-----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, KyGUJGHUsVQxVEwz3GRbhubJQhEZcfofUpBfnMMVp5MWjrZnf/N1IhOAKYrjw9gC hRQnmnYRAut7YL9tOD5y+Q== 0000950137-98-003452.txt : 19981014 0000950137-98-003452.hdr.sgml : 19981014 ACCESSION NUMBER: 0000950137-98-003452 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981009 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981009 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEEBLER FOODS CO CENTRAL INDEX KEY: 0001018848 STANDARD INDUSTRIAL CLASSIFICATION: COOKIES & CRACKERS [2052] IRS NUMBER: 363839556 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13705 FILM NUMBER: 98723867 BUSINESS ADDRESS: STREET 1: 677 LARCH AVE CITY: ELMHURST STATE: IL ZIP: 60126 BUSINESS PHONE: 6308332900 FORMER COMPANY: FORMER CONFORMED NAME: KEEBLER CORP DATE OF NAME CHANGE: 19960715 8-K 1 CURRENT REPORT 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: OCTOBER 9, 1998 (DATE OF EARLIEST EVENT REPORTED: SEPTEMBER 28, 1998) -------------------- KEEBLER FOODS COMPANY (Exact name of Registrant as specified in its charter) DELAWARE NO. 001-13705 36-3839556 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File Number) Identification No.) 677 LARCH AVE., ELMHURST, IL 60126 (Address of principal executive offices) 630-833-2900 (Registrant's telephone number, including area code) NOT APPLICABLE. (Former name or former address, if changed since last report) -------------------- ================================================================================ 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On September 28, 1998, Keebler Foods Company, a Delaware corporation ("Keebler"), purchased all of the issued and outstanding shares of common stock of President International, Inc., a Delaware corporation ("PII"), the parent and sole owner of President Baking Company, Inc. ("President") from President International Trade and Investment Corporation, a company limited by shares under the International Business Companies Ordinance of the British Virgin Islands ("Parent") for an aggregate purchase price of $450.0 million subject to post-closing adjustments. The funds used to consummate the acquisition came from both existing cash resources and from borrowings under the $700.0 million Senior Credit Facility Agreement dated as of September 28, 1998 among Keebler, various financial institutions, and the Bank of Nova Scotia ("BNS"), as the Lead Arranger and Administrative Agent, The First National Bank of Chicago, as the Syndication Agent, and the Bank of Montreal, as the Managing Agent. Keebler financed the transaction using existing cash resources of approximately $75.0 million, and borrowings of $350.0 million under a BNS Term Loan, $105.0 million under a BNS Revolver, and $75.0 million under a BNS Bridge Facility. In conjunction with this acquisition, Keebler extinguished its outstanding Term A Note plus accrued interest and bank fees in the amount of $146.1 million. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired: To be filed by Amendment not later than December 11, 1998. (b) Pro Forma Financial Information: To be filed by Amendment not later than December 11, 1998. (c) EXHIBITS EXHIBIT NO. DOCUMENT ----------- -------- 2.2 Stock Purchase Agreement dated as of August 24, 1998 between Keebler Foods Company and President International, Inc. 10.33 $700,000,000 Senior Credit Facility dated as of September 28, 1998 among Keebler, various financial institutions, and the Bank of Nova Scotia, as the Lead Arranger and Administrative Agent, The First National Bank of Chicago, as the Syndication Agent, and the Bank of Montreal, as the Managing Agent. 3 SIGNATURES Pursuant to the requirements 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. KEEBLER FOODS COMPANY By: /s/ JAMES T. SPEAR ------------------------------------------------------------ Name: James T. Spear Title: Vice President Finance and Corporate Controller (Chief Accounting Officer) Date: October 9, 1998 4 EXHIBIT INDEX EXHIBIT NO. DOCUMENT ----------- -------- 2.2 Stock Purchase Agreement dated as of August 24, 1998 between Keebler Foods Company and President International, Inc. 10.33 $700,000,000 Senior Credit Facility dated as of September 28, 1998 among Keebler, various financial institutions, and the Bank of Nova Scotia, as the Lead Arranger and Administrative Agent, The First National Bank of Chicago, as the Syndication Agent, and the Bank of Montreal, as the Managing Agent. EX-2.2 2 STOCK PURCHASE AGREEMENT 1 EXHIBIT 2.2 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 24, 1998, by and among Keebler Foods Company, a Delaware corporation ("Buyer"), President International, Inc., a Delaware corporation (the "Company"), and President International Trade and Investment Corporation, a company limited by shares under the International Business Companies Ordinance of the British Virgin Islands ("Parent" and, together with the Company, "Seller"). WITNESSETH: WHEREAS, Parent owns all of the issued and outstanding shares of common stock, $.01 par value, of the Company; WHEREAS, Parent desires to sell to Buyer, and Buyer desires to purchase from Parent, all of the issued and outstanding shares of common stock, $.01 par value, of the Company (collectively, the "Shares"). NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, on the basis of, and in reliance upon, the representations, warranties, covenants, obligations and agreements set forth in this Agreement, and upon the terms and subject to the conditions contained herein, hereby agree as follows: ARTICLE I. DEFINITIONS SECTION 1.1 DEFINITIONS. In this Agreement, the following terms have the meanings specified or referred to in this SECTION 1.1 and shall be equally applicable to both the singular and plural forms. Any agreement referred to below shall mean such agreement as amended, supplemented and modified from time to time to the extent permitted by the applicable provisions thereof and by this Agreement. "ACCOUNTANTS" means the New York, New York office of Arthur Andersen LLP, or any other independent accounting firm of nationally recognized standing mutually acceptable to Parent and Buyer. "ACTION" shall mean any civil, criminal or administrative action, proceeding or suit or any appeal in respect thereof. 2 "AFFILIATED PARTIES" shall have the meaning specified in SECTION 5.9. "AGREEMENT" means this Stock Purchase Agreement. "ANTITRUST DIVISION" means the Antitrust Division of the United States Department of Justice. "AUDITED FINANCIAL STATEMENTS" shall have the meaning specified in SECTION 3.7. "AUTHORITY" means any governmental, regulatory or administrative body, agency or authority, any court of judicial authority or any arbitrator, whether foreign, federal, state or local. "BANKRUPTCY EXCEPTION" has the meaning specified in SECTION 3.3(a). "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or a day on which banks in New York, New York are authorized or obligated by Law or executive order to close. "BUYER" means Keebler Foods Company, a Delaware corporation. "CASH ESCROW AMOUNT" shall mean an amount equal to Five Million Dollars ($5,000,000), together with all interest and earnings thereon. "CASH INDEMNIFICATION ESCROW AGREEMENT" shall mean the Cash Indemnification Escrow Agreement between Buyer and Seller in substantially the form of EXHIBIT A attached hereto. "CAPITALIZED LEASE AMOUNT" shall mean the aggregate present value of all unpaid rental obligations of the Company (or its Subsidiaries) under the equipment leases for the Lake Bluff automated brownie line and the Louisville automated mint line as of the Closing Date, through the end of the current term of each such lease; such present value to be computed using a per annum discount rate of seven and one-half percent (7 1/2%). "CLOSING" has the meaning specified in SECTION 2.3. "CLOSING BALANCE SHEET" has the meaning specified in SECTION 2.2(d). "CLOSING DATE" has the meaning specified in SECTION 2.3. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON STOCK" means common stock of the Company, $0.01 par value, of the Company. "COMPANY" means President International, Inc., a Delaware corporation. 2 3 "COMPANY SALE" has the meaning specified in SECTION 5.9. "COMPENSATION AND BENEFIT PLANS" shall have the meaning specified in SECTION 3.15(a). "COMPETING BUSINESS" shall have the meaning specified in SECTION 3.18(a). "CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement dated July 24, 1998, by and among Buyer and Parent. "CONTRACT" shall mean any agreement, contract, license, lease, sublease, binding arrangement or commitment, or other similar agreement. "DEBT AMOUNT" shall mean all Indebtedness as of the Closing Date, and any accrued interest, prepayment penalties, fees, costs and other charges related thereto, but excluding all intercompany debt owed among the Company and its Subsidiaries, all obligations under interest rate swap arrangements and all Letter of Credit Obligations. "EMPLOYEES" has the meaning specified in SECTION 3.15(a). "ENCUMBRANCE" means any lien (statutory or other), claim, charge, security interest, mortgage, pledge, hypothecation, assignment, encumbrance, preference, priority, reversionary interest, easement, conditional sale or other title retention agreement, defect in title or other restrictions of a similar kind. "ENVIRONMENTAL LAW" shall mean all applicable federal, state or local statutes, regulations, rules, permits and orders of any Authority relating to the protection of human health and the environment, soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air, and any environmental medium existing as of the date hereof. Environmental Law shall include, but not be limited to, the following: the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. sections 9601, ET SEQ.) ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act, Public Law 99-499, 100 Stat. 1613; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. sections 6901, ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. sections 2601, ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C. sections 1251, ET SEQ.; the Clean Air Act, 42 U.S.C. sections 7401, ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. section 300f-300j; and the state and local analogs thereto. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ESCROW AGENT" shall mean a bank of nationally recognized standing, whose principal office shall be in New York, New York (but who shall maintain the Cash Escrow Amount in an offshore account provided cash funds are available in New York, New York upon a draw made upon its New York, New York office), mutually acceptable to Seller and Buyer. 3 4 "ESTIMATED BALANCE SHEET" has the meaning specified in SECTION 2.2(b). "EXPENSES" mean any and all reasonable expenses incurred in connection with investigating, defending or asserting any Action incident to any matter indemnified against hereunder (including, without limitation, court filing fees, court costs, arbitration fees or costs, witness fees and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, accountants and other professionals). "FTC" shall mean the Federal Trade Commission. "GAAP" shall mean generally accepted accounting principles in the United States consistently applied and as in effect on December 27, 1997. More specifically, as relates to financial statements of the Company as of any date and for any period ending subsequent to December 27, 1997, GAAP shall exclude the effects of any changes in accounting principles otherwise required to be adopted subsequent to December 27, 1997 pursuant to new or existing standards, interpretations or other pronouncements promulgated by the Financial Accounting Standards Board, American Institute of CPA's, Securities and Exchange Commission, Emerging Issues Task Force or any committees thereof. With respect to the Closing Balance Sheet, GAAP shall have the same meaning as set forth above and shall be applied on the same basis as that utilized in preparation of the December 27, 1997 consolidated balance sheet of the Company as though the Closing Date were a normal fiscal year end date of the Company. "GOVERNMENTAL PERMITS" have the meaning specified in SECTION 3.10. "HAZARDOUS SUBSTANCE" shall mean any substance: (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, permit or Action; (ii) which is or has been identified as a hazardous waste, hazardous substance, pollutant or contaminant under any applicable Environmental Law, or (iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, reactive, or otherwise hazardous and has been identified as regulated under any Environmental Law. "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "INCOME TAX" means any federal, state or local income, alternative, minimum, franchise or other similar tax, duty, governmental charge or assessment imposed by or on behalf of any Authority that is based on or measured by income (including, interest and penalties on any of the foregoing). "INDEBTEDNESS" means all indebtedness for borrowed money by the Company and its Subsidiaries calculated in accordance with GAAP, including (i) prepayment penalties, fees, costs or charges payable in connection with the retirement of such indebtedness as of the Closing, and (ii) obligations evidenced by bonds, debentures, notes or similar instruments, but excluding obligations under capitalized or other leases regardless of how classified under GAAP or by the Company, and excluding all Letter of Credit Obligations (which shall be the responsibility of 4 5 Buyer, including without limitation, the portion of the Company's senior debt facility related thereto). "INDEMNIFICATION ESCROW AGREEMENTS" shall mean collectively the Cash Indemnification Escrow Agreement, Supplemental Letter of Credit Indemnification Escrow Agreement and the Tax Letter of Credit Indemnification Escrow Agreement. "INDEMNIFIED PARTY" shall have the meaning specified in SECTION 8.3(b). "INDEMNIFYING PARTY" shall have the meaning specified in SECTION 8.3(a). "INTELLECTUAL PROPERTY" shall have the meaning specified in SECTION 3.11. "INTERIM BALANCE SHEET" shall have the meaning specified in SECTION 3.7 hereof. "INTERIM FINANCIAL STATEMENTS" shall have the meaning specified in SECTION 3.7 hereof. "IRS" shall mean the United States Internal Revenue Service. "KNOWLEDGE OR KNOWN" with respect to any Person, shall mean the actual conscious awareness of such Person, and Knowledge or Known as to Seller shall mean such awareness of Eric H. Wen, Steven B. Woolf, William G. Bayers, Jerry Cavitt, Gerald V. DeFalco, Emmett E. Watson, Wendell Horner, Donald W. Davis, Jr., Mark Murphy and Forest Ralph. "LABOR DISPUTES" shall have the meaning specified in SECTION 3.20(b). "LAW" shall mean any law, rule, regulation, order, ordinance, requirement, treaty, statute or code or other binding action, requirement or ruling of an Authority, other than any Environmental Law. "LEASED REAL PROPERTY" means those certain parcels of land more fully described on SCHEDULE 3.12 to this Agreement under the heading "Leased Real Property." "LETTER OF CREDIT BANK" shall mean a bank of nationally recognized standing with not less than an "A" rating having combined capital and surplus of not less than $300,000,000 and an office in New York, New York, mutually acceptable to Seller and Buyer. "LETTER OF CREDIT OBLIGATIONS" shall mean all reimbursement obligations of the Company in respect of letters of credit issued in connection with distributor loans. "LIABILITY" shall mean any debt, liability, commitment or obligation of any kind, character or nature whatsoever, known or unknown, secured or unsecured, accrued, fixed, absolute, contingent, and whether due or to become due. 5 6 "LICENSES" means all licenses, franchises, certifications, authorizations, approvals and permits issued or approved by any Authority and relating to the operation, ownership, development and maintenance of the Real Property or any part thereof, including elevator permits, machinery permits, business licenses, ingress and egress permits and the like. "LOSSES" mean any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges. "LTIP AMOUNT" shall mean all liabilities incurred in respect of the sale of the Shares under the Company's 1998 Long-Term Incentive Plan calculable as of the Closing Date. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets, business (including current business and prospects for continuation of current business) or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole. "MATERIAL CONTRACTS" has the meaning specified in SECTION 3.14(a). "MULTIEMPLOYER PLAN" shall have the meaning specified in SECTION 3.15(a). "NET WORKING CAPITAL" shall mean all current assets of the Company and its Subsidiaries (excluding only cash and amounts owed to the Company or any Subsidiary from Parent, any Subsidiary or the Company), MINUS all current liabilities of the Company and its Subsidiaries (excluding amounts owed by the Company or any Subsidiary to any Subsidiary, the Company or Parent), in each case determined in accordance with GAAP, as further qualified by this definition. Current liabilities of the Company and its Subsidiaries shall not include any liability to the extent included in the Capitalized Lease Amount, the Debt Amount, the LTIP Amount or the Tax Amount. Current liabilities shall not include liabilities unknown to Seller or incurred out of the Ordinary Course of Business, the existence of either of which constitutes the breach of any representation or warranty contained in ARTICLE III whether or not giving effect to any qualification contained therein as to materiality, Knowledge or by reference to any Schedule. Current liabilities shall not include any reserves or accruals for environmental liabilities of any nature. All reserves and other accounts based on estimates shall be calculated in the same manner and shall be based upon similar types of information, as was used by the Company in the preparation of the Audited Financial Statements; PROVIDED THAT such calculation shall not include the effects of any reversal or dimunition of such reserves from those included in the June 27, 1998 balance sheet of the Company, except to the extent of actual charges incurred in the Ordinary Course of Business. Current assets and current liabilities shall include for purposes of the computation of Net Working Capital, (i) any accelerated bonus payments made by the Company at or immediately prior to Closing under the Company's Management Incentive Plan, and (ii) Taxes other than Income Taxes (but only to the extent historically included). "NET WORKING CAPITAL DEFICIT" means the excess, if any, of (i) (A) Thirty-Seven Million and One Hundred Thousand Dollars ($37,100,000), LESS (B) the Swap Adjustment Amount, LESS (ii) the Net Working Capital as of the date of the Closing Balance Sheet. 6 7 "NET WORKING CAPITAL EXCESS" means the excess, if any, of (i) the Net Working Capital as of the date of the Closing Balance Sheet, LESS (ii) (A) Thirty-Seven Million and One Hundred Thousand Dollars ($37,100,000), LESS (B) the Swap Adjustment Amount. "ORDER" shall mean any award, decision, injunction, judgment, decree, stipulation, settlement, order, filing, subpoena, consent or verdict (whether temporary, preliminary or permanent) entered, issued, made or rendered by any Authority against the Company or its Subsidiaries. "ORDINARY COURSE OF BUSINESS" shall mean in the ordinary course of the Company's or any Subsidiary's business, in a manner consistent with its past practice or in a manner the Company believes is in the commercial best interests of the Company (including without limitation with respect to the purchase, development and maintenance of inventory of a quantity and type to enable the Company and its Subsidiaries to fulfill their respective obligations under Contracts with Girl Scouts Councils in a full and timely manner). "ORGANIZATIONAL DOCUMENTS" shall mean, collectively, a true, complete and correct copy of the Certificate of Incorporation (or comparable governing document) and By-laws, each as amended to date, of a party as indicated herein. "OWNED REAL PROPERTY" means those certain parcels of land more fully identified on SCHEDULE 3.12 to this Agreement under the heading "Owned Real Property," together with all privileges and appurtenances thereto and all plants, buildings, structures, fixtures and improvements, together with all easements and rights-of-way granted to the Company and its Subsidiaries in connection therewith. "PENSION PLAN" shall have the meaning specified in SECTION 3.15(a). "PERMITTED ENCUMBRANCES" means (a) Encumbrances for Taxes and other governmental charges and assessments for the year 1998 which are not yet due and payable, (b) Encumbrances of landlords and liens of carriers, warehousemen, mechanics and materialmen and other like liens arising in the Ordinary Course of Business for sums not yet due and payable, (c) other Encumbrances on property which are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Encumbrance and (d) all Encumbrances in favor of Chase Manhattan Bank, N.A., as agent for the Company's senior lenders. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Authority. "PRELIMINARY CAPITALIZED LEASE AMOUNT" means the Capitalized Lease Amount as computed pursuant to SECTION 2.2(b). "PRELIMINARY DEBT AMOUNT" means the Debt Amount as computed pursuant to SECTION 2.2(b). 7 8 "PRELIMINARY LTIP AMOUNT" means the LTIP Amount computed pursuant to SECTION 2.2(b). "PRELIMINARY NET WORKING CAPITAL DEFICIT" means the excess, if any, of (i) (A) Thirty-Seven Million and One Hundred Thousand Dollars ($37,100,000), LESS (B) the Swap Adjustment Amount, LESS (ii) the Net Working Capital as reflected on the Estimated Balance Sheet. "PRELIMINARY NET WORKING CAPITAL EXCESS" means the excess, if any, of (i) the Net Working Capital as reflected on the Estimated Balance Sheet, LESS (ii) (A) Thirty-Seven Million and One Hundred Thousand Dollars ($37,100,000), LESS (B) the Swap Adjustment Amount. "PRELIMINARY PURCHASE PRICE" shall have the meaning set forth in SECTION 2.2(c). "PRELIMINARY TAX AMOUNT" means the Tax Amount as reflected on the Estimated Balance Sheet. "PROPOSED FINAL PURCHASE PRICE" has the meaning specified in SECTION 2.2(d). "PURCHASE PRICE" has the meaning specified in SECTION 2.2(a). "PURCHASE PRICE CERTIFICATE" has the meaning specified in SECTION 2.2(d). "REAL PROPERTY" means, collectively, the Owned Real Property and the Leased Real Property. "SHARES" means all of the issued and outstanding shares of Common Stock. "SUBSIDIARY" shall mean with respect to any Person, any corporation or other entity of which such Person has, directly or indirectly, ownership of securities or other interests having the power to elect a majority of such corporation's Board of Directors (or similar governing body), or otherwise having the power to direct the business and policies of that corporation, and with respect to the Company shall include the corporations listed on SCHEDULE 3.1, but in no event shall include the Company's interests in the Shanghai and Tainjin joint ventures. "SUPPLEMENTAL LETTER OF CREDIT" shall mean the irrevocable letter of credit issued by the Letter of Credit Bank and required to be delivered to the Escrow Agent pursuant to the Supplemental Letter of Credit Indemnification Escrow Agreement. "SUPPLEMENTAL LETTER OF CREDIT ESCROW AMOUNT" shall mean Five Million Dollars ($5,000,000), as may be adjusted in accordance with SECTION 6.2(a). 8 9 "SUPPLEMENTAL LETTER OF CREDIT INDEMNIFICATION ESCROW AGREEMENT" shall mean the Supplemental Letter of Credit Indemnification Escrow Agreement substantially in the form of EXHIBIT B attached hereto. "SWAP ADJUSTMENT AMOUNT" means the lesser of (i) $250,000, OR (ii) the sum of all fees, penalties, costs and expenses incurred by the Company in connection with the termination of the interest rate swap agreements as required pursuant to SECTION 5.12. "TAX AMOUNT" means all obligations as of the Closing Date as accrued through such date of the Company and its Subsidiaries for Income Taxes for periods ending on or before the Closing Date after giving effect to all Tax write offs, benefits, deductions, credits and related Tax effects associated with any payments actually made on, before or simultaneously with the Closing, including without limitation, (i) the payment of accelerated bonuses by the Company at or immediately prior to Closing under the Company's Management Incentive Plan; (ii) all payments made by the Company in respect of the termination of interest rate swap agreements at or prior to Closing as required under SECTION 5.12; and (iii) the retirement of the Debt Amount. "TAX(ES)" shall mean all federal, state, local or foreign income, capital gains, gross receipts, windfall or excess profits, severance, property, production, sales, use, license, excise, franchise, employment, withholding, goods and services, stamp, occupation, value added or other tax or customs duties, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties. "TAX LETTER OF CREDIT" shall mean the irrevocable letter of credit issued by the Letter of Credit Bank and required to be delivered to the Escrow Agent pursuant to the Tax Letter of Credit Indemnification Escrow Agreement. "TAX LETTER OF CREDIT ESCROW AMOUNT" shall mean Five Million Dollars ($5,000,000). "TAX LETTER OF CREDIT INDEMNIFICATION ESCROW AGREEMENT" shall mean the Tax Letter of Credit Indemnification Escrow Agreement between Buyer and Seller substantially in the form of EXHIBIT C attached hereto. "TAX RETURN" means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax. "TAX WITHHOLDING" shall have the meaning specified in SECTION 5.10. "TRADE SECRETS" shall have the meaning specified in SECTION 3.11. "WARN ACT" shall mean the Worker Adjustment and Retraining Notification Act of 1988, as amended. "WELFARE PLAN" shall have the meaning specified in SECTION 3.15(a). 9 10 ARTICLE II PURCHASE AND SALE OF SHARES SECTION 2.1 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties, covenants and agreements made by each party hereto, at the Closing, Parent shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Parent, the Shares, free and clear of any Encumbrances. SECTION 2.2 PURCHASE PRICE. (a) CONSIDERATION. In full consideration for the sale and purchase of the Shares, Buyer shall pay to Parent, in the manner set forth in this SECTION 2.2, subject to the adjustments set forth herein, an aggregate purchase price (the "PURCHASE PRICE") equal to Four Hundred Fifty Million Dollars ($450,000,000), PLUS (A) the Net Working Capital Excess, if any, or MINUS (B) the Net Working Capital Deficit, if any, as the case may be. The actual consideration to be paid to Parent shall be the Purchase Price LESS each of the Debt Amount, the LTIP Amount, the Capitalized Lease Amount, and the Tax Amount. (b) PRELIMINARY PURCHASE PRICE. On each Tuesday commencing on September 22, 1998, the Company shall prepare and deliver to Buyer (i) an unaudited consolidated balance sheet of the Company prepared in accordance with GAAP, estimated as of the Saturday prior to the Closing Date, pro forma as to, and giving effect for, any transactions or operations anticipated to occur subsequent to its preparation but on or before the Closing Date (the "ESTIMATED BALANCE SHEET"), and (ii) a calculation of (A) Net Working Capital, (B) the Debt Amount, (C) the LTIP Amount, (D) the Capitalized Lease Amount, and (E) the Tax Amount; PROVIDED that the Company shall not be required to so deliver an Estimated Balance Sheet in the event the Company does not reasonably anticipate that Closing will occur the following week but in any event shall be required to deliver an Estimated Balance Sheet at least three (3) Business Days prior to the Closing Date. (c) PAYMENT OF PRELIMINARY PURCHASE PRICE. At the Closing, the Buyer shall deliver: (i) to Parent by wire transfer of immediately available federal funds to an account designated by Parent, an aggregate amount equal to (A) Four Hundred Forty-Five Million Dollars ($445,000,000), MINUS (B) the Preliminary Net Working Capital Deficit (if any), PLUS (C) the Preliminary Net Working Capital Excess (if any), MINUS (D) the Preliminary Debt Amount, MINUS (E) the Preliminary LTIP Amount, MINUS (F) the Preliminary Capitalized Lease Amount, MINUS (G) the Preliminary Tax Amount; and (ii) to the Escrow Agent, the Cash Escrow Amount to be held in an escrow account pursuant to the terms of the Cash Indemnification Escrow Agreement (the aggregate amount payable pursuant to this SECTION 2.1(c) is the "PRELIMINARY PURCHASE PRICE"). 10 11 (d) ADJUSTMENT TO PURCHASE PRICE. No later than thirty (30) days after the Closing Date, Buyer shall prepare and deliver to Parent (i) an unaudited consolidated balance sheet of the Company as of the Saturday prior to the Closing Date prepared in accordance with GAAP, giving effect for any transactions or operations occurring on or before the Closing Date (the "CLOSING BALANCE SHEET"), (ii) a calculation of (A) Net Working Capital, (B) the Debt Amount, (C) the LTIP Amount, (D) the Capitalized Lease Amount and (E) the Tax Amount, in each case as of the Closing Date and (iii) a certificate (the "PURCHASE PRICE CERTIFICATE") setting forth a proposed final Purchase Price subject to the adjustments provided in SECTION 2.2(a) (the "PROPOSED FINAL PURCHASE PRICE") which shall be calculated as (A) Four Hundred Fifty Million Dollars ($450,000,000), MINUS (B) the Working Capital Deficit (if any), PLUS (C) the Net Working Capital Excess (if any), MINUS (D) the Debt Amount, MINUS (E) the LTIP Amount, MINUS (F) the Capitalized Lease Amount, MINUS (G) the Tax Amount. Buyer will furnish and cause the Company to furnish to Parent and its advisors access (and if requested, copies) of such documents, financial records, work papers, financial management personnel and other information as Parent may request that are available to or obtainable by Buyer or the Company and reasonably deemed relevant by Parent to the preparation of the Closing Balance Sheet and Purchase Price Certificate. If within thirty (30) days following delivery of the Closing Balance Sheet and the Purchase Price Certificate, Parent has not given Buyer written notice of its objection thereto (such notice must contain a statement of the basis of Parent's objection), then Parent shall be deemed to have accepted and agreed to the Closing Balance Sheet and the Purchase Price Certificate, and the Proposed Final Purchase Price shall be deemed to be the Purchase Price as required to be adjusted per SECTION 2.2(a). If Parent gives such notice of objection, then Buyer and Parent shall cooperate with each other in an effort to come to an agreement on the matters which are in dispute. If such dispute cannot be resolved within thirty (30) days of Buyer's receipt of Parent's notice of objection, then the issues in dispute will be submitted to the Accountants for resolution. If issues in dispute are submitted to the Accountants for resolution, (i) each party will be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination with the Accountants; (ii) the determination by the Accountants, as set forth in a notice delivered to both parties by the Accountants, will be binding and conclusive on the parties; and (iii) Buyer and Parent will each bear one-half (1/2) of the fees and expenses of the Accountants for such determination. The Final Purchase Price shall be deemed to be the final Purchase Price (subject to and as required to be adjusted pursuant to SECTION 2.2(a)) determined in accordance with this SECTION 2.2(d), whether by the failure of Parent to provide a notice of objection to the Proposed Final Purchase Price, by resolution of all disputes by Buyer and Parent or by determination of the Accountants. (e) POST-CLOSING PAYMENT. On the tenth (10th) Business Day following the final determination of the Closing Balance Sheet and the Purchase Price as provided hereinabove, if the Purchase Price as required to be adjusted per SECTION 2.2(a) (as determined in accordance with SECTION 2.2(d)) is greater than the Preliminary Purchase Price, Buyer will pay the difference to Parent, and if the Purchase Price as required to be adjusted per SECTION 2.2(a) (as determined in accordance with SECTION 2.2(d)) is less than the Preliminary Purchase Price, Parent will pay the difference to Buyer. Payment must be made in immediately available federal funds. Payment to Parent must be made in the manner set forth in SECTION 2.2(c)(i). Payment to Buyer must be made by wire transfer to such bank account as Buyer will specify. During the period from the Closing 11 12 Date until payment of the Purchase Price as provided in this SECTION 2.2(e), Parent and Buyer shall each maintain available cash or account balances of at least $5,000,000 in a bank of nationally recognized standing whose principal office shall be in New York, New York (but Parent may maintain such balance in an offshore account provided the cash funds are available in New York, New York) and each shall provide the other with account statements or other documentation on a monthly basis evidencing compliance with this covenant. SECTION 2.3 CLOSING. The closing of the purchase and sale of the Shares and the other transactions provided for herein to occur coincident therewith (the "CLOSING") shall occur on the Closing Date at the offices of Winston & Strawn, New York, New York, commencing at 10:00 a.m. Eastern Time, unless another date, time or place is mutually agreed to by Parent and Buyer. The "CLOSING DATE" shall mean the later of (i) September 28, 1998 or (ii) the first Monday which is a Business Day subsequent to satisfaction or waiver of the closing condition set forth in SECTION 6.3 or such other date as Buyer and Parent may mutually agree in writing, in either case, upon which date the parties agree to effect the Closing. SECTION 2.4 DELIVERIES BY SELLER. On the Closing Date, Seller shall deliver, or cause to be delivered, to Buyer the following: (a) a certificate or certificates evidencing all of the Shares, duly endorsed or accompanied by stock powers executed in blank; (b) (i) the certificate of incorporation of the Company and each of its Subsidiaries certified by the Secretary of State of the State of Delaware as of a date subsequent to the date hereof and (ii) the by-laws of the Company certified by the Secretary or an Assistant Secretary of the Company as of the Closing Date; (c) certificates of good standing for the Company from the State of Delaware and for each of its Subsidiaries in their respective jurisdictions of incorporation; (d) (i) the memorandum of association of Parent certified by the appropriate governmental agency of the British Virgin Islands as of a date subsequent to the date hereof and (ii) the articles of association of Parent certified by the Secretary or an Assistant Secretary of Parent as of the Closing Date; (e) certificate of good standing (or comparable equivalent) for Parent from its jurisdiction of incorporation to the extent such certificate is issuable by such jurisdiction; (f) the legal opinion of Jones, Day, Reavis & Pogue, counsel for Parent and the Company, substantially in the proposed form attached hereto as EXHIBIT 2.4(f), and in respect of matters concerning the British Virgin Islands, the legal opinion of counsel qualified to practice law in such jurisdiction; (g) a copies of the Cash Indemnification Escrow Agreement, Supplemental Letter of Credit Indemnification Escrow Agreement and Tax Letter of Credit Indemnification Escrow Agreement duly executed by Parent; 12 13 (h) copies of the resolutions of the Board of Directors of the Company and Parent authorizing the execution, delivery and performance of this Agreement and certificates of the Secretary or any Assistant Secretary of Parent and the Company, as the case may be, dated as of the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect; (i) the resignations of all directors of the Company; (j) pay off letters from the Company's lenders with respect to the Debt Amount in customary form reasonably satisfactory to Buyer; (k) a copy of the Supplemental Letter of Credit and Tax Letter of Credit; and (l) an executed indemnity side letter by President Enterprises Corp. for the benefit of Buyer indemnifying Buyer for any and all Tax Liabilities associated with the operation or disposition of the Shanghai and Tainjin joint ventures, and any payments owing to Buyer pursuant to SECTION 2.2(d), in the form attached hereto as EXHIBIT 2.4(l). SECTION 2.5 DELIVERIES BY BUYER. On the Closing Date, Buyer shall deliver to Parent the following: (a) the Preliminary Purchase Price in accordance with SECTION 2.2(c); (b) the legal opinion of Winston & Strawn, special counsel for Buyer, substantially in the form attached hereto as EXHIBIT 2.5(b); (c) the certificate of incorporation of Buyer certified by the Secretary of State of the State of Delaware as of a date subsequent to the date hereof; (d) copies of the Cash Indemnification Escrow Agreement, Supplemental Letter of Credit Indemnification Escrow Agreement and Tax Letter of Credit Indemnification Escrow Agreement duly executed by Buyer; and (e) copies of the resolutions of the Board of Directors and a certificate of the Secretary or an Assistant Secretary of Buyer dated as of the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE COMPANY As an inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, and in consideration of the covenants of Buyer contained herein, Parent and the Company, jointly and severally, represent and warrant to, and for the 13 14 benefit of, Buyer as set forth hereinbelow. All references to the Company unless the context requires otherwise shall include the Company and each of its Subsidiaries and references to Seller include Parent, the Company and each of its Subsidiaries. SECTION 3.1 CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation as set forth on SCHEDULE 3.1. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing as a foreign corporation in each jurisdiction, except for immaterial failures to be so qualified, licensed or in goodstanding. The Company has full corporate power and authority to own, lease, operate or otherwise hold its properties and assets and to carry on its business as it is now being conducted. The Company has delivered to Buyer a complete and correct copy of the Company's Organizational Documents. SECTION 3.2 CAPITALIZATION. (a) The authorized capital stock of the Company consists of one thousand (1,000) shares of Common Stock, of which only the Shares are issued and outstanding. All of the Shares have been duly authorized and are validly issued, fully paid and nonassessable. There are no options, conversion rights, warrants, or other commitments by the Seller to issue additional shares of capital stock of the Company. (b) None of the Shares are subject to preemptive rights or any outstanding subscriptions, options, warrants, calls, rights, convertible securities or other agreements or other instruments outstanding or in effect giving any Person the right to acquire any shares of capital stock or other securities of the Company or any commitments of any character relating to the issued or unissued capital stock or other securities of the Company, which have not been waived. (c) SCHEDULE 3.2 sets forth the authorized capital stock, and shares issued and outstanding, of each Subsidiary of the Company, and indicates the ownership of such shares. SECTION 3.3 AUTHORITY; CONFLICTS. (a) Each of the Company and Parent has the corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform this Agreement and each other agreement or certificate delivered pursuant hereto and to consummate the transactions contemplated in each such agreement. This Agreement and each other agreement or certificate delivered pursuant hereto has been duly authorized, executed and delivered by each of the Company and Parent and each such agreement constitutes or will constitute (assuming the valid authorization, execution and delivery of this Agreement and each other agreement or certificate delivered pursuant hereto by Buyer) the legal, valid and binding obligation of each of the Company and Parent enforceable in accordance with its terms, in each case subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application relating to or affecting creditors' rights and to general equity principles (the "BANKRUPTCY EXCEPTION"). 14 15 (b) Assuming compliance with the HSR Act, neither the execution and delivery of this Agreement by Seller or the consummation of any of the transactions contemplated herein or in any other agreement or certificate delivered pursuant hereto, nor compliance with or fulfillment of the terms, conditions and provisions thereof, except as set forth on SCHEDULE 3.3, will conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default (or an event that with the passage of time will become a default), an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance upon any of the Shares or any of the assets of the Company, under (i) the Organizational Documents of either Parent or the Company, (ii) any Material Contract (as defined in Section 3.14), franchise or financial obligation to which Parent or the Company is a party or by which Parent or the Company is bound, (iii) any Order to which Parent or the Company is a party or by which Parent or the Company is bound or (iv) any Law by which Parent or the Company is bound. SECTION 3.4 REGULATORY FILINGS; NO VIOLATIONS. Other than the filings and/or notices necessary to comply with the HSR Act, no notices, declarations, registrations, reports or other filings are required to be made by Seller with, nor are any consents, registrations, approvals, permits, expiration of any applicable waiting periods or authorizations required to be obtained by Seller or the Company (or any of its Subsidiaries) from, any Authority, in connection with the execution or delivery of this Agreement or any other agreement delivered in connection herewith by Seller, the performance by Seller of its obligations hereunder or thereunder or the consummation by Seller of the transactions contemplated hereby and thereby, other than notices, declarations, registrations, reports, other filings, consents, approvals, permits, expirations and authorizations that are immaterial. SECTION 3.5 NO ACTIONS AGAINST SELLER. There is no Action pending or to Seller's Knowledge threatened, against Seller which questions or challenges the validity of this Agreement, any other agreement delivered pursuant hereto or any action taken or proposed to be taken by the Seller pursuant hereto or thereto or in connection with the transactions contemplated hereby and thereby. SECTION 3.6 OWNERSHIP OF SHARES. Parent owns the Shares free and clear of any Encumbrances and upon delivery of and payment by Buyer to Parent of the Purchase Price, Buyer will acquire the Shares free and clear of all Encumbrances. SECTION 3.7 FINANCIAL STATEMENTS. The consolidated balance sheets of the Company as of the fiscal years ended December 28, 1996 and December 27, 1997 and the related consolidated income statements and statements of cash flow of the Company for the fiscal years ended on such dates (in each case audited by and accompanied by the report of Price Waterhouse LLP (n/k/a PricewaterhouseCoopers LLP) (collectively, the "AUDITED FINANCIAL STATEMENTS"), and the unaudited consolidated balance sheet as of June 27, 1998 (the "INTERIM BALANCE SHEET") and the income statement for the accounting period ending on such date (together with the Interim Balance Sheet, the "INTERIM FINANCIAL STATEMENTS"), copies of which are attached hereto as SCHEDULE 3.7, were prepared from the books and records of the Company in accordance with GAAP as consistently applied by the Company and present fairly in all material respects the consolidated financial position and results of operations of the Company (a) in the case of the 15 16 Audited Financial Statements, as of and for the accounting periods ended on December 28, 1996 and December 27, 1997, respectively, and (b) in the case of the Interim Financial Statements, as of June 27, 1998 and for the period ended on such date, except that the Interim Financial Statements have been prepared using practices customarily followed in the preparation of interim financial statements by the Company and exclude a statement of cash flows and informative disclosures customarily required in notes to the financial statements. SECTION 3.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 3.8, since the date of the Interim Financial Statements through the date of this Agreement, the Company has conducted its business only in, and has not engaged in any transaction other than according to, the Ordinary Course of Business, or if not in the Ordinary Course of Business, not reasonably likely to have a Material Adverse Effect. In addition, except as set forth in SCHEDULE 3.8, there has not been any: (a) (i) change in the authorized or issued capital stock of the Company; (ii) grant of any stock option, warrant, subscription, calls or other right to purchase shares of capital stock of the Company; (iii) issuance of any security convertible into the capital stock of the Company; (iv) grant of any registration rights in respect of the capital stock of the Company; (v) reclassification, combination, split, subdivision, purchase, redemption, retirement, issuance, sale, or any other acquisition or disposition, directly or indirectly, by the Company of any shares of the capital stock of the Company; (vi) any amendment of any material terms of any outstanding security of the Company; or (vii) sale or pledge of any stock or other equity interests owned by the Company; (b) amendment or other change to the Company's Organizational Documents; (c) (i) increase by the Company in the agreement of any bonus, salary or other compensation payable to any officer or employee of the Company, other than increases in the Ordinary Course of Business; (ii) entry into any employment, consulting, termination, settlement, severance or similar Contracts with any existing or former officer or employee of the Company or the payment of any severance or termination pay to such Person, other than as required by existing contractual obligations described on SCHEDULE 3.8(c); (iii) adoption or amendment in any material respect of, or material increase or acceleration in the payments to or benefits under, any profit sharing, bonus, thrift, stock option, deferred compensation, savings, insurance, restricted stock, pension, retirement, or other employee benefit plan for or with any officer or employee of the Company; or (iv) establishment or adoption of, or material amendment to, any collective bargaining agreement; (d) (i) sale or lease (except for sales or disposition of inventory or sale or lease of other property in the Ordinary Course of Business), alteration, or other disposition of, or write down in excess of $250,000 of the book value of (except under accounting practices and principles applied for amortization and depreciation thereof for the period ending the date of the Audited Financial Statements), any asset of the Company, except to the extent replaced by a comparable asset; (ii) mortgage, pledge or imposition of any Encumbrance (other than a Permitted Encumbrance) upon any asset of the Company; (iii) sale, lease or other disposition of, or termination, lapse or other expiration of the rights to the use of, any of the Intellectual 16 17 Property; or (iv) entry into any transaction, arrangement, agreement or understanding between the Company, Parent or any officer, director or shareholder thereof other than the payment of cash dividends in accordance with SECTION 5.6(b)(iii) or in connection with the distribution of the Company's interests in the Shanghai and Tainjin joint ventures; (e) (i) acquisition (including by merger, consolidation or acquisition of stock or assets) by the Company of any Person or any division thereof or portion of the assets thereof (other than the repurchase of routes in the Ordinary Course of Business); (ii) liquidation, dissolution or winding up of the Company; or (iii) organization of any new Subsidiary; (f) entry into, amendment to, termination of, or receipt of notice of termination of any Contract involving the commitment of the Company involving a total remaining commitment by the Company of at least $250,000; (g) settlement or compromise of any Action, other than such Actions in which the amount paid in settlement or compromise, including the cost to the Company of complying with any provision of such settlement or compromise other than cash payments, does not exceed $100,000, in excess of any amount covered by insurance; (h) material change in the accounting practices, methods or principles used by the Company; (i) effectuation of (i) a "plant closing" (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the business of the Company or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facilities of the business of the Company, except, in either case, after fully complying with the notice and other requirements of the WARN Act; and (j) agreement (whether written or oral and express or implied) by the Company to do any of the foregoing. SECTION 3.9 TAXES. (a) Except as provided in SCHEDULE 3.9: (i) The Company has timely filed (or prior to Closing will timely file) all Tax Returns that it is required to file on or before the Closing Date in all jurisdictions in which it is required to file Tax Returns. All such returns were prepared in accordance with applicable Laws, and are true, correct, and complete in all material respects. All Taxes, as due and payable in respect of such Tax Returns have been paid, and there is no current liability for any Taxes due in connection with any such returns. As of the Closing Date, all material Taxes not yet due and payable have been fully accrued on the books of the Company and adequate reserves have been established for Taxes. There are no unpaid assessments for additional Taxes for any period. All federal and state income Tax Returns filed by the Company for the past three years have been provided to the Buyer; 17 18 (ii) The Company has not been a member of any consolidated, combined or unitary group for federal, state, local or foreign Tax purposes within the last four (4) years other than the consolidated group that includes the Company and its Subsidiaries; (iii) the Company is not a party to any joint venture, partnership or other arrangement that could be treated as a partnership for federal income Tax purposes; (iv) Except for failures that are immaterial, the Company has (A) withheld all required amounts from its employees, agents, contractors and nonresidents and remitted such amounts to the proper agencies; (B) paid all employer contributions and premiums; and (C) filed all federal, state, local, and foreign returns and reports required with respect to employee income Tax withholding, social security unemployment Taxes and premiums; (v) The federal income Tax Returns of the Company have been examined by the IRS, or have been closed by the applicable statute of limitations, for all periods through 1994; no deficiencies or reassessments of any Taxes have been proposed, asserted or assessed against the Company by any federal, state, local or foreign taxing authority which remain outstanding; (vi) The Company has not executed or filed with any taxing authority (whether federal, state, local or foreign) any agreement or other document extending or having the effect of extending the period for assessment, reassessment or collection of any Taxes, that remains outstanding or in force and no power of attorney granted by the Company with respect to any Taxes is currently in force; (vii) No federal, state, local or foreign Tax audits or other administrative proceedings, discussions or court proceedings are presently pending with regard to any Taxes or Tax Returns of the Company and no additional issues has been asserted in writing against the Company in connection with any existing audits of the Company; (viii) The Company has not entered into any closing agreement with the IRS or any other agreement with any taxing Authority relating to Taxes which affects any taxable year ending after the Closing Date; (ix) The Company has not agreed to and it is not required to make any adjustment by reason of a change in accounting methods that affects any taxable year ending after the Closing Date. Neither the IRS nor any other agency has proposed any such adjustment or change in accounting methods that affects any taxable year ending after the Closing date. The Company has no application pending with any taxing authority requesting permission for any changes in accounting methods that relate to its business or operations and that affects any taxable year ending after the Closing Date; 18 19 (x) The Company is not a party to any tax sharing agreement or similar arrangement for the sharing of Tax liabilities or benefits that will be in effect with respect to the Company after the Closing Date for which the Company will have any liability after the Closing Date; (xi) The Company is not a foreign person within the meaning of Code section 1445; (xii) The Company has not consented to the application of Code section 341(f); (xiii) There is no contract, agreement, plan or arrangement covering any employee or former employee of the Company, that individually or collectively, could give rise to the payment of the Company of any amount that would not be deductible by reason Code section 280G; (xiv) No asset of the Company is tax-exempt use property under Code section 168(h); (xv) No portion of the cost of any asset of the Company has been financed directly or indirectly from the proceeds of any tax-exempt state or local government obligation described in Code section 103(a) that are currently outstanding. (xvi) The Company does not have and has not had a permanent establishment in any foreign country and does not and has not engaged in a trade or business in any foreign country; and (xvii) None of the assets of the Company is property that the Company is required to treat as being owned by any other person pursuant to the safe harbor lease provision. SECTION 3.10 GOVERNMENTAL PERMITS. The Company owns, holds or possesses all licenses, franchises, permits, privileges, immunities, approvals and other authorizations from any Authority that are necessary to entitle it to own or lease, operate and use its assets and to carry on and conduct its business substantially as conducted immediately prior to the date of this Agreement (herein collectively called "GOVERNMENTAL PERMITS"), except for such Governmental Permits which are immaterial. SECTION 3.11 INTELLECTUAL PROPERTY. SCHEDULE 3.11 sets forth (a) a true and complete list of each patent and each patent application therefor which has been issued to or is held by the Company or any of its Subsidiaries, (b) a true and accurate identification of each United States federal and foreign registered and material unregistered trademark, service mark, trade name, and slogan, and each registration and application for any of the foregoing issued to or held or used by the Company or any of its Subsidiaries, (c) a true and complete list of each registered copyright, and each registration and application for any of the foregoing, issued to or held by the Company or any of its Subsidiaries, and (d) a true and complete list of all Contracts to 19 20 which the Company or any of its Subsidiaries is a party or by which any of them is bound either as licensee or licensor relating to any item of intellectual property described in clauses (a) through (c) above that is material to the business of the Company and its Subsidiaries (collectively, together with all trade secrets and proprietary technology, designs, know-how and processes owned by the Company or any of its Subsidiaries ("Trade Secrets"), being referred to as the "Intellectual Property"). The consummation of the transactions contemplated herein will not impair the rights of the Company and its Subsidiaries to any item of the Intellectual property. Except as indicated in SCHEDULE 3.11: (a) the Company or a Subsidiary of the Company is the owner of all right, title and interest in and to each item of Intellectual Property, free and clear of all Encumbrances other than Permitted Encumbrances or is a licensee of the Intellectual Property pursuant to a license agreement that is a valid and binding obligation of the parties thereto enforceable in accordance with its terms, except where the lack of ownership or the existence of Encumbrance would be immaterial; (b) all patents, copyrights, trademarks, service marks and other state and federal registrations and all applications therefor listed in SCHEDULE 3.11 are valid and in full force and effect in each of the listed jurisdictions, except where invalidity would be immaterial; (c) there are no pending or threatened Actions concerning any item of the Intellectual Property material to the business of the Company and its Subsidiaries, and no such action, proceeding, dispute or disagreement has been threatened in writing; (d) to the Knowledge of the Company, the use or other exploitation of each item of the Intellectual Property, either alone or in any combination used or useful in the business of the Company or any of its Subsidiaries does not conflict with, infringe upon or violate any patent, copyright, trademark, trade secret or other proprietary right of any other Person; (e) with respect to each Trade Secret comprising a part of the Intellectual Property, such Trade Secret is valid and protectable, except where its invalidity or unprotectability would be immaterial; (f) to the Knowledge of the Company, no copying or reproduction of any material copyrighted in the name of the Company or any Subsidiary of the Company has occurred or been allowed that would materially diminish the value thereof, or limit the ability of the Company or a Subsidiary of the Company to enforce its rights thereto; (g) the trademark registrations set forth in SCHEDULE 3.11 to the Knowledge of the Seller are not being infringed by others, except where such infringement is not material or the Company has taken commercially reasonable action in respect of such infringement; (h) the Company or one of its Subsidiaries has been assigned and owns or has obtained licenses for any Intellectual Property that was developed by any third-party contractor of, or consultant to, the Company or such Subsidiary, except where the failure to obtain such assignment or license would be immaterial. 20 21 SECTION 3.12 REAL PROPERTY. (a) A list of all Real Property of the Company other than immaterial Real Property with an aggregate fair market value of less than $250,000 is set forth on SCHEDULE 3.12(a) under the headings "Owned Real Property" and "Leased Real Property." Except for the Leased Real Property listed on SCHEDULE 3.12(a), the Company owns, and has good title to, all of the Real Property, free and clear of all Encumbrances, except for Permitted Encumbrances. To the Seller's Knowledge, except as set forth on SCHEDULE 3.12(a), the use and operation of the Real Property does not violate any instrument of record or agreement or order of any Authority affecting or relating to the Real Property, or any building, zoning, subdivision or other land use or similar Law affecting the Real Property. (b) The plants, buildings, structures, fixtures and improvements which are a part of the Real Property are generally in good operating condition and repair, consistent with industry practices, normal wear and tear excepted, taking into account age and usage and are generally adequate for the uses to which they are being put. (c) There is no existing or pending, or, to the Seller's Knowledge, contemplated, threatened or anticipated (i) condemnation of any part of the Real Property, except as provided on Schedule 3.12(c), (ii) special tax or assessment to be levied against the Real Property, or (iii) change in the zoning classification of the Real Property. SECTION 3.13 LITIGATION. Except as set forth in SCHEDULE 3.13, there are no (i) Actions, or (ii) Orders by which the Company or any of its assets, properties or business are bound, other than immaterial Actions or Orders, pending, or to the Seller's Knowledge, threatened against the Company or any of its assets, properties or businesses. SECTION 3.14 CONTRACTS. (a) SCHEDULE 3.14(a) contains (A) a true and complete list of each Contract to which the Company is party or by which it or any of its properties or assets are bound (or as the case may be a summary of any binding arrangement or commitment involving the Company), which (i) is an employment contract, or material consulting agreement; (ii) is an indenture, mortgage, note, installment obligation, agreement or other instrument relating to the borrowing of money in excess of $250,000 by the Company or the guaranty of any obligation for the borrowing of money in excess of $250,000 by the Company; (iii) imposes any Encumbrance (other than Permitted Encumbrances); (iv) has a remaining term as of the date hereof of over one year in length of obligation on the part of the Company and involves the receipt or payment by the Company of more than $250,000, except for agreements with suppliers or customers entered into in the Ordinary Course of Business; (v) is a co-pack agreement; (vi) is an agreement with one or more Girl Scouts Councils or any representative or agent thereof; or (vii) has been entered into with an officer, director of affiliate of the Company or Parent, and (B) a true and correct list of not less than 95% of all broker distribution, franchise and distributor agreements (and the remainder are of the same quality and tenor) to which the Company is a party or by which it or any of its properties or assets are bound (collectively, the "MATERIAL CONTRACTS"). 21 22 (b) Except as set forth in SCHEDULE 3.14(b), the Company is not a party to or bound by any Contract: (i) prohibiting or limiting the ability of the Company to (A) engage in any line of business, (B) compete with any Person or (C) carry on or expand the nature or geographical scope of the business of the Company anywhere in the world; (ii) providing for the acquisition or disposition after the date of this Agreement of any portion of the business or assets (except for sales of inventory or other disposition of property or assets in the Ordinary Course of Business) of the Company; (iii) relating to product warranties, guaranties, and/or other similar undertakings with respect to contractual performance extended by the Company other than in the Ordinary Course of Business; (iv) involving the grant by the Company to any Person of any right of first refusal to purchase any rights, assets or property of the Company; (v) to or with any labor union or other employee representative of a group of employees relating to wages, hours, and any other conditions of employment; or (vi) which, in the case of broker Contracts, may not be terminated by the Company at will or without penalty, subject to current obligations thereunder and state law restrictions. (c) Except as set forth in SCHEDULE 3.14(c), (i) each Material Contract is a valid and binding obligation of the Company, and to the Seller's Knowledge, of each of the other parties thereto, and is enforceable against each party in accordance with its terms, except for the Bankruptcy Exception, (ii) the Company is not in violation or breach of, or in default under, any Material Contract and, to the Seller's Knowledge, no other party to any Material Contract is in violation or breach thereof, or in default thereunder, other than immaterial breaches or defaults, and (iii) to the Seller's Knowledge, other than the transactions contemplated by this Agreement and except for or by reason of violations, breaches or defaults referred to in clause (ii) above, no event has occurred that, with the passage of time or the giving of notice or both, would permit the unilateral modification, acceleration or termination of any Material Contract. SECTION 3.15 EMPLOYEE BENEFITS; ERISA. (a) Except as set forth in SCHEDULE 3.15(a), the Company (including, for purposes of this SECTION 3.15, its Subsidiaries), either directly or indirectly through any other Person or entity, has not sponsored, established, maintained, contributed to or become obligated under any "Compensation and Benefit Plan" (as defined herein) on behalf of any current or former employee of the Company (the "EMPLOYEES"). The term "COMPENSATION AND BENEFIT PLAN" includes any pension, retirement, savings, profit-sharing, deferred compensation, stock purchase, stock option, bonus (including without limitation any stay or retention bonuses), incentive, 22 23 disability, medical, dental, health, vacation pay, severance pay or benefit commitment, life, death benefit, group insurance, collective bargaining or other employee benefit plan, trust, arrangement, contract, agreement, policy or commitment (including, without limitation, any PENSION PLAN as defined in ERISA Section 3(2) ("PENSION PLAN"), any welfare plan as defined in ERISA Section 3(1) ("WELFARE PLAN"), and any multiemployer plan as defined under ERISA Sections 3(37) and 4001 ("MULTIEMPLOYER PLAN")) and any other compensation arrangement, other than for current compensation, whether or not any of the foregoing is funded or insured and whether written or oral, which is intended to provide or does in fact provide a benefit to any Employee, and to which the Company is a party or is bound, either (i) at any time since December 31, 1992, or (ii) if prior to that date, with respect to which the Company has any liability (whether or not it still maintains such plan, trust, arrangement, contract, agreement, policy or commitment). (b) With respect to each Compensation and Benefit Plan listed on SCHEDULE 3.15(a), Seller has provided or made available to Buyer current, accurate and complete copies of (i) all material plan documents, amendments, trust agreements, insurance contracts and other written materials describing the substantive terms, conditions, benefits, rights and features of such Compensation and Benefit Plan, and (ii) the most recent Form 5500 (with schedules), actuarial valuation (for each defined benefit pension plan), and audited financial statements (to the extent required by law to be prepared). (c) Each Pension Plan that is intended to be qualified under Code Section 401(a) (as amended by the Tax Reform Act of 1986) and subsequent relevant legislation) has received a favorable determination letter from the IRS for "TRA '86" (within the meaning of Revenue Procedure 93-39) stating that the Pension Plan satisfies applicable requirements of the Code and that the trust associated with the Pension Plan is tax-exempt under Code Section 501(a), or applications for such determination letters have been timely filed with the IRS in accordance with IRS procedures. To the best of Seller's Knowledge, no facts exist that could reasonably be expected to affect adversely the tax-qualified status of any Pension Plan that has received a favorable determination letter of the IRS or to otherwise cause the revocation of any such letter. Seller has provided or made available to Buyer a copy of the most current favorable determination letter issued by the IRS as to each Compensation and Benefit Plan that is intended to constitute a tax-qualified retirement plan. (d) Notwithstanding the standards of compliance set forth on SCHEDULE 3.16, each Compensation and Benefit Plans provided on SCHEDULE 3.15(a) conforms to, and has been maintained, administered and operated in substantial compliance with its terms and applicable Laws (including, without limitation, the substantive and procedural requirements of ERISA and the Code). In addition, no act or omission has occurred nor condition or fact exists, as of the Closing with respect to the Compensation and Benefit Plans that could have any Material Adverse Effect on the Company (either directly or by reason of its affiliation with any member of its "controlled group" within the meaning of Code Sections 414(b), (c), (m) and (o)) or Buyer, or any Compensation and Benefit Plan participant, beneficiary or alternate payee, or in a lien upon the Company. (e) All contributions required to be made under applicable Law or under the terms of any Compensation and Benefit Plan have been timely made or have been reflected on the 23 24 Company's financial statements. Neither any Pension Plan, nor the pension plan of any member of the Company's "controlled group" (within the meaning of ERISA Section 4001(a)(14)) (such controlled group member being referred to in this subsection (e) as an "ERISA Affiliate" and such pension plan being referred to in this subsection (e) as an "ERISA Affiliate Plan"), other than any multiemployer plan not maintained by the Company or any ERISA Affiliate and that is contained in or contributed to pursuant to a collective bargaining agreement, has an "accumulated funding deficiency" (whether or not waived) within the meaning of Code Section 412 and ERISA Section 302, and all required payments with respect to each such Pension Plan or ERISA Affiliate Plan have been made on or before the respective due dates for such payments. (f) Except as set forth in SCHEDULE 3.15(f), the Company has not at any time contributed, nor been obligated to contribute, to any Multiemployer Plan with respect to any Employee. With respect to any Multiemployer Plan listed in SCHEDULED 3.15(f), (i) neither the Company nor any member of its controlled group (within the meaning of Code Sections 414(b), (c), (m) and (o)) has incurred any withdrawal Liability under Title IV of ERISA for which the Company is liable; (ii) the Company has not received written notification from the trustees or other administrator of the Multiemployer Plan that such Multiemployer Plan is in reorganization or insolvent (within the meaning of ERISA Sections 4241 and 4245, respectively), and the Company has not taken any action or failed to take any action that was not in substantial compliance with the provisions of a Multiemployer Plan, collective bargaining agreement, ERISA, the Code or any applicable Law. (g) Except as set forth in SCHEDULE 3.15(g), the Company has no obligation to provide retiree health and life insurance or other retiree benefit (including, without limitation, retiree death benefits) under any Compensation and Benefit Plan with respect to any Employee, except as mandated under Code Section 4980B. Except to the extent set forth in SCHEDULE 3.15(g), any retiree health benefit at all times has been, by its terms and administration, secondary to benefits provided under the Medicare program. To the extent that retiree health and/or life insurance benefits were at any time reduced or eliminated by the Company, such reduction or elimination complied with then-applicable plan documents and Law, and no claim or threat of claim has at any time been made by any Employee (or by a dependent of any such Employee) for retiree health and/or life insurance benefits that are no longer available. (h) Except as set forth in SCHEDULE 3.15(h), with respect to any Compensation and Benefit Plan, (i) no "reportable event" within the meaning of ERISA Section 4043) has occurred, (ii) to the best of Seller's Knowledge no "prohibited transaction" (within the meaning of Code section 4975(c)) has occurred, and (iii) no breach of "fiduciary duty (within the meaning of ERISA Section 404) has occurred. (i) Except as set forth in SCHEDULE 3.15(i), to the Seller's Knowledge, no Action (other than routine claims for benefits) to, or by, any Person or governmental entity have been filed, are pending or threatened, and no facts or contemplated events exist that reasonably could be expected to give rise to any such Action (other than a routine claim for benefits) with respect to any Compensation and Benefit Plan. 24 25 (j) Seller has no Liabilities for any accrued but unused paid-time off (including without limitation vacation pay, holiday pay, short-term disability pay and sick pay) for any period prior to the twelve (12) month period preceding the Closing Date. (k) Except as set forth in SCHEDULE 3.15(k), Seller does not maintain, nor does it have any Liability for, any severance pay plans, policies, arrangements or programs (including individual severance arrangements). (l) Seller does not maintain, nor does it have any Liability for, any nonqualified deferred compensation arrangements, "top hat" plans (within the meaning of Department of Labor Regulation Section 2520.104-23), supplemental executive retirement plan, or stock-based or equity-based plans. (m) Except as set forth in SCHEDULE 3.15(m), the consummation of the transaction contemplated hereunder would not (i) entitle any Employee to any payment (including severance pay or similar compensation) or any increase in compensation, (ii) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan, or (iii) result in any material increase in benefits payable under any Compensation and Benefit Plan. SECTION 3.16 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 3.16, and except with respect to any Environmental Law and except for immaterial matters: (a) The Company is in compliance with each Law that is or was applicable to it or to the conduct or operation of the business of the Company or the ownership or use of any of its assets; (b) To the Seller's Knowledge, no investigation or review by any Authority with respect to the Company or any of its businesses, facilities, operations, agreements or products is pending or threatened, nor has any Authority indicated an intention to conduct the same; (c) During the twenty-four (24) months preceding the date hereof, the Company has not received any notice or written communication alleging any noncompliance by the Company with any Law, Order or approval that has not been cured or otherwise resolved, and the Company is not subject to any unpaid fine or any continuing sanction for any such noncompliance; (d) The Company is not in violation of or in default under, and to the Seller's Knowledge, no event has occurred which, with the lapse of time or the giving of notice or both, would result in the violation of or default under, the terms of any Order; and (e) The Company has not received any notice, citation, claim, assessment or proposed assessment as to or alleging any violation of any federal, state or local occupational safety and health Laws relating to its business nor to the Company's Knowledge has the Company been subject to any investigation relating to its business by any occupational safety and health Authority within the twenty-four (24) months preceding the date hereof. 25 26 SECTION 3.17 INSURANCE. SCHEDULE 3.17 contains a true, complete and current list of (i) all material insurance policies currently insuring the property, assets or business Liabilities of the Company and all bonds required to be maintained with respect to the operation of its business, and (ii) any agreements, arrangements or commitments by or relating to the Company under which the Company indemnifies any other Person or is required to carry insurance for the benefit of any other Person, except for indemnity agreements with customers or lessees in the Ordinary Course of Business. Such policies and bonds are in full force and effect, no notice of cancellation or termination has been received with respect to any such policy, and the Company has complied in all material respects with such policies and bonds. SECTION 3.18 INTERESTS OF RELATED PERSONS. Except as set forth in SCHEDULE 3.18: (a) Neither Parent, any director or officer of Seller or any affiliate of Seller (i) has any interest in any property, real or personal, tangible or intangible, of the Company, (ii) to the Seller's Knowledge, has any cause of action or other claim whatsoever against the Company or its assets or properties, (iii) other than for travel, meals and similar reimbursable expenses, owes any amount to, or is owed any amount by, the Company or (iv) other than Parent owns, directly or indirectly, any debt, equity or other interest or investment in any Person that has (x) had business dealings or a material financial interest in any transaction with the Company (other than business dealings or transactions conducted in the Ordinary Course of Business with the Company at substantially prevailing market prices and on substantially prevailing market terms), or (y) engaged in competition with the Company with respect to the business of the Company or 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 (1%) of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market). (b) There are no Contracts, indebtedness, arrangements, understandings, obligations or other rights or obligations in effect between the Company, on the one hand, and any director, officer, stockholder or other affiliate of Parent or the Company, on the other hand, other than employment relationships. (c) There will be as of Closing no obligations of the Company outstanding or accruing in connection with the distribution of the Company's interests in the Shanghai and Tainjin joint ventures to Parent. SECTION 3.19 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 3.19, The Company, and the operation of its business, is in substantial compliance with all applicable Environmental Laws and, in addition, the Company has not received during the preceding thirty-six (36) months or, to the Company's Knowledge, prior to that time any written notice, demand, or claim that it may be in violation of or liable under any Environmental Law. There is no civil, criminal, or administrative action, suit, demand, claim, notice of violation, notice of investigation, or proceeding pending relating to the property or 26 27 business of the Company, or to the Company's Knowledge, threatened against the business or property of the Company or relating to any formerly-owned properties for which the Company has retained or assumed liability either contractually or by operation of law, relating in any way to Environmental Laws. The Company has no material Liability for any indemnity or other agreement with any third party relating to Liability under any Environmental Law. (b) The Company possesses all permits, licenses, authorizations, and approvals required under Environmental Law ("Environmental Permits") to operate its business in substantial compliance with such Environmental Laws and all such Environmental Permits are currently maintained in full force and effect. The Company has received no written notice or other written communication and has no Knowledge of any facts or circumstances that any such Environmental Permits may be suspended, revoked, or modified by any Authority. SCHEDULE 3.19(b) contains a true and complete listing of all material Environmental Permits. (c) The Company has not, nor to the Knowledge of the Company has any other person, placed, stored, buried, released, dumped or disposed of any Hazardous Substances in quantities requiring investigation or cleanup, or otherwise in a manner that could form the basis of liability under Environmental Laws, on the properties owned or operated by the Company or to the Company's Knowledge, at any formerly-owned properties for which the Company has retained or assumed liability either contractually or by operation of law, or at any offsite storage, treatment or disposal facility, except for inventories of such substances to be used, and wastes generated therefrom, in the Ordinary Course of Business (which inventories and wastes, if any, were stored or disposed of in accordance with Environmental Laws and in a manner such that there was no material release of any such substances into the environment) and the Company has received no request for information nor any notice of potential liability from any Authority or individual with respect to Hazardous Substances or contamination at any such properties. No cleanup has occurred at any property owned or operated by the Company that could reasonably be expected to result in the assertion or creation of a lien on such property by any Authority with respect thereto, nor has any such assertion of a lien been made by any Authority. (d) Except as set forth on SCHEDULE 3.19, to the Company's Knowledge there is not at, on or in any property owned or operated by the Company (i) any friable asbestos-containing material or (ii) any poly-chlorinated biphenyls which, with respect to either (i) or (ii) are present in concentrations that would impose regulatory obligations on the Company that requires under Law corrective or cleanup action. (e) Except as set forth on SCHEDULE 3.19, there are no underground storage tanks or regulated surface impoundments at, on or in any property owned or operated by the Company, including to the Seller's Knowledge, any former property of the Company for which the Company has retained or assumed liability either contractually or by operation of law. (f) The Seller and the Company have provided Buyer copies of all environmental reports, studies, assessments, and sampling data within its possession that have been issued in the past three (3) years relating to the Company or any of its current or former properties or operations. 27 28 SECTION 3.20 LABOR MATTERS. As of the date hereof and during the prior twenty-four (24) months, except as set forth in SCHEDULE 3.20: (a) The Company has not been a party to, or bound by, any collective bargaining agreement or other labor Contract nor is any collective bargaining agreement or other labor Contract currently being negotiated, nor are there any activities or proceedings of any labor union or labor organization to organize any of the employees of the Company. (b) There has not been, there is not presently pending or existing, and there is not threatened any strike, slowdown, picketing, work stoppage, material labor difficulty, labor arbitration or other proceeding in respect of the grievance of any employee, application or complaint filed by an employee or union with the National Labor Relations Board or any comparable Authority, organizational activity or other material labor dispute against or affecting the Company or its premises (collectively, "LABOR DISPUTES"), and no application for certification of a collective bargaining agent is pending or, to the Company's Knowledge, is threatened. SECTION 3.21 ASSETS USED IN THE CONDUCT OF THE BUSINESS. Except for assets disposed of in the Ordinary Course of Business and except as set forth on SCHEDULE 3.21(a), the Company, or as the case may be, the Company's Subsidiaries, have good and marketable title to each item of equipment and other property reflected in the Interim Financial Statements, free and clear of all Encumbrances, except for Permitted Encumbrances. The assets of the Company as of the date hereof are sufficient for the conduct of the business of the Company as conducted on the date hereof. All of the assets reflected in the Interim Financial Statements are generally in good operating condition and repair, consistent with industry practices, normal wear and tear excepted, taking into account age and usage, and are generally adequate for the uses to which they are being put. Attached hereto as SCHEDULE 3.21(b) are certifications or other undertakings from certain software vendors to the Company in respect of software licensed by the Company regarding the ability of such software to process date data between the 20th and 21st centuries, and such certifications and undertakings have not been amended or withdrawn. SECTION 3.22 BANK ACCOUNTS. SCHEDULE 3.22 contains a true, correct and complete schedule setting forth the name of every bank in which the Company or any Subsidiary has one or more accounts, savings or other certificates, or safe deposit boxes; the names of every Person authorized to draw on such accounts, redeem such certificates or have access to such boxes; and the principal terms of such certificates and the contents of such boxes. SECTION 3.23 NO BROKERS. Except as set forth in SCHEDULE 3.23, neither the Seller nor any Person acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement. SECTION 3.24 GIRL SCOUT RELATIONSHIP. To the Company's and Parent's Knowledge, there is no fact, circumstance, information, development or event in existence which could result in an adverse change other than an immaterial adverse change in the Company's current or prospective relationship with the Girl Scouts of America relating to the sale of cookies thereto or the Contract entered in connection therewith. SCHEDULE 3.24 sets forth the current Girl Scouts production schedule through December 31, 1998. SECTION 3.25 PARENT OPERATIONS. Except as disclosed on SCHEDULE 3.25, there are no operations, offices, employees, assets or Liabilities of Parent associated with the Company's Los Angeles office. SECTION 3.26 GRANNY GOOSE RELATIONSHIP. The Company is currently distributing certain of its products through the Granny Goose distribution network. Other than fulfilling current orders for product, the Company has no contractual commitment to continue such distribution arrangement. SECTION 3.27 CERTAIN LIABILITIES. As of June 27, 1998, neither the Company nor any Subsidiary of the Company had any Liability with respect to its business of any nature of the type required to be reflected on a balance sheet prepared in accordance with GAAP using practices customarily followed in preparation of interim financial statements of the Company (inclusive without limitation of the practice of not preparing footnotes) which was not fully disclosed, reflected or reserved against in the Interim Financial Statements including, without limitation, such Liabilities arising in connection with any distribution agreement (although excluding any obligations under leases, capitalized or otherwise); and, except for Liabilities which have been incurred since such date in the Ordinary Course of Business, the Company has not incurred any such Liability except as disclosed on SCHEDULE 3.8 or as would be included in the Debt Amount or the LTIP Amount, or in respect of leases, capitalized or otherwise with obligations in excess of $250,000 in the aggregate. At the Closing Date neither the Company nor any Subsidiary of the Company will have any Indebtedness other than the Debt Amount and intercompany debt owned among the Company and its Subsidiaries. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER As an inducement to Seller to enter into this Agreement and to consummate the transactions contemplated hereby, and in consideration of the covenants of Seller contained herein, Buyer hereby represents and warrants to the Seller as follows: SECTION 4.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer has the corporate power and corporate authority to own, lease, operate or otherwise hold its properties and assets and to carry on its business as it is now being conducted. SECTION 4.2 AUTHORITY OF BUYER; CONFLICTS. Buyer has the corporate power and authority to execute, deliver and perform this Agreement and each other agreement or certificate delivered pursuant hereto and to consummate the transactions contemplated in each such agreement. This Agreement and each other agreement or certificate delivered pursuant hereto by Buyer has been duly authorized and 29 29 approved by Buyer's board of directors and do not require any further authorization or consent of Buyer or its shareholders. This Agreement and each other agreement or certificate delivered pursuant hereto has been duly authorized, executed and delivered by Buyer and (assuming the valid authorization, execution and delivery of this Agreement and each other agreement or certificate delivered pursuant hereto by Seller) each such agreement is the legal, valid and binding agreement of Buyer enforceable in accordance with its terms, subject to the Bankruptcy Exception. (b) Neither the execution and delivery of this Agreement each other agreement or certificate delivered herewith by Buyer or the consummation of any of the transactions contemplated hereby and thereby nor compliance with or fulfillment of the terms, conditions and provisions hereof and thereof will: (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under (A) the Organizational Documents of Buyer, (B) any material note, instrument, mortgage, lease, franchise or financial obligation to which Buyer is a party or any of its properties is subject or by which Buyer is bound, (C) any Order to which Buyer is a party or by which it is bound or (D) any Law by which Buyer is bound, or (ii) require the approval, consent, authorization or act of, or the making by Buyer of any declaration, filing or registration with, any Person, except for (A) in connection, or in compliance, with the provisions of the HSR Act, and (B) such approvals, consents, authorizations, declarations, filings or registrations the failure of which to be obtained or made would not materially impair the ability of Buyer to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated hereby. SECTION 4.3 NO PROCEEDING. There is no Action pending or, to the Knowledge of Buyer, threatened that questions the legality or propriety of the transactions contemplated by this Agreement. SECTION 4.4 NO FINDERS OR BROKERS. Except as set forth in SCHEDULE 4.4, neither Buyer nor any Person acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement. SECTION 4.5 FINANCIAL ABILITY. Buyer has ready access to sufficient funds or has received written commitments from responsible financial institutions to provide sufficient funds on the Closing Date to pay the Preliminary Purchase Price. SECTION 4.6 INVESTMENT INTENT. Buyer is acquiring the Shares as an investment for its own account and not with a view to the distribution thereof. Buyer shall not sell, transfer, assign, pledge or hypothecate any of the Shares in the absence of registration under, or pursuant to an applicable exemption from, federal and applicable state securities Laws. 30 30 ARTICLE V. ACTIONS PRIOR TO THE CLOSING DATE The respective parties hereto covenant and agree to take the following actions between the date hereof and the Closing Date set forth hereinbelow. All references to the Company, unless the context requires otherwise, shall include the Company and each of its Subsidiaries. SECTION 5.1 ACCESS TO INFORMATION. The officers, employees and authorized representatives of Buyer (including, without limitation, independent public accountants and attorneys) shall have reasonable access, during normal business hours and upon reasonable advance notice, to the offices, properties, employees and business and financial records of the Company, to the extent Buyer shall reasonably deem necessary or desirable and the Company shall furnish to Buyer or its authorized representatives such additional information concerning the Company as shall be reasonably requested and shall reasonably promptly respond to reasonable inquiries by Seller; PROVIDED, HOWEVER, that the Seller shall not be required to violate any obligation of confidentiality to which it is subject in discharging its obligations pursuant to this SECTION 5.1. Buyer agrees that such investigation shall be conducted in such a manner as not to interfere unreasonably with the operations of the Seller. No such access, examination or review shall in any way affect, diminish, terminate or mitigate any of the representations, warranties or covenants of Seller set forth herein. If in the course of any investigation pursuant to this SECTION 5.1 the Buyer's officers, employees or authorized representatives discover any breach of any representation or warranty contained in this Agreement that is not immaterial, or any circumstance or condition that upon Closing would constitute such a breach, Buyer covenants that it will use its best efforts to promptly inform Seller in writing; PROVIDED, the failure by Buyer to so inform Seller shall not in any way affect, diminish, terminate or mitigate Seller's liability for such breach. SECTION 5.2 PUBLICITY. The initial press release announcing the transactions contemplated herein shall be released jointly after mutual agreement between the parties hereto and thereafter except for making customary communications by the Company and Buyer to employees, shareholders, financial analysts, customers or suppliers, the parties hereto shall obtain the prior approval of each party hereto prior to issuing any press releases or otherwise making public announcements with respect to the transactions contemplated herein and prior to making any filings with any Authority or with any national securities exchange with respect thereto, except as may be required by Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange. SECTION 5.3 CERTAIN NOTIFICATIONS. Each party shall promptly notify the other of any Action that shall be instituted or threatened against such party to restrain, prohibit or otherwise challenge the legality of any transaction contemplated by this Agreement. Each party hereto shall promptly notify the other of any lawsuit, claim, proceeding or investigation that may be threatened, brought, asserted or commenced against the Company or Buyer, as the case may be, that would have been listed in SCHEDULE 3.13 or constitute an exception to SECTION 4.3, as the 31 31 case may be, if such lawsuit, claim, proceeding or investigation had arisen prior to the date hereof. Seller shall promptly notify Buyer in writing of any event following the date hereof of which Seller is or becomes aware that could have a Material Adverse Effect or adversely affect the performance by Seller of its obligations under the Agreement. SECTION 5.4 REQUIRED APPROVALS. Each party hereto hereby agrees to cooperate with the other and use its reasonable efforts to promptly prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents and to obtain as promptly as practicable all necessary permits, consents, approvals and authorizations of all third parties and Authorities that are necessary to the consummation of the transactions contemplated herein. Each party shall have the right to review in advance, and to the extent practicable each will consult with the other on, in each case subject to applicable Laws relating to the exchange of information, all the information relating to the other party that appears in any filing made with, or written materials submitted to, all third parties and Authorities in connection with the transactions contemplated in this Agreement. In exercising the foregoing right, Buyer and the Seller shall act reasonably and as promptly as practicable. Buyer and the Seller agree that they will keep the other apprised of the status of matters relating to completion of the transactions contemplated herein, including promptly furnishing the other with copies of notices or other communications received from all third parties and Authorities with respect to the transactions contemplated herein. HSR ACT. Buyer and Seller each agree to prepare and file the Notification and Report Form required pursuant to the HSR Act with the FTC and the Antitrust Division if reasonably practicable on the date hereof, and otherwise by no later than the first (1st) Business Day following the date hereof. The Notification and Report Form shall be in accordance with the requirements of the HSR Act. Each such party hereby covenants (i) to request early termination of the waiting period required by the HSR Act; (ii) to promptly furnish to the other party hereto such necessary or appropriate information and reasonable assistance, including access to each other's documents and personnel, as such other party may reasonably request in connection with its preparation of necessary or voluntary filings and other submissions, communications or presentations pursuant to the HSR Act; (iii) to promptly keep the other party apprised of the status of any communications with and any inquiries by the FTC or Antitrust Division; and (iv) to comply with a request for additional information issued by the FTC, the Antitrust Division or any other Authority, as the case may be, as promptly and expeditiously as practicable. The parties shall use best efforts and cooperate to expedite the termination of the waiting period under the HSR Act. Buyer and Seller each agree that they will not undertake any unilateral contacts with either the FTC or Antitrust Division without the prior approval of the other party. Buyer shall pay the HSR Act filing fee. If any administrative, judicial or legislative action or proceeding is instituted (or threatened to be instituted) challenging the transactions contemplated by this Agreement as violative of any antitrust Law, Buyer and Seller shall each use best efforts and cooperate to contest and vigorously resist any such action or proceeding, and to have vacated, lifted, reversed or overturned as promptly and expeditiously as practicable any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that is in effect and that restricts, prevents or prohibits consummation of the transactions contemplated by this Agreement, including, without limitation, by pursuing all reasonable avenues of administrative and judicial appeal. 32 32 SECTION 5.6 OPERATIONS PRIOR TO THE CLOSING DATE. (a) The Company shall operate and carry on its business in the Ordinary Course of Business including, without limitation, the processing of cash receipts and disbursements. The Company shall use all commercially reasonable efforts consistent with good business practice to preserve its goodwill, prospects, rights, properties, assets and business, and to preserve and protect the Company's relationships with its suppliers, contractors, employees, customers, including without limitation, its current and prospective relationship with the Girl Scouts Councils with whom it has a Contract, relating to the sale of cookies thereto. (b) Notwithstanding SECTION 5.6(a), except as expressly contemplated by this Agreement or except with the express written approval of Buyer (which Buyer agrees shall not be unreasonably withheld or delayed), the Company shall not, except as allowed on SCHEDULE 5.6: (i) other than is required pursuant to applicable Laws, take any act listed in subparagraph (a) through (j) of SECTION 3.8; or (ii) other than in the Ordinary Course of Business, enter into or terminate any Material Contract; (iii) not issue any shares of its capital stock or issue any distribution or dividend thereon of property or capital stock; PROVIDED, HOWEVER, notwithstanding anything herein to the contrary, the Company shall be entitled to (i) distribute or forgive the promissory note received from Parent in respect of the Shanghai and Tainjin joint ventures, and (ii) make distributions from available cash on hand from time to time in any amount or amounts to Parent on or prior to the end of business on the Friday prior to the Closing Date; (iv) enter into or contract for any hedging or similar derivative transaction other than in the Ordinary Course of Business; (v) engage in the offering of special programs whether written or oral including, without limitation, trade discounts, special payment terms, consignment programs, pricing changes or announced price increases which will be effective in the future other than in the Ordinary Course of Business; or (vi) enter into or issue letter of credit guarantees in connection with route man loans other than in the Ordinary Course of Business. (c) As of the Closing Date, any net intercompany receivables, payables, loans and any other corporate charges then existing between the Company, Parent and any affiliate (excluding the Company's Subsidiaries) shall be settled or forgiven (implementing whichever action is most tax advantageous to the Company) and any intercompany agreement between such parties shall be terminated. 33 33 SECTION 5.7 BOOKS AND RECORDS. Buyer agrees to, and shall cause the Company to, retain all books, records and other documents pertaining to the Company's business in existence on the Closing Date for a period of four (4) years (or such longer period of the applicable statutes of limitation relating to claims relative to such matters or such longer period as is required by Law) after the Closing and to make the same available after the Closing Date for inspection and copying by Parent or Parent's agents, upon reasonable request and upon reasonable notice. SECTION 5.8 FURTHER ASSURANCES. At any time and from time to time after the Closing Date, the parties hereto agree to (a) furnish upon request to each other such further assurances, information, documents, instruments of transfer or assignment, files and books and records as reasonably requested, (b) promptly execute, acknowledge, and deliver any such further assurances, documents, instruments of transfer or assignment, files and books and records as reasonably requested, and (c) do all such further acts and things all as such other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to herein. SECTION 5.9 EXCLUSIVITY. Unless this Agreement has been terminated in accordance with ARTICLE VII, and except as provided on SCHEDULE 5.9, Seller agrees that from the date hereof neither it nor any of Seller's officers, directors, shareholders, affiliates or other representatives (collectively the "AFFILIATED PARTIES") will invite, solicit or encourage proposals or offers or entertain, accept, negotiate, discuss or otherwise participate in a possible merger, combination, sale or other disposition of the Shares or substantially all the assets of Parent or the Company or any business combination or change in control of the Company (a "COMPANY SALE") with any other party. Seller represents that it is not a party to or bound by any agreement with respect to a Company Sale other than this Agreement. Seller shall cause the Affiliated Parties to immediately cease and terminate any existing or prior existing activities, discussions or negotiations with any persons or entities conducted heretofore with respect to any Company Sale, and shall promptly request each such person or entity who has heretofore entered into a confidentiality agreement in connection with a Company Sale or has otherwise received information in connection with a Company Sale to (a) return to the Seller all confidential information heretofore furnished to such person or entity by or on behalf of the Seller and (b) destroy (and certify to the Seller as to the destruction) all notes, analyses, compilations, reports, forecasts, studies, memoranda, computer-stored data or other documents which contain, or are based in whole or in part or otherwise reflect, confidential information received in connection with a Company Sale. It is intended by the parties hereto that so long as the terms of this SECTION 5.9 are in effect, Buyer shall have the exclusive right to purchase the Shares on the terms and conditions herein contained. SECTION 5.10 TAX WITHHOLDING. The Company and Seller shall take all actions necessary to comply with sections 897, 1446, and 3406 of the Code and any rules, regulations, and orders promulgated thereunder. In the event that the Company or Parent fails to provide Buyer, at or prior to Closing (a) an affidavit in the form attached hereto as EXHIBIT 5.10, or (b) other evidence satisfactory to Buyer that the transactions contemplated by this Agreement are exempt from any Taxes which may apply by reason of sections 897, 1446, or 3406 of the Code, 34 34 Buyer shall have the right to withhold the required portion of the Purchase Price ("Tax Withholding"). The amount of Tax Withholding shall be credited against the Purchase Price and Parent shall not have recourse against Buyer for the amount of the Tax Withholding. SECTION 5.11 EMPLOYMENT MATTERS. Buyer covenants and agrees after Closing to timely discharge all Liabilities under the 1998 Long Term Incentive Plan as directed by Parent. Parent shall reimburse the Company for any Liabilities so discharged to the extent not reflected in the LTIP Amount. Buyer also covenants and agrees that for a period of one (1) year after Closing, the Company shall continue the employment of Messrs. Woolf, Cavitt and Bayers at their current salary and bonus opportunity levels with generally comparable terms and conditions of employment (other than job title and specific duties) and fringe benefits; PROVIDED, that long-term incentive and other programs (severance, etc.) will be determined by the Company after Closing in its discretion. SECTION 5.12 INTEREST RATE SWAP AGREEMENTS. Seller covenants and agrees to terminate all interest rate swap agreements to which the Company is a party at or prior to Closing. SECTION 6.1 LOS ANGELES OFFICE. The Company covenants and agrees to close the Company's Los Angeles office prior to Closing and any expense, cost or liability in connection therewith shall either be discharged by the Company prior to Closing or accrued as a current liability on the Closing Balance Sheet. ARTICLE VI CONDITIONS TO OBLIGATION OF PARTIES TO CLOSE CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE. The obligations of the Seller to consummate the sale and transfer of the Shares and the other transactions set forth herein shall be subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Each of the representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects as of the Closing Date, except that such representations and warranties made as of a specific date need only be true as of such specified date, and each of the covenants and agreements of Buyer to be performed on or prior to the Closing Date shall have been duly performed in all material respects. (b) OPINION OF BUYER'S COUNSEL. Seller shall have received from Winston & Strawn, counsel to Buyer, an opinion dated as of the Closing Date to the effect set forth in EXHIBIT 2.5(b). (c) PRELIMINARY PURCHASE PRICE. Buyer shall have made payment of the Preliminary Purchase Price in the amount and manner provided for in SECTION 2.2(c). 35 35 (d) SECRETARY'S CERTIFICATE. Seller shall have received copies of the resolutions of the Board of Directors of Buyer, authorizing the execution, delivery and performance of this Agreement and certificates of the secretary or any assistant secretary of the Buyer dated as of the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect, together with copies of the Organizational Documents of the Buyer certified by such secretary or assistant secretary. (e) INDEMNIFICATION ESCROW AGREEMENTS. The Buyer shall have entered into Indemnification Escrow Agreements. (f) NO ORDER. No Order shall be in effect which would prohibit or restrict the consummation of any of the transactions contemplated hereby. (g) CLOSING DOCUMENTS. Buyer shall have delivered all agreements, certificates, instruments, opinions and other documents required to be delivered by it on the Closing Date pursuant to SECTION 2.5. SECTION 6.2 CONDITIONS TO OBLIGATIONS OF BUYER TO CLOSE. The obligations of the Buyer to consummate the purchase and sale of the Shares and the other transactions set forth herein shall be subject to the satisfaction or waiver on or prior to the Scheduled Closing Date of the following conditions: (a) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Each of the representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date, in each case with the same effect as though such representations and warranties had been made on and as of such date, except that such representations and warranties made as of a specific date need only be true as of such specified date, and each of the covenants and agreements of the Seller to be performed on or prior to the Closing Date shall have been duly performed in all material respects; PROVIDED, HOWEVER, that, notwithstanding the failure of such representations and warranties to be true and correct, and such covenants and agreements to be performed, the condition provided in this SECTION 6.2(a) shall be deemed satisfied if the aggregate Losses and Expenses that could reasonably be expected (as determined as indicated below) to result to Buyer by reason of the failure of such representations and warranties to be true and correct and such covenants and agreements to be performed, if the Closing would be effected, is (i) less than or equal to $2 million, or (ii) greater than $2 million, only if the Seller elects, in its discretion, by a notice to Buyer, to increase the then effective Supplemental Letter of Credit Escrow Amount by the amount that such Losses and Expenses exceed $2 million, PROVIDED that such increase may not exceed $15 million in the aggregate. In the event Buyer in good faith at any time believes that the amount of such Losses and Expenses exceed $2 million, Buyer shall provide the Seller a certificate to such effect, which certificate shall set forth the details on which such belief is based. If the Seller does not agree in writing within ten (10) Business Days of the issuance of Buyer's certificate that the amount of the Losses and Expenses determined pursuant to this SECTION 6.2(a) exceed $2 million, the issue shall be settled by arbitration in accordance with the arbitration procedures set forth in Section 9.12 hereof. The decision resulting from such arbitration shall be final regarding the issue of whether such Losses and Expenses exceed $2 million and whether the 36 36 condition provided in this Section 6.2(a) is satisfied. Any claim for indemnification (including claims for Losses and Expenses identified pursuant to this SECTION 6.2(a)) which may be asserted by Buyer relative to the failure of such representations or warranties to be true and correct and such covenants and agreements to be performed shall be determined in accordance with the provisions of Article VIII hereto regarding indemnification, and upon a determination in accordance therewith, the Supplemental Letter of Credit Escrow Amount shall be reduced by the amount, if any, by which the Supplemental Letter of Credit Escrow Amount was increased in respect of such claim, LESS the amount disbursed to Buyer pursuant to such determination. (b) OPINION OF SELLER'S COUNSEL. Buyer shall have received from Jones, Day, Reavis & Pogue, an opinion dated as of the Closing Date to the effect set forth in EXHIBIT 2.4(f). (c) SHARE CERTIFICATES. Parent shall have delivered to Buyer the certificates evidencing the Shares, accompanied by stock powers duly executed in blank. (d) SECRETARY'S CERTIFICATES. Buyer shall have received copies of the resolutions of the respective Boards of Directors of each of the Parent and the Company (and the Parent as sole shareholder of the Company) authorizing the execution, delivery and performance of this Agreement and certificates of the secretary or any assistant secretary of each of Parent and the Company dated as of the Closing Date, to the effect that such resolutions were duly adopted and are in full force and effect, together with copies of the Organizational Documents of each of the Parent and the Company certified by their respective secretaries or assistant secretaries. (e) INDEMNIFICATION ESCROW AGREEMENTS. The Parent shall have entered into the Indemnification Escrow Agreements. (f) NO ORDER. No Order shall be in effect which would prohibit or restrict the consummation of any of the transactions contemplated hereby. (g) CLOSING DOCUMENTS. Seller shall have delivered all agreements, certificates, instruments, opinions and other documents required to be delivered by it on the Closing Date pursuant to SECTION 2.4. SECTION 6.3 CONDITION TO OBLIGATIONS OF THE PARTIES TO CLOSE. The respective obligations of the Seller and Buyer to consummate the purchase and sale of the Shares and the other transactions set forth herein shall be subject to the satisfaction or waiver on or prior to the Scheduled Closing Date of the following condition: The waiting period applicable to the purchase and sale of the Shares provided for herein under the HSR Act shall have expired or been terminated, and there shall be no order or injunction of any court of competent jurisdiction that prohibits the purchase and sale of the Shares provided for herein. SECTION 6.4 EFFECT OF WAIVER OF CONDITIONS, ETC. Any of the foregoing conditions may be waived, in whole or in part, by any party as to whom such condition is a condition precedent to such party's performance, for purposes of consummating the purchase and 37 37 sale of the Shares and the other transactions provided for herein. Should the condition provided for in Section 6.2(a) be satisfied by reason of a determination by the parties or by arbitration that the amount of the Damage Proviso has not been exceeded, and the Closing occurs, although the Seller may have nonetheless breached a representation, warranty or covenant hereunder, nothing provided in Section 6.2(a) shall obviate or diminish Buyer's right to seek indemnification therefor in accordance with the provisions of Article VIII hereto regarding indemnification, subject to the conditions and limitations therein. ARTICLE VII. TERMINATION OF AGREEMENT SECTION 7.1 TERMINATION. This Agreement constitutes the binding and irrevocable agreement of the parties to consummate the transactions contemplated hereby, and this Agreement may be terminated prior to the Closing only as follows: By mutual written consent of Buyer and Seller; (a) By the Seller by written notice to Buyer given subsequent to December 26, 1998, if the Closing shall not have been consummated on or prior to such date, regardless of whether the condition provided in Section 6.3 has been satisfied, unless any of the conditions precedent to the obligation of Buyer to effect the Closing set forth in Section 6.2 shall not have been satisfied or waived; or (b) By the Buyer by written notice to Seller given subsequent to December 26, 1998, if the Closing shall not have been consummated on or prior to such date, regardless of whether the condition provided in SECTION 6.3 has been satisfied, unless any of the conditions precedent to the obligations of Seller to effect the Closing set forth in Section 6.1 shall not have been satisfied or waived. SECTION 7.2 EFFECT OF TERMINATION. (a) In the event of a termination of this Agreement pursuant to SECTION 7.1 hereof, each party shall pay the Expenses incurred by it in connection with the Agreement and no party hereto shall have any liability or obligation to any other party to this Agreement under or in connection with this Agreement, but except that nothing herein will relieve any party from liability for any breach of this Agreement prior to such termination; PROVIDED, HOWEVER, that if this Agreement is terminated by a party because of the breach of this 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 in all material respects with its obligations under this Agreement, the terminating party's rights to pursue all legal remedies will survive such termination unimpaired. (b) Notwithstanding any termination of this Agreement, the obligations of the parties with respect to SECTION 5.2 (Publicity), SECTION 9.11 (Governing Law), and in the Confidentiality Agreement shall survive. 38 38 ARTICLE VIII. INDEMNIFICATION SECTION 8.1 INDEMNIFICATION BY THE PARENT. From and after the Closing, Parent shall defend, indemnify, hold harmless and waive any claim for contribution against the Buyer, the Company and all of their officers, directors, employees, agents and affiliates from and against and in respect of any and all Losses and Expenses arising out of or due to a breach of any representation, warranty or covenant of the Seller contained in this Agreement, PROVIDED, that Parent shall have no obligation to indemnify Buyer (other than for indemnification claims with a respect to a breach of the representations or warranties contained in SECTIONS 3.6 and 3.9 hereof which shall not be subject to this proviso) until the aggregate Losses and Expense to which it would be entitled to be indemnified pursuant to this sentence shall equal or exceed Two Million Dollars ($2,000,000), in which event Parent shall be obligated only for Losses and Expenses in excess of such sum; and PROVIDED FURTHER, that the liability of Parent for indemnification hereunder shall be limited to, and all such claims for indemnification hereunder shall be payable solely from (and to the extent of), (i) the Cash Escrow Amount pursuant to the terms and conditions of the Cash Indemnification Escrow Agreement for any indemnification claim other than with respect to a breach of the representations or warranties contained in SECTION 3.9, (ii) the Tax Letter of Credit Escrow Amount pursuant to the terms and conditions of the Tax Letter of Credit Indemnification Escrow Agreement for any indemnification claim with respect to a breach of the representations contained in SECTION 3.9, and (iii) the Supplemental Letter of Credit Escrow Amount pursuant to the terms and conditions of the Supplemental Letter of Credit Indemnification Escrow Agreement, if and only if (A) the Cash Escrow Amount has been exhausted (and not in any event with respect of a claim for a breach of the representations in SECTION 3.9), or (B) a claim for indemnification is made with respect to a breach of the representations in SECTION 3.19 after the date that is fifteen (15) months after the Closing Date. The indemnification provided for in this SECTION 8.1 shall terminate on the date that is fifteen (15) months after the Closing Date and no claim may be made by Buyer hereunder or pursuant to the Cash Indemnification Escrow Agreement, the Supplemental Letter of Credit Indemnification Escrow Agreement, the Tax Letter of Credit Indemnification Escrow Agreement or otherwise thereafter, except for (x) indemnification claims with respect to a breach of the representations or warranties contained in SECTION 3.19 which may be made pursuant to the Supplemental Letter of Credit Indemnification Escrow Agreement prior to the date that is thirty (30) months after the Closing Date, and (y) indemnification claims with respect to a breach of the representations or warranties contained in SECTION 3.9 which may be made pursuant to the Tax Letter of Credit Indemnification Escrow Agreement prior to the date that is thirty-six (36) months after the Closing Date. Notwithstanding anything herein to the contrary, an indemnification claim in respect of a breach of the representations or warranties in SECTIONS 3.6 and 3.18(c) and the covenants set forth in SECTION 5.11 shall not be subject to any of the limitations in this SECTION 8.1. SECTION 8.2 INDEMNIFICATION BY BUYER. From and after the Closing, Buyer agrees to defend, indemnify, hold harmless and waive any claim for contribution against Parent and all of its officers, directors, employees, agents, and affiliates from and against any and all Losses and Expenses incurred by Parent or arising out of or due to a breach of any representation, 39 39 warranty or covenant of Buyer contained in this Agreement. The maximum amount payable by Buyer pursuant to this SECTION 8.2 shall not exceed $10 million. Buyer's obligation to make payments hereunder shall expire fifteen (15) months after the Closing Date. SECTION 8.3 PROCEDURE FOR INDEMNIFICATION. (a) Promptly after the receipt by a party hereto of notice of any claim or the commencement of any action or proceeding, such party (the "INDEMNIFIED PARTY") will, if a claim with respect thereto is to be made against the other party pursuant to SECTION 8.1 or 8.2, give the indemnifying party (the "INDEMNIFYING PARTY") written notice of such claim or the commencement of such action or proceeding and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting from such claim; PROVIDED that no failure or delay in delivery of any notice shall impair the rights of the Indemnified Party, except to the extent the Indemnifying Party is prejudiced thereby. If the Indemnifying Party assumes the defense of any such claim or litigation resulting therefrom, the obligations of the Indemnifying Party as to such claim shall be limited to taking all steps necessary in the defense or settlement of such claim or litigation resulting therefrom and to the extent required by SECTION 8.1 or 8.2, and subject to its terms, conditions and limitations, to holding the Indemnified Party harmless from and against any and all Losses and Expenses caused by or arising out of any settlement approved by the Indemnifying Party or any judgment in connection with such claim or litigation resulting therefrom. The Indemnified Party may participate, at its expense, in the defense of such claim or litigation provided that the attorney selected by the Indemnifying Party to represent the Indemnifying Party shall direct and control the defense of such claim or litigation. The Indemnifying Party shall not, in the defense of such claim or any litigation resulting therefrom, consent to entry of any judgment, or enter into any settlement, except with the written consent of the Indemnified Party, which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation or which provides for a settlement payment in excess of the remaining amount held pursuant to the Indemnification Escrow Agreement. (b) If the Indemnifying Party shall not assume the defense of any such claim or litigation resulting therefrom, the Indemnified Party may defend against such claim or litigation in such manner as it may deem appropriate. The Indemnified Party may not settle such claim or litigation as to which it seeks indemnification hereunder without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld). SECTION 8.4 EXCLUSIVE REMEDY. Other than a claim for breach should the Closing not occur, the parties hereto acknowledge and agree that the remedies provided in this ARTICLE VIII shall be the sole and exclusive remedies of such parties (or any Person claiming by or through such party) for breach, misrepresentation or default by any party under or in respect to this Agreement, or in respect of the transactions provided for herein. In particular, and not in limitation of the foregoing, each party hereto waives in respect of, and covenants not to sue, each other party hereto, as to any claim, right or remedy against or in respect of (including without limitation any right of contribution) as to each such other party under any Environmental Law, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act of 1989, as amended. 40 40 SECTION 8.5 EXCLUSION OF CERTAIN DAMAGES. Except as provided for in this Agreement, for purposes of this ARTICLE VIII, no party shall have any liability under this Agreement or any agreement, document or instrument delivered pursuant to this Agreement, or in connection with the transactions contemplated hereby or thereby, for indirect, consequential or incidental damages of any kind or nature, including, without limitation, loss of profits or loss of business, howsoever caused. SECTION 8.5 MITIGATION, ETC. Any party seeking indemnification for any damages for which it is entitled to seek indemnification shall use all commercially reasonable efforts to mitigate its damages in connection with such indemnity claim. The indemnification obligation of any party shall be adjusted so as to give credit to such party for any tax benefits, or any other recovery available to the party being indemnified, including without limitation insurance and contractual or other rights to indemnification available from third parties. ARTICLE IX. GENERAL PROVISIONS SECTION 9.1 CONFIDENTIAL NATURE OF INFORMATION. Buyer agrees that all documents, materials and other information which it shall have obtained regarding the Company during the course of the negotiations leading to the consummation of the transactions contemplated hereby (whether obtained before or after the date of this Agreement), the investigation provided for herein and the preparation of this Agreement and other related documents shall be held in confidence pursuant to terms, conditions and limitations set forth in the Confidentiality Agreement. SECTION 9.2 NON-COMPETITION AGREEMENT. From the date of Closing for a period of one (1) year Parent shall not, directly or indirectly, or as the agent of another Person or through other Persons as an agent: (i) engage, directly or indirectly, within the United States in a business the same as, or substantially similar to, the business currently conducted by the Company and Buyer; (ii) own, manage or operate any other business directly or indirectly engaged in the promotion, sale or distribution, within the United States, of products or services competitive with those of the business currently conducted by the Company and Buyer, except that an interest of less than five percent (5%) of a publicly-held corporation that is engaged in a business competitive with the business currently conducted by the Company and Buyer within the United States shall be permitted; or (iii) directly or indirectly solicit for employment any employee of Buyer or the Company within the United States, or request, induce or advise any employee to leave the employ of Buyer or the Company, unless Buyer consents to said employee leaving the employ of the Buyer or the Company. 41 41 (b) The necessity of protection against the competition of Parent against Buyer or the Company and the nature and scope of such protection has been carefully considered by the parties hereto. The parties hereto agree and acknowledge that the duration, scope and geographic areas applicable to the covenant not-to-compete described in this SECTION 9.2 are fair, reasonable and necessary and that adequate compensation has been received by Sellers for such obligations. If, however, for any reason any court determines that the restrictions in this SECTION 9.2 are not reasonable or that consideration is inadequate, such restrictions shall be interpreted, modified or rewritten to include as much of the duration, scope and geographic area identified in this SECTION 9.2 as will render such restrictions valid and enforceable. (c) In the event of a breach or threatened breach of this SECTION 9.2, Buyer shall be entitled, without the posting of a bond, to an injunction restraining such breach. Nothing herein contained shall be construed as prohibiting any party from pursuing any other remedy available to it for such breach or threatened breach. SECTION 9.3 NOTICES. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered when delivered personally or when sent by registered or certified mail or by private courier addressed as follows: If to Buyer, to: Keebler Foods Company 677 Larch Avenue Elmhurst, Illinois 60126 Attention: Sam K. Reed with a copy to: Keebler Foods Company 677 Larch Avenue Elmhurst, Illinois 60126 Attention: Thomas E. O'Neill and: Winston & Strawn 35 West Wacker Drive Chicago, Illinois 60601 Attention: Bruce A. Toth Oscar A. David 42 42 If to Seller, and prior to Closing, to: President International Trade and Investment Corporation c/o 41 Perimeter Center East Suite 400 Atlanta, Georgia 30346 Attention: Eric H. Wen or, if to Seller, and subsequent to Closing, to: President International Trade and Investment Corporation c/o President Enterprises Corporation 301 Chung Chen Rd. Yan Harng Yeong Kang Shiano Tainan Hsien, Taiwan Republic of China Attention: C. S. Lin with a copy, in either case, to: Jones, Day, Reavis & Pogue 3500 SunTrust Plaza 303 Peachtree Street, N.E. Atlanta, Georgia 30308-3242 Attention: John E. Zamer and Jones, Day, Reavis & Pogue 8th Floor No. 2 Tun Hwa South Road Section 2, Taipei Taiwan, R.O.C. Attention: Jack J. T. Huang or to such other address as such party may indicate by a notice delivered to the other party hereto. SECTION 9.5 SUCCESSORS AND ASSIGNS. The rights of either party under this Agreement shall not be assignable by such party without the written consent of the other party. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended or shall be construed to confer upon any Person other than the parties and successors and assigns permitted by this SECTION 9.4 any right, remedy or claim under or by reason of this Agreement. SECTION 9.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Exhibits and Schedules referred to herein and the documents delivered pursuant hereto and the 43 43 Confidentiality Agreement contain the entire understanding of the parties hereto with regard to the subject matter contained herein or therein, and supersede all other prior agreements, understandings or letters of intent between or among any of the parties hereto. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the parties hereto. SECTION 9.6 INTERPRETATION. Articles, titles and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. Neither the specification of any dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule hereto is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no party shall use the fact of the setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in any Schedule or Exhibit is or is not material for purposes of this Agreement. Unless this Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule hereto is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business, and no party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in any Schedule is or is not in the ordinary course of business for purposes of this Agreement. SECTION 9.7 WAIVERS. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such party. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. SECTION 9.8 EXPENSES. The Buyer on the one hand, and the Parent, with respect to the costs and expenses of Parent and the Company, on the other hand, will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel and independent public accountants. SECTION 9.9 PARTIAL INVALIDITY. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable Law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the 44 44 extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable. SECTION 9.10 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties hereto and delivered to Seller and Buyer. SECTION 9.11 FURTHER ASSURANCES. On and after the Closing Date each party hereto shall take such other actions and execute such other documents and instruments of conveyance and transfer as may be reasonably requested by the other party hereto from time to time to effectuate or confirm the transfer of the Shares to Buyer in accordance with the terms of this Agreement. SECTION 9.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts of law provisions) of the State of New York. The parties hereby irrevocably and unconditionally agree that except as provided in SECTION 9.13 hereof, any legal action or proceeding arising out of or relating to this Agreement may be brought in the United States District Court for the Southern District of New York; PROVIDED, HOWEVER, in the event such court shall not then have jurisdiction over such action or proceeding, each party hereby irrevocably and unconditionally agrees that such action or proceeding may be brought in any state court in the State of New York. By the execution and delivery of this Agreement, each party hereby irrevocably submits to the exclusive jurisdiction of such court(s). Each party hereby waives any objection which it may hereafter have to the laying of venue of any proceeding arising out of or relating to this Agreement brought in the United States District Court for the Southern District of New York (or in any state court in the State of New York in the event said United States District Court shall not then have jurisdiction) and further waives any claim that any such proceeding brought in such court(s) has been brought in an inconvenient forum. SECTION 9.13 CONSULTATION AND ARBITRATION. The parties hereto agree that they shall attempt to resolve in good faith disputes arising in connection with the proviso set forth in SECTION 6.2(a) of this Agreement. Parent and Buyer shall designate one officer for this purpose who is expressly authorized to make decisions. A dispute shall be referred by a party for consultation between the parties by delivering written notice to the other party briefly stating the nature of the dispute and requesting consultation. (b) In the event that, upon the expiration of ten (10) calendar days after receipt of the notice referred to in subsection (a) of this Section, the parties are unable to resolve the matter in dispute, and if the matter relates to any alleged breach of any representation, warranty, covenant or agreement in this Agreement hereto, then the dispute shall be resolved in the manner provided in subsection (c) of this Section. 45 45 (c) Any dispute with respect to the proviso set forth in SECTION 6.2(a) of this Agreement, including any dispute relating to the construction or interpretation of the rights and obligations of any party, which is not resolved through consultation as provided in subsection (a) and (b) of this Section, shall be resolved by an arbitration proceeding conducted in accordance with the following: (i) The arbitration proceeding shall be governed by the commercial rules of the American Arbitration Association ("AAA"); (ii) The arbitrators shall be qualified by education and training to pass upon the particular matter to be decided; (iii) There shall be three (3) arbitrators, one of whom shall be selected by the party seeking to initiate arbitration, one by the other party and the third by the two arbitrators so selected; (iv) The arbitration proceeding shall take place in Atlanta, Georgia; (v) The parties shall agree in advance as to the manner in which the arbitration panel shall promptly hear witnesses and arguments, review documents and otherwise conduct the arbitration proceedings. Both parties shall receive notice of the subject of the arbitration and the arbitration shall not be binding on the parties with respect to any matters not specified in such notice. Should the parties fail to reach an agreement as to the conduct of such proceedings, the arbitration panel shall formulate its own procedural rules and promptly commence the arbitration proceedings; (vi) The arbitration proceedings shall be conducted as expeditiously as possible with due consideration for the complexity of the dispute in question. The arbitration panel shall issue its decision in writing within fifteen (15) days from the hearing of final arguments by the parties. (vii) The arbitration award shall be given in writing and shall be final and binding on the parties with respect to the subject matter identified in the notice called for by subjection (c)(v) of this Section, and not subject to any appeal and shall deal with the question of costs of arbitration; (viii) Judgment upon the award may be entered in any court having jurisdiction or, application may be made to such court for a judicial recognition of the award or an order of enforcement thereof, as the case may be; (ix) The parties shall not submit a dispute subject to this subsection (c) of this Section to any federal, state, local or foreign court or arbitration association except as may be necessary to enforce the arbitration procedures of this subsection (c) of this Section or to enforce the award of the arbitration panel, and if court proceedings to stay litigation or compel arbitration under the Federal Arbitration Act (Title 9, U.S.C.) or 46 46 similar state or foreign legislation are necessary, the party who unsuccessfully opposes such proceedings shall pay all associated costs, expenses and attorneys' fees which are reasonably and actually incurred by the other party; and (x) The parties shall keep confidential the arbitration proceedings and the terms of any arbitration award, except as may be otherwise required by Law. SECTION 9.14 DISCLAIMER OF WARRANTIES. Seller makes no representations or warranties with respect to any projections, forecasts or forward-looking information provided to Buyer. There is no assurance that any projected or forecasted results will be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, SELLER IS SELLING THE SHARES (AND THE BUSINESS AND ASSETS OF THE COMPANY REPRESENTED THEREBY) ON AN "AS IS, WHERE IS" BASIS AND DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED. EXCEPT FOR THOSE REPRESENTATIONS OR WARRANTIES SET FORTH IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Buyer acknowledges that neither Seller nor any of its representatives nor any other Person has made any representation or warranty, express or implied, as to the accuracy or completeness of any memoranda, charts, summaries or schedules heretofore made available by Seller or its respective representatives to Buyer or any other information which is not included in this Agreement or the Schedules hereto, and neither Seller nor any of its representatives nor any other Person will have or be subject to any liability to Buyer, any affiliate of Buyer or any other Person resulting from the distribution of any such information to, or use of any such information by, Buyer, any affiliate of Buyer or any of their agents, consultants, accountants, counsel or other representatives. 47 47 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. PRESIDENT INTERNATIONAL TRADE AND INVESTMENT CORPORATION By: /s/ ERIC HONG-HSU WEN Name: Eric Hong-Hsu Wen Title: President PRESIDENT INTERNATIONAL, INC. By: /s/ ERIC HONG-HSU WEN Name: Eric Hong-Hsu Wen Title: Vice Chairman & CEO KEEBLER FOODS COMPANY By: /s/ SAM K. REED Name: Sam K. Reed Title: President & CEO 48 48 The following schedules to the Stock Purchase Agreement have been omitted. The Company hereby undertakes to furnish supplementally a copy of any such omitted schedules to the Commission upon request. SCHEDULE TITLE - -------- ----- SCHEDULE 3.1 CORPORATE ORGANIZATION AND QUALIFICATION SCHEDULE 3.2 CAPITALIZATION SCHEDULE 3.3 AUTHORITY: CONFLICTS SCHEDULE 3.7 FINANCIAL STATEMENTS SCHEDULE 3.8 ABSENCE OF CERTAIN CHANGES SCHEDULE 3.8(c) ABSENCE OF CERTAIN CHANGES SCHEDULE 3.9 TAXES SCHEDULE 3.11 INTELLECTUAL PROPERTY ATTACHMENT 1 U.S. TRADEMARKS: - PRESIDENT BAKING COMPANY, INC. - BISHOP BAKING COMPANY - FAMOUS AMOS CHOCOLATE CHIP COOKIE CORPORATION - PLANTATION BAKING COMPANY, INC. ATTACHMENT 2 FOREIGN TRADEMARK/SERVICE MARK APPLICATIONS AND REGISTRATIONS: - PRESIDENT BAKING COMPANY, INC. - BISHOP BAKING COMPANY, INC. - FAMOUS AMOS CHOCOLATE CHIP COOKIE CORPORATION - PLANTATION BAKING COMPANY ATTACHMENT 3 ADDITIONAL FOREIGN TRADEMARK/SERVICE MARK APPLICATIONS AND REGISTRATIONS: - PRESIDENT BAKING COMPANY, INC. - BISHOP BAKING COMPANY, INC. - FAMOUS AMOS CHOCOLATE CHIP COOKIE CORPORATION - PLANTATION BAKING COMPANY SCHEDULE 3.12(a) REAL PROPERTY SCHEDULE 3.12(c) CONDEMNATION SCHEDULE 3.13 LITIGATION SCHEDULE 3.14(a) CONTRACTS SCHEDULE 3.14(b) CONTRACTS SCHEDULE 3.14(c) CONTRACTS SCHEDULE 3.15(a) EMPLOYEE BENEFITS: ERISA SCHEDULE 3.15(f) MULTIEMPLOYER PLANS SCHEDULE 3.15(g) RETIREE BENEFITS 49 SCHEDULE 3.15(h) "REPORTABLE EVENTS," "PROHIBITED TRANSACTIONS," AND BREACHES OF "FIDUCIARY DUTY" SCHEDULE 3.15(i) ACTIONS WITH RESPECT TO COMPENSATION AND BENEFIT PLANS SCHEDULE 3.15(k) SEVERANCE PAY PLANS, POLICIES, ARRANGEMENTS OR PROGRAMS SCHEDULE 3.15(m) SEVERANCE PAY: COMPENSATION INCREASES SCHEDULE 3.16 COMPLIANCE WITH LAWS SCHEDULE 3.17 INSURANCE SCHEDULE 3.18 INTERESTS OF RELATED PERSONS SCHEDULE 3.19 ENVIRONMENTAL MATTERS SCHEDULE 3.19(b) ENVIRONMENTAL PERMITS SCHEDULE 3.20 LABOR MATTERS SCHEDULE 3.21(a) EQUIPMENT AND OTHER PROPERTY ENCUMBRANCES SCHEDULE 3.21(b) YEAR 2000 CERTIFICATIONS SCHEDULE 3.22 BANK ACCOUNTS AND AUTHORIZED PERSONS SCHEDULE 3.23 BROKERS SCHEDULE 3.24 PRODUCTION SCHEDULE SCHEDULE 3.25 PARENT OPERATIONS SCHEDULE 5.6 OPERATIONS PRIOR TO THE CLOSING DATE ATTACHMENT A OWNERS OF M/J/FA ATTACHMENT B EEO CHARGES ATTACHMENT C GIRL SCOUT BROKER AGREEMENTS AND GIRL SCOUT COUNCIL SALES AGREEMENTS SCHEDULE 5.9 SECTION 5.9 CLOSING DATE CLAUSE EXHIBIT A FORM OF CASH INDEMNIFICATION ESCROW AGREEMENT SCHEDULE 1 PERMITTED INVESTMENTS EXHIBIT B FORM OF SUPPLEMENTAL LETTER OF CREDIT INDEMNIFICATION ESCROW AGREEMENT SCHEDULE 1 PERMITTED INVESTMENTS EXHIBIT C FORM OF TAX LETTER OF CREDIT INDEMNIFICATION ESCROW AGREEMENT SCHEDULE 1 PERMITTED INVESTMENTS 50 EXHIBIT 2.4(f) OPINION LETTER TO KEEBLER FROM JONES, DAY, REAVIS & POGUE EXHIBIT 2.4(l) STOCK PURCHASE AGREEMENT LETTER TO KEEBLER FROM PRESIDENT ENTERPRISES CORP. EXHIBIT 2.5(b) OPINION LETTER TO PRESIDENT INTERNATIONAL TRADE AND INVESTMENT CORPORATION FROM WINSTON & STRAWN EXHIBIT 5.10 A PRESIDENT INTERNATIONAL, INC. TAX REPRESENTATION LETTER EXHIBIT 5.10 B NOTICE OF STATEMENT GIVEN TO SHAREHOLDER EXHIBIT 5.10 C FORM W-8, CERTIFICATE OF FOREIGN STATUS EX-10.33 3 CREDIT AGREEMENT 1 EXHIBIT 10.33 CREDIT AGREEMENT, dated as of September 28, 1998, among KEEBLER FOODS COMPANY, as the Borrower, VARIOUS FINANCIAL INSTITUTIONS, as the Lenders, THE BANK OF NOVA SCOTIA, as the Lead Arranger and the Administrative Agent for the Lenders, THE FIRST NATIONAL BANK OF CHICAGO, as the Syndication Agent for the Lenders, BANK OF MONTREAL, as the Managing agent for the Lenders, and NATIONSBANK, N.A., THE NORTHERN TRUST COMPANY, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., NEW YORK BRANCH, SUNTRUST BANK, ATLANTA, and WACHOVIA BANK, as the Co-Agents for the Lenders 2 TABLE OF CONTENTS
Section Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.1. Defined Terms.....................................................................2 1.2. Use of Defined Terms.............................................................24 1.3. CrossReferences..................................................................25 1.4. Accounting and Financial Determinations..........................................25 ARTICLE II COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES, NOTES AND LETTERS OF CREDIT 2.1. Commitments......................................................................25 2.1.1. Term Loan Commitments............................................................25 2.1.2. Revolving Loan Commitment and Swing Line Loan Commitment.........................25 2.1.3. Letter of Credit Commitment......................................................26 2.1.4. Lenders Not Permitted or Required To Make the Loans..............................26 2.1.5. Issuer Not Permitted or Required to Issue Letters of Credit......................27 2.2. Reduction of the Commitment Amounts..............................................27 2.2.1. Optional.........................................................................27 2.2.2. Mandatory........................................................................27 2.3. Borrowing Procedures and Funding Maintenance.....................................27 2.3.1. Term Loans and Revolving Loans...................................................28 2.3.2. Swing Line Loans.................................................................28 2.4. Continuation and Conversion Elections............................................29 2.5. Funding..........................................................................30 2.6. Issuance Procedures..............................................................30 2.6.1. Other Lenders' Participation.....................................................31 2.6.2. Disbursements; Conversion to Revolving Loans.....................................31 2.6.3. Reimbursement....................................................................31 2.6.4. Deemed Disbursements.............................................................32 2.6.5. Nature of Reimbursement Obligations..............................................32 2.6.6. Deemed Issuance of Existing Letters of Credit....................................33 2.7. Register; Notes..................................................................33
- i - 3 ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES 3.1. Repayments and Prepayments; Application..........................................35 3.1.1. Repayments and Prepayments.......................................................35 3.1.2. Application......................................................................37 3.2. Interest Provisions..............................................................37 3.2.1. Rates............................................................................37 3.2.2. PostMaturity Rates...............................................................38 3.2.3. Payment Dates....................................................................38 3.3. Fees.............................................................................39 3.3.1. Commitment Fee...................................................................39 3.3.2. Administrative Agent's Fee.......................................................39 3.3.3. Letter of Credit Fee.............................................................39 ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS 4.1. LIBO Rate Lending Unlawful.......................................................39 4.2. Deposits Unavailable.............................................................40 4.3. Increased LIBO Rate Loan Costs, etc..............................................40 4.4. Funding Losses...................................................................40 4.5. Increased Capital Costs..........................................................41 4.6. Taxes............................................................................41 4.7. Payments, Computations, etc......................................................43 4.8. Sharing of Payments..............................................................43 4.9. Setoff...........................................................................44 4.10. Mitigation.......................................................................44 4.11. Replacement of Lenders...........................................................44 ARTICLE V CONDITIONS TO CREDIT EXTENSIONS 5.1. Initial Credit Extensions........................................................45 5.1.1. Resolutions, etc.................................................................45 5.1.2. Delivery of Notes................................................................45 5.1.3. Consummation of Acquisition......................................................45 5.1.4. Acquisition Documents............................................................46 5.1.5. Closing Date Certificate.........................................................46 5.1.6. Payment of Outstanding Indebtedness, etc.........................................46 5.1.7. Financial Information, etc.......................................................46
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5.1.8. Solvency, etc....................................................................47 5.1.9. Litigation.......................................................................47 5.1.10. Material Adverse Change..........................................................47 5.1.11. Sources and Uses, etc............................................................47 5.1.12. Governmental Approval, etc.......................................................47 5.1.13. Trustee Letter; Calculation of Consolidated Coverage Ratio.......................47 5.1.14. Opinion of Counsel...............................................................47 5.1.15. Reliance Letters.................................................................48 5.1.16. Closing Fees, Expenses, etc......................................................48 5.2. All Credit Extensions............................................................48 5.2.1. Compliance with Warranties, No Default, etc......................................48 5.2.2. Credit Extension Request.........................................................48 ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1. Organization, etc................................................................49 6.2. Due Authorization, NonContravention, etc.........................................49 6.3. Government Approval, Regulation, etc.............................................49 6.4. Validity, etc....................................................................49 6.5. Financial Information............................................................50 6.6. No Material Adverse Change.......................................................50 6.7. Litigation, Labor Controversies, etc.............................................50 6.8. Year 2000 Compliance.............................................................50 6.9. Ownership of Properties..........................................................50 6.10. Taxes............................................................................50 6.11. Pension and Welfare Plans........................................................51 6.12. Environmental Warranties.........................................................51 6.13. Regulations U and X..............................................................52 6.14. Accuracy of Information..........................................................52 6.15. Seniority of Obligations, etc....................................................52 ARTICLE VII COVENANTS 7.1. Affirmative Covenants............................................................53 7.1.1. Financial Information, Reports, Notices, etc.....................................53 7.1.2. Compliance with Laws, etc........................................................54 7.1.3. Maintenance of Properties........................................................55 7.1.4. Books and Records................................................................55 7.1.5. Use of Proceeds, etc.............................................................55 7.1.6. LongTerm Debt Rating Downgrade...................................................56
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7.2. Negative Covenants...............................................................57 7.2.1. Business Activities..............................................................57 7.2.2. Indebtedness.....................................................................57 7.2.3. Liens............................................................................58 7.2.4. Financial Condition..............................................................60 7.2.5. Investments......................................................................60 7.2.6. Restricted Payments, etc.........................................................61 7.2.7. Capital Expenditures, etc........................................................63 7.2.8. Consolidation, Merger, etc.......................................................63 7.2.9. Asset Dispositions, etc..........................................................63 7.2.10. Modification of Certain Agreements...............................................64 7.2.11. Transactions with Affiliates.....................................................65 7.2.12. Negative Pledges, Restrictive Agreements, etc....................................65 7.2.13. Sale and Leaseback...............................................................65 7.2.14. Indenture Restrictions...........................................................66 ARTICLE VIII EVENTS OF DEFAULT 8.1. Listing of Events of Default.....................................................66 8.1.1. NonPayment of Obligations........................................................66 8.1.2. Breach of Warranty...............................................................66 8.1.3. NonPerformance of Certain Covenants and Obligations..............................66 8.1.4. NonPerformance of Other Covenants and Obligations................................66 8.1.5. Default on Other Indebtedness....................................................67 8.1.6. Judgments........................................................................67 8.1.7. Pension Plans....................................................................67 8.1.8. Change in Control................................................................67 8.1.9. Bankruptcy, Insolvency, etc......................................................67 8.1.10. Impairment of Security, etc......................................................68 8.1.11. Subordinated Notes...............................................................68 8.1.12. Termination of Receivables Facility..............................................69 8.2. Action if Bankruptcy, etc........................................................69 8.3. Action if Other Event of Default.................................................69 ARTICLE IX THE AGENTS 9.1. Actions..........................................................................69 9.2. Funding Reliance, etc............................................................70 9.3. Exculpation......................................................................70 9.4. Successor........................................................................71
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9.5. Credit Extensions by Each Agent..................................................71 9.6. Credit Decisions.................................................................71 9.7. Copies, etc......................................................................71 9.8. The Syndication Agent, the Managing Agent and the CoAgents.......................72 ARTICLE X MISCELLANEOUS PROVISIONS 10.1. Waivers, Amendments, etc.........................................................72 10.2. Notices..........................................................................73 10.3. Payment of Costs and Expenses....................................................73 10.4. Indemnification..................................................................74 10.5. Survival.........................................................................75 10.6. Severability.....................................................................75 10.7. Headings.........................................................................75 10.8. Execution in Counterparts, Effectiveness, etc....................................75 10.9. Governing Law; Entire Agreement..................................................75 10.10. Successors and Assigns...........................................................75 10.11. Sale and Transfer of Loans and Notes; Participations in Loans and Notes..........76 10.11.1. Assignments......................................................................76 10.11.2. Participations...................................................................78 10.12. Other Transactions...............................................................79 10.13. Forum Selection and Consent to Jurisdiction......................................79 10.14. Waiver of Jury Trial.............................................................79 10.15. Confidentiality..................................................................80
- v - 7 SCHEDULE I - Disclosure Schedule SCHEDULE II - Fiscal Quarters SCHEDULE III - Percentages and Administrative Information SCHEDULE IV - Existing Letters of Credit EXHIBIT A-1 - Form of Revolving Note EXHIBIT A-2 - Form of Term Note EXHIBIT A-3 - Form of Swing Line Note EXHIBIT A-4 - Form of Registered Note EXHIBIT B-1 - Form of Borrowing Request EXHIBIT B-2 - Form of Issuance Request EXHIBIT C - Form of Continuation/Conversion Notice EXHIBIT D - Form of Lender Assignment Agreement EXHIBIT E - Form of Compliance Certificate EXHIBIT F - Form of Closing Date Certificate EXHIBIT G - Form of Intercompany Subordination Agreement EXHIBIT H - Form of Solvency Certificate - vi - 8 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of September 28, 1998, is among KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), the various financial institutions as are or may become parties hereto (collectively, the "LENDERS"), THE BANK OF NOVA SCOTIA ("SCOTIABANK"), as the lead arranger and as the administrative agent (the "ADMINISTRATIVE AGENT") for the Lenders, THE FIRST NATIONAL BANK OF CHICAGO, as the syndication agent (the "SYNDICATION AGENT") for the Lenders, the BANK OF MONTREAL as the managing agent (the "MANAGING AGENT") for the Lenders, and NATIONSBANK, N.A., THE NORTHERN TRUST COMPANY, COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., NEW YORK BRANCH, SUNTRUST BANK, ATLANTA and WACHOVIA BANK as the co-agents (collectively, the "CO-AGENTS") for the Lenders. W I T N E S S E T H: WHEREAS, in accordance with and subject to the terms and conditions contained in the Stock Purchase Agreement, dated August 24, 1998 (as amended or otherwise modified in accordance with CLAUSE (a) of SECTION 7.2.10, the "PURCHASE AGREEMENT"), by and among the Borrower, President International, Inc., a Delaware corporation ("PRESIDENT") and President International Trade and Investment Corporation, a company limited by shares under the International Business Companies Ordinance of the British Virgin Islands (the "SELLER"), the Borrower has agreed to acquire (the "ACQUISITION") from the Seller all of the outstanding shares of issued and outstanding shares of Capital Stock (the "SHARES") of President, as further set forth in the Purchase Agreement, for an aggregate purchase price not to exceed $450,000,000 (as such amount may be adjusted pursuant to the terms of the Purchase Agreement); WHEREAS, in connection with the Acquisition, the Borrower has requested the Lenders and the Issuer to provide (a) a Term Loan Commitment pursuant to which Borrowings of Term Loans will be made, in a maximum, original principal amount equal to the Term Loan Commitment Amount, to the Borrower in a single Borrowing to occur on the Closing Date; (b) a Revolving Loan Commitment (to include availability for Revolving Loans, Swing Line Loans and Letters of Credit) pursuant to which Borrowings of Revolving Loans will be made to the Borrower from time to time prior to the Revolving Loan Commitment Termination Date; (c) a Letter of Credit Commitment pursuant to which the Issuer will issue Letters of Credit from time to time prior to the Revolving Loan Commitment Termination Date; and (d) a Swing Line Loan Commitment pursuant to which Borrowings of Swing Line Loans will be made from time to time prior to the Revolving Loan Commitment Termination Date; and 9 WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set forth (including ARTICLE V), to extend such Commitments and make Loans to the Borrower and issue (or participate in) Letters of Credit pursuant to the Commitments described above; NOW, THEREFORE, the parties hereto agree as set forth above and as follows. ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1. DEFINED TERMS. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "ACCOUNT" means any account (as that term is defined in Section 9-106 of the UCC) of the Borrower or any of its wholly-owned U.S. Subsidiaries arising from the sale or lease of goods or rendering of services. "ACQUISITION" is defined in the FIRST RECITAL. "ADMINISTRATIVE AGENT" is defined in the PREAMBLE and includes each other Person as shall have subsequently been appointed as the successor Administrative Agent pursuant to SECTION 9.4. "AFFILIATE" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 15% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "AGENTS" means, collectively, the Administrative Agent, the Syndication Agent, the Managing Agent and the Co-Agents. "AGREEMENT" means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "ALTERNATE BASE RATE" means, on any date and with respect to all Base Rate Loans, a fluctuating rate of interest per annum equal to the higher of -2- 10 (a) the rate of interest most recently established by the Administrative Agent at its Domestic Office as its base rate for Dollar loans in the United States; and (b) the Federal Funds Rate most recently determined by the Administrative Agent plus 1/2 of 1%. The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by the Administrative Agent in connection with extensions of credit. Changes in the rate of interest on that portion of any Loans maintained as Base Rate Loans will take effect simultaneously with each change in the Alternate Base Rate. The Administrative Agent will give notice promptly to the Borrower and the Lenders of changes in the Alternate Base Rate. "APPLICABLE COMMITMENT FEE MARGIN" means at all times during the applicable periods set forth below, the applicable percentage per annum set forth below under the column entitled "Applicable Commitment Fee Margin":
Applicable Debt to EBITDA Ratio Commitment Fee Margin -------------------- --------------------- Greater than or equal to 3.5:1 0.30% Greater than or equal to 3.0:1 and less than 3.5:1 0.25% Greater than or equal to 2.5:1 and less than 3.00:1 0.20% Greater than or equal to 2.0:1 and less than 2.5:1 0.15% Less than 2.0:1 0.125%;
PROVIDED, that, notwithstanding the then applicable Debt to EBITDA Ratio, the Applicable Commitment Fee Margin for the period from the Closing Date through the sixth-month anniversary of the Closing Date shall be at least 0.20%. The Debt to EBITDA Ratio used to compute the Applicable Commitment Fee Margin shall be the Debt to EBITDA Ratio set forth in the Compliance Certificate most recently delivered by the Borrower to the Administrative Agent pursuant to CLAUSE (c) of SECTION 7.1.1; changes in the Applicable Commitment Fee Margin resulting from a change in the Debt to EBITDA Ratio shall become effective upon delivery by the Borrower to the Administrative Agent of a new Compliance Certificate pursuant to CLAUSE (c) of SECTION 7.1.1. If the Borrower shall fail to deliver a Compliance Certificate within the number of days after the end of any Fiscal Quarter as required pursuant to CLAUSE (c) of SECTION 7.1.1 (without giving effect to any grace period), the Applicable Commitment Fee Margin from and including the first day after the date on which such Compliance Certificate was required to be delivered to but not including the date the Borrower delivers to the Administrative Agent a Compliance Certificate shall conclusively equal the highest Applicable Commitment Fee Margin set forth above. -3- 11 "APPLICABLE MARGIN" means at all times during the applicable periods set forth below, (a) with respect to the unpaid principal amount of each Revolving Loan and each Term Loan maintained as a Base Rate Loan, the applicable percentage per annum set forth below under the column entitled "Applicable Margin for Base Rate Loans"; and (b) with respect to the unpaid principal amount of each Revolving Loan and each Term Loan maintained as a LIBO Rate Loan, the applicable percentage per annum set forth below under the column entitled "Applicable Margin for LIBO Rate Loans":
Applicable Applicable Margin for Base Margin for LIBO Debt to EBITDA Ratio Rate Loans Rate Loans -------------------- ---------- ---------- Greater than or equal to 3.5:1 0.25% 1.25% Greater than or equal to 3.0:1 and less than 3.5:1 0.00% 1.00% Greater than or equal to 2.5:1 and less than 3.0:1 0.00% 0.75% Greater than or equal to 2.0:1 and less than 2.5:1 0.00% 0.50% Less than 2.0:1 0.00% 0.40%;
PROVIDED, that, notwithstanding the then applicable Debt to EBITDA Ratio, the Applicable Margin for LIBO Rate Loans for the period from the Closing Date through the sixth-month anniversary of the Closing Date shall be at least 0.75%. The Debt to EBITDA Ratio used to compute the Applicable Margin for Revolving Loans and Term Loans shall be the Debt to EBITDA Ratio set forth in the Compliance Certificate most recently delivered by the Borrower to the Administrative Agent pursuant to CLAUSE (c) of SECTION 7.1.1; changes in the Applicable Margin for Revolving Loans and Term Loans resulting from a change in the Debt to EBITDA Ratio shall become effective upon delivery by the Borrower to the Administrative Agent of a new Compliance Certificate pursuant to CLAUSE (c) of SECTION 7.1.1. If the Borrower shall fail to deliver a Compliance Certificate within the number of days after the end of any Fiscal Quarter as required pursuant to CLAUSE (c) of SECTION 7.1.1 (without giving effect to any grace period), the Applicable Margin for Revolving Loans and Term Loans from and including the first day after the date on which such Compliance Certificate was required to be delivered to but not including the date the Borrower delivers to the Administrative Agent a Compliance Certificate shall conclusively equal the highest Applicable Margin for Revolving Loans and Term Loans set forth above. "ARTAL" means ARTAL Luxembourg S.A., a corporation organized under the laws of Luxembourg. "ASSIGNEE LENDER" is defined in SECTION 10.11.1. -4- 12 "AUTHORIZED OFFICER" means, relative to any Obligor, those of its officers whose signatures and incumbency shall have been certified to the Administrative Agent and the Lenders pursuant to SECTION 5.1.1. "BANK CONFIDENTIAL OFFERING MEMORANDUM" means, the Confidential Offering Memorandum, dated September, 1998. "BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate determined by reference to the Alternate Base Rate. "BORROWER" is defined in the PREAMBLE. "BORROWING" means the Loans of the same type and, in the case of LIBO Rate Loans, having the same Interest Period made by the relevant Lenders on the same Business Day and pursuant to the same Borrowing Request in accordance with SECTION 2.1. "BORROWING REQUEST" means a loan request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B-1 hereto. "BRIDGE AGREEMENT" means the credit agreement, dated as of the date hereof, between the Borrower and Scotiabank, as amended, supplemented, amended and restated or otherwise modified from time to time. "BUSINESS DAY" means (a) any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in Atlanta, Georgia or New York, New York; and (b) relative to the making, continuing, prepaying or repaying of any LIBO Rate Loans, any day on which dealings in Dollars are carried on in the London interbank market. "CAPITAL EXPENDITURES" means for any period, the sum, without duplication, of (a) the aggregate amount of all expenditures of the Borrower and its Subsidiaries for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures; and (b) the aggregate amount of all Capitalized Lease Liabilities incurred during such period. "CAPITALIZED LEASE LIABILITIES" means, without duplication, all monetary obligations of the Borrower or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease -5- 13 prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "CAPITAL STOCK" means (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type. "CASH EQUIVALENT INVESTMENT" means, at any time: (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof; (b) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an Affiliate of any Obligor) organized under the laws of any state of the United States or of the District of Columbia and rated at least A1 by S&P or P-1 by Moody's, or (ii) any Lender (or its holding company); (c) any certificate of deposit or bankers acceptance, maturing not more than one year after such time, which is issued by either (i) a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender; (d) short-term tax-exempt securities rated not lower than MIG-1/1+ by either Moody's or S&P with provisions for liquidity or maturity accommodations of 183 days or less; (e) any money market or similar fund the assets of which are comprised exclusively of any of the items specified in CLAUSES (a) through (d) above and as to which withdrawals are permitted at least every 90 days; or (f) any repurchase agreement entered into with any Lender or any commercial banking institution of the stature referred to in CLAUSE (c)(i) which (i) is secured by a fully perfected security interest in any obligation of the type described in CLAUSE (a), and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder. -6- 14 "CASH FLOW COVERAGE RATIO" means, at the close of any Fiscal Quarter, the ratio, computed (except as set forth in CLAUSES (c), (d) and (e), below) for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters, of (a) EBITDA less Capital Expenditures actually made by the Borrower and its Subsidiaries (for all such Fiscal Quarters) TO (b) Interest Expense (for all such Fiscal Quarters); PROVIDED, HOWEVER, that in computing the Cash Flow Coverage Ratio for (c) the fourth Fiscal Quarter of the 1998 Fiscal Year, the amount set forth in CLAUSE (b) above shall equal the amount set forth in CLAUSE (b) for such Fiscal Quarter multiplied by four; (d) the first Fiscal Quarter of the 1999 Fiscal Year, the amount set forth in CLAUSE (b) above shall equal the amount set forth in CLAUSE (b) for such Fiscal Quarter and the immediately preceding Fiscal Quarter multiplied by two; and (e) the second Fiscal Quarter of the 1999 Fiscal Year, the amount set forth in CLAUSE (b) above shall equal the amount set forth in CLAUSE (b) for such Fiscal Quarter and the two immediately preceding Fiscal Quarters multiplied by 1.333. "CERCLA" means the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List. "CHANGE IN CONTROL" means (a) any "person" or "group" (as such terms are used in Rule 13d-5 of the Exchange Act, and Sections 13(d) and 14(d) of the Exchange Act) of persons (other than the Permitted ARTAL Investor Group or Flowers or, in either case, any of their wholly-owned Subsidiaries) becomes, directly or indirectly, in a single transaction or in a related series of transactions by way of merger, consolidation, or other business combination or otherwise, the "beneficial owner" (as such term is used in Rule 13d-3 of the Exchange Act) of more than 30% of the total voting power in the aggregate of all classes of Capital Stock of the Borrower then outstanding entitled to vote generally in elections of directors of the Borrower; or (b) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election to such Board or whose nomination for election by the stockholders of the Borrower was approved by ARTAL or Flowers or a vote of a majority of the directors then still in office who were either directors at the beginning -7- 15 of such period or whose nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office. "CLOSING DATE" means the date all conditions set forth in SECTION 5.1 are satisfied (or have been waived) and the initial Credit Extension is made hereunder. "CLOSING DATE CERTIFICATE" means a certificate of an Authorized Officer of the Borrower, substantially in the form of EXHIBIT F hereto, delivered pursuant to SECTION 5.1.5. "CO-AGENTS" is defined in the PREAMBLE. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMITMENT" means, as the context may require, a Lender's Letter of Credit Commitment, Revolving Loan Commitment, Swing Line Loan Commitment or Term Loan Commitment. "COMMITMENT AMOUNT" means, as the context may require, the Letter of Credit Commitment Amount, the Revolving Loan Commitment Amount, the Swing Line Loan Commitment Amount or the Term Loan Commitment Amount. "COMMITMENT TERMINATION DATE" means, as the context may require, the Revolving Loan Commitment Termination Date or the Term Loan Commitment Termination Date. "COMMITMENT TERMINATION EVENT" means (a) the occurrence of any Event of Default described in CLAUSES (a) through (d) of SECTION 8.1.9 with respect to the Borrower; or (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to SECTION 8.3, or (ii) in the absence of such declaration, the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Commitments have been terminated. "COMPLIANCE CERTIFICATE" means a certificate duly completed and executed by the chief financial Authorized Officer of the Borrower, substantially in the form of EXHIBIT E hereto. "CONSOLIDATED TANGIBLE ASSETS" means, as determined on any date, all assets other than intangible assets of the Borrower and its Subsidiaries as reflected on the latest audited consolidated financial statements of the Borrower and its Subsidiaries. "CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, a -8- 16 debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability, including "keep-well" agreements, of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "CONTINUATION/CONVERSION NOTICE" means a notice of continuation or conversion and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT C hereto. "CONTROLLED GROUP" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA. "CREDIT EXTENSION" means, as the context may require, (a) the making of a Loan by a Lender; or (b) the issuance of any Letter of Credit, or the extension of any Stated Expiry Date of any previously issued Letter of Credit, by the Issuer. "CREDIT EXTENSION REQUEST" means, as the context may require, any Borrowing Request or Issuance Request. "DEBT" means, without duplication, as determined on any date, Indebtedness of the Borrower and its Subsidiaries to the extent reflected on a consolidated balance sheet of the Borrower determined in accordance with GAAP (but net, for so long as no Revolving Loans or Swing Line Loans are outstanding on such date of determination, of cash and Cash Equivalent Investments of the Borrower and its Subsidiaries on such date) and which shall also include Indebtedness of the Borrower and its Subsidiaries of the type referred to in clauses (b) (without duplication of letters of credit issued to support obligations under industrial development revenue bonds to the extent the obligations arising under such bonds are otherwise included in this definition, and exclusive of documentary trade letters of credit) and (f) of the definition of "Indebtedness" or any Contingent Liability in respect thereof. "DEBT TO EBITDA RATIO" means, as of the last day of any Fiscal Quarter, the ratio of (a) Debt outstanding on the last day of such Fiscal Quarter TO (b) EBITDA computed for the period consisting of such Fiscal Quarter and each of the three immediately preceding Fiscal Quarters. "DEFAULT" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default. -9- 17 "DISBURSEMENT" is defined in SECTION 2.6.2. "DISBURSEMENT DATE" is defined in SECTION 2.6.2. "DISBURSEMENT DUE DATE" is defined in SECTION 2.6.2. "DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as SCHEDULE I, as it may be amended, supplemented or otherwise modified from time to time by the Borrower with the written consent of the Required Lenders. "DOLLAR" and the sign "$" mean lawful money of the United States. "DOMESTIC OFFICE" means, relative to any Lender, the office of such Lender designated as such on SCHEDULE III hereto or designated in the Lender Assignment Agreement or such other office of a Lender (or any successor or assign of such Lender) within the United States as may be designated from time to time by notice from such Lender, as the case may be, to each other Person party hereto. "DOWNGRADE DATE" means the date on which the Borrower's long-term senior, unsecured Debt (without third party credit enhancement) is no longer Investment Grade. "EBITDA" means, for any applicable period and giving PRO FORMA effect to any permitted acquisitions (including the Acquisition) on terms satisfactory to the Administrative Agent, the sum (without duplication) of (a) Net Income, PLUS (b) the amount deducted, in determining Net Income, representing amortization, PLUS (c) the amount deducted, in determining Net Income, of all income taxes (whether paid or deferred) of the Borrower and its Subsidiaries, PLUS (d) Interest Expense, PLUS (e) the amount deducted, in determining Net Income, representing depreciation of assets, -10- 18 PLUS (f) an amount equal to the amount of all extraordinary, non-recurring non-cash charges deducted in arriving at Net Income, MINUS (g) an amount equal to the amount of all extraordinary, non-recurring non-cash credits included in arriving at Net Income. "EFFECTIVE DATE" means the date this Agreement becomes effective pursuant to SECTION 10.8. "ENVIRONMENTAL LAWS" means all applicable federal, state or local statutes, laws, ordinances, codes, rules and regulations (including consent decrees and administrative orders) relating to public health and safety and protection of the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "EVENT OF DEFAULT" is defined in SECTION 8.1. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING LETTERS OF CREDIT" means, collectively, the letters of credit listed on SCHEDULE IV hereto. "EXISTING CREDIT AGREEMENT" means the Second Amended and Restated Credit Agreement, dated as of April 8, 1997 (as amended or otherwise modified prior to the Effective Date), among the Borrower, certain financial institutions from time to time parties thereto, certain financial institutions parties thereto as co-agents and Scotiabank, as administrative agent. "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (a) the weighted average of the rates on overnight federal funds transactions with members 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 New York; or (b) 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 Administrative Agent from three federal funds brokers of recognized standing selected by it. "FEE LETTER" means the confidential fee letter, dated as of August 28, 1998, between the Borrower and the Administrative Agent. "FISCAL QUARTER" means any quarter beginning and ending on the dates set forth in SCHEDULE II. -11- 19 "FISCAL YEAR" means any period of 52 (or, if applicable, 53) consecutive weeks ending on the Saturday occurring nearest to December 31 of any year; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the "1998 FISCAL YEAR") refer to the Fiscal Year ending on the Saturday occurring nearest to December 31 of that calendar year, even if such date occurs in the next calendar year. "FLOWERS" means Flowers Industries, Inc., a Georgia corporation. "F.R.S. BOARD" means the Board of Governors of the Federal Reserve System or any successor thereto. "GAAP" is defined in SECTION 1.4. "HAZARDOUS MATERIAL" means (a) any "hazardous substance", as defined by CERCLA; (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of such Person under commodity hedging agreements, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in commodity prices, interest rates or currency exchange rates. "HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "IMMATERIAL SUBSIDIARY" means each Subsidiary of the Borrower that (a) accounted for no more than 2% of the consolidated gross revenues of the Borrower and its Subsidiaries; and (b) has assets which represent no more than 2% of the consolidated gross assets of the Borrower and its Subsidiaries, in each case, as of the last day of the most recently completed Fiscal Quarter with respect to which, pursuant to CLAUSES (a) or (b) of SECTION 7.1.1, financial statements have been, or are required to have been, delivered by the Borrower. -12- 20 "IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or certification of any independent public accountant as to any financial statement of any Obligor, any qualification or exception to such opinion or certification (a) which is of a "going concern" or similar nature; (b) which relates to the limited scope of examination of matters relevant to such financial statement; or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause such Obligor to be in default of any of its obligations under SECTION 7.2.4. "INCLUDING" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of EJUSDEM GENERIS shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned. "INDEBTEDNESS" of any Person means, without duplication: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments for borrowed money in respect thereof; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) net liabilities of such Person under all Hedging Obligations; (e) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon and interest not yet due) due more than six months from the date of incurrence of the obligation in respect thereof and secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; PROVIDED, HOWEVER, that, for purposes of determining the amount of any Indebtedness of the type described in this clause, if recourse with respect to such Indebtedness is limited to specific property financed with such Indebtedness, the amount of such Indebtedness shall be limited to the fair market value (determined on a basis reasonably acceptable to the Administrative Agent) of such property or the principal amount of such Indebtedness, whichever is less; -13- 21 (f) all Receivables Facility Outstandings; and (g) all Contingent Liabilities of such Person in respect of any of the foregoing; PROVIDED, that, Indebtedness shall not include unsecured Indebtedness incurred in the ordinary course of business in the nature of accrued liabilities and open accounts extended by suppliers on normal trade terms in connection with purchases of goods and services, but excluding the Indebtedness incurred through the borrowing of money. For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer (to the extent such Person is liable for such Indebtedness). "INDEMNIFIED LIABILITIES" is defined in SECTION 10.4. "INDEMNIFIED PARTIES" is defined in SECTION 10.4. "INDENTURE" means the Indenture, dated as of June 15, 1996, by and among the Borrower, the Subsidiaries of the Borrower from time to time parties thereto (as guarantors) and U.S. Trust Company of New York, as the trustee, as such Indenture may be amended, supplemented, amended and restated or otherwise modified in accordance with the terms of SECTION 7.2.10. "INTERCOMPANY SUBORDINATION AGREEMENT" means an agreement to be executed and delivered pursuant to the terms of this Agreement (including CLAUSE (f) of SECTION 7.2.2), substantially in the form of EXHIBIT G hereto, as amended, supplemented, amended and restated or otherwise modified from time to time in accordance with its terms. "INTEREST EXPENSE" means, for any Fiscal Quarter, the aggregate consolidated cash interest expense (net of interest income) of the Borrower and its Subsidiaries for such Fiscal Quarter, as determined in accordance with GAAP, including (i) the portion of any payments made in respect of Capitalized Lease Liabilities allocable to interest expense and (ii) interest (or other fees in the nature of interest or discount accrued and paid or payable in cash for such Fiscal Quarter) in respect of the Permitted Receivables Transaction. "INTEREST PERIOD" means, relative to any LIBO Rate Loans, the period beginning on (and including) the date on which such LIBO Rate Loan is made or continued as, or converted into, a LIBO Rate Loan pursuant to SECTION 2.3.1 or 2.4 and shall end on (but exclude) the day which numerically corresponds to such date one, two, three or six (or, if available to all relevant Lenders and at the discretion of the Administrative Agent, nine or twelve) months thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month), in either case as the Borrower may select in its relevant notice pursuant to SECTION 2.3 or 2.4; PROVIDED, HOWEVER, that (a) the Borrower shall not be permitted to select Interest Periods to be in effect at any one time which have expiration dates occurring on more than ten different dates; (b) Interest Periods commencing on the same date for Loans comprising part of the same Borrowing shall be of the same duration; -14- 22 (c) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day (unless such next following Business Day is the first Business Day of a calendar month, in which case such Interest Period shall end on the Business Day next preceding such numerically corresponding day); and (d) no Interest Period for any Loan may end later than the Stated Maturity Date for such Loan. "INVESTMENT" means, relative to any Person, (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); and (b) any ownership or similar interest held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such transfer or exchange. "INVESTMENT AMOUNT" means an unlimited amount which can be applied for acquisitions of Capital Stock pursuant to CLAUSE (i) of SECTION 7.2.5 and/or the making of Capital Expenditures pursuant to CLAUSE (b)(ii) of SECTION 7.2.7; PROVIDED, HOWEVER, that after the Downgrade Date, the aggregate amount of such acquisitions and Capital Expenditures shall not, singly or in the aggregate exceed 20% of Consolidated Tangible Assets (less the aggregate amount of Investments and Capital Expenditures made subsequent to the Downgrade Date pursuant to CLAUSE (i) of SECTION 7.2.5 and CLAUSE (b)(ii) of SECTION 7.2.7 (respectively)). "INVESTMENT GRADE" means, with respect to the Borrower's long-term senior, unsecured Debt (without third party credit enhancement), a rating of BBB- or above from S&P or Baa3 or above from Moody's or an equivalent rating from another nationally recognized rating agency acceptable to the Administrative Agent. "ISSUANCE REQUEST" means a Letter of Credit request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B-2 hereto. "ISSUER" means, collectively, Scotiabank in its individual capacity hereunder as issuer of the Letters of Credit and such other Lender as may be designated by Scotiabank (and agreed to by the Borrower and such Lender) in its individual capacity as the issuer of Letters of Credit. "LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement, substantially in the form of EXHIBIT D hereto. "LENDERS" is defined in the PREAMBLE. "LETTER OF CREDIT" is defined in SECTION 2.1.3. -15- 23 "LETTER OF CREDIT COMMITMENT" means, with respect to the Issuer, the Issuer's obligation to issue Letters of Credit pursuant to SECTION 2.1.3 and, with respect to each of the Revolving Loan Lenders, the obligations of each such Revolving Loan Lender to participate in such Letters of Credit pursuant to SECTION 2.6.1. "LETTER OF CREDIT COMMITMENT AMOUNT" means, on any date, a maximum amount of $75,000,000, as such amount may be reduced from time to time pursuant to SECTION 2.2. "LETTER OF CREDIT OUTSTANDINGS" means, on any date, an amount equal to the sum of (a) the then aggregate amount which is undrawn and available under all issued and outstanding Letters of Credit, PLUS (b) the then aggregate amount of all unpaid and outstanding Reimbursement Obligations in respect of such Letters of Credit. "LIBO RATE" means, relative to any Interest Period for LIBO Rate Loans, the rate of interest equal to the average (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in immediately available funds are offered to the Administrative Agent's LIBOR Office in the London interbank market as at or about 11:00 a.m. London time two Business Days prior to the beginning of such Interest Period for delivery on the first day of such Interest Period, and in an amount approximately equal to the amount of the Administrative Agent's LIBO Rate Loan and for a period approximately equal to such Interest Period. "LIBO RATE LOAN" means a Loan bearing interest, at all times during an Interest Period applicable to such Loan, at a fixed rate of interest determined by reference to the LIBO Rate (Reserve Adjusted). "LIBO RATE (RESERVE ADJUSTED)" means, relative to any Loan to be made, continued or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the following formula: LIBO Rate = LIBO Rate ------------------------------- (Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans will be determined by the Administrative Agent on the basis of the LIBOR Reserve Percentage in effect on, and the applicable rates furnished to and received by the Administrative Agent from Scotiabank, two Business Days before the first day of such Interest Period. "LIBOR OFFICE" means, relative to any Lender, the office of such Lender designated as such on SCHEDULE III hereto or designated in the Lender Assignment Agreement or such other office of a Lender as designated from time to time by notice from such Lender to the Borrower and the Administrative Agent, whether or not outside the United States, which shall be making or maintaining LIBO Rate Loans of such Lender hereunder. "LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum aggregate reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve -16- 24 requirements) specified under regulations issued from time to time by the F.R.S. Board and then applicable to assets or liabilities consisting of and including "Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S. Board, having a term approximately equal or comparable to such Interest Period. "LIEN" means any security interest, mortgage, pledge, hypothecation, assignment, encumbrance, lien (statutory or otherwise) or charge against or interest in property, to secure payment of a debt or performance of an obligation. "LOAN" means, as the context may require, a Revolving Loan, a Swing Line Loan or a Term Loan of any type. "LOAN DOCUMENT" means this Agreement, the Notes, the Letters of Credit, the Fee Letter, the Intercompany Subordination Agreement and each other agreement, document or instrument delivered in connection with this Agreement or any other Loan Document, whether or not specifically mentioned herein or therein. "MANAGING AGENT" is defined in the PREAMBLE. "MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the financial condition, operations, assets, business or properties of the Borrower and its Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Borrower or any other Obligor (other than any Immaterial Subsidiary) to perform its respective material obligations under the Loan Documents to which it is or will be a party, or (c) an impairment of the validity or enforceability of, or a material impairment of the rights, remedies or benefits available to the Administrative Agent, the Issuer or the Lenders under, this Agreement or any other Loan Document. "MOODY'S" means Moody's Investors Service, Inc. "NET DISPOSITION PROCEEDS" means, with respect to a Permitted Disposition of the assets of the Borrower or any of its Subsidiaries, the excess of (a) the gross cash proceeds received by the Borrower or any of its Subsidiaries from any Permitted Disposition and any cash payments received in respect of promissory notes or other non-cash consideration delivered to the Borrower or such Subsidiary in respect of any Permitted Disposition, LESS (b) the sum of (i) all reasonable and customary fees and expenses with respect to legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such Permitted Disposition which have not been paid to Affiliates of the Borrower, -17- 25 (ii) all taxes and other governmental costs and expenses actually paid or estimated by the Borrower (in good faith) to be payable in cash in connection with such Permitted Disposition, and (iii) payments made by the Borrower or any of its Subsidiaries to retire Indebtedness (other than the Loans) of the Borrower or any of its Subsidiaries where payment of such Indebtedness is required in connection with such Permitted Disposition; PROVIDED, HOWEVER, that if, after the payment of all taxes with respect to such Permitted Disposition, the amount of estimated taxes, if any, pursuant to CLAUSE (b)(ii) above exceeded the tax amount actually paid in cash in respect of such Permitted Disposition, the aggregate amount of such excess shall be immediately payable, pursuant to CLAUSE (b) of SECTION 3.1.1, as Net Disposition Proceeds. "NET INCOME" means, for any period, the net income of the Borrower and its Subsidiaries for such period on a consolidated basis, excluding extraordinary gains. "NON-U.S. LENDER" means any Lender (including each Assignee Lender) that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any state thereof, or (iii) any estate or trust that is subject to U.S. Federal income taxation regardless of the source of its income. "NON-U.S. SUBSIDIARY" means any Subsidiary of the Borrower that is not incorporated or organized in or under the laws of the United States or any state thereof. "NOTE" means, as the context may require, a Revolving Note, a Swing Line Note, a Registered Note or a Term Note. "OBLIGATIONS" means all obligations (monetary or otherwise) of the Borrower and each other Obligor arising under or in connection with this Agreement and each other Loan Document, and Hedging Obligations owed to a Lender or an Affiliate thereof (or a Person that was a Lender or an Affiliate of a Lender at the time the applicable Rate Protection Agreement was entered into), unless the Lender or such Affiliate (or other Person) otherwise agrees. "OBLIGOR" means the Borrower or any other Person (other than the Administrative Agent or any Lender) obligated under any Loan Document. "ORGANIC DOCUMENT" means, relative to any Obligor, its certificate of incorporation, its by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized interests of Capital Stock. "PARTICIPANT" is defined in SECTION 10.11.2. "PBGC" means the Pension Benefit Guaranty Corporation and any successor entity. "PENSION PLAN" means a "pension plan", as such term is defined in SECTION 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in SECTION 4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is, -18- 26 along with the Borrower, a member of a Controlled Group, has or within the prior six years has had any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "PERCENTAGE" means, relative to any Lender, the applicable percentage relating to Term Loans or Revolving Loans, as the case may be, as set forth opposite its name on SCHEDULE III hereto under the applicable column heading or set forth in Lender Assignment Agreement(s) under the applicable column heading, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to SECTION 10.11.1. A Lender shall not have any Commitment to make Revolving Loans or Term Loans (as the case may be) if its percentage under the respective column heading is zero. "PERMITTED ARTAL INVESTOR GROUP" means ARTAL or any of its direct or indirect wholly-owned Subsidiaries and ARTAL Group S.A., a Luxembourg corporation or any of its direct or indirect wholly-owned Subsidiaries. "PERMITTED DISPOSITION" means a sale, disposition or other conveyance of assets by the Borrower or any of its Subsidiaries in accordance with the terms of CLAUSE (b) (other than as permitted by CLAUSE (a) or (c)) of SECTION 7.2.9. "PERMITTED RECEIVABLES TRANSACTION" means any transaction providing for the sale or financing of Accounts with customary limited recourse based on the collectability of the Accounts sold; PROVIDED, HOWEVER, that the expiration date, term, conditions and structure (including the legal and organizational structure of Receivables Co. and the restrictions imposed on its activities) of, and the documentation relating to, the Permitted Receivables Transaction must be on terms and conditions reasonably satisfactory to the Administrative Agent. "PERSON" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency, limited liability company or any other entity, whether acting in an individual, fiduciary or other capacity. "PLAN" means any Pension Plan or Welfare Plan. "PRESIDENT" is defined in the FIRST RECITAL. "PRO FORMA BALANCE SHEET" is defined in CLAUSE (b) of SECTION 5.1.7. "PURCHASE AGREEMENT" is defined in the FIRST RECITAL. "QUALIFIED ASSETS" is defined in CLAUSE (b) of SECTION 3.1.1. "QUARTERLY PAYMENT DATE" means the last day of each March, June, September and December, or, if any such day is not a Business Day, the next succeeding Business Day. "RATE PROTECTION AGREEMENT" means, collectively, any interest rate swap, cap, collar or similar agreement entered into by the Borrower under which the counterparty to such agreement -19- 27 is (or at the time such Rate Protection Agreement was entered into, was) a Lender or an Affiliate of a Lender. "RECEIVABLES CO." means any special purpose, bankruptcy-remote wholly-owned Subsidiary of the Borrower organized after the date hereof (or such other Person agreed to by the Administrative Agent) that purchases Accounts generated by the Borrower or any of its Subsidiaries in connection with the Permitted Receivables Transaction. "RECEIVABLES FACILITY OUTSTANDINGS" means, at any date of determination, with respect to the Permitted Receivables Transaction, the aggregate cash proceeds received by the Borrower or any of its Subsidiaries from the sale or financing of Accounts pursuant to the Permitted Receivables Transaction which are outstanding on the date of determination. "REFINANCING" means, the sale by public offering or private placement by the Borrower of the Refinancing Notes in order to refinance all or any portion of the then outstanding principal amount of the Subordinated Notes outstanding on the Effective Date or other Refinancing Notes in accordance with the terms of this Agreement. "REFINANCING NOTE INDENTURE" means, collectively, each indenture, if any, to be executed by the Borrower and a trustee to be named therein, pursuant to which the Refinancing Notes are issued and governed by, which Refinancing Note Indenture shall (i) contain subordination provisions that are no less favorable to the holders of "Senior Indebtedness", "Senior Debt" or terms of similar import as used in such Refinancing Note Indenture than the subordination provisions contained in the Indenture, (ii) not provide for any amortization (in whole or in part) of the Refinancing Notes prior to July 26, 2005, (iii) provide for accrued interest on the Refinancing Notes at a maximum rate per annum not in excess of the rate of interest then prevailing in the unsecured senior subordinated debt capital markets (as reasonably determined in good faith by the Administrative Agent) for companies comparable to the Borrower (based upon, INTER ALIA, historical and current financial performance, credit ratios and the industry in which the Borrower participates) at the time of the Refinancing, and (iv) contain such other terms and conditions which, taken as a whole, are comparable to those contained in indentures then prevailing in the unsecured senior subordinated debt capital markets (as reasonably determined in good faith by the Required Lenders) for companies comparable to the Borrower (based upon, INTER ALIA, historical and current financial performance, credit ratios and the industry in which the Borrower participates) at the time of the Refinancing, as such indenture may be amended, supplemented, amended and restated or otherwise modified pursuant to SECTION 7.2.10. "REFINANCING NOTES" means, collectively, the unsecured senior subordinated notes, if any, to be issued by the Borrower pursuant to the Refinancing Note Indenture in connection with a Refinancing of the Subordinated Notes outstanding on the Effective Date or other Refinancing Notes which Refinancing Notes shall not have any terms that are inconsistent with the Refinancing Note Indenture pursuant to which they were issued. "REFUNDED SWING LINE LOANS" is defined in CLAUSE (b) of SECTION 2.3.2. "REGISTER" is defined in CLAUSE (b) of SECTION 2.7. "REGISTERED NOTE" means a promissory note of the Borrower payable to the order of any Lender, substantially in the form of EXHIBIT A-4 hereto (as such promissory note may be -20- 28 amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Term Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof, in each case registered pursuant to SECTION 2.7. "REIMBURSEMENT OBLIGATION" is defined in SECTION 2.6.3. "RELEASE" means a "release", as such term is defined in CERCLA. "REQUIRED LENDERS" means, at any time, Lenders holding more than 50% of the Total Exposure Amount. "RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as in effect from time to time. "RESTRICTED PAYMENTS" is defined in SECTION 7.2.6. "REVOLVING LOAN" is defined in CLAUSE (a) of SECTION 2.1.2. "REVOLVING LOAN COMMITMENT" is defined in CLAUSE (a) of SECTION 2.1.2. "REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $350,000,000, as such amount may be reduced from time to time pursuant to SECTION 2.2. "REVOLVING LOAN COMMITMENT TERMINATION DATE" means the earliest of (a) November 15, 1998 (if the initial Loans have not been made on or prior to such date); (b) September 28, 2004; (c) the date on which the Revolving Loan Commitment Amount is terminated in full or reduced to zero pursuant to SECTION 2.2; and (d) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in CLAUSE (c) or (d), the Revolving Loan Commitments shall terminate automatically and without any further action. "REVOLVING LOAN LENDERS" means Lenders with a Revolving Loan Commitment. "REVOLVING NOTE" means a promissory note of the Borrower payable to any Lender, substantially in the form of EXHIBIT A-1 hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Revolving Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "RL PERCENTAGE" means, as to any Revolving Loan Lender, such Revolving Loan Lender's Percentage (in excess of zero) of the Revolving Loan Commitment Amount. -21- 29 "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. "SCOTIABANK" is defined in the PREAMBLE. "SEC" means the Securities and Exchange Commission. "SELLER" is defined in the FIRST RECITAL. "SHARES" is defined in the FIRST RECITAL. "SOLVENCY CERTIFICATE" means a certificate of an Authorized Officer of the Borrower, substantially in the form of EXHIBIT H hereto, delivered pursuant to SECTION 5.1.8. "STATED AMOUNT" of each Letter of Credit means the total amount available to be drawn under such Letter of Credit upon the issuance thereof. "STATED EXPIRY DATE" is defined in SECTION 2.6. "STATED MATURITY DATE" means September 28, 2004. "SUBORDINATED DEBT" means, as the context may require, (i) the unsecured Debt of the Borrower evidenced by the Subordinated Notes and (ii) to the extent permitted by the Required Lenders, any other unsecured Debt of the Borrower subordinated in right of payment to the Obligations pursuant to documentation containing maturities, amortization schedules, covenants, defaults, remedies, subordination provisions and other material terms in form and substance satisfactory to the Administrative Agent and Required Lenders. "SUBORDINATED GUARANTY" means, collectively, each guaranty, if any, executed from time to time by any Subsidiary of the Borrower pursuant to which the guarantor thereunder has any Contingent Liability with respect to any Subordinated Debt. "SUBORDINATED NOTE" means, as the context may require, (i) the 10 3/4% senior subordinated notes due 2006 issued under the Indenture and outstanding on the Effective Date and (ii) the Refinancing Notes, and collectively means all of the above notes, as, in each case, amended, supplemented, amended and restated or otherwise modified from time to time in accordance with SECTION 7.2.10. "SUBORDINATED NOTE INDENTURE" means, as the context may require, the Indenture and each Refinancing Note Indenture, and collectively means all of the above agreements and indentures, in each case, as such agreements or indentures may hereafter be amended, supplemented, restated or otherwise modified from time to time in accordance with CLAUSE (b) of SECTION 7.2.10. "SUBORDINATED NOTEHOLDER" means, at any time, any holder of a Subordinated Note. "SUBORDINATION PROVISIONS" is defined in SECTION 8.1.11. "SUBSIDIARY" means, with respect to any Person, any corporation, limited liability company, partnership or other entity of which more than 50% of the outstanding Capital Stock -22- 30 (or other ownership interest) having ordinary voting power to elect the board of directors, managers or other voting members of the governing body of such corporation, limited liability company, partnership or other entity (irrespective of whether at the time Capital Stock of any other class or classes of such corporation, limited liability company, partnership or other entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. Unless the context otherwise specifically requires, the term "Subsidiary" shall be a reference to a Subsidiary of the Borrower. "SWING LINE LENDER" means Scotiabank (or another Lender designated by Scotiabank with the consent of the Borrower, if such Lender agrees to be the Swing Line Lender hereunder), in such Person's capacity as the maker of Swing Line Loans. "SWING LINE LOAN" is defined in CLAUSE (b) of SECTION 2.1.2. "SWING LINE LOAN COMMITMENT" means, with respect to the Swing Line Lender, the Swing Line Lender's obligation pursuant to CLAUSE (b) of SECTION 2.1.2 to make Swing Line Loans and, with respect to each Lender with a Commitment to make Revolving Loans (other than the Swing Line Lender), such Lender's obligation to participate in Swing Line Loans pursuant to SECTION 2.3.2. "SWING LINE LOAN COMMITMENT AMOUNT" means, on any date, $20,000,000, as such amount may be reduced from time to time pursuant to SECTION 2.2. "SWING LINE NOTE" means a promissory note of the Borrower payable to the Swing Line Lender, substantially in the form of EXHIBIT A-3 hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to the Swing Line Lender resulting from outstanding Swing Line Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "SYNDICATION AGENT" is defined in the PREAMBLE. "TAXES" is defined in SECTION 4.6. "TERM LOAN" is defined in SECTION 2.1.1. "TERM LOAN COMMITMENT" is defined in SECTION 2.1.1. "TERM LOAN COMMITMENT AMOUNT" means $350,000,000. "TERM LOAN COMMITMENT TERMINATION DATE" means the earlier of (a) November 15, 1998 (if the Term Loans have not been made on or prior to such date); (b) the Closing Date (immediately after the making of the Term Loans on such date); or -23- 31 (c) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in CLAUSE (b) or (c), the Term Loan Commitments shall terminate automatically and without any further action. "TERM NOTE" means each promissory note of the Borrower payable to the order of any Lender, substantially in the form of EXHIBIT A-2 hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Term Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "TOTAL EXPOSURE AMOUNT" means, on any date of determination, the then outstanding principal amount of all Term Loans and the then effective Revolving Loan Commitment Amount (or in the event the Revolving Loan Commitments are no longer in effect, the then outstanding principal amount of all Revolving Loans). "TRANCHE" means, as the context may require, the Loans constituting Term Loans, Swing Line Loans or Revolving Loans. "TRUE AND ACCURATE" means, as to any information, that such information is true and accurate in every material respect on the date as of which such information is dated or certified and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. "TYPE" means, relative to any Loan, the portion thereof, if any, being maintained as a Base Rate Loan or a LIBO Rate Loan. "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York. "UNITED STATES" or "U.S." means the United States of America, its fifty States and the District of Columbia. "U.S. SUBSIDIARIES" means each Subsidiary that is organized under the laws of the United States or a State thereof. "WELFARE PLAN" means a "WELFARE PLAN", as such term is defined in section 3(1) of ERISA, and to which the Borrower has any liability. "WHOLLY-OWNED SUBSIDIARY" shall mean, with respect to any Person, any Subsidiary of such Person all of the Capital Stock (and all rights and options to purchase such Capital Stock) of which, other than directors' qualifying shares, are owned, beneficially and of record, by such Person and/or one or more wholly-owned Subsidiaries of such Person. SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and in each other Loan Document, notice and -24- 32 other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under SECTION 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles ("GAAP") as in effect as of December 31, 1997. ARTICLE II COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES, NOTES AND LETTERS OF CREDIT SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of this Agreement (including ARTICLE V), (a) each Lender severally agrees to make Loans (other than Swing Line Loans) pursuant to the Commitments and the Swing Line Lender agrees to make Swing Line Loans pursuant to the Swing Line Loan Commitment in each case as described in this ARTICLE II; and (b) each Issuer severally agrees that it will issue Letters of Credit pursuant to SECTION 2.1.3, and each Revolving Loan Lender severally agrees that it will purchase participation interests in such Letters of Credit pursuant to SECTION 2.6.1. SECTION 2.1.1. TERM LOAN COMMITMENTS. In a single Borrowing on the Closing Date (which shall be a Business Day) occurring on or prior to the Term Loan Commitment Termination Date, each Lender with a commitment to make Term Loans will make term loans (relative to such Lender, its "TERM LOANS") to the Borrower in an amount equal to such Lender's Percentage of the Term Loan Commitment Amount (with the commitment of each such applicable Lender described in this Section herein referred to as its "TERM LOAN COMMITMENT"). No amounts paid or prepaid with respect to Term Loans may be reborrowed. SECTION 2.1.2. REVOLVING LOAN COMMITMENT AND SWING LINE LOAN COMMITMENT. The Revolving Loans and Swing Line Loans will be made as set forth below. (a) From time to time on any Business Day occurring concurrently with (or after) the making of the Term Loans but prior to the Revolving Loan Commitment Termination Date, each Revolving Loan Lender will make loans (relative to such Revolving Loan Lender, its "REVOLVING LOANS") to the Borrower equal to such Revolving Loan Lender's -25- 33 RL Percentage of the aggregate amount of the Borrowing of the Revolving Loans requested by the Borrower to be made on such day. The Commitment of each Revolving Loan Lender described in this clause is herein referred to as its "REVOLVING LOAN COMMITMENT". On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow the Revolving Loans. (b) From time to time on any Business Day occurring concurrently with (or after) the making of the Term Loans, but prior to the Revolving Loan Commitment Termination Date, the Swing Line Lender will make Loans (relative to the Swing Line Lender, its "SWING LINE LOANS") to the Borrower equal to the principal amount of the Swing Line Loans requested by the Borrower. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow such Swing Line Loans. SECTION 2.1.3. LETTER OF CREDIT COMMITMENT. From time to time on any Business Day occurring from and after the Closing Date but prior to the Revolving Loan Commitment Termination Date, the Issuer will (a) issue one or more standby (including direct pay) or documentary letters of credit (including the Existing Letters of Credit, individually referred to as a "LETTER OF CREDIT" and collectively referred to as the "LETTERS OF CREDIT") for the account of the Borrower or certain of its Subsidiaries, as described in SECTION 2.6, in the Stated Amount requested by the Borrower on such day; or (b) extend the Stated Expiry Date of an existing standby (including direct pay) Letter of Credit previously issued hereunder to a date not later than the earlier of (x) the Revolving Loan Commitment Termination Date and (y) one year from the date of such extension. SECTION 2.1.4. LENDERS NOT PERMITTED OR REQUIRED TO MAKE THE LOANS. No Lender shall be permitted or required to, and the Borrower shall not request that any Lender, make (a) any Term Loan if, after giving effect thereto, the aggregate original principal amount of all the Term Loans (i) of all Lenders would exceed the Term Loan Commitment Amount; or (ii) of such Lender would exceed its Percentage of the Term Loan Commitment Amount; (b) any Revolving Loan or Swing Line Loan if, after giving effect thereto, the aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans (i) of all the Revolving Loan Lenders, together with the aggregate amount of all Letter of Credit Outstandings, would exceed the Revolving Loan Commitment Amount; or (ii) of such Revolving Loan Lender (other than the Swing Line Lender), together with such Revolving Loan Lender's RL Percentage of the aggregate -26- 34 amount of all Letter of Credit Outstandings, would exceed such Revolving Loan Lender's RL Percentage of the Revolving Loan Commitment Amount; or (c) any Swing Line Loan if after giving effect to the making of such Swing Line Loan, the outstanding principal amount of all Swing Line Loans would exceed the then existing Swing Line Loan Commitment Amount. SECTION 2.1.5. ISSUER NOT PERMITTED OR REQUIRED TO ISSUE LETTERS OF CREDIT. No Issuer shall be permitted or required to issue any Letter of Credit if, after giving effect thereto, (a) the aggregate amount of all Letter of Credit Outstandings would exceed the Letter of Credit Commitment Amount or (b) the sum of the aggregate amount of all Letter of Credit Outstandings plus the aggregate principal amount of all Revolving Loans and Swing Line Loans then outstanding would exceed the Revolving Loan Commitment Amount. SECTION 2.2. REDUCTION OF THE COMMITMENT AMOUNTS. The Commitment Amounts are subject to reductions from time to time pursuant to this SECTION 2.2. SECTION 2.2.1. OPTIONAL. The Borrower may, from time to time on any Business Day occurring after the Closing Date, voluntarily reduce the Swing Line Loan Commitment Amount, the Letter of Credit Commitment Amount or the Revolving Loan Commitment Amount; PROVIDED, HOWEVER, that all such reductions shall require at least three Business Days' prior notice to the Administrative Agent and be permanent, and any partial reduction of any Commitment Amount shall be in a minimum amount of $5,000,000 and in an integral multiple of $1,000,000. SECTION 2.2.2. MANDATORY. The Revolving Loan Commitment Amount shall be reduced as set forth below. (a) Following the prepayment in full of the Term Loans, the Revolving Loan Commitment Amount shall, without any further action, automatically and permanently be reduced on the date the Term Loans would otherwise have been required to be prepaid with any Excess Net Disposition Proceeds in an amount equal to the amount by which the Term Loans would otherwise be required to be prepaid if Term Loans had been outstanding; PROVIDED, that (notwithstanding the foregoing), the Revolving Loan Commitment Amount shall not be reduced to less than $200,000,000 as a result of the application of Excess Net Disposition Proceeds. (b) Any reduction of the Revolving Loan Commitment Amount (whether pursuant to SECTION 2.2.1 or this Section) which reduces the Revolving Loan Commitment Amount below the sum of (i) the Swing Line Loan Commitment Amount and (ii) the Letter of Credit Commitment Amount shall result in an automatic and corresponding reduction of the Swing Line Loan Commitment Amount and/or Letter of Credit Commitment Amount (as directed by the Borrower in a notice to the Administrative Agent) to an aggregate amount not in excess of the Revolving Loan Commitment Amount, as so reduced, without any further action on the part of the Swing Line Lender or the Issuer. SECTION 2.3. BORROWING PROCEDURES AND FUNDING MAINTENANCE. Loans shall be made by the Lenders in accordance with this Section. -27- 35 SECTION 2.3.1. TERM LOANS AND REVOLVING LOANS. By delivering a Borrowing Request to the Administrative Agent on or before 1:00 p.m., New York time, on a Business Day, the Borrower may from time to time irrevocably request, on not less than one (in the case of Base Rate Loans) and three (in the case of LIBO Rate Loans) nor more than (in each case) five Business Days' notice, that a Borrowing be made, in the case of LIBO Rate Loans, in a minimum amount of $5,000,000 and an integral multiple of $1,000,000, and in the case of Base Rate Loans, in a minimum amount of $1,000,000 and an integral multiple thereof, or, in either case, in the unused amount of the applicable Commitment. On the terms and subject to the conditions of this Agreement, each Borrowing shall be comprised of the type of Loans, and shall be made on the Business Day, specified in such Borrowing Request. On or before 11:00 a.m., New York time, on such Business Day each Lender shall deposit with the Administrative Agent same day funds in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Administrative Agent shall make such funds available to the Borrower by wire transfer to the accounts the Borrower shall have specified in its Borrowing Request. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. SECTION 2.3.2. SWING LINE LOANS. (a) By telephonic notice, promptly followed (within three Business Days) by the delivery of a confirming Borrowing Request, to the Swing Line Lender on or before 12:00 noon (or later, if agreed to by the Swing Line Lender), New York time, on a Business Day, the Borrower may from time to time irrevocably request that Swing Line Loans be made by the Swing Line Lender in an aggregate minimum principal amount of $200,000 and an integral multiple of $100,000. Each request by the Borrower for a Swing Line Loan shall constitute a representation and warranty by the Borrower that on the date of such request and (if different) the date of the making of the Swing Line Loan, both immediately before and after giving effect to such Swing Line Loan and the application of the proceeds thereof, the statements made in SECTION 5.2.1 are true and correct. All Swing Line Loans shall be made as Base Rate Loans and shall not be entitled to be converted into LIBO Rate Loans. The proceeds of each Swing Line Loan shall be made available by the Swing Line Lender, by its close of business on the Business Day telephonic notice is received by it as provided in the preceding sentences, to the Borrower by wire transfer to the accounts the Borrower shall have specified in its notice therefor. (b) If (i) any Swing Line Loan shall be outstanding for more than four full Business Days or (ii) after giving effect to any request for a Swing Line Loan or a Revolving Loan the aggregate principal amount of Revolving Loans and Swing Line Loans outstanding to the Swing Line Lender, together with the Swing Line Lender's Percentage of all Letter of Credit Outstandings, would exceed the Swing Line Lender's Percentage of the Revolving Loan Commitment Amount, the Swing Line Lender, at any time in its sole and absolute discretion, may request each Revolving Loan Lender, and each such Revolving Loan Lender, including the Swing Line Lender hereby agrees, to make a Revolving Loan (which shall always be initially funded as a Base Rate Loan) in an amount equal to such Lender's Percentage of the amount of the Swing Line Loans ("REFUNDED SWING LINE LOANS") outstanding on the date such notice is given. On or before 11:00 a.m. (New York time) on the first Business Day following receipt by each Revolving Loan Lender of a request to make Revolving Loans as provided in the preceding sentence, each Revolving Loan Lender (other than the Swing Line Lender) shall deposit in an account specified by the Administrative 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 -28- 36 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 Percentage of the Refunded Swing Line Loans shall be deemed to be paid. Upon the making of any Revolving Loan pursuant to this clause, the amount so funded shall become due under such Revolving Loan Lender's Revolving Note and shall no longer be owed under the Swing Line Note. Each Revolving Loan 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 (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Loan 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; (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any other Obligor; (iv) the acceleration or maturity of any Loans or the termination of the Revolving Loan Commitment 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. (c) In the event that (i) the Borrower or any Subsidiary is subject to any bankruptcy or insolvency proceedings as provided in SECTION 8.1.9 or (ii) the Swing Line Lender otherwise requests, each Revolving Loan Lender shall acquire without recourse or warranty an undivided participation interest equal to such Revolving Loan Lender's Percentage of any Swing Line Loan otherwise required to be repaid by such Revolving Loan Lender pursuant to the preceding clause by paying to the Swing Line Lender on the date on which such Revolving Loan 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 Revolving Loan Lender's Percentage of such Swing Line Loan, and no Revolving Loans shall be made by such Revolving Loan Lender pursuant to the preceding clause. From and after the date on which any Revolving Loan Lender purchases an undivided participation interest in a Swing Line Loan pursuant to this clause, the Swing Line Lender shall distribute to such Revolving Loan Lender (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Revolving Loan 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 Revolving Loan Lender shall return to the Swing Line Lender the portion of any amounts which such Revolving Loan Lender had received from the Swing Line Lender in like funds. (d) Notwithstanding anything herein to the contrary, the Swing Line Lender shall not be obligated to make any Swing Line Loans if it has elected after the occurrence of a Default not to make Swing Line Loans and has notified the Borrower in writing or by telephone of such election. The Swing Line Lender shall promptly give notice to the Lenders of such election not to make Swing Line Loans. SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a Continuation/Conversion Notice to the Administrative Agent on or before 1:00 p.m., New York time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than one (in the case of a conversion of LIBO Rate Loans to Base Rate Loans) and three (in the case of a continuation of LIBO Rate Loans or a conversion of Base Rate Loans into LIBO Rate Loans) nor more than (in each case) five Business Days' notice that all, or any portion in an aggregate minimum amount of $5,000,000 and an integral multiple of $1,000,000, in the case of the -29- 37 continuation of, or conversion into, LIBO Rate Loans, or an aggregate minimum amount of $1,000,000 and an integral multiple thereof, in the case of the conversion into Base Rate Loans, (other than Swing Line Loans as provided in CLAUSE (a) of SECTION 2.3.2) be, in the case of Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three Business Days before the last day of the then current Interest Period with respect thereto, such LIBO Rate Loan shall, on such last day, automatically convert to a Base Rate Loan); PROVIDED, HOWEVER, that (x) each such conversion or continuation shall be pro rated among the applicable outstanding Loans of the relevant Lenders, and (y) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, LIBO Rate Loans when any Event of Default has occurred and is continuing. SECTION 2.5. FUNDING. Each Lender may, if it so elects, fulfill its obligation to make, continue or convert LIBO Rate Loans hereunder by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to make or maintain such LIBO Rate Loan, so long as such action does not result in increased costs to the Borrower; PROVIDED, HOWEVER, that such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrower to repay such LIBO Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, Affiliate or international banking facility; and PROVIDED, FURTHER, HOWEVER, that such Lender shall cause such foreign branch, Affiliate or international banking facility to comply with the applicable provisions of CLAUSE (b) of SECTION 4.6 with respect to such LIBO Rate Loan. In addition, the Borrower hereby consents and agrees that, for purposes of any determination to be made for purposes of SECTION 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's interbank Eurodollar market. SECTION 2.6. ISSUANCE PROCEDURES. By delivering to the Administrative Agent an Issuance Request on or before 1:00 p.m., New York time, on a Business Day, the Borrower may, from time to time irrevocably request, on not less than three nor more than ten Business Days' notice (or such other notice as may be acceptable to the Issuer in its sole discretion), in the case of an initial issuance of a Letter of Credit, and not less than three nor more than ten Business Days' notice prior to the then existing Stated Expiry Date of a Letter of Credit (unless a shorter or longer notice period is acceptable to the Issuer in its sole discretion), in the case of a request for the extension of the Stated Expiry Date of a Letter of Credit, that the Issuer issue, or extend the Stated Expiry Date of, as the case may be, an irrevocable Letter of Credit for the Borrower's account or for the account of any wholly-owned U.S. Subsidiary of the Borrower, in such form as may be requested by the Borrower and approved by the Issuer, solely for the purposes described in SECTION 7.1.5. Notwithstanding anything to the contrary contained herein or in any separate application for any Letter of Credit, the Borrower hereby acknowledges and agrees that it shall be obligated to reimburse the Issuer upon each Disbursement of a Letter of Credit, and it shall be deemed to be the obligor for purposes of each Letter of Credit issued hereunder (whether the account party on such Letter of Credit is the Borrower or a Subsidiary of the Borrower). Upon receipt of an Issuance Request, the Administrative Agent shall promptly notify the Issuer. Each Letter of Credit shall by its terms be stated to expire on a date (its "STATED EXPIRY DATE") no later than the earlier to occur of (i) the Revolving Loan Commitment Termination Date or (ii) in the case of standby (including direct pay) Letters of Credit, one year from the date of its issuance and, in the case of documentary Letters of Credit, 180 days from the date of its issuance. The -30- 38 Issuer will make available to the beneficiary thereof the original of each Letter of Credit which it issues hereunder. SECTION 2.6.1. OTHER LENDERS' PARTICIPATION. Upon the issuance of each Letter of Credit issued by the Issuer pursuant hereto, and without further action, each Revolving Loan Lender (other than the Issuer) shall be deemed to have irrevocably purchased from the Issuer, to the extent of its RL Percentage, and the Issuer shall be deemed to have irrevocably granted and sold to such Revolving Loan Lender, a participation interest in such Letter of Credit (including the Contingent Liability and any Reimbursement Obligation and all rights with respect thereto), and such Revolving Loan Lender shall, to the extent of its RL Percentage, be responsible for reimbursing promptly (and in any event within one Business Day) the Issuer for Reimbursement Obligations which have not been reimbursed by the Borrower in accordance with SECTION 2.6.3. In addition, such Revolving Loan Lender shall, to the extent of its RL Percentage, be entitled to receive a ratable portion of the Letter of Credit fees payable pursuant to SECTION 3.3.3 with respect to each Letter of Credit and of interest payable pursuant to SECTION 3.2 with respect to any Reimbursement Obligation. To the extent that any Revolving Loan Lender has reimbursed the Issuer for a Disbursement as required by this Section, such Revolving Loan Lender shall be entitled to receive its ratable portion of any amounts subsequently received (from the Borrower or otherwise) in respect of such Disbursement. SECTION 2.6.2. DISBURSEMENTS; CONVERSION TO REVOLVING LOANS. The Issuer will notify the Borrower and the Administrative Agent promptly of the presentment for payment of any Letter of Credit issued by the Issuer, together with notice of the date (the "DISBURSEMENT DATE") such payment shall be made (each such payment, a "DISBURSEMENT"). Subject to the terms and provisions of such Letter of Credit and this Agreement, the Issuer shall make such payment to the beneficiary (or its designee) of such Letter of Credit. Prior to 12:00 noon, New York time, on the first Business Day following the Disbursement Date (the "DISBURSEMENT DUE DATE"), the Borrower will reimburse the Administrative Agent, for the account of the Issuer, for all amounts which the Issuer has disbursed under such Letter of Credit, together with interest thereon at the rate per annum otherwise applicable to Revolving Loans (made as Base Rate Loans) from and including the Disbursement Date to but excluding the Disbursement Due Date and, thereafter (unless such Disbursement is converted into a Base Rate Loan on the Disbursement Due Date), at a rate per annum equal to the rate per annum then in effect with respect to overdue Revolving Loans (made as Base Rate Loans) pursuant to SECTION 3.2.2 for the period from the Disbursement Due Date through the date of such reimbursement; PROVIDED, HOWEVER, that, if no Default shall have then occurred and be continuing, unless the Borrower has notified the Administrative Agent no later than one Business Day prior to the Disbursement Due Date that it will reimburse the Issuer for the applicable Disbursement, then the amount of the Disbursement shall be deemed to be a Revolving Loan constituting a Base Rate Loan and following the giving of notice thereof by the Administrative Agent to the Lenders, each Revolving Loan Lender (other than the Issuer) will deliver to the Issuer on the Disbursement Due Date immediately available funds in an amount equal to such Revolving Loan Lender's RL Percentage of such Revolving Loan. Each conversion of Disbursement amounts into Revolving Loans shall constitute a representation and warranty by the Borrower that on the date of the making of such Revolving Loan all of the statements set forth in SECTION 5.2.1 are true and correct. SECTION 2.6.3. REIMBURSEMENT. The obligation (a "REIMBURSEMENT OBLIGATION") of the Borrower under SECTION 2.6.2 to reimburse the Issuer with respect to each Disbursement (including interest thereon) not converted into a Base Rate Loan pursuant to SECTION 2.6.2, and, -31- 39 upon the failure of the Borrower to reimburse the Issuer and the giving of notice thereof by the Administrative Agent to the Lenders, each Revolving Loan Lender's obligation under SECTION 2.6.1 to reimburse the Issuer or fund its RL Percentage of any Disbursement converted into a Base Rate Loan, shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or such Lender, as the case may be, may have or have had against the Issuer or any such Lender, including any defense based upon the failure of any Disbursement to conform to the terms of the applicable Letter of Credit (if, in the Issuer's good faith opinion, such Disbursement is determined to be appropriate) or any non-application or misapplication by the beneficiary of the proceeds of such Letter of Credit; PROVIDED, HOWEVER, that after paying in full its Reimbursement Obligation hereunder, nothing herein shall adversely affect the right of the Borrower or such Lender, as the case may be, to commence any proceeding against the Issuer for any wrongful Disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of the Issuer. SECTION 2.6.4. DEEMED DISBURSEMENTS. Upon the occurrence and during the continuation of any Event of Default of the type described in SECTION 8.1.9 or, with notice from the Administrative Agent acting at the direction of the Required Lenders, upon the occurrence and during the continuation of any other Event of Default, (a) an amount equal to that portion of all Letter of Credit Outstandings attributable to the then aggregate amount which is undrawn and available under all Letters of Credit issued and outstanding shall, without demand upon or notice to the Borrower or any other Person, be deemed to have been paid or disbursed by the Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed); and (b) upon notification by the Administrative Agent to the Borrower of its obligations under this Section, the Borrower shall be immediately obligated to reimburse the Issuer for the amount deemed to have been so paid or disbursed by the Issuer. Any amounts so payable by the Borrower pursuant to this Section shall be deposited in cash with the Administrative Agent and held as collateral security for the Obligations in connection with the Letters of Credit issued by the Issuer. At such time when the Events of Default giving rise to the deemed disbursements hereunder shall have been cured or waived, the Administrative Agent shall return to the Borrower all amounts then on deposit with the Administrative Agent pursuant to this Section, together with accrued interest at the Federal Funds Rate, which have not been applied to the satisfaction of such Obligations. SECTION 2.6.5. NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower and, to the extent set forth in SECTION 2.6.1, each Revolving Loan Lender, shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of its own gross negligence or willful misconduct) shall not be responsible for: (a) the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; -32- 40 (b) the form, validity, sufficiency, accuracy, genuineness or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or the proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason; (c) failure of the beneficiary to comply fully with conditions required in order to demand payment under a Letter of Credit; (d) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise; or (e) any loss or delay in the transmission or otherwise of any document or draft required in order to make a Disbursement under a Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any of the rights or powers granted to the Issuer or any Revolving Loan Lender hereunder. In furtherance and extension and not in limitation or derogation of any of the foregoing, any action taken or omitted to be taken by the Issuer in good faith (and not constituting gross negligence or willful misconduct) shall be binding upon the Borrower, each Obligor and each such Lender, and shall not put the Issuer under any resulting liability to the Borrower, any Obligor or any such Lender, as the case may be. SECTION 2.6.6. DEEMED ISSUANCE OF EXISTING LETTERS OF CREDIT. The parties hereto acknowledge and agree that all Existing Letters of Credit shall, for all purposes hereof, be deemed to be Letters of Credit issued hereunder on the Closing Date. SECTION 2.7. REGISTER; NOTES. (a) Each Lender may maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. In the case of a Lender that does not request, pursuant to CLAUSE (b)(ii) below, execution and delivery of a Note evidencing the Loans made by such Lender to the Borrower, such account or accounts shall, to the extent not inconsistent with the notations made by the Administrative Agent in the Register, be conclusive and binding on the Borrower absent manifest error; PROVIDED, HOWEVER, that the failure of any Lender to maintain such account or accounts shall not limit or otherwise affect any Obligations of the Borrower or any other Obligor. (b)(i) The Borrower hereby designates the Administrative Agent to serve as the Borrower's agent, solely for the purpose of this CLAUSE (b), to maintain a register (the "REGISTER") on which the Administrative Agent will record each Lender's Commitment, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and annexed to which the Administrative Agent shall retain a copy of each Lender Assignment Agreement delivered to the Administrative Agent pursuant to SECTION 10.11.1. Failure to make any recordation, or any error in such recordation, shall not affect the Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person in whose -33- 41 name a Loan (and as provided in CLAUSE (ii) the Note evidencing such Loan, if any) is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. A Lender's Commitment and the Loans made pursuant thereto may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer in the Register. Any assignment or transfer of a Lender's Commitment or the Loans made pursuant thereto shall be registered in the Register only upon delivery to the Administrative Agent of a Lender Assignment Agreement duly executed by the assignor thereof and the compliance by the parties thereto with the other requirements of SECTION 10.11.1. No assignment or transfer of a Lender's Commitment or the Loans made pursuant thereto shall be effective unless such assignment or transfer shall have been recorded in the Register by the Administrative Agent as provided in this Section. (ii) The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender, as applicable, a Note of the applicable Tranche evidencing the Loans made by such Lender. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender's Notes (or on any continuation of such grid), which notations, if made, shall evidence, INTER ALIA, the date of, the outstanding principal amount of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall, to the extent not inconsistent with the notations made by the Administrative Agent in the Register, be conclusive and binding on the Borrower absent manifest error; PROVIDED, HOWEVER, that the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of the Borrower or any other Obligor. The Loans evidenced by any Registered Note and interest thereon shall at all times (including after assignment pursuant to SECTION 10.11.1) be payable to the order of the payee named therein and its registered assigns. A Registered Note and the obligation evidenced thereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of such Registered Note and the obligation evidenced thereby in the Register (and each Registered Note shall expressly so provide). Any assignment or transfer of all or part of an obligation evidenced by a Registered Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Registered Note evidencing such obligation, accompanied by a Lender Assignment Agreement duly executed by the assignor thereof and the compliance by the parties thereto with the other requirements of SECTION 10.11.1, and thereupon, if requested by the assignee, one or more new Notes shall be issued to the designated assignee and the old Registered Note shall be returned by the Administrative Agent to the Borrower marked "exchanged". No assignment of a Registered Note and the obligation evidenced thereby shall be effective unless it shall have been recorded in the Register by the Administrative Agent as provided in this Section. -34- 42 ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION 3.1. REPAYMENTS AND PREPAYMENTS; APPLICATION. SECTION 3.1.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date therefor. Prior thereto, the Borrower (a) may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any (i) Loans (other than Swing Line Loans), PROVIDED, HOWEVER, that (A) any such prepayment of the Term Loans shall be made PRO RATA among Term Loans of the same type and if applicable, having the same Interest Period of all Lenders that have made such Term Loans, and any such prepayment of Revolving Loans shall be made PRO RATA among the Revolving Loans of the same type and, if applicable, having the same Interest Period of all Lenders that have made such Revolving Loans; (B) the Borrower shall comply with SECTION 4.4 in the event that any LIBO Rate Loan is prepaid on any day other than the last day of the Interest Period for such Loan; (C) all such voluntary prepayments shall require at least three but no more than five Business Days' prior written notice to the Administrative Agent; and (D) all such voluntary partial prepayments shall be, in the case of LIBO Rate Loans, in an aggregate minimum amount of $5,000,000 and an integral multiple of $1,000,000 and, in the case of Base Rate Loans, in an aggregate minimum amount of $1,000,000 and an integral multiple of $500,000; or (ii) Swing Line Loans, PROVIDED that all such voluntary prepayments shall require prior telephonic notice to the Swing Line Lender on or before 1:00 p.m., New York time, on the day of such prepayment (such notice to be confirmed in writing within 24 hours thereafter); (b) shall, no later than one Business Day following the receipt of any Net Disposition Proceeds (exclusive of Net Disposition Proceeds received in connection with the disposition of assets of President and its Subsidiaries in an amount not to exceed $60,000,000 over the term of this Agreement) in excess of $25,000,000 ("EXCESS NET DISPOSITION PROCEEDS") in any Fiscal Year, subject to the following proviso, make a mandatory prepayment of the Term Loans in an amount equal to 100% of such Excess Net Disposition Proceeds, to be applied as set forth in SECTION 3.1.2; PROVIDED, that, at the option of the Borrower and so long as no Default shall have occurred and be continuing -35- 43 or would result therefrom, the Borrower may use or cause the appropriate Subsidiary to use the Excess Net Disposition Proceeds to purchase assets useful in the business of the Borrower and its Subsidiaries or to purchase a majority controlling interest in a Person owning such assets or to increase any such controlling interest already maintained by it (with such assets or interests collectively referred to as "QUALIFIED ASSETS") within 18 months after the consummation (and with the Net Disposition Proceeds) of such sale, conveyance or disposition. If and to the extent that the Borrower has elected to reinvest Excess Net Disposition Proceeds as permitted above, then on the date which is 18 months after the relevant sale, conveyance or disposition, the Borrower shall deliver to the Administrative Agent, for application in accordance with this clause and SECTION 3.1.2, an amount equal to the remaining unused Excess Net Disposition Proceeds; (c) shall, on each date when any reduction in the Revolving Loan Commitment Amount shall become effective, including pursuant to SECTION 2.2, make a mandatory prepayment of Revolving Loans and (if necessary) Swing Line Loans, and (if necessary) deposit with the Administrative Agent cash collateral for Letter of Credit Outstandings in an aggregate amount equal to the excess, if any, of the aggregate outstanding principal amount of all Revolving Loans, Swing Line Loans and Letters of Credit Outstanding over the Revolving Loan Commitment Amount as so reduced; (d) shall, on the Stated Maturity Date and on each Quarterly Payment Date occurring on or during any period set forth below, make a scheduled repayment of the aggregate outstanding principal amount of all Term Loans in an amount equal to the amount set forth below opposite the Stated Maturity Date or such Quarterly Payment Date (as such amounts may have otherwise been reduced pursuant to this Agreement), as applicable:
Principal Period Amount ------ ------ 03/31/99 through (and including) 12/31/99 $8,750,000 03/31/00 through (and including) 12/31/00 $8,750,000 03/31/01 through (and including) 12/31/01 $13,125,000 03/31/02 through (and including) 12/31/02 $17,500,000 03/31/03 through (and including) 12/31/03 $21,875,000 03/31/04 through (and including) 06/30/04 $17,500,000
-36- 44
Stated Maturity Date for Term Loans $35,000,000 or the then outstanding principal amount of all Term Loans, if different; and
(e) shall, immediately upon any acceleration of the Stated Maturity Date of any Loans or Obligations pursuant to SECTION 8.2 or SECTION 8.3, repay all Loans and provide the Administrative Agent with cash collateral in an amount equal to the Letter of Credit Outstandings, unless, pursuant to SECTION 8.3, only a portion of all Loans and Obligations are so accelerated (in which case the portion so accelerated shall be so prepaid or cash collateralized with the Administrative Agent). Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by SECTION 4.4. No prepayment of principal of any Revolving Loans or Swing Line Loans pursuant to CLAUSE (a) of SECTION 3.1.1 shall cause a reduction in the Revolving Loan Commitment Amount or the Swing Line Loan Commitment Amount, as the case may be. SECTION 3.1.2. APPLICATION. (a) Subject to CLAUSE (b), each prepayment or repayment of the principal of the Loans shall be applied, to the extent of such prepayment or repayment, FIRST, to the principal amount thereof being maintained as Base Rate Loans, and SECOND, to the principal amount thereof being maintained as LIBO Rate Loans. (b) Each voluntary prepayment of Term Loans and each prepayment of Term Loans made pursuant to CLAUSE (b) of SECTION 3.1.1 shall be applied to the remaining Term Loan amortization payments required pursuant to CLAUSE (d) of SECTION 3.1.1, PRO RATA in accordance with the amount of each such remaining Term Loan amortization payment, until all such Term Loans have been paid in full. SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal amount of Loans shall accrue and be payable in accordance with this SECTION 3.2. SECTION 3.2.1. RATES. Pursuant to an appropriately delivered Borrowing Request or Continuation/Conversion Notice, the Borrower may elect that Loans comprising a Borrowing accrue interest at a rate per annum: (a) with respect to Revolving Loans and Term Loans, (i) on that portion maintained from time to time as a Base Rate Loan, equal to the sum of the Alternate Base Rate from time to time in effect plus the Applicable Margin; and (ii) on that portion maintained as a LIBO Rate Loan, during each Interest Period applicable thereto, equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin; and -37- 45 (b) with respect to Swing Line Loans, equal to the sum of the Alternate Base Rate from time to time in effect plus the Applicable Margin payable for Revolving Loans that are Base Rate Loans. All LIBO Rate Loans shall bear interest from and including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such LIBO Rate Loan. SECTION 3.2.2. POST-MATURITY RATES. After the date any principal amount of any Loan shall have become due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise), or any other monetary Obligation (other than overdue Reimbursement Obligations which shall bear interest as provided in SECTION 2.6.2) of the Borrower shall have become due and payable, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to (a) in the case of any overdue principal amount of Loans, overdue interest thereon, overdue commitment fees or other overdue amounts owing in respect of Loans or other obligations (or the related Commitments) under a particular Tranche, the rate that would otherwise be applicable to Base Rate Loans under such Tranche pursuant to SECTION 3.2.1 plus 2%; and (b) in the case of overdue monetary Obligations (other than as described in CLAUSE (a)), the Alternate Base Rate plus 2%. SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be payable, without duplication: (a) on the Stated Maturity Date therefor; (b) on the date of any payment or prepayment of the Term Loans, in whole or in part, of principal outstanding on such Loan; (c) with respect to Base Rate Loans, on each Quarterly Payment Date; (d) with respect to LIBO Rate Loans, the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, on the third month anniversary of the first day of such Interest Period); (e) with respect to any Base Rate Loans converted into LIBO Rate Loans on a day when interest would not otherwise have been payable pursuant to CLAUSE (c), on the date of such conversion; and (f) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to SECTION 8.2 or SECTION 8.3, immediately upon such acceleration. Interest accrued on Loans, Reimbursement Obligations or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand. -38- 46 SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in this SECTION 3.3. All such fees shall be non-refundable. SECTION 3.3.1. COMMITMENT FEE. The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Loan Lender, for the period (including any portion thereof when any of the Revolving Loan Lender's Commitments are suspended by reason of the Borrower's inability to satisfy any condition of ARTICLE V) commencing on the Effective Date and continuing through the Revolving Loan Commitment Termination Date, a commitment fee at the rate of the Applicable Commitment Fee Margin on such Revolving Loan Lender's RL Percentage of the average daily unused portion of the Revolving Loan Commitment Amount (net of Letter of Credit Outstandings). Such commitment fees shall be payable by the Borrower in arrears on each Quarterly Payment Date and on the Revolving Loan Commitment Termination Date. The making of Swing Line Loans by the Swing Line Lender shall constitute the usage of the Revolving Loan Commitment with respect to the Swing Line Lender only and the commitment fees to be paid by the Borrower to the Lenders (other than the Swing Line Lender) shall be calculated and paid accordingly. SECTION 3.3.2. ADMINISTRATIVE AGENT'S FEE. The Borrower agrees to pay to the Administrative Agent, for its own account, the non-refundable fees in the amounts and on the dates set forth in the Fee Letter. SECTION 3.3.3. LETTER OF CREDIT FEE. The Borrower agrees to pay to the Administrative Agent, for the PRO RATA account of the Issuer and each other Revolving Loan Lender, a Letter of Credit fee in an amount equal to (a) with respect to each standby (including direct pay) Letter of Credit, the Applicable Margin per annum for Revolving Loans that are maintained as LIBO Rate Loans multiplied by the Stated Amount of each such Letter of Credit, and (b) with respect to each documentary Letter of Credit, 0.5625% per annum multiplied by the Stated Amount of each such Letter of Credit, such fees being in each case payable quarterly in arrears on each Quarterly Payment Date. ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine (which determination shall, upon notice thereof to the Borrower and the Lenders, be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make, continue, maintain or convert any Loans as LIBO Rate Loans shall, upon such determination, forthwith be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist (with the date of such notice being the "REINSTATEMENT DATE"), and (i) all LIBO Rate Loans previously made by such Lender shall automatically convert into Base Rate Loans at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion and (ii) all Loans thereafter made by such Lender and outstanding prior to the Reinstatement Date shall be made as Base Rate Loans, with interest -39- 47 thereon being payable on the same date that interest is payable with respect to corresponding Borrowing of LIBO Rate Loans made by Lenders not so affected. SECTION 4.2. DEPOSITS UNAVAILABLE. If the Administrative Agent shall have determined that (a) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Administrative Agent in its relevant market; or (b) by reason of circumstances affecting the Administrative Agent's relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans, then, upon notice from the Administrative Agent to the Borrower and the Lenders, the obligations of all Lenders under SECTION 2.3 and SECTION 2.4 to make or continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 4.3. INCREASED LIBO RATE LOAN COSTS, ETC. The Borrower agrees to reimburse each Lender for any increase in the cost to such Lender of, or any reduction in the amount of any sum receivable by such Lender in respect of, making, continuing or maintaining (or of its obligation to make, continue or maintain) any Loans as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate Loans (excluding any amounts, whether or not constituting Taxes, referred to in SECTION 4.6) arising after the date of any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority that results in such increase in cost or reduction in amounts receivable. Such Lender shall promptly notify the Administrative Agent and the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate such Lender for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower directly to such Lender within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower. SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a LIBO Rate Loan) as a result of (a) any conversion or repayment or prepayment of the principal amount of any LIBO Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to SECTION 3.1 or otherwise; (b) any Loans not being made as LIBO Rate Loans in accordance with the Borrowing Request therefor; or -40- 48 (c) any Loans not being continued as, or converted into, LIBO Rate Loans in accordance with the Continuation/Conversion Notice therefor, then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its sole and absolute discretion) that the rate of return on its or such controlling Person's capital as a consequence of its Commitments, participation in Letters of Credit or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, the Borrower shall immediately pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return; PROVIDED, that the Borrower shall not be liable to any Lender for such additional amounts incurred more than sixty days prior to receipt by the Borrower of the notice referred to in the immediately preceding sentence from such Lender. A statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. In determining such amount, such Lender may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable. SECTION 4.6. TAXES. (a) All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder (including Reimbursement Obligations and fees) shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding (i) Taxes imposed on the Administrative Agent as a result of a present or former connection between the applicable lending office of the Administrative Agent, and Taxes imposed on any Lender as a result of a present or former connection between the applicable lending office of a Lender, in each case and the jurisdiction of the governmental authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or taken any action to enforce, this Agreement) or (ii) any taxes to the extent that they are in effect and would apply as of the date any Person becomes a Lender or Assignee Lender, or as of the date that any Lender changes its applicable lending office, to the extent such taxes become applicable as a result of such change (other than a change in an applicable lending office made pursuant to SECTION 4.10 below) (such non-excluded items being called "TAXES"). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will -41- 49 (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such authority; and (iii) pay to the Administrative Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required, PROVIDED, HOWEVER, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States or a state thereof if such Lender fails to comply with the requirements of CLAUSE (b) of SECTION 4.6. Moreover, if any Taxes are directly asserted against the Administrative Agent or any Lender with respect to any payment received by the Administrative Agent or such Lender hereunder, the Administrative Agent or such Lender may pay such Taxes and the Borrower will promptly pay to such Person such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such Person (including any Taxes on such additional amount) shall equal the amount of such Taxes paid by such Person. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the Borrower shall indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. (b) Each Non-U.S. Lender shall, (i) on or prior to the date of the execution and delivery of this Agreement, in the case of each Lender listed on the signature pages hereof, or, in the case of an Assignee Lender, on or prior to the date it becomes a Lender, execute and deliver to the Borrower and the Administrative Agent, two or more (as the Borrower or the Administrative Agent may reasonably request) United States Internal Revenue Service Forms 4224 or Forms 1001 or, solely if such Lender is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", United States Internal Revenue Service Forms W-8 and a certificate signed by a duly authorized officer of such Lender representing that such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender is exempt from withholding or deduction of Taxes; and (ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or documents on or before the date that any such form or document expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent such form or document previously delivered by it to the Borrower. (c) If the Borrower determines in good faith that a reasonable basis exists for contesting the imposition of a Tax with respect to a Lender or the Administrative Agent, the relevant Lender or the Administrative Agent, as applicable, shall cooperate with the Borrower in challenging such Tax at the Borrower's expense if requested by the Borrower. -42- 50 SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly provided, all payments by or on behalf of the Borrower pursuant to this Agreement, the Notes, each Letter of Credit or any other Loan Document shall be made by the Borrower to the Administrative Agent for the PRO RATA account of the Lenders entitled to receive such payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, deduction or counterclaim, not later than 12:00 noon, New York time, on the date due, in same day or immediately available funds, to such account as the Administrative Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly remit in same day funds to each Lender its share, if any, of such payments received by the Administrative Agent for the account of such Lender. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by CLAUSE (c) of the definition of the term "INTEREST PERIOD") be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan or Reimbursement Obligation (other than pursuant to the terms of SECTIONS 4.3, 4.4 and 4.5) in excess of its PRO RATA share of payments then or therewith obtained by all Lenders entitled thereto, such Lender shall purchase from the other Lenders such participation in Credit Extensions made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of (a) the amount of such selling Lender's required repayment to the purchasing Lender TO (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to SECTION 4.9) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with -43- 51 the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim. SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any Default described in CLAUSES (a) through (d) of SECTION 8.1.9 as it relates to the Borrower or, with the consent of the Required Lenders, upon the occurrence of any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due) any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with or otherwise held by such Lender; PROVIDED, HOWEVER, that any such appropriation and application shall be subject to the provisions of SECTION 4.8. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have. SECTION 4.10. MITIGATION. Each Lender agrees that if it makes any demand for payment under SECTION 4.3, 4.4, 4.5, or 4.6, or if any adoption or change of the type described in SECTION 4.1 shall occur with respect to it, it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, as determined in its sole discretion) to designate a different lending office if the making of such a designation would reduce or obviate the need for the Borrower to make payments under SECTION 4.3, 4.4, 4.5, or 4.6, or would eliminate or reduce the effect of any adoption or change described in SECTION 4.1. SECTION 4.11. REPLACEMENT OF LENDERS. If any Lender (an "AFFECTED LENDER") makes a determination under SECTION 4.1 or a demand upon the Borrower for (or if the Borrower is otherwise required to pay) amounts pursuant to SECTION 4.3, 4.5 or 4.6 and the payment of such additional amounts are, and are likely to continue to be, more onerous in the reasonable judgment of the Borrower than with respect to the other Lenders, the Borrower may, within 30 days of receipt by the Borrower of such demand or notice (or the occurrence of such other event causing the Borrower to be required to pay such compensation), as the case may be, give notice (a "REPLACEMENT NOTICE") in writing to the Administrative Agent and such Affected Lender of the Borrower's intention to replace such Affected Lender with a financial institution (a "REPLACEMENT LENDER") designated in such Replacement Notice. If the Administrative Agent shall, in the exercise of its reasonable discretion and within 30 days of their receipt of such Replacement Notice, notify the Borrower and such Affected Lender in writing that the designated financial institution is satisfactory to the Administrative Agent (such consent not being required where the Replacement Lender is already a Lender), then such Affected Lender shall assign, in accordance with SECTION 10.11.1, all of its Commitments, Loans and other rights and obligations under this Agreement and all other Loan Documents (including Reimbursement Obligations, if applicable) to such designated financial institution; PROVIDED, HOWEVER, that (i) such assignment shall be without recourse, representation or warranty (except as to title) and shall be on terms and conditions reasonably satisfactory to such Affected Lender and such designated financial institution, (ii) the purchase price paid by such designated financial institution shall be in the amount of such Affected Lender's Loans and its Percentage of outstanding Reimbursement Obligations, together with all accrued and unpaid interest and fees in respect thereof), (ii) the Borrower shall have paid to the Administrative Agent for the account of the Affected Lender all other amounts owing to such Affected Lender under this Agreement -44- 52 (including the amounts demanded and unreimbursed under this Article, commitment fees, expense reimbursements, indemnities and breakage fees with respect to any LIBO Rate Loan computed as if such Loan were being prepaid) and (iii) the Borrower shall pay to the Affected Lender and the Administrative Agent all reasonable out-of-pocket expenses incurred by the Affected Lender and the Administrative Agent in connection with such assignment and assumption (including the processing fees described in SECTION 10.11.1). Upon the effective date of an assignment described above, the Replacement Lender shall become a "Lender" for all purposes under this Agreement and the other Loan Documents. ARTICLE V CONDITIONS TO CREDIT EXTENSIONS SECTION 5.1. INITIAL CREDIT EXTENSIONS. The obligations of the Lenders to make Loans and the Issuer to issue Letters of Credit and continue Existing Letters of Credit as Letters of Credit under this Agreement shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth below. SECTION 5.1.1. RESOLUTIONS, ETC. The Administrative Agent shall have received from the Borrower a certificate, dated the Closing Date, of its Secretary or Assistant Secretary as to, and attaching, (a) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of the Purchase Agreement, this Agreement, each other Loan Document to be executed by it and the transactions contemplated hereby and thereby; (b) the incumbency and signatures of those of its officers authorized to act with respect to the Purchase Agreement, this Agreement and each other Loan Document executed by it; and (c) the full force and validity of its Organic Documents, upon which certificate each Agent, each Lender and the Issuer may conclusively rely until it shall have received a further certificate of the Secretary of the Borrower canceling or amending such prior certificate. SECTION 5.1.2. DELIVERY OF NOTES. The Administrative Agent shall have received, for the account of each Lender that has requested a Note, such Lender's Notes, duly executed and delivered by the Borrower. SECTION 5.1.3. CONSUMMATION OF ACQUISITION. The Administrative Agent shall have received evidence satisfactory to it that (a) all actions necessary to consummate the Acquisition shall have been taken in accordance with all applicable laws, and (b) the Acquisition shall have been consummated for an aggregate purchase price (excluding related fees and expenses) not to exceed $450,000,000 (as such amount may be adjusted pursuant to the terms of the Purchase Agreement), with the amount of related fees and expenses not to exceed $10,000,000. -45- 53 SECTION 5.1.4. ACQUISITION DOCUMENTS. The Administrative Agent shall have received (with copies for each Lender) a fully executed copy of the Purchase Agreement and, to the extent requested by the Administrative Agent, all other documents and instruments delivered in connection with the consummation of the Acquisition that are required to be delivered pursuant to the terms of the Purchase Agreement. The Purchase Agreement shall be in full force and effect and shall not have been modified or waived in any material respect, nor shall there have been any forbearance to exercise any material rights with respect to any of the terms or provisions relating to the conditions to the consummation of the Acquisition in the Purchase Agreement unless otherwise agreed to by the Required Lenders. SECTION 5.1.5. CLOSING DATE CERTIFICATE. The Administrative Agent shall have received, with counterparts for each Lender, the Closing Date Certificate, dated the Closing Date and duly executed and delivered by the chief executive, financial or accounting (or equivalent) Authorized Officer of the Borrower, in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date under this Agreement, and, at the time such certificate is delivered, such statements shall in fact be true and correct. SECTION 5.1.6. PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All Indebtedness identified in ITEM 7.2.2 of the Disclosure Schedule, together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, shall have been paid in full (including, to the extent necessary, from proceeds of the initial Credit Extensions) or to the extent not pre-paid are permitted to remain outstanding under this Agreement, and all Liens securing payment of any such Indebtedness shall have been released (or to the extent not released are permitted to remain outstanding under this Agreement) and (if applicable) the Administrative Agent shall have received executed Uniform Commercial Code Form UCC-3 termination statements or other instruments as may be suitable or appropriate in connection therewith (or arrangements satisfactory to the Administrative Agent shall have been entered into relating to such release to occur promptly following the initial Credit Extensions). SECTION 5.1.7. FINANCIAL INFORMATION, ETC. The Administrative Agent shall have received, with copies for each Lender, (a) the (i) unqualified audited consolidated financial statements of President and its Subsidiaries for the 1995, 1996, 1997 Fiscal Years, and (ii) the unaudited consolidated balance sheet and income statements of President and its Subsidiaries for the period ended June 30, 1998, prepared on a basis substantially comparable to the basis used to prepare the audited financial statements of President and its Subsidiaries referred to in CLAUSE (a)(i); (b) a PRO FORMA consolidated balance sheet to the Borrower and its Subsidiaries, as of the Closing Date (the "PRO FORMA BALANCE SHEET"), certified by the chief financial or accounting Authorized Officer of the Borrower, giving effect to the consummation of the Acquisition and all the transactions contemplated by this Agreement and reflecting the proposed capital structure of the Borrower, which shall be satisfactory in all respects to the Administrative Agent; and -46- 54 (c) PRO FORMA consolidated projections of the Borrower and its Subsidiaries (including President and its Subsidiaries), satisfactory in all respects to the Administrative Agent. SECTION 5.1.8. SOLVENCY, ETC. The Administrative Agent shall have received, with counterparts for each Lender, a Solvency Certificate dated the Closing Date, duly executed and delivered by an Authorized Officer of the Borrower. SECTION 5.1.9. LITIGATION. The Administrative Agent shall be satisfied in all respects that there exists no pending or threatened material litigation, proceedings or investigation contesting the Acquisition or this Agreement, or which could reasonably be expected to have a material adverse effect on the financial condition, operations, assets, business, properties or prospects of the Borrower and its Subsidiaries, taken as a whole (which shall be deemed to include President and its Subsidiaries). SECTION 5.1.10. MATERIAL ADVERSE CHANGE. The Lenders shall be satisfied (as evidenced by the delivery of their respective executed signature page to this Agreement) that there has been no material adverse change in the financial condition, operations, assets, business, properties, or prospects of the Borrower and its Subsidiaries, taken as a whole (which shall be deemed to include President and its Subsidiaries) since January 3, 1998. SECTION 5.1.11. SOURCES AND USES, ETC. The Administrative Agent shall be satisfied with (i) the final structure of the Acquisition, (ii) the sources and uses of proceeds used to consummate the Acquisition and (iii) the terms and provisions of all documents, agreements and contracts related to the Acquisition. SECTION 5.1.12. GOVERNMENTAL APPROVAL, ETC. All material (as reasonably determined by the Administrative Agent) governmental and third party approvals necessary or advisable in connection with the Acquisition, the financing contemplated hereunder and the continuing operations of the Borrower, President and their respective Subsidiaries shall have been obtained and shall be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Acquisition or the financing thereof. SECTION 5.1.13. TRUSTEE LETTER; CALCULATION OF CONSOLIDATED COVERAGE RATIO. The Borrower shall have delivered to the trustee under the Indenture a notice to the effect that this Agreement is the "Credit Agreement" and that the Administrative Agent is the "Credit Agent" for all purposes under (and as such terms are defined in) the Indenture. The Administrative Agent shall have also received a certificate from an Authorized Officer of the Borrower evidencing the calculation of the Consolidated Coverage Ratio (under and as defined in the Indenture) after giving effect to the Credit Extensions made on the Closing Date, together with a summary of how the Borrower is designating the Credit Extensions under Section 3.8 of the Indenture, and such certificates shall demonstrate that all Credit Extensions made on such date shall constitute "Senior Indebtedness" (as defined in the Indenture). SECTION 5.1.14. OPINION OF COUNSEL. The Administrative Agent shall have received an opinion letter, dated the Closing Date and addressed to the Administrative Agent and all Lenders, from (i) Winston & Strawn, New York counsel to the Borrower and its U.S. -47- 55 Subsidiaries, and (ii) Thomas E. O'Neill, general counsel to the Borrower and its U.S. Subsidiaries, in each case in form and substance satisfactory to the Administrative Agent. SECTION 5.1.15. RELIANCE LETTERS. The Administrative Agent shall have received reliance letters, dated the Closing Date and addressed to each Lender and the Administrative Agent, in respect of each of the legal opinions delivered in connection with the Acquisition from counsel to the Borrower and counsel to President. SECTION 5.1.16. CLOSING FEES, EXPENSES, ETC. The Administrative Agent shall have received for its own account, or for the account of each Lender, as the case may be, all fees, costs and expenses due and payable pursuant to SECTIONS 3.3 and 10.3, if then invoiced. SECTION 5.2. ALL CREDIT EXTENSIONS. The obligation of each Lender and the Issuer to make any Credit Extension (including the initial Credit Extensions) shall be subject to the satisfaction of each of the conditions precedent set forth in this SECTION 5.2. SECTION 5.2.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before and after giving effect to any Credit Extension the following statements shall be true and correct: (a) the representations and warranties set forth in ARTICLE VI and in each other Loan Document shall, in each case, be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); (b) the sum of (x) the aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans and (y) all Letter of Credit Outstandings does not exceed the Revolving Loan Commitment Amount; and (c) no Default shall have then occurred and be continuing. SECTION 5.2.2. CREDIT EXTENSION REQUEST. The Administrative Agent shall have received a Borrowing Request, if Loans (other than Swing Line Loans) are being requested, or an Issuance Request (except in the case of the deemed issuance hereunder on the Closing Date of Existing Letters of Credit pursuant to SECTION 2.6.6), if a Letter of Credit is being requested or extended. Each of the delivery of a Borrowing Request or Issuance Request and the acceptance by the Borrower of the proceeds of any Credit Extension shall constitute a representation and warranty by the Borrower that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the statements made in SECTION 5.2.1 are true and correct. ARTICLE VI REPRESENTATIONS AND WARRANTIES In order to induce the Lenders, the Issuer and the Agents to enter into this Agreement, continue the Existing Letters of Credit as Letters of Credit hereunder and to make Credit -48- 56 Extensions hereunder, the Borrower represents and warrants unto each Lender, the Issuer and each Agent as set forth in this Article. SECTION 6.1. ORGANIZATION, ETC. The Borrower and each of its Subsidiaries (a) is validly organized and existing and in good standing under the laws of the State of its organization, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification, except to the extent that the failure to qualify would not reasonably be expected to result in a Material Adverse Effect, and (b) has full power and authority and holds all requisite governmental licenses, permits and other approvals to (i) enter into and perform its Obligations in connection with the Acquisition and under this Agreement and each other Loan Document to which it is a party and (ii) own and hold under lease its property and to conduct its business substantially as currently conducted by it except, in the case of this CLAUSE (b)(ii), where the failure could not reasonably be expected to result in a Material Adverse Effect. SECTION 6.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution, delivery and performance by the Borrower of this Agreement and each other Loan Document executed or to be executed by it, and the Borrower's and, where applicable, each Subsidiary's participation in the consummation of the Acquisition are within the Borrower's and each such Subsidiary's corporate powers, have been duly authorized by all necessary corporate action, and do not (a) contravene the Borrower's or any such Subsidiary's Organic Documents; (b) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower or any such Subsidiary, where such contravention, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; or (c) result in, or require the creation or imposition of, any Lien on any of the Borrower's or any other Subsidiary's properties. SECTION 6.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person, is required for the due execution, delivery or performance by the Borrower of this Agreement or any other Loan Document to which it is a party, or for the Borrower's or any Subsidiary's participation in the consummation of the Acquisition, except as have been duly obtained or made and are in full force and effect or those which the failure to obtain or make could not reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 6.4. VALIDITY, ETC. This Agreement constitutes, and each other Loan Document executed by the Borrower will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights -49- 57 generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. SECTION 6.5. FINANCIAL INFORMATION. The (a) audited consolidated balance sheet of President and its Subsidiaries as at December 27, 1997 and the related consolidated statements of earnings and cash flow; and (b) audited consolidated balance sheet of the Borrower and its Subsidiaries (prior to giving effect to the Acquisition) and related consolidated statement of earnings and cash flow, as at January 3, 1998; copies of which have been furnished to each Agent, the Issuer and each Lender, have, in each case, been prepared in accordance with GAAP consistently applied, and present fairly the consolidated financial condition of the Persons covered thereby as at the dates thereof and the results of their operations for the periods then ended. SECTION 6.6. NO MATERIAL ADVERSE CHANGE. Since January 3, 1998, there has been no material adverse change in the financial condition, operations, assets, business or properties of the Borrower and its Subsidiaries, taken as a whole. SECTION 6.7. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending or, to the knowledge of the Borrower, threatened litigation, action, proceeding, labor controversy, arbitration or governmental investigation affecting the Borrower or any Subsidiary, or any of their respective properties, businesses, assets or revenues, which (a) could reasonably be expected to result in a Material Adverse Effect, or (b) purports to affect the legality, validity or enforceability of the Acquisition, this Agreement, the Notes or any other Loan Document, except as disclosed in ITEM 6.7 ("Litigation") of the Disclosure Schedule. SECTION 6.8. YEAR 2000 COMPLIANCE. The Borrower reasonably believes that all internal computer operations that are material to its and each of its Subsidiaries' business operations will be able to perform properly date sensitive functions for all dates before, on and after January 1, 2000, except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect. SECTION 6.9. OWNERSHIP OF PROPERTIES. The Borrower and each of its Subsidiaries owns good title to all of its properties and assets (other than insignificant properties and assets), real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens or material claims (including material infringement claims with respect to patents, trademarks, copyrights and the like) except as permitted pursuant to SECTION 7.2.3. SECTION 6.10. TAXES. The Borrower and each of its Subsidiaries has filed all Federal, State and other material tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. -50- 58 SECTION 6.11. PENSION AND WELFARE PLANS. During the twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Credit Extension hereunder, no Pension Plan has been terminated that has resulted in a liability to the Borrower or any of its Subsidiaries of more than $10,000,000, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA in excess of $10,000,000. No condition exists or event or transaction has occurred with respect to any Pension Plan which could reasonably be expected to result in the incurrence by the Borrower or any of its Subsidiaries of any material liability, fine or penalty other than such condition, event or transaction which would not reasonably be expected to have a Material Adverse Effect. Except as disclosed in ITEM 6.11 of the Disclosure Schedule, since the date of the last financial statement the Borrower has not materially increased any contingent liability with respect to any post-retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA. SECTION 6.12. ENVIRONMENTAL WARRANTIES. Except as set forth in ITEM 6.12 of the Disclosure Schedule or as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) all facilities and property (including underlying groundwater) owned or leased by the Borrower or any of its Subsidiaries have been, and continue to be, owned or leased by the Borrower and its Subsidiaries in compliance with all Environmental Laws; (b) there have been no past, and there are no pending or threatened (i) written claims, complaints, notices or requests for information received by the Borrower or any of its Subsidiaries with respect to any alleged violation of any Environmental Law, or (ii) written complaints, notices or inquiries to the Borrower or any of its Subsidiaries regarding potential liability under any Environmental Law; (c) to the best knowledge of the Borrower, there have been no Releases of Hazardous Materials at, on or under any property now or previously owned or leased by the Borrower or any of its Subsidiaries; (d) the Borrower and its Subsidiaries have been issued and are in compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses; (e) no property now or previously owned or leased by the Borrower or any of its Subsidiaries is listed or, to the knowledge of the Borrower or any of its Subsidiaries, proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up; (f) to the best knowledge of the Borrower, there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned or leased by the Borrower or any of its Subsidiaries; -51- 59 (g) the Borrower and its Subsidiaries have not directly transported or directly arranged for the transportation of any Hazardous Material to any location (i) which is listed or to the knowledge of the Borrower or any of its Subsidiaries, proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list, or (ii) which is the subject of federal, state or local enforcement actions or other investigations; (h) to the best knowledge of the Borrower, there are no polychlorinated biphenyls or friable asbestos present in a manner or condition at any property now or previously owned or leased by the Borrower or any Subsidiary of the Borrower; and (i) to the best knowledge of the Borrower, no conditions exist at, on or under any property now or previously owned or leased by the Borrower or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law. SECTION 6.13. REGULATIONS U AND X. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Credit Extensions will be used to acquire any equity security of a class which is registered pursuant to Section 12 of the Exchange Act or any "margin stock" in violation of Regulations U or X. Terms for which meanings are provided in F.R.S. Board Regulation U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. SECTION 6.14. ACCURACY OF INFORMATION. (a) All material factual information concerning the financial condition, operations or prospects of the Borrower and its Subsidiaries furnished on or prior to the Closing Date by or on behalf of the Borrower in writing to the Administrative Agent, the Issuer or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby (including (i) the Acquisition and (ii) such information contained in the Bank Confidential Offering Memorandum) is, and all other such factual information hereafter furnished by or on behalf of the Borrower to the Administrative Agent, the Issuer or any Lender will be, True and Accurate. (b) Any term or provision of this Section to the contrary notwithstanding, insofar as any of the factual information described above includes (i) assumptions, estimates, projections or opinions, no representation or warranty is made herein with respect thereto; PROVIDED, HOWEVER, that to the extent any such assumptions, estimates, projections or opinions are based on factual matters, the Borrower has reviewed such factual matters and nothing has come to its attention in the context of such review which would lead it to believe that such factual matters were not or are not true and correct in all material respects or that such factual matters omit to state any material fact necessary to make such assumptions, estimates, projections or opinions not misleading in any material respect and (ii) information concerning President and its Subsidiaries prior to the Acquisition that was supplied to the Agents, the Lenders or the Issuer on or prior to the Closing Date, then the representation made in CLAUSE (a) as to such information being True and Accurate is only made to the best of the Borrower's knowledge. SECTION 6.15. SENIORITY OF OBLIGATIONS, ETC. The subordination provisions of the Subordinated Notes and contained in each Subordinated Note Indenture are enforceable against the holders of the Subordinated Notes by the Agents, the Lenders and the Issuer, as applicable, -52- 60 which have not effectively waived the benefits thereof in writing. All monetary Obligations, including those to pay principal of and interest (including post-petition interest, whether or not permitted as a claim) on the Loans and Reimbursement Obligations, and fees and expenses in connection therewith, constitute "Senior Indebtedness", "Senior Debt" or similar term referring to the Obligations, as applicable in such Subordinated Note Indenture, and all such Obligations are entitled to the benefits of the subordination created by such Subordinated Note Indenture. The Borrower acknowledges that each Agent, the Issuer and each Lender is entering into this Agreement, and is extending its Commitments, in reliance upon the subordination provisions of (or to be contained in) each Subordinated Note Indenture, the Subordinated Notes and this Section. Both before and after giving effect to the making of a Credit Extension, the Borrower has remained in compliance with Section 3.8 of the Indenture (or any similar provision contained in any Refinancing Note Indenture). Notwithstanding anything herein or in any Subordinated Note Indenture to the contrary, each Revolving Loan and Swing Line Loan and Letter of Credit made hereunder and Reimbursement Obligations under Letters of Credit issued hereunder shall constitute "Senior Indebtedness", "Senior Debt" or similar term referring to the Obligations, as applicable in such Subordinated Note Indenture. The parties hereto acknowledge and agree that the foregoing representations shall only be made to the extent that the Subordinated Notes have not been repaid in full. ARTICLE VII COVENANTS SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with each Agent, the Issuer and each Lender that, until all Commitments have terminated, all Letters of Credit have terminated or expired and all Obligations have been paid and performed in full, the Borrower will perform the obligations set forth below. SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Borrower will furnish, or will cause to be furnished, to each Lender, the Issuer and each Agent copies of the following financial statements, reports, notices and information: (a) promptly following each Form 10-Q filing by the Borrower with the SEC and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, the Borrower's report to the SEC on Form 10-Q, certified by the chief financial Authorized Officer of the Borrower; (b) promptly following each Form 10-K filing by the Borrower with the SEC and in any event within 120 days after the end of each Fiscal Year of the Borrower, a copy of the annual audit report for such Fiscal Year for the Borrower and its Subsidiaries, including therein a consolidated balance sheet for the Borrower and its Subsidiaries as of the end of such Fiscal Year, together with the related consolidated statement of earnings and cash flow of the Borrower and its Subsidiaries for such Fiscal Year the Borrower's report to the SEC on Form 10-K, in each case certified (without any Impermissible Qualification) by PriceWaterhouseCoopers LLP or another "Big Four" firm of independent public accountants; -53- 61 (c) together with the delivery of the financial information required pursuant to CLAUSES (a) and (b), a Compliance Certificate, executed by the chief financial Authorized Officer of the Borrower, showing (in reasonable detail and with appropriate calculations and computations in all respects satisfactory to the Administrative Agent) compliance with the financial covenants set forth in SECTION 7.2.4; (d) as soon as possible and in any event within three Business Days after obtaining knowledge of the occurrence of each Default, a statement of the chief financial Authorized Officer of the Borrower setting forth details of such Default and the action which the Borrower has taken and proposes to take with respect thereto; (e) as soon as possible and in any event within five Business Days after (x) the occurrence of any material adverse development with respect to any litigation, action, proceeding, labor controversy, arbitration or governmental investigation described in SECTION 6.7 and the action which the Borrower has taken and proposes to take with respect thereto or (y) the commencement of any litigation, action, proceeding, labor controversy, arbitration or governmental investigation of the type described in SECTION 6.7, notice thereof and of the action which the Borrower has taken and proposes to take with respect thereto; (f) promptly after the sending or filing thereof, copies of all reports and registration statements which the Borrower or any of its Subsidiaries files with the SEC or any national securities exchange; (g) as soon as practicable after the chief financial officer or the chief executive officer of the Borrower or a member of the Borrower's Controlled Group becomes aware of (i) formal steps in writing to terminate any Pension Plan or (ii) the occurrence of any event with respect to a Pension Plan which, in the case of (i) or (ii), could reasonably be expected to result in a contribution to such Pension Plan by (or a liability to) the Borrower or a member of the Borrower's Controlled Group in excess of $10,000,000, (iii) the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, (iv) the taking of any action with respect to a Pension Plan which could reasonably be expected to result in the requirement that the Borrower furnish a bond to the PBGC or such Pension Plan or (v) any material increase in the contingent liability of the Borrower with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto; (h) promptly and in any event within five Business Days following receipt of any notice from S&P or Moody's (or any other nationally recognized agency that has previously rated the Borrower's long-term unsecured Debt) of a change in such long-term unsecured Debt rating, a copy of such notice; and (i) such other information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries as any Lender or the Issuer through the Administrative Agent may from time to time reasonably request. SECTION 7.1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all applicable laws (including -54- 62 Environmental Laws), rules, regulations and orders, such compliance to include (without limitation): (a) the maintenance and preservation of its corporate existence and qualification as a foreign corporation, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; (b) the payment, before the same become delinquent, of all material taxes, assessments and governmental charges imposed upon it or upon its property except to the extent being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; and (c) use and operate all of its facilities and properties in compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable Environmental Laws, in each case except where the failure to comply with the terms of this clause could not reasonably be expected to have a Material Adverse Effect. SECTION 7.1.3. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each of its Subsidiaries to, maintain, preserve, protect and keep its properties (other than insignificant properties) in good repair, working order and condition (ordinary wear and tear excepted), and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times unless the Borrower determines in good faith that the continued maintenance of any of its properties is no longer economically desirable. SECTION 7.1.4. BOOKS AND RECORDS. The Borrower will, and will cause each of its Subsidiaries to, keep books and records which accurately reflect in all material respects all of its business affairs and transactions and permit the Administrative Agent, the Issuer and each Lender or any of their respective representatives, at reasonable times and intervals, and upon reasonable notice, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant (and the Borrower hereby authorizes such independent public accountant to discuss the Borrower's financial matters with the Issuer and each Lender or its representatives whether or not any representative of the Borrower is present) and to examine, and photocopy extracts from, any of its books or other corporate records. SECTION 7.1.5. USE OF PROCEEDS, ETC. The Borrower shall apply the proceeds of the Credit Extensions as follows: (a) in the case of Revolving Loans, (i) to refinance the principal amount of the loans and other amounts owing under the Existing Credit Agreement; (ii) to pay a portion of the purchase price of the Shares, and to pay transaction costs, fees and expenses associated with the Acquisition; and -55- 63 (iii) for working capital and general corporate purposes of the Borrower and its U.S. Subsidiaries (including the acquisition of Capital Stock and assets, and the redemption, repurchase or defeasance of Subordinated Debt, in each case to the extent permitted under the terms of this Agreement); and (b) in the case of Letters of Credit, for issuing documentary and standby (including direct pay) Letters of Credit for working capital and general corporate purposes of the Borrower and its U.S. Subsidiaries (including the replacement of or deemed issuance hereunder of Existing Letters of Credit), as described in SECTION 2.6; and (c) in the case of Term Loans, (i) to refinance the principal amount of the loans and other amounts owing under the Existing Credit Agreement; and (ii) to pay a portion of the purchase price of the Shares, and to pay costs, fees and expenses associated with the Acquisition. Notwithstanding any provisions of this Agreement to the contrary, no proceeds of any Credit Extension shall be used to make an Investment in or otherwise acquire any Capital Stock of a Person unless such Investment or acquisition has been approved by the board of directors (or equivalent managerial body) of such Person (it being the intent of the parties hereto that proceeds of Credit Extensions shall not be used to finance the purchase of Capital Stock in "hostile tender offers"). SECTION 7.1.6. LONG-TERM DEBT RATING DOWNGRADE. The Borrower covenants and agrees that promptly, and in any event within 30 days following the Downgrade Date, it will, and will cause each of its then existing U.S. Subsidiaries (other than Immaterial Subsidiaries and Receivable Co.) and, after the Downgrade Date, upon any Person becoming a U.S. Subsidiary of the Borrower (other than an Immaterial Subsidiary and Receivable Co.), such future U.S. Subsidiary to, (a) in the case of such U.S. Subsidiaries, execute and deliver to the Administrative Agent, with sufficient copies for each Lender, a guaranty of payment (in form and substance reasonably satisfactory to the Administrative Agent) of all Obligations; and (b) pledge to the Administrative Agent, for the benefit of the Lenders, the Issuer and each Agent, pursuant to a pledge agreement (in form and substance satisfactory to the Administrative Agent), 100%, in the case of each U.S. Subsidiary, other than Immaterial Subsidiaries and Receivables Co., and 65%, in the case of non-U.S. Subsidiaries, of the issued and outstanding Capital Stock of each Subsidiary, and shall take all such actions as requested by the Administrative Agent to ensure that the Administrative Agent has a first priority (shared PARI PASSU with obligations (if any) under the Bridge Facility pursuant to an Intercreditor Agreement satisfactory to the Required Lenders) perfected Lien on and security interest in all Capital Stock pledged in favor of the Administrative Agent (including delivery to the Administrative Agent of all shares of certificated securities so pledged, accompanied by stock powers or other instruments of transfer, -56- 64 undated and duly executed in blank by the applicable pledgor and, in the case of uncertificated Capital Stock, notice of the pledge by the pledgor to the issuer of such Capital Stock, and evidence of the recording on the books of such issuer of the pledge described above); PROVIDED, that the failure of the Required Lenders to approve an Intercreditor Agreement shall not result in a breach of the Agreement; and (c) deliver legal opinions addressed to all Lenders, the Issuer and the Administrative Agent in form and substance, and from counsel, reasonably acceptable to the Administrative Agent relating to the actions described in CLAUSES (a) and (b); PROVIDED, HOWEVER, that the U.S. Subsidiaries executing a guaranty and whose Capital Stock is pledged pursuant to this Section shall, at any time after the Downgrade Date, in the aggregate, account for no less than 85% of the consolidated gross revenues of the Borrower and its Subsidiaries and have assets which represent no less than 85% of the consolidated gross assets of the Borrower and its Subsidiaries, as such revenues and assets are measured on the last day of the most recently completed Fiscal Quarter with respect to which, pursuant to CLAUSES (a) or (b) of SECTION 7.1.1, financial statements have been, or are required to have been, delivered by the Borrower. In furtherance of the foregoing, the Borrower agrees that it shall make all reasonable efforts to cause either S&P and/or Moody's (or another nationally recognized rating agency acceptable to the Administrative Agent) to at all times continue to rate the Borrower's long term senior, unsecured Debt. SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Administrative Agent, the Issuer and each Lender that, until all Commitments have terminated, all Letters of Credit have terminated or expired and all Obligations have been paid and performed in full, the Borrower will perform the obligations set forth below. SECTION 7.2.1. BUSINESS ACTIVITIES. The Borrower will not, and will not permit any of its Subsidiaries to, engage in any business activity, except (i) business activities of the type in which the Borrower and its Subsidiaries are engaged on the date hereof and such activities as may be incidental, similar or related thereto and (ii) other business activities which, collectively, do not account for more than 10% of the consolidated total revenue of the Borrower and its Subsidiaries for the most recently ended four quarter period. SECTION 7.2.2. INDEBTEDNESS. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following: (a) Indebtedness in respect of the Credit Extensions and other Obligations; (b) Indebtedness existing as of the Effective Date which is identified in ITEM 7.2.2(b) of the Disclosure Schedule, and any refinancing or replacement thereof, but only in amounts not in excess of the outstanding amounts on the date of such refinancing (which shall not exceed the committed amount on the Effective Date); (c) Indebtedness incurred by the Borrower or any of its Subsidiaries (i) owed to any Person providing financing for the acquisition of any assets permitted to be acquired -57- 65 pursuant to SECTION 7.2.7 to finance its acquisition of such assets, and (ii) in respect of Capitalized Lease Liabilities (but only to the extent otherwise permitted by SECTION 7.2.7); PROVIDED, that the maximum aggregate amount of all Indebtedness permitted under this CLAUSE (c) shall not at any time exceed $50,000,000; (d) Hedging Obligations of the Borrower or any of its Subsidiaries; (e) intercompany Indebtedness of any Subsidiary of the Borrower owing to the Borrower or any other Subsidiary of the Borrower, which Indebtedness shall, in the case of Receivables Co., be incurred only in connection with the Permitted Receivables Transaction; (f) unsecured intercompany Indebtedness of the Borrower owing to a Subsidiary of the Borrower that has previously executed and delivered to the Administrative Agent the Intercompany Subordination Agreement; (g) unsecured Subordinated Debt of the Borrower owing to the Subordinated Noteholders evidenced by the Subordinated Notes and governed by the terms of a Subordinated Note Indenture; (h) Indebtedness of Receivables Co. incurred in connection with the Permitted Receivables Transaction in an aggregate amount at any time not to exceed $145,000,000; (i) Indebtedness of the Borrower incurred under the Bridge Agreement in a principal amount at any time outstanding not to exceed $125,000,000; PROVIDED, HOWEVER, that the Indebtedness under the Bridge Agreement shall be repaid in full and the Bridge Agreement shall be terminated upon earlier of (i) 364 days following the Closing Date and (ii) the consummation of the Permitted Receivables Transaction; (j) Indebtedness of Subsidiaries of the Borrower (other than the Immaterial Subsidiaries and Receivables Co.) pursuant to the Subordinated Guaranty; and (k) other Indebtedness in an aggregate amount at any time not to exceed $250,000,000 (provided that the aggregate amount of such Indebtedness of Subsidiaries shall not exceed $125,000,000 at any time outstanding). SECTION 7.2.3. LIENS. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except: (a) Liens securing payment of the Obligations, granted pursuant to any Loan Document executed pursuant to SECTION 7.1.6 together with a PARI PASSU Lien to secure obligations under the Bridge Facility and related documents; (b) Liens granted prior to the Effective Date to secure payment of Indebtedness of the type permitted and described in CLAUSE (b) of SECTION 7.2.2; (c) Liens granted to secure payment of Indebtedness of the type permitted and described in CLAUSE (c) of SECTION 7.2.2 and any extension, renewal or replacement -58- 66 thereof but only if the principal amount of the Indebtedness secured thereby is not increased and such Liens do not extend to cover any other property or assets; (d) Liens for taxes, assessments or other governmental charges or levies, including Liens pursuant to Section 107(l) of CERCLA or other similar law, not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (e) Liens of carriers, warehousemen, mechanics, repairmen, materialmen and landlords or other like liens incurred in the ordinary course of business for sums not overdue for a period of more than 30 days or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (f) Liens incurred in the ordinary course of business in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, insurance obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (g) judgment Liens in existence less than 60 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full by a bond or (subject to a customary deductible) by insurance maintained with responsible insurance companies; (h) Liens with respect to recorded minor imperfections of title and easements, rights-of-way, restrictions, reservations, permits, servitudes and other similar encumbrances on real property and fixtures which do not materially detract from the value or materially impair the use by the Borrower or any such Subsidiary in the ordinary course of their business of the property subject thereto; (i) leases or subleases granted by the Borrower or any of its Subsidiaries to any other Person in the ordinary course of business; (j) Liens in the nature of trustees' Liens granted pursuant to any indenture governing any Indebtedness permitted by SECTION 7.2.2, in each case in favor of the trustee under such indenture and securing only obligations to pay compensation to such trustee, to reimburse its expenses and to indemnify it under the terms thereof; (k) Liens on Accounts of Receivables Co. created in connection with the Permitted Receivables Transaction; and (l) other Liens securing Indebtedness or other obligations of the Borrower and its Subsidiaries; PROVIDED that the aggregate principal amount of the Indebtedness or other obligations so secured at any time, when added to the net book value of all property the subject of Sale and Leaseback Transactions at such time does not exceed $125,000,000. -59- 67 SECTION 7.2.4. FINANCIAL CONDITION. (a) DEBT TO EBITDA RATIO. The Borrower will not permit the Debt to EBITDA Ratio as of the last day of any Fiscal Quarter occurring during any period set forth below to be greater than the ratio set forth opposite such period:
Debt to Period EBITDA Ratio Effective Date through (and including) 12/30/00 3.75:1 12/31/00 through (and including) 12/29/01 3.25:1 12/30/01 through (and including) 12/28/02 3.00:1 12/29/02 through (and including) 01/03/04 2.75:1 01/04/04 and thereafter 2.50:1
(b) CASH FLOW COVERAGE RATIO. The Borrower will not permit the Cash Flow Coverage Ratio as of the end of any Fiscal Quarter occurring after the Effective Date to be less than 3:1 SECTION 7.2.5. INVESTMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, make, incur or assume any Investment in any other Person, except: [(a) Investments existing on the Effective Date and identified in ITEM 7.2.5(a) of the Disclosure Schedule;] (b) Cash Equivalent Investments; PROVIDED, HOWEVER, that any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; (c) without duplication, Investments (i) permitted as Indebtedness pursuant to SECTION 7.2.2 and (ii) to the extent that Receivables Co. is not a Subsidiary of the Borrower, Investments in Receivables Co. in connection with the Permitted Receivables Transaction made by the Borrower and/or its Subsidiaries; (d) without duplication, Investments permitted as Capital Expenditures pursuant to SECTION 7.2.7; (e) Investments by the Borrower in any of its Subsidiaries, or by any such Subsidiary in any of its Subsidiaries, by way of contributions to capital; PROVIDED, that -60- 68 such Investments in Receivables Co. shall only be made in connection with the Permitted Receivables Transaction; (f) Investments made by the Borrower or any of its Subsidiaries, solely with proceeds from Net Disposition Proceeds which are being reinvested by the Borrower or such Subsidiary in Qualified Assets in accordance with the terms of CLAUSE (b) of SECTION 3.1.1; (g) Investments in the form of loans or advances made to management or employees of the Borrower or any of its Subsidiaries in the ordinary course of business; (h) Investments to the extent the consideration received pursuant to CLAUSE (b)(i) of SECTION 7.2.9 is not all cash; (i) Investments of Capital Stock made by the Borrower or any of its Subsidiaries (other than Receivables Co.) in an amount which shall not exceed the Investment Amount, which Investments shall (if less than 100% of the outstanding Capital Stock is being acquired) result in the Borrower or the relevant Subsidiary acquiring (subject to SECTION 7.2.1) either (i) a sufficient number of shares of Capital Stock of such Person such that the Borrower or its Subsidiaries can consummate the merger of such Person with or into the Borrower or another Subsidiary without the approval of shareholders (or any other equity owners) of the Person being acquired (other than the Borrower and its Subsidiaries, after giving effect to their initial purchase of such Capital Stock in such acquisition) or (ii) additional Capital Stock in a non-wholly-owned Subsidiary; and (j) other Investments made by the Borrower or any of its Subsidiaries (other than Receivables Co.) in an amount which are outstanding at any date (singly or in the aggregate with other Investments made pursuant to this clause since the Closing Date) do not exceed 10% of Consolidated Tangible Assets. SECTION 7.2.6. RESTRICTED PAYMENTS, ETC. (a) The Borrower will not declare, pay or make any dividend or distribution (in cash, property or obligations) on any shares of any class of Capital Stock (now or hereafter outstanding) of the Borrower or on any warrants, options or other rights with respect to any shares of any class of Capital Stock (now or hereafter outstanding) of the Borrower (other than dividends or distributions payable in its common stock or warrants to purchase its common stock or splits or reclassifications of its stock into additional or other shares of its common stock) or apply, or permit any of its Subsidiaries to apply, any of its funds, property or assets to the purchase, redemption, sinking fund or other retirement of, or agree or permit any of its Subsidiaries to purchase or redeem, any shares of any class of Capital Stock (now or hereafter outstanding) of the Borrower, or warrants, options or other rights with respect to any shares of any class of Capital Stock (now or hereafter outstanding) of the Borrower (collectively, "RESTRICTED PAYMENTS"); (b) The Borrower will not, and will not permit any of its Subsidiaries to (i) make any payment or prepayment of principal of, or interest on, any Subordinated Notes (A) on any day other than, in the case of interest only, the -61- 69 stated, scheduled date for such payment of interest set forth in the applicable Subordinated Notes or in the applicable Subordinated Note Indenture, or (B) which would violate the terms of this Agreement or the subordination provisions of such Subordinated Note Indenture; or (ii) redeem, purchase or defease, any Subordinated Notes; and (c) the Borrower will not, and will not permit any Subsidiary to, make any deposit for any of the foregoing purposes; PROVIDED, HOWEVER, that, (d) notwithstanding the provisions of CLAUSE (a) above, the Borrower shall be permitted to make Restricted Payments in an aggregate amount not to exceed the sum of $50,000,000 plus 50% of positive net income accrued during the period (treated as one accounting period) from December 31, 1997 to the end of the most recent Fiscal Quarter for which financial statements have been delivered to the Administrative Agent plus the aggregate net proceeds received by the Borrower from the issuance or sale of Capital Stock subsequent to the Closing Date, so long as (A) no Default shall have occurred and be continuing on the date such Restricted Payment is declared or to be made, nor would a Default result from the making of such Restricted Payment and (B) after giving effect to the making of such Restricted Payment, the Borrower shall be in PRO FORMA compliance with the covenants set forth in SECTION 7.2.4 for the most recent full Fiscal Quarter immediately preceding the date of the payment of such Restricted Payment for which the relevant financial information has been delivered pursuant to CLAUSE (a) or CLAUSE (b) of SECTION 7.1.1; and (e) notwithstanding the provisions of CLAUSE (b) above, the Borrower shall be permitted to (i) redeem, purchase or defease the Subordinated Notes, but only if (A) no Default shall have occurred and be continuing on the date such redemption, purchase or defeasance is to occur, nor would a Default result therefrom, (B) after giving effect thereto, the Borrower will be in compliance with SECTION 7.2.4 on a PRO FORMA basis for the most recent full Fiscal Quarter immediately preceding the date of such redemption, purchase or defeasance for which the relevant financial information has been delivered pursuant to CLAUSE (a) or CLAUSE (b) of SECTION 7.1.1, and (C) an Authorized Officer of the Borrower shall have delivered a certificate to the Administrative Agent in form and substance satisfactory to the Administrative Agent certifying to the accuracy of the foregoing; and (ii) refinance and repay Dollar for Dollar the Subordinated Notes and accrued interest and fees thereon with the net proceeds of other unsecured Subordinated Debt with all terms and conditions reasonably satisfactory to the Administrative Agent, upon which issuance such other Subordinated Debt shall be deemed for all purposes of this Agreement and the Loan Documents to be "Refinancing Notes" issued pursuant to the "Refinancing Note Indenture". -62- 70 SECTION 7.2.7. CAPITAL EXPENDITURES, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, make or commit to make Capital Expenditures in excess of $200,000,000 in any Fiscal Year, PROVIDED, that to the extent the amount of Capital Expenditures permitted to be made in any Fiscal Year pursuant to this clause exceeds the aggregate amount of Capital Expenditures actually made during such Fiscal Year, such excess amount may be carried forward to (but only to) and made in the next succeeding Fiscal Year. (b) The parties acknowledge and agree that the permitted Capital Expenditure levels set forth in CLAUSE (a) above shall be exclusive of: (i) Net Disposition Proceeds which have been reinvested by the Borrower or a Subsidiary of the Borrower in Qualified Assets in accordance with the terms of CLAUSE (b) of SECTION 3.1.1 and casualty proceeds applied to rebuild or replace property or other assets of the Borrower and its Subsidiaries; and (ii) Capital Expenditures constituting the purchase of all or substantially all of the assets of another Person or a division or line of business of another Person, in each case in an amount which shall not exceed the Investment Amount. SECTION 7.2.8. CONSOLIDATION, MERGER, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof) except (a) any such Subsidiary (other than Receivables Co.) may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower (so long as the Borrower is the surviving corporation of such combination or merger) or any other Subsidiary (other than Receivables Co.), and the assets or stock of any Subsidiary may be purchased or otherwise acquired by the Borrower or any other Subsidiary (other than an Immaterial Subsidiary and Receivables Co.); and (b) so long as no Default has occurred and is continuing or would occur after giving effect thereto, the Borrower or any of its Subsidiaries may purchase all or substantially all of the assets of any Person (or any division thereof) not then a Subsidiary, or acquire such Person by merger. SECTION 7.2.9. ASSET DISPOSITIONS, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, all or any part of its assets, whether now owned or hereafter acquired (including Accounts and Capital Stock of Subsidiaries) to any Person, unless (a) such sale, transfer, lease, contribution or conveyance of such assets is (i) in the ordinary course of its business (and does not constitute a sale, transfer, lease, contribution or other conveyance of all or a substantial part of the Borrower's or such Subsidiary's assets) or is of obsolete or worn out property or (ii) permitted by SECTION 7.2.8; (b) (i) such sale, transfer, lease, contribution or conveyance of such assets is for fair market value and the consideration consists of no less than 75% in cash and (ii) the -63- 71 Net Disposition Proceeds received from such assets, together with the Net Disposition Proceeds of all other assets sold, transferred, leased, contributed or conveyed pursuant to this clause since the Effective Date, does not exceed (individually or in the aggregate) 30% of the amount of Consolidated Tangible Assets; or (c) such sale is of Accounts or related assets pursuant to the Permitted Receivables Transaction. SECTION 7.2.10. MODIFICATION OF CERTAIN AGREEMENTS. The Borrower will not, and will not permit any of its Subsidiaries to, consent to any amendment, supplement, amendment and restatement, waiver or other modification of any of the terms or provisions contained in, or applicable to, (a) the Purchase Agreement or any schedules, exhibits or agreements related thereto (including the certificate of merger), in each case which would adversely affect the rights or remedies of the Lenders, or the Borrower's ability to perform hereunder or under any Loan Document or which would increase the purchase price with respect to the Acquisition or, which would increase the Borrower's or any of its Subsidiaries' obligations or liabilities, contingent or otherwise (other than adjustments to the purchase price made pursuant to the terms of the Purchase Agreement); or (b) any Subordinated Debt (including any Subordinated Note Indenture or any of the Subordinated Notes), or any guarantees delivered in connection with any Subordinated Debt (including any Subordinated Guaranty) (collectively, the "RESTRICTED AGREEMENTS"), or make any payment in order to obtain an amendment thereof or change thereto, if the effect of such amendment, supplement, modification or change is to (i) increase the principal amount of, or increase the interest rate on, or add or increase any fee with respect to such Subordinated Debt or any such Restricted Agreement, advance any dates upon which payments of principal or interest are due thereon or change any of the covenants with respect thereto in a manner which is more restrictive to the Borrower or any of its Subsidiaries or (ii) change any event of default or condition to an event of default with respect thereto, change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions thereof, or change any collateral therefor (other than to release such collateral), if (in the case of this CLAUSE (b)(ii)), the effect of such amendment or change, individually or together with all other amendments or changes made, is to increase the obligations of the obligor thereunder or to confer any additional rights on the holders of such Subordinated Debt, or any such Restricted Agreement (or a trustee or other representative on their behalf). (c) Without the prior written consent of the Administrative Agent, the Borrower will not, and will not permit any of its Subsidiaries to consent to any amendment, supplement, or other modification to any of the terms of the documents, instruments and agreements delivered in connection with the Permitted Receivables Transaction, other than any such amendment, modification or change which (A) would extend the maturity thereof or (B) does not in any way adversely affect the interests of the Agents, the Lenders or the Issuer hereunder or under the Loan Documents or (C) is of a technical or clarifying nature. -64- 72 SECTION 7.2.11. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any arrangement or contract with any of its other Affiliates (other than any Obligor) unless such arrangement or contract is fair and equitable to the Borrower or such Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of the Borrower or such Subsidiary with a Person which is not one of its Affiliates; PROVIDED, HOWEVER, that notwithstanding the foregoing, (a) the Borrower may pay to The Invus Group Ltd. and/or Flowers management and consulting fees in an amount not to exceed in the aggregate $1,500,000 per annum, PROVIDED, FURTHER, that no such payment shall be made during the occurrence and continuation of a Default, or if such payment would result in a Default; and (b) Indebtedness permitted by CLAUSE (e) of SECTION 7.2.2, Investments permitted by CLAUSE (c)(ii) or (d) of SECTION 7.2.5 and Restricted Payments permitted by SECTION 7.2.6 shall not be restricted by this Section. SECTION 7.2.12. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement (excluding (i) any restrictions existing under the Loan Documents or, in the case of CLAUSES (a)(i) and (b) below, any other agreements in effect on the Effective Date and disclosed in ITEM 7.2.12 of the Disclosure Schedule, (ii) in the case of CLAUSES (a)(i) and (b), any restrictions with respect to a Subsidiary imposed pursuant to an agreement which has been entered into in connection with the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary pursuant to a transaction otherwise permitted hereby, (iii) in the case of CLAUSE (b), restrictions on Receivables Co. contained in documentation delivered for the Permitted Receivables Transaction, or (iv) any restrictions existing under any agreement that amends, refinances or replaces any agreement containing the restrictions referred to in CLAUSE (i) or (ii) above; PROVIDED, that the terms and conditions of any such agreement referred to in CLAUSE (i), (ii) or (iv) are not materially less favorable to the Lenders or materially more restrictive to any Obligor a party thereto than those under the agreement so amended, refinanced or replaced) prohibiting (a) the (i) creation or assumption of any Lien upon any Capital Stock that may be required to be pledged pursuant to CLAUSE (b) of SECTION 7.1.6 (unless the pledge contemplated by this Agreement is permitted), or (ii) ability of the Borrower or any other Obligor to amend or otherwise modify this Agreement or any other Loan Document; or (b) the ability of any Subsidiary to make any payments, directly or indirectly, to the Borrower by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Subsidiary to make any payment, directly or indirectly, to the Borrower. SECTION 7.2.13. SALE AND LEASEBACK. The Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement or arrangement with any other Person providing for the leasing by the Borrower or any of its Subsidiaries of real or personal property which has been or is to be sold or transferred by the Borrower or any of its Subsidiaries to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or any of its Subsidiaries -65- 73 (hereinafter a "SALE AND LEASEBACK TRANSACTION") unless immediately thereafter the sum of (i) the net book value (determined as of the time of sale) of all property that is the subject of Sale and Leaseback Transactions, PLUS (ii) the aggregate principal amount of Indebtedness of the Borrower or any Subsidiary secured at such time by Liens permitted only under CLAUSE (l) of SECTION 7.2.3, does not exceed $125,000,000 at such time. SECTION 7.2.14. INDENTURE RESTRICTIONS. Notwithstanding other provisions of this Agreement to the contrary, the Borrower and the Lenders acknowledge and agree that if covenants similar to those contained in this Agreement are contained in a Subordinated Note Indenture and such Subordinated Note Indenture covenants are more restrictive than the terms of the covenants contained in this Agreement, then, for so long as the more restrictive Subordinated Note Indenture covenants are binding on the Borrower or its Subsidiaries, the covenants contained in this Agreement shall be deemed to be as restrictive as those contained in such Subordinated Note Indenture. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF DEFAULT". SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. (a) The Borrower shall default in the payment or prepayment of (i) any Reimbursement Obligation (including pursuant to SECTIONS 2.6 and 2.6.2) on the applicable Disbursement Due Date or any deposit of cash for collateral purposes on the date required pursuant to SECTION 2.6.4 or (ii) any principal of any Loan when due, or (b) any Obligor (including the Borrower) shall default (and such default shall continue unremedied for a period of five Business Days) in the payment when due of any interest or commitment fee or of any other monetary Obligation. SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty of the Borrower or any other Obligor made or deemed to be made hereunder or in any other Loan Document executed by it or any other writing or certificate (including the Closing Date Certificate) furnished by or on behalf of the Borrower or any other Obligor to the Administrative Agent, the Issuer or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to ARTICLE V) is or shall be incorrect when made in any material respect. SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The Borrower shall default in the due performance and observance of any of its obligations under SECTIONS 7.1.5, 7.1.6, 7.2.4, 7.2.6, 7.2.7 or 7.2.9. SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any Obligor shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document executed by it, and such default shall continue unremedied for a period of 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent at the direction of the Required Lenders. -66- 74 SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur (i) in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness (which, for purposes of this Section, shall also include all other items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of the Borrower and its Subsidiaries as of the date at which Indebtedness is to be determined), other than Indebtedness described in SECTION 8.1.1, of the Borrower or any of its Subsidiaries or any other Obligor having a principal amount, individually or in the aggregate, in excess of $10,000,000, or (ii) a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness having a principal amount, individually or in the aggregate, in excess of $20,000,000 if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity. SECTION 8.1.6. JUDGMENTS. Any judgment or order for the payment of money in excess of $10,000,000 (not covered by insurance from a responsible insurance company that is not denying its liability with respect thereto) shall be rendered against the Borrower or any of its Subsidiaries or any other Obligor and remain unpaid and either (a) enforcement proceedings shall have been commenced by any creditor upon such judgment or order; or (b) there shall be any period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. SECTION 8.1.7. PENSION PLANS. Any of the following events shall occur with respect to any Pension Plan (a) the termination of any Pension Plan if, as a result of such termination, the Borrower would be required to make a contribution to such Pension Plan, or would reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $10,000,000; or (b) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA in an amount in excess of $10,000,000. SECTION 8.1.8. CHANGE IN CONTROL. Any Change in Control shall occur. SECTION 8.1.9. BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its Subsidiaries or any other Obligor (other than one or more Immaterial Subsidiaries) shall (a) become insolvent or generally fail to pay, or admit in writing its inability or unwillingness to pay, debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or any of its Subsidiaries or any other -67- 75 Obligor (other than such Immaterial Subsidiaries) or any property of any thereof, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or any of its Subsidiaries or any other Obligor (other than such Immaterial Subsidiaries) or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days, provided that the Borrower, each Subsidiary and each other Obligor hereby expressly authorizes the Administrative Agent, the Issuer and each Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; (d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Borrower or any of its Subsidiaries or any other Obligor (other than such Immaterial Subsidiaries), and, if any such case or proceeding is not commenced by the Borrower or such Subsidiary or such other Obligor, such case or proceeding shall be consented to or acquiesced in by the Borrower or such Subsidiary or such other Obligor or shall result in the entry of an order for relief or shall remain for 60 days undismissed, provided that the Borrower, each Subsidiary and each other Obligor hereby expressly authorizes the Administrative Agent, the Issuer and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or (e) take any action (corporate or otherwise) authorizing, or in furtherance of, any of the foregoing. SECTION 8.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document or, if granted pursuant to SECTION 7.1.6, any Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be in full force and effect or cease to be the legally valid, binding and enforceable obligation of any Obligor party thereto; the Borrower or any other Obligor shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability thereof; or any Lien securing any Obligation granted pursuant to SECTION 7.1.6 shall, in whole or in part, cease to be a perfected first priority Lien, subject only to those exceptions expressly permitted by such Loan Document, except to the extent any event referred to above (a) relates to assets or the Borrower or any of its Subsidiaries which are immaterial, or (b) results from the failure of the Administrative Agent to maintain possession of certificates representing securities pledged under any pledge agreement or to file continuation statements under the Uniform Commercial Code of any applicable jurisdiction. SECTION 8.1.11. SUBORDINATED NOTES. So long as the Subordinated Notes have not been repaid in full, the subordination provisions relating to any Subordinated Note Indenture (the "SUBORDINATION PROVISIONS") shall fail to be enforceable by the Administrative Agent, the Issuer or the Lenders (which have not effectively waived the benefits thereof) in accordance with the terms thereof, or the principal or interest on any Loan, Reimbursement Obligation or other monetary Obligations shall fail to constitute Senior Indebtedness (as defined in the Indenture) or the same (or any other similar term) used to define the monetary Obligations (as set forth in the -68- 76 Refinancing Note Indenture or any other agreement or indenture governing Subordinated Debt); or the Borrower, or any of its Subsidiaries shall, directly or indirectly, disavow or contest in any manner (i) the effectiveness, validity or enforceability of any of the Subordination Provisions, or (ii) that any of such Subordination Provisions exist for the benefit of the Administrative Agent, the Issuer and the Lenders. SECTION 8.1.12. TERMINATION OF RECEIVABLES FACILITY. Any event or circumstance shall occur which permits or requires the Persons purchasing, or financing the purchase of, Accounts under the Permitted Receivables Transaction to stop so purchasing or financing such Accounts, other than by reason of the occurrence of the stated expiry date of the Permitted Receivables Transaction; PROVIDED, that any notices or cure periods that are conditions to the rights of such Persons to stop purchasing, or financing the purchase of, such Accounts have been given or have expired, as the case may be. SECTION 8.2. ACTION IF BANKRUPTCY, ETC. If any Event of Default described in CLAUSES (a) through (d) of SECTION 8.1.9 shall occur with respect to the Borrower, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand. SECTION 8.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default other than under CLAUSES (a) through (d) of SECTION 8.1.9 with respect to the Borrower shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable, require the Borrower to provide cash collateral to be deposited with the Administrative Agent in an amount equal to the Stated Amount of all issued Letters of Credit and/or declare the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, the Borrower shall deposit with the Administrative Agent cash collateral in an amount equal to the Stated Amount of all issued Letters of Credit and/or, as the case may be, the Commitments shall terminate. ARTICLE IX THE AGENTS SECTION 9.1. ACTIONS. Each Lender hereby appoints Scotiabank as its Administrative Agent under and for purposes of this Agreement, the Notes and each other Loan Document. Each Lender authorizes the Administrative Agent to act on behalf of such Lender under this Agreement, the Notes and each other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any amendment and restatement -69- 77 of, or termination of, this Agreement) the Administrative Agent, ratably in accordance with their respective Term Loans outstanding and Commitments (or, if no Term Loans or Commitments are at the time outstanding and in effect, then ratably in accordance with the principal amount of Term Loans held by such Lender, and their respective Commitments as in effect in each case on the date of the termination of this Agreement), from and against any and all liabilities, obligations, losses, damages, claims, reasonable costs or reasonable expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of this Agreement, the Notes and any other Loan Document, including reasonable attorneys' fees, and as to which the Administrative Agent is not reimbursed by the Borrower or any other Obligor (and without limiting the obligation of the Borrower or any other Obligor to do so); PROVIDED, HOWEVER, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the Administrative Agent's gross negligence or willful misconduct. The Administrative Agent shall not be required to take any action hereunder, under the Notes or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the Administrative Agent's determination, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given. SECTION 9.2. FUNDING RELIANCE, ETC. Unless the Administrative Agent shall have been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New York time, on the day prior to a Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender severally agrees and the Borrower agrees to repay the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Administrative Agent made such amount available to the Borrower to the date such amount is repaid to the Administrative Agent, at the interest rate applicable at the time to Loans comprising such Borrowing. SECTION 9.3. EXCULPATION. Neither the Administrative Agent, any other Agent nor any of their respective directors, officers, employees or agents shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, nor for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security, nor to make any inquiry respecting the performance by the Borrower of its obligations hereunder or under any other Loan Document. Any such inquiry which may be made by any Agent shall not obligate it to make any further inquiry or to take any action. The Administrative Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Administrative Agent believes to be genuine and to have been presented by a proper Person. -70- 78 SECTION 9.4. SUCCESSOR. Any Agent (other than the Administrative Agent) may resign as such upon one Business Day's notice to the Borrower and the Administrative Agent. The Administrative Agent may resign as such at any time upon at least 30 days' prior notice to the Borrower and all Lenders. If the Administrative Agent at any time shall resign, the Required Lenders may, with the prior consent of the Borrower (which consent shall not be unreasonably withheld), appoint another Lender as a successor Administrative Agent which shall thereupon become the Administrative Agent hereunder. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be one of the Lenders or a commercial banking institution organized under the laws of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial banking institution, and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall be entitled to receive from the retiring Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation hereunder as the Administrative Agent, the provisions of (a) this ARTICLE IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement; and (b) SECTION 10.3 and SECTION 10.4 shall continue to inure to its benefit. SECTION 9.5. CREDIT EXTENSIONS BY EACH AGENT. Each Agent shall have the same rights and powers with respect to (x) the Credit Extensions made by it or any of its Affiliates, and (y) the Notes held by it or any of its Affiliates as any other Lender and may exercise the same as if it were not an Agent. Each Agent and its respective Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the Borrower as if such Agent were not an Agent hereunder. SECTION 9.6. CREDIT DECISIONS. Each Lender acknowledges that it has, independently of each Agent and each other Lender, and based on such Lender's review of the financial information of the Borrower, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitments. Each Lender also acknowledges that it will, independently of each Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document. SECTION 9.7. COPIES, ETC. The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by the Borrower). The Administrative Agent will distribute to each Lender each document or instrument received for its account and copies of all other communications received -71- 79 by the Administrative Agent from the Borrower for distribution to the Lenders by the Administrative Agent in accordance with the terms of this Agreement. SECTION 9.8. THE SYNDICATION AGENT, THE MANAGING AGENT AND THE CO-AGENTS. Notwithstanding anything else to the contrary contained in this Agreement or any other Loan Document, the Syndication Agent, the Managing Agent and the Co-Agents, in such capacity, shall not have any rights, duties or responsibilities under this Agreement or any other Loan Document, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Syndication Agent, the Managing Agent or any Co-Agent in such capacity. ARTICLE X MISCELLANEOUS PROVISIONS SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that no such amendment, modification or waiver which would: (a) modify any requirement hereunder that any particular action be taken by all the Lenders shall be effective unless consented to by each Lender; (b) modify this SECTION 10.1, or CLAUSE (a) of SECTION 10.10, change the definition of "Required Lenders", increase any Commitment Amount or the Percentage of any Lender, reduce any fees described in ARTICLE III, if any guarantees are delivered or Capital Stock is pledged pursuant to SECTION 7.1.6, release any Subsidiary guarantor from its obligations under such guaranty or all or substantially all of the collateral security (except in each case as otherwise specifically provided in this Agreement, the subsidiary guaranty or a pledge agreement), or extend any Commitment Termination Date shall be made without the consent of each Lender adversely affected thereby; (c) extend the final Stated Maturity Date of any Loan, or extend the due date for, or reduce the amount of any payment of interest on or fees payable in respect of any Loan (or reduce the principal amount of or rate of interest on or fees payable in respect of any Loan) or any Reimbursement Obligation (which shall in each case include the conversion of all or any part of the Obligations into equity of any Obligor) shall be made without the consent of the Lender owed such Loan or, in the case of a Reimbursement Obligation, the Issuer owed (and those Lenders participating in) such Reimbursement Obligation; (d) extend the due date for, or reduce the amount of, any mandatory prepayment of principal of any Loan or any mandatory reduction in the Revolving Loan Commitment Amount shall be made unless consented to by, so long as any such Loans are outstanding (or, in the case of Revolving Loan Lenders, the Revolving Loan Commitment is in effect), Lenders holding at least 51% of the outstanding principal amount of the Tranche of Loans (or Revolving Loan Commitments, in the case of Revolving Loan Lenders) adversely affected by such amendment, modification or waiver; or -72- 80 (e) affect adversely the interests, rights or obligations of the Administrative Agent (in its capacity as Administrative Agent), the Issuer (in its capacity as Issuer), or the Swing Line Lender (in its capacity as Swing Line Lender) shall be effective unless consented to by the Administrative Agent, the Issuer or the Swing Line Lender, as the case may be. No failure or delay on the part of the Administrative Agent, the Issuer or any Lender in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Administrative Agent, the Issuer or any Lender under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. SECTION 10.2. NOTICES. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted to such party, in the case of the Borrower or the Administrative Agent, at its address or facsimile number set forth below its signatures in this Agreement, and if to any other party, as set forth on SCHEDULE III hereto or set forth in the Lender Assignment Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by prepaid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when transmitted (telephonic confirmation in the case of facsimile). SECTION 10.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay on demand all reasonable expenses of the Administrative Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent and of local counsel, if any, who may be retained by counsel to the Administrative Agent) in connection with (a) the syndication by the Administrative Agent of the Loans, the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated; and (b) the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document. The Borrower further agrees to pay, and to save the Administrative Agent, the Issuer and the Lenders harmless from all liability for, any stamp or other similar taxes which may be payable in connection with the execution or delivery of this Agreement, the Credit Extensions made hereunder, or the issuance of the Notes and Letters of Credit or any other Loan Documents. The Borrower also agrees to reimburse the Administrative Agent, the Issuer and each Lender upon demand for all reasonable out-of-pocket expenses (including attorneys' fees and legal expenses) -73- 81 incurred by the Administrative Agent, the Issuer or such Lender in connection with (x) the negotiation of any restructuring or "work-out", whether or not consummated, of any Obligations and (y) the enforcement of any Obligations. SECTION 10.4. INDEMNIFICATION. In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, the Borrower hereby indemnifies, exonerates and holds each Agent, the Issuer and each Lender and each of their respective Affiliates, and each of their respective partners, officers, directors, employees and agents, and each other Person controlling any of the foregoing within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Exchange Act, (collectively, the "INDEMNIFIED PARTIES"), free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, fees, and expenses actually incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to (a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Credit Extension hereunder; (b) the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties (including any action brought by or on behalf of the Borrower as the result of any determination by the Required Lenders pursuant to ARTICLE V not to make any Credit Extension); (c) any investigation, litigation or proceeding related to any acquisition or proposed acquisition by the Borrower or any of its Subsidiaries of all or any portion of the stock or assets of any Person, whether or not such Indemnified Party is party thereto; (d) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the Borrower's or any of its Subsidiaries' compliance with or liability under Environmental Law or the Release by the Borrower or any of its Subsidiaries of any Hazardous Material; or (e) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, any real property owned or operated by the Borrower or any Subsidiary thereof of any Hazardous Material present on or under such property in a manner giving rise to liability at or prior to the time the Borrower or such Subsidiary owned or operated such property (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, the Borrower or such Subsidiary, except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or willful misconduct. The Borrower and its permitted successors and assigns hereby waive, release and agree not to make any claim, or bring any cost recovery action against, any Agent, the Issuer or any Lender under CERCLA or any state equivalent, or any similar law now existing or hereafter enacted, except to the extent arising out of the gross negligence or willful misconduct of any Indemnified Party. It -74- 82 is expressly understood and agreed that to the extent that any of such Persons is strictly liable under any Environmental Laws, the Borrower's obligation to such Person under this indemnity shall likewise be without regard to fault on the part of the Borrower with respect to the violation or condition which results in liability of such Person. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. SECTION 10.5. SURVIVAL. The obligations of the Borrower under SECTIONS 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under SECTIONS 4.8 and 9.1, shall in each case survive any termination of this Agreement, the payment in full of all Obligations, the termination or expiration of all Letters of Credit and the termination of all Commitments. The representations and warranties made by the Borrower and each other Obligor in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document. SECTION 10.6. SEVERABILITY. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 10.7. HEADINGS. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof. SECTION 10.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower, the Issuer and each Lender (or notice thereof satisfactory to the Administrative Agent) shall have been received by the Administrative Agent and notice thereof shall have been given by the Administrative Agent to the Borrower, the Issuer and each Lender. SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto. SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, that: (a) the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent and all Lenders; and -75- 83 (b) the rights of sale, assignment and transfer of the Lenders are subject to SECTION 10.11. SECTION 10.11. SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans, Letters of Credit and Commitments to one or more other Persons, on a non PRO RATA basis, in accordance with this SECTION 10.11. SECTION 10.11.1. ASSIGNMENTS. Any Lender (the "ASSIGNOR LENDER"), (a) with the written consents of the Borrower and the Administrative Agent (which consents shall not be unreasonably delayed or withheld and which consent, in the case of the Borrower, shall be deemed to have been given in the absence of a written notice delivered by the Borrower to the Administrative Agent, on or before the fifth Business Day after receipt by the Borrower of such Lender's request for such consent), may at any time assign and delegate to one or more commercial banks or other financial institutions or funds which are regularly engaged in making, purchasing or investing in loans or securities, and (b) with notice to the Borrower and the Administrative Agent, but without the consent of either the Borrower or the Administrative Agent, may assign and delegate to any of its Affiliates or to any other Lender (each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an "ASSIGNEE LENDER"), all or any fraction of such Lender's total Loans, participations in Letters of Credit and Letter of Credit Outstandings with respect thereto and Commitments (which assignment and delegation shall be, as among Revolving Loan Commitments, Revolving Loans, participations in Letters of Credit and Swing Line Loans and Term Loans, of a constant, and not a varying, percentage) in a minimum aggregate amount of $10,000,000 or the then remaining amount of a Lender's Loans and Commitments; PROVIDED, HOWEVER, that any such Assignee Lender will comply, if applicable, with the provisions contained in SECTION 4.6 and the Borrower, each other Obligor and the Administrative Agent shall be entitled to continue to deal solely and directly with such Assignor Lender in connection with the interests so assigned and delegated to an Assignee Lender until (c) written notice of such assignment and delegation, together with payment instructions, addresses and related information with respect to such Assignee Lender, shall have been given to the Borrower and the Administrative Agent by such Assignor Lender and such Assignee Lender; (d) such Assignee Lender shall have executed and delivered to the Borrower and the Administrative Agent a Lender Assignment Agreement, accepted by the Administrative Agent; (e) the processing fees described below shall have been paid; and (f) the Administrative Agent shall have registered such assignment and delegation in the Register pursuant to CLAUSE (b) of SECTION 2.7. -76- 84 From and after the date that the Administrative Agent accepts such Lender Assignment Agreement and such assignment and delegation is registered in the Register pursuant to CLAUSE (b) of SECTION 2.7, (i) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (ii) the Assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it in connection with such Lender Assignment Agreement, shall be released from its obligations hereunder and under the other Loan Documents. Subject to the provisions of SECTION 2.7, within ten Business Days after its receipt of notice that the Administrative Agent has received an executed Lender Assignment Agreement, at the request of the Assignee Lender, the Borrower shall execute and deliver to the Administrative Agent (for delivery to the relevant Assignee Lender) new Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if the assignor Lender has retained Loans and Commitments hereunder and had originally requested Notes to evidence such loans and Commitments, replacement Notes in the principal amount of the Loans and Commitments retained by the assignor Lender hereunder (such Notes to be in exchange for, but not in payment of, those Notes then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Notes. The Assignor Lender shall mark the predecessor Notes "exchanged" and deliver them to the Borrower. Unless otherwise specified in the Lender Assignment Agreement, interest and fees on the portion of Loans and Commitments being assigned that have accrued prior to the date of such assignment shall be paid to the account of the Assignor Lender and interest and fees that accrue on and subsequent to the date of such assignment shall be paid to the account of the Assignee Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in this Agreement. Such Assignor Lender or such Assignee Lender (unless such Assignor Lender or Assignee Lender is Scotiabank) must also pay a processing fee to the Administrative Agent upon delivery of any Lender Assignment Agreement in the amount of $3,500, unless such assignment and delegation is by a Lender to its Affiliate or if such assignment and delegation is by a Lender to the Federal Reserve Bank (or in the case of a Lender that is an investment fund, to the trustee under the indenture to which such fund is a party), as provided below or is otherwise consented to by the Administrative Agent. Any attempted assignment and delegation not made in accordance with this SECTION 10.11.1 shall be null and void. Notwithstanding any other term of this SECTION 10.11.1, the agreement of the Swing Line Lender to provide the Swing Line Loan Commitment shall not impair or otherwise restrict in any manner the ability of the Swing Line Lender to make any assignment of its Loans or Commitments, it being understood and agreed that the Swing Line Lender may terminate its Swing Line Loan Commitment, to the extent such Swing Line Commitment would exceed its Revolving Loan Commitment after giving effect to such assignment, in connection with the making of any assignment. Nothing contained in this SECTION 10.11.1 shall prevent or prohibit any Lender from pledging its rights (but not its obligations to make Loans) under this Agreement and/or its Loans and/or its Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank or in the case of a Lender that is an investment fund, to the trustee under the indenture to which such fund is a party in support of its obligations to such trustee, in either case, without notice to or consent of the Borrower or the Administrative Agent; PROVIDED, HOWEVER, that (A) such Lender shall remain a "Lender" under this Agreement and shall continue to be bound by the terms and conditions hereof and in the other Loan Documents, and (B) any assignment by such trustee shall be subject to the provisions of CLAUSE (a) of this SECTION 10.11.1. In the event that S&P, Moody's or Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance -77- 85 companies (or Best's Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender with a Commitment to make Revolving Loans or participate in Letters of Credit or Swing Line Loans becomes a Lender, downgrade the long-term certificate of deposit rating or long-term senior, unsecured debt rating of such Lender, and the resulting rating shall be below BBB-, Baa3 or C (or BB, in the case of Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)), then each of the Issuer and (if different) the Swing Line Lender shall have the right, but not the obligation, upon notice to such Lender and the Administrative Agent, to replace such Lender with an Assignee Lender in accordance with and subject to the restrictions contained in this Section, and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in this Section) all its interests, rights and obligations in respect of its Revolving Loan Commitment under this Agreement to such Assignee Lender; PROVIDED, HOWEVER, that (i) no such assignment shall conflict with any law, rule and regulation or order of any governmental authority and (ii) such Assignee Lender shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest and fees (if any) accrued to the date of payment on the Loans made, and Letters of Credit participated in, by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder. SECTION 10.11.2. PARTICIPATIONS. Any Lender may at any time sell to one or more commercial banks or other Persons (each of such commercial banks and other Persons being herein called a "PARTICIPANT") participating interests in any of the Loans, Commitments, or other interests of such Lender hereunder; PROVIDED, HOWEVER, that (a) no participation contemplated in this Section shall relieve such Lender from its Commitments or its other obligations hereunder or under any other Loan Document; (b) such Lender shall remain solely responsible for the performance of its Commitments and such other obligations; (c) the Borrower and each other Obligor and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and each of the other Loan Documents; (d) no Participant, unless such Participant is an Affiliate of such Lender, or is itself a Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant's consent, agree to (i) any reduction in the interest rate or amount of fees that such Participant is otherwise entitled to or (ii) a decrease in the principal amount, or an extension of the final Stated Maturity Date, of any Loan in which such Participant has purchased a participating interest; and (e) the Borrower shall not be required to pay any amount under SECTIONS 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than the amount which it would have been required to pay had no participating interest been sold. The Borrower acknowledges and agrees, subject to CLAUSE (e) above, that each Participant, for purposes of SECTIONS 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a Lender. -78- 86 SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein shall preclude the Agents, the Issuer or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person. SECTION 10.13. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. SECTION 10.14. WAIVER OF JURY TRIAL. THE AGENTS, THE ISSUER, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND -79- 87 AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT, THE ISSUER AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. SECTION 10.15. CONFIDENTIALITY. The Lenders shall hold all non-public information obtained pursuant to or in connection with this Agreement or obtained by such Lender based on a review of the books and records of the Borrower or any of its Subsidiaries in accordance with their customary procedures for handling confidential information of this nature, but may make disclosure to any of their examiners, Affiliates, outside auditors, counsel and other professional advisors in connection with this Agreement or as reasonably required by any potential bona fide transferee, participant or assignee, or in connection with the exercise of remedies under a Loan Document, or as requested by any governmental agency or representative thereof or pursuant to legal process; PROVIDED, HOWEVER, that (a) unless specifically prohibited by applicable law or court order, each Lender shall notify the Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; (b) prior to any such disclosure pursuant to this SECTION 10.15, each Lender shall require any such BONA FIDE transferee, participant and assignee receiving a disclosure of non-public information to agree in writing (i) to be bound by this SECTION 10.15; and (ii) to require such Person to require any other Person to whom such Person discloses such non-public information to be similarly bound by this SECTION 10.15; and (c) except as may be required by an order of a court of competent jurisdiction and to the extent set forth therein, no Agent or Lender shall be obligated or required to return any materials furnished by the Borrower or any Subsidiary. -80- 88 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. KEEBLER FOODS COMPANY By: /s/ E. NICHOL MCCULLY --------------------------------- Name: E. Nichol McCully Title: Senior Vice President and Chief Financial Officer THE BANK OF NOVA SCOTIA, as the Administrative Agent and as a Lender By: /s/ F.C.H. ASHBY ------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations THE FIRST NATIONAL BANK OF CHICAGO, as the Syndication Agent and as a Lender By: /s/ KAREN F. KIZER ------------------------- Name: Karen F. Kizer Title: Senior Vice President 89 BANK OF MONTREAL, as Managing Agent and as a Lender, By: -------------------------- Name: L.A. Durning Title: Portfolio Manager 90 NATIONSBANK, N.A., as a Co-Agent and Lender By: /s/ KATHRYN W. ROBINSON -------------------------------- Name: Kathryn W. Robinson Title: Senior Vice President 91 THE NORTHERN TRUST COMPANY, as a CoAgent and as a Lender, By: /s/ LISA M. TAYLOR ---------------------------- Name: Lisa M. Taylor Title: Second Vice President 92 COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEEN BANK B.A."RABOBANK NEDERLAND," NEW YORK BRANCH, as a CoAgent and as a Lender, By: /s/ IAN REECE ------------------------------ Name: Ian Reece Title: Senior Credit Officer By: /s/ CAROLINE HASTINGS ------------------------------ Name: Caroline Hastings Title: VP 93 SUNTRUST BANK, ATLANTA, as a CoAgent and as a Lender, By: /s/ MICHAEL A. ODERMATT ------------------------ Name: Michael A. Odermatt Title: Vice President By: /s/ F. STEVEN PARRISH ------------------------ Name: F. Steven Parrish Title: Vice President 94 WACHOVIA BANK, as a CoAgent and as a Lender By: /s/ J. TIMOTHY TOLER --------------------------------- Name: J. Timothy Toler Title: Senior Vice President 95 LENDERS ABN AMRO BANK N.V. By: /s/ J. PAUL DE KLERK ---------------------------- Name: J. Paul de Klerk Title: SVP By: /s/ WENDY DEVENISH ---------------------------- Name: Wendy Devenish Title: AVP 96 BANK OF NEW YORK By:/s/ JOHN M. LOKAY, JR. -------------------------- Name: John M. Lokay. Jr. Title: Vice President 97 BANQUE NATIONALE DE PARIS By: /s/ ARNAUD COLLIN DU BOCAGE --------------------------- Name: Arnaud Collin du Bocage Title: Executive Vice President and General Manager 98 COBANK, ACB By: /s/ ANTONY BAHR ------------------------ Name: Antony Bahr Title: VP 99 DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, CAYMAN ISLANDS BRANCH By: /s/ SABINE WENDT ------------------------- Name: Sabine Wendt Title: Asst. Vice President By: /s/ KAREN A. BRINKMAN ------------------------- Name: Karen A. Brinkman Title: Vice President 100 FIRST UNION NATIONAL BANK By: /s/ SCOTT SANTA CRUZ --------------------------- Name: Scott Santa Cruz Title: Vice President 101 FIRSTRUST BANK By: /s/ EDWARD D' ANCONA -------------------------- Name: Edward D' Ancona Title: EVP 102 GENERALE BANK, NEW YORK BRANCH By: /s/ E. MATTHEWS ---------------------------------- Name: E. Matthews Title: SVP By: /s/ S. DEL ROSARIO ---------------------------------- Name: S. Del Rosario Title: SVP 103 HIBERNIA NATIONAL BANK By: /s/ CHRISTOPHER B. PITRE ---------------------------- Name: Christopher B. Pitre Title: Vice President 104 KBC BANK N.V. By: /s/ JOHN E. THERFELLER ----------------------------------------- Name: John E. Therfeller Title: Vice President By: /s/ ROBERT SNAUFFER ----------------------------------------- Name: Robert Snauffer Title: First Vice President 105 LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ ARMUND J. SCHOEN. JR. ----------------------------- Name: Armund J. Schoen, Jr. Title: Senior; Vice President 106 NATIONAL CITY BANK By: /s/ JOSEPH D. ROBISON -------------------------- Name: Joseph D. Robison Title: Vice President 107 SUMITOMO BANK, LIMITED By: /s/ KENICHIRO KOBAYASHI -------------------------- Name: Kenichiro Kobayashi Title: Joint General Manager 108 SCHEDULE I DISCLOSURE SCHEDULE 109 ITEM 6.7 LITIGATION None 110 ITEM 6.11 ERISA Employees Benefit Plans set forth on Schedule 3.15(a) to the Purchase Agreement, a copy of which has been provided to all Lenders. 111 ITEM 6.12 ENVIRONMENTAL MATTERS None 112 ITEM 7.2.2 INDEBTEDNESS TO BE PAID 1. Indebtedness of President and its subsidiaries, including without limitation the following: (i) Third Amended and Restated Loan Agreement dated December 19, 1997 by and between President Baking Company, Inc., The Chase Manhattan Bank and the parties who are signatories thereto; and (ii) The Chase Manhattan Bank Letter of Credit dated October 28, 1993 on behalf of President Baking Company, Inc. in favor of First Union National Bank of Georgia. 2. Second Amended and Restated Credit Agreement, dated as of April 8, 1997, among Keebler Corporation, the Lenders named therein, the Co-Agents named therein and The Bank of Nova Scotia, as Administrative Agent for the Lenders. 113 ITEM 7.2.2(b) ONGOING INDEBTEDNESS 1. Loan Agreement, dated February 1, 1993, between Summit county, Ohio and Keebler Company relating to $995,000 aggregate principal amount of industrial development revenue refunding bonds issued by Summit County, Ohio ("Summit County IRB's"). 2. Lease Agreement, dated February 1, 1993, between The Industrial Development Board of The City of Homewood, Alabama and Keebler Company relating to $560,000 aggregate principal amount of industrial development revenue refunding bonds issued by The Industrial Development Board of the City of Homewood, Alabama ("Homewood IRB's"). 3. Loan Agreement, dated February 1, 1993, between the City of Evansville, Indiana and Keebler Company relating to $505,000 aggregate principal amount of industrial development revenue refunding bonds issued by the City of Evansville, Indiana ("Evansville IRB's"). 4. Loan Agreement, dated January 1, 1993, between the City of Bluffton, Indiana and Keebler Company relating to $5,300,000 aggregate principal amount of industrial development revenue refunding bonds issued by the City of Bluffton, Indiana. 5. Loan Agreement, dated February 1, 1993, between Village of Alsip, Illinois and Keebler Company relating to $3,750,000 aggregate principal amount of industrial development revenue refunding bonds issued by the Village of Alsip, Illinois ("Alsip IRB's"). 6. Loan Agreement, dated January 1, 1993, between Howard County, Maryland and Keebler Company relating to $925,000 aggregate principal amount of industrial development revenue refunding bonds issued by Howard County, Maryland. 7. Loan Agreement, dated January 1, 1993, between the city of Fort Wayne, Indiana and Keebler Company relating to aggregate principal amount of $825,000 industrial development revenue refunding bonds issued by the City of Fort Wayne, Indiana. 8. Loan Agreement, dated January 1, 1993, between the Village of Menomonee Falls, Wisconsin and Keebler Company relating to $850,000 aggregate principal amount of industrial development revenue refunding bonds issued by the Village of Menomonee Falls, Wisconsin. 9. Loan Agreement, dated January 1, 1993, between the Industrial Development Authority of the City of Springfield, Missouri and Keebler Company relating to $850,000 aggregate principal amount of industrial development revenue refunding bonds, issued by the Industrial Development Authority of the City of Springfield, Missouri. 10. Financing Agreement, dated January 1, 1993, between Lehigh County Industrial Development Authority and Keebler Company relating to $1,125,000 aggregate principal amount of industrial development revenue refunding bonds issued by Lehigh County 114 Industrial Development Authority. 11. Financing Agreement, dated January 1, 1992, between the Lehigh County Industrial Development Authority and Keebler Company, relating to $6,340,000 aggregate principal amount of industrial revenue refunding bonds issued by the Lehigh County Industrial Development Authority ("Lehigh 1992 IRB's"). 12. Letter of Credit #S243004 with Continental Casualty relating to Automobile/General Liability insurance. 13. Letter of Credit #S245282 with Transportation Insurance relating to Workers' Compensation insurance. 14. Letter of Credit #S250171 with Transportation Insurance relating to Workers' Compensation insurance. 15. Letter of Credit #S254296 with Trans. Ins. Cont. Casualty relating to Workers' Compensation insurance. 16. Letter of Credit #S257646 with Trans. Ins. Cont. Casualty relating to Workers' compensation insurance. 17. Letter of Credit #S261336 with Trans. Ins. Cont. Casualty relating to Workers' Compensation insurance. 18. Letter of Credit #S245281 with Continental Casualty relating to Automobile/General Liability insurance. 19. Letter of Credit #250172 with Continental Casualty relating to Automobile/General Liability insurance. 20. Letter of Credit #S254299 with Continental Casualty relating to Automobile/General Liability insurance. 21. Letter of Credit #S257645 with continental Casualty relating to Automobile/General Liability insurance. 22. Letter of Credit #S261337 with Continental Casualty relating to Automobile/General Liability insurance. 23. Gerber Debt-Grand Rapids. The balance as of September 12, 1998 is $867.23. 24. Lease Agreement, dated March 21, 1991, between Wyndham Baking Company, Inc. and Gelco Company (d/b/a GE Capital Fleet Services). 115 25. Vehicle Lease Service Agreement, dated May 30, 1997, between President Baking Company, Inc. and Penske Truck Leasing Co., L.P. ("Penske"). 26. Equipment Lease, dated August 19, 1993, between President Baking Company, Inc. and First Union Commercial Corporation ("First Union"). 27. Equipment Lease, dated May 8,1995, between President Baking Company, Inc. and Citicorp Dealer Finance. 28. Three Party Consent and Agreement, dated May 30, 1997, by and between President Baking Company, Inc., Penske and GE Capital. 29. Nissan Motor Corporation Master Lease Agreement, dated May 9, 1997, between Burch Lowe, Inc. and President Baking Company, Inc. 30. Vehicle Lease Agreement, dated March 13, 1998, between President Baking Company, Inc. and Lease Plan U.S.A. 31. Master Lease Agreement, dated July 11, 1997, between President Baking Company, Inc. and GE Capital. 32. Vehicle Lease Agreement, dated March 30, 1990, between World Omni Leasing, Inc. and Wyndham Baking Company, Inc. 116 ITEM 7.2.5(a) INVESTMENTS The following are the only investments maintained by the Borrower and its subsidiaries in any other Person: I. The Borrower directly owns 100% of all classes of the outstanding stock of the following corporations: Keebler Leasing Corp. Keebler Company ("Keebler") Johnston's Ready-Crust Company Bake-Line Products, Inc. Sunshine Biscuits, Inc. Shaffer, Clarke & Co., Inc. President International, Inc. ("President") II. Keebler directly owns 100% of all classes of the outstanding stock of the following corporations: Steamboat Corporation Illinois Baking Corporation Keebler Cookie and Cracker Company Hollow Tree Company Keebler Company/Puerto Rico, Inc. Keebler H.C., Inc. Keebler-Georgia, Inc. Keebler Foreign Sales Corporation Godfrey Transport, Inc. III. Keebler directly owns a membership interest in the following limited liability companies: Hollow Tree Financial Co., LLC (100%) Elfin Equity Co., LLC (65%; Sunshine 35%) Keebler Assets Company, LLC (34%; Keebler Leasing Company 33%; Keebler-Georgia, Inc. 33%) IV. Keebler is the sole member of the following Illinois not for profit corporations: Keebler International Prep Track & Field Invitational Foundation Keebler Company Foundation 117 V. President directly owns 100% of all classes of the outstanding stock of the following corporations: President Baking Company, Inc. VI. Investments made pursuant to the Purchase Agreement. 118 ITEM 7.2.12 RESTRICTIVE AGREEMENTS None 119 SCHEDULE II FISCAL QUARTERS ---------------
- -------------------------------------------------------------------------------- 1998 - -------------------------------------------------------------------------------- 07/19/98 through (and including) 10/10/98 10/11/98 through (and including) 01/02/99 - -------------------------------------------------------------------------------- 1999 - -------------------------------------------------------------------------------- 01/03/99 through (and including) 04/24/99 04/25/99 through (and including) 07/17/99 07/18/99 through (and including) 10/09/99 10/10/99 through (and including) 01/01/00 - -------------------------------------------------------------------------------- 2000 - -------------------------------------------------------------------------------- 01/02/00 through (and including) 04/22/00 04/23/00 through (and including) 07/15/00 07/16/00 through (and including) 10/07/00 10/08/00 through (and including) 12/30/00 - -------------------------------------------------------------------------------- 2001 - -------------------------------------------------------------------------------- 12/31/00 through (and including) 04/21/01 04/22/01 through (and including) 07/14/01 07/15/01 through (and including) 10/06/01 10/07/01 through (and including) 12/29/01 - -------------------------------------------------------------------------------- 2002 - -------------------------------------------------------------------------------- 12/30/01 through (and including) 04/20/02 04/21/02 through (and including) 07/13/02 07/14/02 through (and including) 10/05/02 10/06/02 through (and including) 12/28/02
- i - 120
- -------------------------------------------------------------------------------- 2003 - -------------------------------------------------------------------------------- 12/29/02 through (and including) 04/19/03 04/20/03 through (and including) 07/12/03 07/13/03 through (and including) 10/04/03 10/05/03 through (and including) 01/03/04 - -------------------------------------------------------------------------------- 2004 - -------------------------------------------------------------------------------- 01/04/04 through (and including) 04/24/04 04/25/04 through (and including) 07/17/04 07/18/04 through (and including) 10/09/04
- ii - 121 SCHEDULE III PERCENTAGES AND ADMINISTRATIVE INFORMATION __________________________________________ THE BORROWER: Keebler Foods Company Address: 677 Larch Avenue Elmhurst, Illinois 60126 Facsimile No.: (708) 833-3372 Attention: E. Nichol McCully LENDERS:
PERCENTAGES ----------- TERM LOAN COMMITMENT/TERM REVOLVING LOAN NAME: LOANS: COMMITMENT: DOMESTIC OFFICE: LIBOR OFFICE: - ----- ------ ----------- ---------------- ------------- - ---------------------------------------------------------------------------------------------------------------------------------- The Bank of Nova Scotia 8.5714286000% 8.5714286000% One Liberty Plaza One Liberty Plaza New York, NY 10006 New York, NY 10006 Facsimile No.: (212) 225-5090 Facsimile No.: (212) 225-5090 Attn: Carroll Rockey Attn: Carroll Rockey - ---------------------------------------------------------------------------------------------------------------------------------- The First National Bank of 7.8571429000% 7.8571429000% First National Plaza First National Plaza Chicago Suite 0088 Suite 0088 14th Floor 14th Floor Chicago, IL 60670 Chicago, IL 60670 - ---------------------------------------------------------------------------------------------------------------------------------- Bank of Montreal 7.8571429000% 7.8571429000% 115 South LaSalle Street 115 South LaSalle Street Chicago, IL 60603 Chicago, IL 60603 Facsimile No.: (312) 750-4304 Facsimile No.: (312) 750-4304 Attn: Josie Nichols Attn: Josie Nichols - ----------------------------------------------------------------------------------------------------------------------------------
- i - 122
- ---------------------------------------------------------------------------------------------------------------------------------- PERCENTAGES ----------- TERM LOAN COMMITMENT/TERM REVOLVING LOAN NAME: LOANS: COMMITMENT: DOMESTIC OFFICE: LIBOR OFFICE: - ----- ------ ----------- ---------------- ------------- - ---------------------------------------------------------------------------------------------------------------------------------- Banque Nationale de Paris 5.0000000000% 5.0000000000% 209 South LaSalle Street 209 South LaSalle Street Fifth Floor Fifth Floor Chicago, IL 60604 Chicago, IL 60604 Facsimile: (312) 977-2234 Facsimile: (312) 977-2234 - ---------------------------------------------------------------------------------------------------------------------------------- CoBank, ACB 5.0000000000% 5.0000000000% 5500 S. Quebec Street 5500 S. Quebec Street Englewood, CD 80111 Englewood, CD 80111 Facsimile: (303) 740-4021 Facsimile: (303) 740-4021 - ---------------------------------------------------------------------------------------------------------------------------------- NationsBank, N.A. 5.7142857000 5.7142857000% 101 N. Tryon Street 101 N. Tryon Street Charlotte, NC 28255-0001 Charlotte, NC 28255-0001 Facsimile: (704) 386-4576 Facsimile: (704) 386-4576 Attn: Corporate Credit Services Attn: Corporate Credit Services - ---------------------------------------------------------------------------------------------------------------------------------- The Northern Trust Company 5.7142857000 5.7142857000 50 S. LaSalle Street 50 S. LaSalle Street 11th Floor 11th Floor Chicago, IL Chicago, IL Facsimile: (312) 630-1566 Facsimile: (312) 630-1566 Attn: Commercial Loan Dept. Attn: Commercial Loan Dept. - ---------------------------------------------------------------------------------------------------------------------------------- Cooperatieve Centrale 5.7142857000 5.7142857000 245 Park Avenue 245 Park Avenue Raiffeisen-Boerenleenbank New York, NY 10167 New York, NY 10167 B.A. "Rabobank Nederland" Facsimile: (212) 916-7930 Facsimile: (212) 916-7930 New York Branch - ---------------------------------------------------------------------------------------------------------------------------------- SunTrust Bank, Atlanta 5.7142857000 5.7142857000 25 Park Place 25 Park Place Atlanta, GA 30302 Atlanta, GA 30302 Facsimile: (404) 724-3790 Facsimile: (404) 724-3790 Attn: Alma Sellers Attn: Alma Sellers - ---------------------------------------------------------------------------------------------------------------------------------- Wachovia Bank 5.7142857000 5.7142857000 191 Peachtree Street 191 Peachtree Street Atlanta, GA 30303 Atlanta, GA 30303 Facsimile: (404) 332-6408 Facsimile: (404) 332-6408 - ----------------------------------------------------------------------------------------------------------------------------------
- ii - 123
- ------------------------------------------------------------------------------------------------------------------------------------ PERCENTAGES ----------- TERM LOAN COMMITMENT/TERM REVOLVING LOAN NAME: LOANS: COMMITMENT: DOMESTIC OFFICE: LIBOR OFFICE: - ----- ------ ----------- ---------------- ------------- - ------------------------------------------------------------------------------------------------------------------------------------ First Union National Bank 5.0000000000% 5.0000000000% 301 S. College Street 301 S. College Street Charlotte, NC 28288-0979 Charlotte, NC 28288-0979 Facsimile: (704) 374-2802 Facsimile: (704) 374-2802 Attn: Leneisha Neely Attn: Lekeisha Neely - ------------------------------------------------------------------------------------------------------------------------------------ ABN Amro Bank N.V. 5.0000000000% 5.0000000000% 135 South LaSalle Street 135 South LaSalle Street Suite 625 Suite 625 Chicago, IL 60674-9135 Chicago, IL 60674-9135 Facsimile No.: (312) 904-6893 Facsimile No.: (312) 904-6893 Attn: Loan Operations Attn: Loan Operations - ------------------------------------------------------------------------------------------------------------------------------------ Generale Bank 5.0000000000% 5.0000000000% 520 Madison Avenue 520 Madison Avenue New York Branch 3rd Floor 3rd Floor New York, NY 10022 New York, NY 10022 Facsimile No.: (212) 750-9503 Facsimile No.: (212) 750-9503 Attn: Loans Admin. Attn: Loans Admin. - ------------------------------------------------------------------------------------------------------------------------------------ Hibernia National Bank 3.5714286000% 3.5714286000% 313 Carondelet Street 313 Carondelet Street New Orleans, LA 70130 New Orleans, LA 70130 Facsimile: 504-533-5344 Facsimile: 504-533-5344 - ------------------------------------------------------------------------------------------------------------------------------------ The Bank of New York 2.8571429000% 2.8571429000% One Wall Street One Wall Street 19th Floor 19th Floor New York, NY 10286 New York, NY 10286 Attn: Central Division Attn: Central Division - ------------------------------------------------------------------------------------------------------------------------------------ DG Bank Deutsche 2.8571429000% 2.8571429000% 609 Fifth Avenue 609 Fifth Avenue Genossenschaftsbank New York, NY 10017 New York, NY 10017 Cayman Islands Branch Facsimile: (212) 745- Facsimile: (212) 745- 1556/1550 1556/1550 - ------------------------------------------------------------------------------------------------------------------------------------
- iii - 124
- ------------------------------------------------------------------------------------------------------------------------------------ PERCENTAGES ----------- TERM LOAN COMMITMENT/TERM REVOLVING LOAN NAME: LOANS: COMMITMENT: DOMESTIC OFFICE: LIBOR OFFICE: - ----- ------ ----------- ---------------- ------------- - ------------------------------------------------------------------------------------------------------------------------------------ KBC Bank N.V. 2.8571429000% 2.8571429000% 125 West 55th Street 125 West 55th Street New York, NY 10019 New York, NY 10019 Facsimile: (212) 956-5581 Facsimile: (212) 956-5581 Attn: Loan Department Attn: Loan Department - ------------------------------------------------------------------------------------------------------------------------------------ The Long Term Credit Bank of 2.8571429000% 2.8571429000% 165 Broadway, 48th Floor 165 Broadway, 48th Floor Japan, Ltd. New York, NY 10006 New York, NY 10006 Facsimile: (212) 335-4441 Facsimile: (212) 335-4441 - ------------------------------------------------------------------------------------------------------------------------------------ National City Bank 2.8571429000% 2.8571429000% 1111 W. 22nd, Suite 300 1111 W. 22nd, Suite 300 Oakbrook, IL 60521 Oakbrook, IL 60521 Facsimile: (630) 954-3135 Facsimile: (630) 954-3135 - ------------------------------------------------------------------------------------------------------------------------------------ The Sumitomo Bank, Limited 2.8571429000% 2.8571429000% 233 South Wacker Drive 233 South Wacker Drive Suite 4800 Suite 4800 Chicago, IL 60606-6448 Chicago, IL 60606-6448 Facsimile: (312) 876-6430 Facsimile: (312) 876-6430 Attn: John Kemperl Attn: John Kemperl Mary Coseo Mary Coseo - ------------------------------------------------------------------------------------------------------------------------------------ Firstrust Bank 1.4285714000% 1.4285714000 15 E. Ridge Pike/4th 15 E. Ridge Pike/4th Conshohocken, PA 19428 Consho Locken, PA 19428 Facsimile: 610-238-5066 Facsimile: 610-238-5066 Attn: Kent Nelson Attn: Kent Nelson - ------------------------------------------------------------------------------------------------------------------------------------
- iv - 125 SCHEDULE IV EXISTING LETTERS OF CREDIT --------------------------
ISSUER: NORTHERN TRUST - ------------------------------------------------------------------------------------------------------------------------------------ LETTER OF CREDIT BENEFICIARY L/C DOLLAR RENEWAL EXPIRATION L/C NUMBER AMOUNT NOTIFICATION DATE TERMS DATE - ------------------------------------------------------------------------------------------------------------------------------------ S269658 Burlington Northern Santa Fe Railway $10,000.00 10/26/98 12/31/99 Evergreen Co. - ------------------------------------------------------------------------------------------------------------------------------------ S243004 Continental Casualty Company $1,095,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S245281 Continental Casualty Company $1,202,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S250172 Continental Casualty Company $1,425,000.00 10/26/98 12/31/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S254299 Continental Casualty Company $1,450,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S257645 Continental Casualty Company $1,734,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S261337 Continental Casualty Company $1,850,000.00 10/24/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S245282 Transportation Insurance Company $795,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S254296 Transportation Insurance Company $1,030,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S250171 Transportation Insurance Company $1,155,000.00 10/26/97 12/31/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ S257646 Transportation Insurance Company $2,500,000.00 10/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------
- i - 126
- ------------------------------------------------------------------------------------------------------------------------------------ S261336 Transportation Insurance Company $2,755,000.00 11/27/98 1/1/99 Evergreen - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL DOLLAR AMOUNT $17,001,000.00 - ------------------------------------------------------------------------------------------------------------------------------------
ISSUER: THE BANK OF NOVA SCOTIA
- ------------------------------------------------------------------------------------------------------------------------------- LETTER OF CREDIT BENEFICIARY L/C DOLLAR RENEWAL EXPIRATION L/C NUMBER AMOUNT NOTIFICATION DATE TERMS DATE - ------------------------------------------------------------------------------------------------------------------------------- 2119/96/80085 First Trust of Illinois, Chicago Illinois -- $3,823,973.00 NONE. 02/15/99 NA Village of Alsip - ------------------------------------------------------------------------------------------------------------------------------- 2120/96/80085 First Trust of Illinois, Chicago Illinois -- $1,014,628.00 NONE. 02/15/99 NA County of Summit - ------------------------------------------------------------------------------------------------------------------------------- 2121/96/80085 First Trust of Illinois, Chicago Illinois -- $571,047.00 NONE. 02/15/99 NA Homewood AL - ------------------------------------------------------------------------------------------------------------------------------- 2126/96/80085 First Citizens Bank & Trust Co. Raleigh, $4,137,000.00 NONE. 04/25/99 NA NC -- Lehigh County - ------------------------------------------------------------------------------------------------------------------------------- 2122/96/80085 Fort Wayne National Bank, Fort Wayne, $514,962.00 NONE. 02/15/99 NA IN -- Evansville, IN - ------------------------------------------------------------------------------------------------------------------------------- 2133/96/80085 United States Fire Insurance Co. -- $100,000.00 Auto renew 30 06/04/99 NA Morristown, NJ days prior to expiry date. - -------------------------------------------------------------------------------------------------------------------------------
- ii - 127 - -------------------------------------------------------------------------------- TOTAL DOLLAR AMOUNT: THE BANK OF NOVA SCOTIA: $ 10,161,610.00 - -------------------------------------------------------------------------------- TOTAL DOLLAR AMOUNT (NORTHERN TRUST & THE BANK OF $ 27,162,610.00 NOVA SCOTIA): - --------------------------------------------------------------------------------
- iii - 128 EXHIBIT A-1 REVOLVING NOTE $ , 1998 _______________________ ____________ ___ FOR VALUE RECEIVED, the undersigned, KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of ________ (the "LENDER") on the Stated Maturity Date for Revolving Loans the principal sum of _______ DOLLARS ($______ ) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to the Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, The Bank of Nova Scotia, as Administrative Agent, the various financial institutions as are, or may from time to time become, parties thereto and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined, terms used in this Note have the meanings provided in the Credit Agreement. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement. This Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. 129 THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. KEEBLER FOODS COMPANY By_____________________________ Title: -2- 130 REVOLVING LOANS AND PRINCIPAL PAYMENTS
============================================================================================== Amount of Amount of Unpaid Principal Revolving Principal Balance Loan Made Interest Repaid Period ---------------- (If Ap- ----------------- ----------------- Alternate LIBO plic- Alternate LIBO Alternate LIBO Notation Date Base Rate Rate able) Base Rate Rate Base Rate Rate Total Made By ====== ========== ===== ========= =========== ===== ========== ====== ========== ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ---------- ----- --------- ----------- ----- ---------- ------ ---------- ============= ====== ========== ===== ========= =========== ===== ========== ====== ========== ============= ====== ========== ===== ========= =========== ===== ========== ====== ========== =============
-3- 131 EXHIBIT A-2 TERM NOTE $ , 1998 ___________ _________ ___ FOR VALUE RECEIVED, the undersigned, KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of _________ (the "LENDER") the principal sum of __________ DOLLARS ($________ ) or, if less, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to the Credit Agreement, dated as of September 28, 1998 (as so amended, supplemented, amended and restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, The Bank of Nova Scotia, as Administrative Agent, the various financial institutions as are, or may from time to time become, parties thereto and The First National Bank of Chicago, as Syndication Agent, payable in installments as set forth in the Credit Agreement, with a final installment due and payable on the Stated Maturity Date for Term Loans. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement. This Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. 132 THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. KEEBLER FOODS COMPANY By: ________________________ Title: -2- 133
TERM LOANS AND PRINCIPAL PAYMENTS ================================================================================================================ Amount of Term Interest Amount of Principal Unpaid Principal Loan Made Period Repaid Balance -------------------- (If Ap- ------------------------------------------ Alternate LIBO plic- Alternate LIBO Alternate LIBO Notation Date Base Rate Rate able) Base Rate Rate Base Rate Rate Total Made By ================================================================================================================ - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- ================================================================================================================
-3- 134 EXHIBIT A-3 SWING LINE NOTE $ , 1998 __________________ _______________ FOR VALUE RECEIVED, the undersigned, KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of THE BANK OF NOVA SCOTIA (the "LENDER") on the Stated Maturity Date for Swing Line Loans the principal sum of ________ DOLLARS ($_____) or, if less, the aggregate unpaid principal amount of all Swing Line Loans made by the Lender pursuant to the Credit Agreement, dated as of September 28, 1998 (as so amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, The Bank of Nova Scotia, as Administrative Agent, the various financial institutions as are, or may from time to time become, parties thereto and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined, terms used in this Note have the meanings provided in the Credit Agreement. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Lender pursuant to the Credit Agreement. This Note is the Swing Line Note referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. 135 THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. KEEBLER FOODS COMPANY By _______________________ Title: -2- 136 SWING LINE LOANS AND PRINCIPAL PAYMENTS
============================================================================================================================= Amount of Swing Amount of Principal Outstanding Principal Date Line Loan Payment Balance Notation Made By - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- =============================================================================================================================
-3- 137 EXHIBIT A-4 REGISTERED NOTE THIS REGISTERED NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS REGISTERED NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT. $ , 1997 _______________ _______________ FOR VALUE RECEIVED, the undersigned, KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), promises to pay to the order of _________ (the "LENDER") the principal sum of __________ DOLLARS ($____) or, if less, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to the Credit Agreement, dated as of September 28, 1998 (as so amended, supplemented, amended and restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, The Bank of Nova Scotia, as Administrative Agent, the various financial institutions as are, or may from time to time become, parties thereto and The First National Bank of Chicago, as Syndication Agent, payable in installments as set forth in the Credit Agreement, with a final installment due and payable on the Stated Maturity Date. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement. This Registered Note is one of the Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Registered Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Registered Note and on which such Indebtedness may be declared to be immediately due and payable. 138 As provided in Section 10.11.1 of the Credit Agreement, this Registered Note and the Obligation(s) evidenced hereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of this Registered Note and the Obligation(s) evidenced hereby on the Register described in clause (b) of Section 2.8 of the Credit Agreement. Any assignment or transfer of all or part of such Obligations(s) and this Registered Note evidencing the same shall be registered on the Register only upon surrender for registration of assignment or transfer of this Registered Note evidencing such Obligations(s), duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the Registered Noteholder hereof, and thereupon one or more new Registered Note(s) in the same aggregate principal amount shall be issued to the designated Assignee Lender, and this Registered Note shall be returned by the Administrative Agent to the Borrower marked "canceled". Prior to the due presentment for registration of assignment or transfer of this Registered Note, the Borrower and the Administrative Agent shall treat the Person in whose name such Obligation(s) and this Registered Note(s) evidencing the same is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding any notice to the contrary. This Registered Note may not be exchanged for promissory notes that are not Registered Notes. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. KEEBLER FOODS COMPANY By: ______________________________ Title: 2 139 TERM LOANS AND PRINCIPAL PAYMENTS
=========================================================================================================================== Amount of Amount of Unpaid Term Loan Principal Principal Made Repaid Balance ----------------- -------------- ---------------- Base LIBO Interest Period Base LIBO Base LIBO Notation Date Rate Rate (If Applicable) Rate Rate Rate Rate Total Made By =========================================================================================================================== - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- ===========================================================================================================================
3 140 EXHIBIT B-1 BORROWING REQUEST The Bank of Nova Scotia One Liberty Plaza New York, New York 10006 Attention: ________________ KEEBLER FOODS COMPANY _____________________ Gentlemen and Ladies: This Borrowing Request is delivered to you pursuant to Section 2.3 of the Credit Agreement, dated as of September 28, 1998 (as so amended, modified, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are, or may from time to time become, parties thereto (the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and First Chicago NBD, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. The Borrower hereby requests that a [Revolving Loan] [Term Loan] [Swing Line Loan] be made in the aggregate principal amount of $_____ on ______ , ____ as a [LIBO Rate Loan having an Interest Period of _____ months] [Base Rate Loan]. The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit Agreement, each of the delivery of this Borrowing Request and the acceptance by the Borrower of the proceeds of the Loans requested hereby constitute a representation and warranty by the Borrower that, on the date of such Loans, and before and after giving effect thereto and to the application of the proceeds therefrom, all statements set forth in Section 5.2.1 are true and correct in all material respects. The Borrower agrees that if prior to the time of the Borrowing requested hereby, any matter certified to herein by it will not be true and correct in all material respects at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the time of the Borrowing requested hereby, the Administrative 141 Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed once again to be certified as true and correct in all material respects at the date of such Borrowing as if then made. Please wire transfer the proceeds of the Borrowing to the accounts of the following persons at the financial institutions indicated respectively:
Person to be Paid Amount to be ------------------------- Name, Address, etc. Transferred Name Account No. of Transferee Lender - ----------- ---- ----------- -------------------- $_________ ____________ ____________ __________________ __________________ Attention:________ $_________ ____________ ____________ __________________ __________________ Attention:________ Balance of The Borrower ____________ __________________ such proceeds __________________ Attention:________
-2- 142 IN WITNESS WHEREOF, the undersigned has caused this request to be executed and delivered by its duly Authorized Officer this___ day of________, _______. KEEBLER FOODS COMPANY By:____________________ Title: -3- 143 EXHIBIT B-2 ISSUANCE REQUEST _____________ __, ____ The Bank of Nova Scotia One Liberty Plaza New York, New York 10006 Attention: __________________ KEEBLER FOODS COMPANY _____________________ Gentlemen and Ladies: This Issuance Request is delivered to you, in your capacity as Administrative Agent, in connection with Section 2.6 of the Credit Agreement, dated as of September __, 1998 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation, the various financial institutions as are or may from time to time become, parties thereto (the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. *The undersigned hereby requests that [INSERT NAME OF ISSUER] [extend the Stated Expiry Date of Letter of Credit No. ______, issued on ___________ to - ------------- * To be delivered not less than three nor more than ten Business Days prior to the date of issuance of the Letter of Credit; to be delivered at least 3 Business Days but not more than 10 Business Days prior to the Stated Expiry Date for extensions. 144 _____________] [issue a [standby] [documentary] Letter of Credit on ____________ in the aggregate Stated Amount of $__________]. The beneficiary of [the requested] [such] Letter of Credit [will be] [is] *______________________ , and such Letter of Credit [will have] [has] a Stated Expiry Date (as defined therein) of the earlier of **___________ and the Letter of Credit Commitment Termination Date. The undersigned hereby acknowledges that, pursuant to Section 5.2.2 of the Credit Agreement, each of the delivery of this Issuance Request and the acceptance of any proceeds of or benefits by the undersigned of the Letter of Credit issued in accordance herewith, constitute a representation and warranty by the undersigned that, on the date of delivery of this Issuance Request, and before and after giving effect to the application of any proceeds or benefits of the Letter of Credit requested hereby, all statements set forth in Section 5.2.1 of the Credit Agreement are true and correct in all material respects. The undersigned agrees that if, prior to the time of the issuance of the Letter of Credit requested hereby, any matter certified to herein by it will not be true and correct in all material respects at such time as if then made, it will immediately so notify the Administrative Agent. __________________________________ * Insert name and address of beneficiary. ** Insert a date not to exceed one year from the date of initial issuance or of extension, as appropriate. -2- 145 IN WITNESS WHEREOF, the undersigned has caused this request to be executed and delivered by its duly Authorized Officer this ____ day of ________. KEEBLER FOODS COMPANY By_______________________________ Title: -3- 146 EXHIBIT C CONTINUATION/CONVERSION NOTICE The Bank of Nova Scotia One Liberty Plaza New York, New York 10006 Attention: ________________ KEEBLER FOODS COMPANY Gentlemen and Ladies: This Continuation/Conversion Notice is delivered to you pursuant to Section 2.4 of the Credit Agreement, dated as of September____, 1998 (as so amended, modified, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are, or may from time to time become, parties thereto (the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. The Borrower hereby requests that on ____________, (1) $__________ of the presently outstanding principal amount of the [Term Loans] [Revolving Loans] originally made on _________, [and $ _________ of the presently outstanding principal amount of the [Term Loans] [Revolving Loans] originally made on ___________], (2) and all presently being maintained as 1/[Base Rate Loans] [LIBO Rate Loans], (3) be [converted into] [continued as], ___________________________ 1/ Select appropriate interest rate option. 147 (4) [LIBO Rate Loans having an Interest Period of _____ months] [Base Rate Loans]. The Borrower hereby: (a) certifies and warrants that no Default has occurred and is continuing; and (b) agrees that if prior to the time of such continuation or conversion any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the time of the continuation or conversion requested hereby the Administrative Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed to be certified at the date of such continuation or conversion as if then made. The Borrower has caused this Continuation/Conversion Notice to be executed and delivered, and the certification and warranties contained herein to be made, by its Authorized Officer this ___day of _________. KEEBLER FOODS COMPANY By:________________________ Title: -2- 148 EXHIBIT D LENDER ASSIGNMENT AGREEMENT To: KEEBLER FOODS COMPANY 677 Larch Avenue Elmhurst, Illinois 60126 Attention: E. Nichol McCully To: THE BANK OF NOVA SCOTIA, as the Administrative Agent One Liberty Plaza New York, New York 10006 Attention: _______________ KEEBLER FOODS COMPANY Gentlemen and Ladies: We refer to clause (d) of Section 10.11.1 of the Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are, or may from time to time become, parties thereto (the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. As of ________ __, ____ (the "ASSIGNMENT DATE"), _____________ (the "ASSIGNOR") irrevocably sells, transfers, conveys and assigns, without recourse, representation or warranty (except as expressly set forth herein), to _____________ (the "ASSIGNEE") and the Assignee irrevocably purchases from the Assignor ___% (the "ASSIGNED PORTION") of the Loans and Commitments of the Assignor such that after giving effect to the foregoing assignment and delegation, the Assignor's and the Assignee's Percentages for the purposes of the Credit Agreement will be as set forth on SCHEDULE I hereto. 149 [Add paragraph dealing with accrued interest and fees with respect to the Loans assigned.] The Assignee hereby acknowledges and confirms that it has received a copy of the Credit Agreement and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of the Loans thereunder. The Assignee further confirms and agrees that in becoming a Lender and in making its Commitments and Loans under the Credit Agreement, the Assignee has performed its own analysis of the creditworthiness and financial condition of the Borrower and the other Obligors and such actions have and will be made without recourse to, or representation or warranty by the Administrative Agent. The Assignor represents and warrants that it is legally authorized to enter into and deliver this agreement and represents that it is the legal and beneficial owner of the Assigned Portion. Except as set forth in the previous sentence, the Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made pursuant to or in connection with this agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this agreement, the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto or thereto, including the financial condition of the Borrower or any of its Subsidiaries or the performance or observance by any Lender of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto or thereto. The Assignee represents and warrants that it is legally authorized to enter into and deliver this agreement and confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.1.1 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this agreement. In addition, the Assignee independently and without reliance upon the Assignor, the Administrative Agent or any other Agent or Lender, and based on such documents and information as it shall deem appropriate at the time, shall continue to make its own credit decisions in taking or not taking action under the Credit Agreement, the other Loan Documents and the other instruments and documents delivered in connection therewith. Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Administrative Agent (a) the Assignee (i) shall be deemed automatically to have become a party to the Credit Agreement, have all the rights and obligations of a "Lender" under the Credit Agreement and the other Loan Documents as if it were an original signatory thereto to the extent specified in the second paragraph hereof; -2- 150 (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement and the other Loan Documents as if it were an original signatory thereto; and (b) the Assignor shall be released from its obligations under the Credit Agreement and the other Loan Documents to the extent specified in the second paragraph hereof. The Assignor and the Assignee hereby agree that the [Assignor] [Assignee] will pay to the Administrative Agent the processing fee referred to in Section 10.11.1 of the Credit Agreement upon the delivery hereof. The Assignee hereby advises each of you that set forth in SCHEDULE I hereto are its administrative details with respect to the assigned Loans and Commitments and requests the Administrative Agent to acknowledge receipt of this document. The Assignee agrees to furnish the tax form required by the second to last sentence of Section 4.6 (if so required) of the Credit Agreement no later than the date of acceptance hereof by the Administrative Agent. This Agreement may be executed by the Assignor and Assignee in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. -3- 151 [THE ASSIGNOR], as Assignor By:________________________________________ Title: [THE ASSIGNEE], as Assignee By:________________________________________ Title: Accepted and Acknowledged this __ day of _______, ____ THE BANK OF NOVA SCOTIA, as Administrative Agent By:______________________ Title: KEEBLER FOODS CORPORATION By:______________________ Title: -4- 152 SCHEDULE I LENDER INFORMATION
LENDER PERCENTAGE DOMESTIC OFFICE LIBOR OFFICE ______ __________ _______________ ____________ _______________, Revolving Loans, participations ON FILE WITH ON FILE WITH as Assignor in Letters of Credits Outstandings, ADMINISTRATIVE ADMINISTRATIVE and Revolving Loan Commitment..... ______________% AGENT AGENT Term Loans........................ ______________% _______________, Revolving Loans, participations [ADDRESS] [ADDRESS] as Assignee in Letters of Credits Outstandings, Fax:______________ Fax:______________ and Revolving Loan Commitment..... ______________% Attention:________ Attention:________ Term Loans........................ ______________%
Wiring Instructions for the Assignee: _______________ _______________ _______________ -5- 153 EXHIBIT F CLOSING DATE CERTIFICATE KEEBLER FOODS COMPANY This certificate is delivered pursuant to the Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are or may become parties thereto (collectively, the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein or in any of the attachments hereto have the meanings provided in the Credit Agreement. The undersigned hereby certifies, represents and warrants that, as of the Closing Date: 1. CONSUMMATION OF ACQUISITION. All actions necessary to consummate the Acquisition have been taken in accordance with all applicable laws, and the Acquisition has been consummated for an aggregate purchase price (excluding related fees and expenses) not to exceed $450,000,000 (as such amount may be adjusted pursuant to the terms of the Purchase Agreement), with the amount of related fees and expenses not to exceed $10,000,000. 2. ACQUISITION DOCUMENTS. Attached hereto as ANNEX I is a fully executed copy of the Purchase Agreement and, to the extent requested by the Administrative Agent, all other documents and instruments delivered in connection with the consummation of the Acquisition that are required to be delivered pursuant to the terms of the Purchase Agreement. The Purchase Agreement is in full force and effect and has not been modified or waived in any material respect, nor has there been any forbearance to exercise any material rights with respect to any of the terms or provisions relating to the conditions to the consummation of the Acquisition in the Purchase Agreement. 3. FINANCIAL INFORMATION, ETC. Attached hereto as ANNEX II are: (a) the (i) unqualified audited consolidated financial statements of President and its Subsidiaries for the 1995, 1996, 1997 Fiscal Years, and (ii) the unaudited consolidated balance sheet and income statements of President and its Subsidiaries for the period ended June 30, 1998, prepared on a basis substantially comparable to the basis used to prepare the audited financial statements of President and its Subsidiaries referred to in CLAUSE (a)(i); (b) a PRO FORMA consolidated balance sheet to the Borrower and its Subsidiaries, as of the Closing Date (the "PRO FORMA BALANCE SHEET"), certified by the chief financial or accounting Authorized Officer of the Borrower, giving effect to the consummation of 154 the Acquisition and all the transactions contemplated by this Agreement and reflecting the proposed capital structure of the Borrower; and (c) PRO FORMA consolidated projections of the Borrower and its Subsidiaries (including President and its Subsidiaries). 4. PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All Indebtedness identified in Item 7.2.2 of the Disclosure Schedule to the Credit Agreement, together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, have been paid in full (including, to the extent necessary, from proceeds of the initial Credit Extensions) or to the extent not pre-paid are permitted to remain outstanding under this Agreement, and all Liens securing payment of any such Indebtedness have been released (or to the extent not released are permitted to remain outstanding under this Agreement) and (if applicable) attached hereto as ANNEX III are executed Uniform Commercial Code Form UCC-3 termination statements or other instruments as may be suitable or appropriate in connection therewith Attached hereto as ANNEX IV is each "Payout Letter" executed in conjunction with the payment of such Indebtedness. 5. LITIGATION. There exists no pending or threatened material litigation, proceedings or investigation contesting the Acquisition or the Credit Agreement, or which could reasonably be expected to have a material adverse effect on the financial condition, operations, assets, business, properties or prospects of the Borrower and its Subsidiaries, taken as a whole (which shall be deemed to include President and its Subsidiaries). 6. MATERIAL ADVERSE CHANGE. There has been no material adverse change in the financial condition, operations, assets, business, properties, or prospects of the Borrower and its Subsidiaries, taken as a whole (which shall be deemed to include President and its Subsidiaries) since January 3, 1998. 7. GOVERNMENTAL APPROVAL, ETC. All material governmental and third party approvals necessary or advisable in connection with the Acquisition, the financing contemplated under the Credit Agreement and the continuing operations of the Borrower, President and their respective Subsidiaries have been obtained and are in full force and effect, and all applicable waiting periods have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Acquisition or the financing thereof. 8. TRUSTEE LETTER; CALCULATION OF CONSOLIDATED COVERAGE RATIO. The Borrower has delivered to the trustee under the Indenture a notice, a copy of which is attached hereto as ANNEX V, to the effect that this Agreement is the "Credit Agreement" and that the Administrative Agent is the "Credit Agent" for all purposes under (and as such terms are defined in) the Indenture. Attached hereto as ANNEX VI is a certificate from an Authorized Officer of the Borrower evidencing the calculation of the Consolidated Coverage Ratio (under and as defined in the Indenture) after giving effect to the Credit Extensions made on the Closing Date, together with a summary of how the Borrower is designating the Credit Extensions under Section 3.8 of the -2- 155 Indenture, and demonstrating that all Credit Extensions made on the Closing Date shall constitute "Senior Indebtedness" (as defined in the Indenture). 9. CLOSING FEES, EXPENSES, ETC. The Administrative Agent has received for its own account, or for the account of each Lender, as the case may be, all fees, costs and expenses due and payable pursuant to Sections 3.3 of the Credit Agreement and 10.3 of the Credit Agreement, then invoiced. 10. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before and after giving effect to the Credit Extension to be made on the date hereof: (a) the representations and warranties set forth in Article VI of the Credit Agreement and in each other Loan Document shall, in each case, be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date); (b) the sum of (x) the aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans and (y) all Letter of Credit Outstandings does not exceed the Revolving Loan Commitment Amount; and (c) no Default has occurred and is continuing. -3- 156 IN WITNESS WHEREOF, the undersigned has caused this Certificate to be executed and delivered, and the certification, representations and warranties contained herein to be made, by its duly Authorized Officer this 28th day of September, 1998. KEEBLER FOODS COMPANY By: ______________________________________ Title: -4- 157 EXHIBIT F COMPLIANCE CERTIFICATE KEEBLER FOODS COMPANY This Compliance Certificate is delivered pursuant to clause (c) of Section 7.1.1 of the Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are or may become parties thereto (collectively, the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent, and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein or the context otherwise requires, terms used herein or in any of the attachments hereto have the meanings provided in the Credit Agreement. The Borrower hereby certifies, represents and warrants that for the period (the "COMPUTATION PERIOD") commencing on ________ _____, and ending on ___________ (such latter date being the "COMPUTATION DATE") no Default had occurred and was continuing. The Borrower hereby further certifies, represents and warrants that as of the Computation Date: (a) The Debt to EBITDA ratio was ________:1, as computed on ATTACHMENT 1 hereto. The maximum Debt to EBITDA ratio permitted pursuant to clause (a) of Section 7.2.4 of the Credit Agreement on the Computation Date was ________:1. (b) The Cash Flow Coverage Ratio was ________:1, as computed on ATTACHMENT 2 hereto. The minimum Cash Flow Coverage Ratio permitted pursuant to clause (b) of Section 7.2.4 of the Credit Agreement on the Computation Date was ________:1. IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to be executed and delivered, and the certification and warranties contained herein to be made, by its chief financial Authorized Officer on _______________. KEEBLER FOODS COMPANY By________________________ Title: 158 Attachment 1 (to __/__/__ Compliance Certificate) DEBT TO EBITDA RATIO ____________________ on the Computation Date 1. Debt: as of the Computation Date, Indebtedness of the Borrower and its Subsidiaries to the extent reflected on a consolidated balance sheet of the Borrower determined in accordance with GAAP (but net, for so long as no Revolving Loans or Swing Line Loans are outstanding on the Computation Date, of cash and Cash Equivalent Investments of the Borrower and its Subsidiaries on the Computation Date) and which shall also include Indebtedness of the Borrower and its Subsidiaries of the type referred to in clauses (b) (without duplication of letters of credit issued to support obligations under industrial development revenue bonds to the extent the obligations arising under such bonds are otherwise included in this definition), and exlusive of documentary trade letters of credit) and (f) of the definition of "Indebtedness" or any Contingent Liability in respect thereof................................................. $___________ 2. *EBITDA: the sum (without duplication) of: (a) Net Income: the net income of the Borrower and its Subsidiaries for such period on a consolidated basis, excluding extraordinary gains............................. $___________ (b) the amount deducted, in determining Net Income, representing amortization................................. $___________ (c) the amount deducted, in determining Net Income, of all income taxes (whether paid or deferred) of the Borrower and its Subsidiaries...................................... $___________
_________________________ * Computed for the period consisting of such Fiscal Quarter and each of the three immediately preceding Fiscal Quarters. 1-1 159 (d) Interest Expense: the aggregate consolidated cash interest expense (net of interest income) of the Borrower and its Subsidiaries for such Fiscal Quarters, as determined in accordance with GAAP, including (i) the portion of any payments made in respect of Capitalized Lease Liabilities allocable to interest expense and (ii) interest (or other fees in the nature of interest or discount accrued and paid or payable in cash for such Fiscal Quarter) in respect of the Permitted Receivables Transaction......................... $___________ (e) the amount deducted, in determining Net Income, representing depreciation of assets....................... $___________ (f) an amount equal to the amount of all extraordinary, non- recurring non-cash charges deducted in arriving at Net Income.................................................... $___________ (g) an amount equal to the amount of all extraordinary, non- recurring non-cash credits included in arriving at Net Income.................................................... $___________ (h) EBITDA: the sum of ITEMS 2(a) through 2(f) minus ITEM 2(g)................................................. $___________ 3. DEBT TO EBITDA RATIO: ratio of ITEM 1 to ITEM 2(h)....... : 1.0 ___________
1-2 160 Attachment 2 (to __/__/__ Compliance Certificate) *CASH FLOW COVERAGE RATIO _________________________ on the Computation Date 1. EBITDA (see ITEM 2(h) of ATTACHMENT 1)........................... $ ___________ 2. Capital Expenditures: the sum (without duplication) of: (a) the aggregate amount of all expenditures of the Borrower and its Subsidiaries for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures........................ $ ___________ (b) the aggregate amount of all Capitalized Lease Liabilities incurred during such period............................... $ ___________ (c) the sum of ITEMS 2(a) and 2(b)............................ $ ___________ 3. ITEM 1 minus ITEM 2(c)........................................... $ ___________ 4. Interest Expense (see ITEM 2(d) of ATTACHMENT 1)**............... $ ___________ 5. CASH FLOW COVERAGE RATIO: ratio of ITEM 3 to ITEM 4............. : 1.0 _____
- -------------------------- * As of the close of any Fiscal Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters with respect to the Borrower and its Subsidiaries on a consolidated basis. ** In computing the Cash Flow Coverage Ratio for: (a) the fourth Fiscal Quarter of the 1998 Fiscal Year, the amount set forth in ITEM 4 above shall equal the amount set forth in ITEM 4 for such Fiscal Quarter multiplied by four; (b) the first Fiscal Quarter of the 1999 Fiscal Year, the amount set forth in ITEM 4 above shall equal the amount set forth in ITEM 4 for such Fiscal Quarter and the immediately preceding Fiscal Quarter multiplied by two; and (c) the second Fiscal Quarter of the 1999 Fiscal Year, the amount set forth in ITEM 4 above shall equal the amount set forth in ITEM 4 for such Fiscal Quarter and the two immediately preceding Fiscal Quarters multiplied by 1.333. 2-1 161 EXHIBIT G INTERCOMPANY SUBORDINATION AGREEMENT THIS INTERCOMPANY SUBORDINATION AGREEMENT (this "SUBORDINATION AGREEMENT"), dated as of _________ __, 1998, made by and among each of the undersigned Persons (such capitalized term, and other terms used herein without definition, to have the meanings ascribed thereto in SECTION 1 below) and such other Persons that may from time to time become a party hereto pursuant to the terms hereof or of the Credit Agreement referred to below (collectively, the "SUBORDINATED CREDITORS"), and KEEBLER FOODS COMPANY, a Delaware corporation (the "BORROWER"), in favor of the Administrative Agent and each of the Lenders, W I T N E S S E T H: WHEREAS, the Borrower has entered into a Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the various financial institutions as are, or may from time to time become, parties thereto (the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent, pursuant to which the Lenders and the Issuer have agreed to make Credit Extensions on the terms and subject to the conditions set forth therein; WHEREAS, the Borrower is now or may hereafter from time to time become indebted or otherwise obligated to the Subordinated Creditors in respect of Indebtedness related to or resulting from intercompany loans, advances or other indebtedness from a Subordinated Creditor (all such present and future Indebtedness owing to the Subordinated Creditors (whether created directly or acquired by assignment or otherwise), and interest, premiums and fees, if any, thereon and other amounts payable in respect thereof and all rights and remedies of the Subordinated Creditors with respect thereto, being referred to herein as the "INTERCOMPANY SUBORDINATED DEBT"); WHEREAS, pursuant to clause (e) of Section 7.2.2 of the Credit Agreement, Indebtedness of the Borrower to any of its Subsidiaries is permitted only if such Subsidiary has executed and delivered to the Administrative Agent a counterpart of this Agreement; WHEREAS, each Subordinated Creditor has duly authorized the execution, delivery and performance of this Subordination Agreement; and 162 WHEREAS, it is the best interests of each Subordinated Creditor to execute this Subordination Agreement inasmuch as each Subordinated Creditor will derive substantial direct and indirect benefits from the Credit Extensions made from time to time to the Borrower by the Lenders and the Issuer pursuant to the Credit Agreement; NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders and the Issuer to make Credit Extensions (including the initial Credit Extension) to the Borrower pursuant to the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as set forth above and as follows: AGREEMENT SECTION 1. DEFINITIONS. Terms used but not defined herein have the meanings given to them in the Credit Agreement. As used in this Subordination Agreement, the following terms shall have the meanings specified below: "BORROWER" is defined in the PREAMBLE. "CREDIT AGREEMENT" is defined in the FIRST RECITAL. "INTERCOMPANY SUBORDINATED DEBT" is defined in the SECOND RECITAL. "LENDERS" is defined in the FIRST RECITAL. "SENIOR INDEBTEDNESS" is defined in CLAUSE (a) of SECTION 2. "SUBORDINATED CREDITORS" is defined in the PREAMBLE. "SUBORDINATION AGREEMENT" is defined in the PREAMBLE. SECTION 2. AGREEMENT TO SUBORDINATE. (a) The Borrower and each of the Subordinated Creditors agree that the Intercompany Subordinated Debt is and shall be subject, subordinate and rendered junior, to the extent and in the manner hereinafter set forth, in right of payment, to the prior payment in cash in full of all Obligations of the Borrower now existing or hereafter arising, whether for (i) principal, (ii) interest (including, without limitation, interest accruing after the filing of a petition initiating any proceeding referred to in CLAUSE (a) of SECTION 3, whether or not allowed as a claim in such proceeding), (iii) reasonable costs, (iv) reasonable fees (including, without limitation, reasonable attorneys' fees and -2- 163 disbursements), (v) reasonable expenses, and (vi) otherwise (the Obligations specified in CLAUSES(a)(i) through (a)(vi) above are referred to collectively as the "SENIOR INDEBTEDNESS"). For purposes of this Subordination Agreement, the Senior Indebtedness shall not be deemed to have been paid in cash in full until the Lenders shall have received full payment of the Senior Indebtedness in cash, which payment shall have been retained by the Lenders for a period of time in excess of all applicable preference or other similar periods under applicable bankruptcy, insolvency or creditors' rights laws. Each of the Borrower and the Subordinated Creditors waive notice of acceptance of this Subordination Agreement by the Lenders, and the Subordinated Creditors waive notice of and consent to the making, amount and terms of the Senior Indebtedness which may exist or be created from time to time and any renewal, extension, amendment or modification thereof, and any other lawful action which any Lender or Lenders in its and their sole and absolute discretion may take or omit to take with respect thereto. The provisions of this Section shall constitute a continuing offer made for the benefit of and to all Lenders and each Lender is hereby irrevocably authorized to enforce such provisions. (b) In the event that the Borrower shall make, and/or any Subordinated Creditor shall receive, any payment on Intercompany Subordinated Debt in contravention of this Subordination Agreement or the terms of the Credit Agreement, then and in any such event such payment shall be deemed to be the property of, segregated, received and held in trust for the benefit of and shall be promptly paid over and delivered to the Administrative Agent for the PRO RATA benefit of the Lenders. (c) The Borrower shall not make, and no Subordinated Creditor shall receive or accept, any payment in respect of any Intercompany Subordinated Debt if a Default of the nature set forth in Section 8.1.9 of the Credit Agreement or any Event of Default under Section 8.1.1 of the Credit Agreement has occurred and is continuing or would result therefrom, unless and until (i) the Senior Indebtedness has been paid in cash in full, (ii) in the case of an Event of Default referred to above other than a Default of the nature set forth in Section 8.1.9 of the Credit Agreement, such Event of Default has been cured or waived or (iii) the Administrative Agent has otherwise consented in writing. SECTION 3. IN FURTHERANCE OF SUBORDINATION. (a) Upon any distribution of all or any of the assets of the Borrower or any Subordinated Creditor in the event of (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Borrower or such Subordinated Creditor, or to its creditors, as such, or to its assets, -3- 164 (ii) any liquidation, dissolution or other winding up of the Borrower or any Subordinated Creditor, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Borrower or any Subordinated Creditor, then, and in any such event, unless the Administrative Agent shall otherwise agree in writing, the Lenders shall receive payment in cash in full of all amounts due or to become due (whether or not the Senior Indebtedness has been declared due and payable prior to the date on which the Senior Indebtedness would otherwise have become due and payable) on or in respect of all Senior Indebtedness (including post-petition interest) before the Subordinated Creditors or anyone claiming through or on their behalf (including any receiver, trustee, or otherwise) are entitled to receive any payment on account of principal of (or premium, if any) or interest on or other amounts payable in respect of the Intercompany Subordinated Debt, and to that end, any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in respect of the Intercompany Subordinated Debt in any such case, proceeding, dissolution, liquidation or other winding up or event, shall be paid or delivered directly to the Administrative Agent for the application (in the case of cash) to, or as collateral (in the case of non-cash property or securities) for, the payment or prepayment of the Senior Indebtedness until the Senior Indebtedness shall have been paid in cash in full. (b) If any proceedings, liquidation, dissolution or winding up referred to in CLAUSE (a) above is commenced by or against the Borrower or any Subordinated Creditor, (i) the Administrative Agent or the Lenders are hereby irrevocably authorized and empowered (in their own names or in the name of the Borrower, the Subordinated Creditors or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution in respect of the Intercompany Subordinated Debt above and give acquittance therefor and to file claims and proofs of claim and take such other action (including, without limitation, voting the Intercompany Subordinated Debt or enforcing any security interest or other lien securing payment of the Intercompany Subordinated Debt) as the Lenders or the Administrative Agent may reasonably deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the Lenders or the Administrative Agent hereunder; PROVIDED that in the event the Administrative Agent or the Lenders take such action, the Administrative Agent or the Lenders shall apply all proceeds FIRST, to the payment of the costs of enforcement of this Subordination Agreement, and SECOND, to the PRO RATA payment of the Senior Indebtedness; and -4- 165 (ii) the Subordinated Creditors shall duly and promptly take such action as the Lenders or the Administrative Agent may request (A) to collect the Intercompany Subordinated Debt for the account of the Lenders and the Administrative Agent and to file appropriate claims or proofs of claim in respect of the Intercompany Subordinated Debt, (B) to execute and deliver to the Lenders or the Administrative Agent such powers of attorney, assignments, or other instruments as the Lenders or the Administrative Agent may reasonably request in order to enable them to enforce any and all claims with respect to, and any security interests and other liens securing payment of, the Intercompany Subordinated Debt and (C) to collect and receive any and all payments or distributions which may be payable or deliverable upon or with respect to the Intercompany Subordinated Debt. (c) All payments or distributions of assets of the Borrower, whether in cash, property or securities upon or with respect to the Intercompany Subordinated Debt which are received by the Subordinated Creditors contrary to the provisions of this Subordination Agreement shall be received in trust for the PRO RATA benefit of the Lenders, shall be segregated from other funds and property held by the Subordinated Creditors and shall be forthwith paid over to the Administrative Agent in the same form as so received (with any necessary indorsement) to be applied, PRO RATA (in the case of cash) to, or held as collateral (in the case of noncash property or securities) for, the payment or prepayment of the Senior Indebtedness, whether matured or unmatured, in accordance with the terms of this Subordination Agreement. (d) The Lenders and the Administrative Agent are hereby authorized to demand specific performance of this Subordination Agreement, whether or not the Borrower or any Subordinated Creditor shall have complied with any of the provisions hereof applicable to it, at any time when the Subordinated Creditors or any one of them shall have failed to comply with any of the provisions of this Subordination Agreement applicable to it. The Subordinated Creditors hereby irrevocably waive any defense (other than the defense of payment in full of the Senior Indebtedness) based on the adequacy of a remedy at law which might be asserted as a bar to such remedy of specific performance. SECTION 4. NO ENFORCEMENT OR COMMENCEMENT OF ANY PROCEEDINGS. Each Subordinated Creditor agrees that, so long as any Senior Indebtedness shall remain unpaid, or any Commitment shall be in effect, it will not accelerate the maturity of the Intercompany Subordinated Debt or commence, or join with any creditor other than the Lenders in commencing any proceeding referred to in CLAUSE (a) of SECTION 3. SECTION 5. RIGHTS OF SUBORDINATION. The Subordinated Creditors agree that no payment or distribution to the Lenders or the Administrative Agent pursuant to the provisions of this Subordination Agreement shall entitle the Subordinated Creditors to exercise any rights of subrogation in respect thereof until all Senior Indebtedness has been paid in cash in full and the -5- 166 Commitments have been terminated. The Subordinated Creditors agree that the subordination provisions contained herein shall not be affected by any action, or failure to act, by the Administrative Agent or the Lenders which results, or may result, in affecting, impairing or extinguishing any right of reimbursement or subrogation or other right or remedy of the Subordinated Creditors against the Borrower. SECTION 6. SUBORDINATION LEGEND; FURTHER ASSURANCES. The Subordinated Creditors and the Borrower will cause each note and instrument (if any) evidencing the Intercompany Subordinated Debt to be endorsed with the following legend: "The indebtedness evidenced by this instrument is subordinated to the prior payment in cash in full of the Senior Indebtedness (as defined in the Intercompany Subordination Agreement, dated as of _________ __, 1998) pursuant to, and to the extent provided in, the Intercompany Subordination Agreement by the maker hereof and payee named herein in favor of the Lenders and any person now or hereafter designated as their agent." Each of the Subordinated Creditors and the Borrower hereby agrees to mark its books of account in such a manner as shall be effective to give proper notice of the effect of this Subordination Agreement and will, in the case of any Intercompany Subordinated Debt which is not evidenced by any note or instrument, following the occurrence and subject to the continuation of an Event of Default, upon the Administrative Agent's request, cause such Intercompany Subordinated Debt to be evidenced by an appropriate note or instrument or instruments endorsed with the above legend. Each of the Subordinated Creditors and the Borrower will at its expense and at any time and from time to time promptly execute and deliver all further instruments and documents and take all further action that may be necessary or that the Lenders or the Administrative Agent may reasonably request in order to protect any right or interest granted or purported to be granted hereunder or to enable the Lenders or the Administrative Agent to exercise and enforce their rights and remedies hereunder. SECTION 7. NO CHANGE IN OR DISPOSITION OF INTERCOMPANY SUBORDINATED DEBT. The Subordinated Creditors will not, without the prior written consent of the Administrative Agent: (a) sell, assign, transfer, endorse, pledge, encumber or otherwise dispose of any of the Intercompany Subordinated Debt except as permitted under the Credit Agreement; (b) permit the terms of any of the Intercompany Subordinated Debt to be changed in such a manner as to have a material adverse effect upon the rights or interests of the Lenders or the Administrative Agent; or (c) upon the occurrence and during the continuation of any Default of the nature set forth in Section 8.1.9 of the Credit Agreement or an Event of Default under Section -6- 167 8.1.1 of the Credit Agreement, take, or permit to be taken, any action to assert, collect or enforce the Intercompany Subordinated Debt or any part thereof. SECTION 8. AGREEMENT BY THE BORROWER. The Borrower agrees that it will not make any payment on any of the Intercompany Subordinated Debt, or take any other action, in contravention of the provisions of this Subordination Agreement. SECTION 9. OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interest of the Lenders and the Administrative Agent hereunder, and all agreements and obligations of the Subordinated Creditors and the Borrower hereunder, shall remain in full force and effect irrespective of: (a) any lack of validity or enforceability of any document evidencing Senior Indebtedness; (b) any change in the time, manner or place of payment of, or any other term of, all or any of the Senior Indebtedness, or any other amendment or waiver of or any consent to departure from any of the documents evidencing or relating to the Senior Indebtedness; (c) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guaranty or Loan Document, for all or any of the Senior Indebtedness; (d) any failure of any Lender or the Administrative Agent to assert any claim or to enforce any right or remedy against any other party hereto under the provisions of this Subordination Agreement, the Credit Agreement or any other Loan Document other than this Subordination Agreement; (e) any reduction, limitation, impairment or termination of the Senior Indebtedness for any reason (other than the defense of payment in full of the Senior Indebtedness), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and the Borrower and each Subordinated Creditor hereby waive any right to or claim of) any defense (other than the defense of payment in full of the Senior Indebtedness) or setoff, counterclaim, recoupment or termination whatsoever by reason of invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Senior Indebtedness; and (f) any other circumstance which might otherwise constitute a defense (other than the defense of payment in full of the Senior Indebtedness) available to, or a discharge of, the Borrower in respect of the Senior Indebtedness or the Subordinated Creditors in respect of this Subordination Agreement. This Subordination Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be -7- 168 returned by any Lender or the Administrative Agent upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. The Subordinated Creditors acknowledge and agree that the Lenders and the Administrative Agent may in accordance with the terms of the Credit Agreement, without notice or demand and without affecting or impairing the Subordinated Creditors' obligations hereunder, from time to time (i) renew, compromise, extend, increase, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Senior Indebtedness or any part thereof, including, without limitation, to increase or decrease the rate of interest thereon or the principal amount thereof; (ii) take or hold security for the payment of the Senior Indebtedness and exchange, enforce, foreclose upon, waive and release any such security; (iii) apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders, in their sole discretion, may determine; (iv) release and substitute one or more endorsers, warrantors, borrowers or other obligors; and (v) exercise or refrain from exercising any rights against the Borrower or any other Person. SECTION 10. REPRESENTATIONS AND WARRANTIES. Each of the Subordinated Creditors, in respect of itself and the Intercompany Subordinated Debt owing to it, and the Borrower, as the case may be, hereby represents and warrants as follows: (a) the Subordinated Creditors own the Intercompany Subordinated Debt now outstanding free and clear of any Lien other than pursuant to a Loan Document; (b) this Subordination Agreement constitutes a legal, valid and binding obligation of each Subordinated Creditor and the Borrower, enforceable in accordance with its terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing). SECTION 11. AMENDMENTS, WAIVERS. No amendment or waiver of any provision of this Subordination Agreement nor consent or any departure by the Subordinated Creditors or the Borrower herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent and the other parties hereto, and then such waiver, amendment or consent shall be effective only in the specific instance and for the specific purpose for which given. Any waiver, forbearance, failure or delay by the Administrative Agent or the Lenders in exercising, or the exercise or beginning of exercise by the Administrative Agent or the Lenders of, any right, power or remedy, simultaneous or later shall not preclude the further, simultaneous or later exercise thereof, and every right, power or remedy of the Administrative Agent and the Lenders shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed or authorized by such Lenders. SECTION 12. EXPENSES. The Subordinated Creditors and the Borrower jointly and severally agree to pay, upon demand, to the Administrative Agent or the Lenders, as applicable, -8- 169 any and all reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and disbursements which the Lenders or the Administrative Agent may incur in connection with the exercise or enforcement of any of the rights or interest of the Lenders or the Administrative Agent hereunder. SECTION 13. ADDRESS FOR NOTICES. All notices and other communications provided for hereunder shall be in writing and, if to the Subordinated Creditors, mailed (registered or certified, return receipt requested) or telecopied or hand delivered to it at its address set forth below its name on the signature pages hereto, if to the Borrower, the Administrative Agent or any Lender, mailed (registered or certified, return receipt requested) or hand delivered to it, addressed to it at the address of the Borrower or such Lender or the Administrative Agent (as the case may be) listed in the Credit Agreement, or as to each party or other Person at such other address as shall be designated by such party or Person in a written notice to each other party complying as to delivery with the terms of this Section. All such notices and communications shall be effective when received, if sent by mail or delivery service or when transmitted by telecopy, each in the manner provided above. SECTION 14. ENTIRE AGREEMENT; SEVERABILITY. This Subordination Agreement contains the entire subordination agreement among the parties hereto with respect to the subject matter hereof. If any of the provisions of this Subordination Agreement shall be held invalid or unenforceable, this Subordination Agreement shall be construed as if not containing those provisions, and the rights and obligations of the parties hereto shall be construed and enforced accordingly. SECTION 15. CUMULATIVE RIGHTS. The rights, powers and remedies of the Lenders and the Administrative Agent under this Subordination Agreement shall be in addition to all rights, powers and remedies given to the Lenders and the Administrative Agent by virtue of any contract, statute or rule of law, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently. The parties hereto expressly acknowledge and agree that the Lenders and the Administrative Agent are intended, and by this reference expressly made, third party beneficiaries of the provisions of this Subordination Agreement. SECTION 16. CONTINUING AGREEMENT; ASSIGNMENTS. This Subordination Agreement is a continuing agreement of subordination and the Lenders may, from time to time and without notice to the Subordinated Creditors, extend credit to or make other financial arrangements with the Borrower in reliance hereon. This Subordination Agreement shall (a) remain in full force and effect until the Senior Indebtedness shall have been paid in cash in full and all Commitments terminated, (b) be binding upon the Subordinated Creditors, the Borrower and their respective successors, transferees and assigns, and (c) inure to the benefit of and be enforceable by the Administrative Agent and each Lender and their respective successors, transferees and assigns. Without limiting the generality of the foregoing, any Lender may, subject to the provisions of the Credit Agreement, assign or otherwise transfer the Senior Indebtedness held by it to any other -9- 170 Person, subject to Section 10.11.1 of the Credit Agreement and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Lender herein or otherwise. SECTION 17. GOVERNING LAW. THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. SECTION 18. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SUBORDINATION AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OR ANY SUBORDINATED CREDITOR OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER AND EACH SUBORDINATED CREDITOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL, NON-APPEALABLE JUDGEMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION OR BY A FINAL, NON-APPEALABLE JUDGMENT OF ANY APPLICABLE APPELLATE COURT. THE BORROWER AND EACH SUBORDINATED CREDITOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER AND EACH SUBORDINATED CREDITOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER OR SUCH SUBORDINATED CREDITOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH OF THE BORROWER AND EACH OF SUCH SUBORDINATED CREDITORS HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS SUBORDINATION AGREEMENT. -10- 171 SECTION 19. WAIVER OF JURY TRIAL. THE BORROWER AND EACH SUBORDINATED CREDITOR AND, BY ACCEPTING THIS SUBORDINATION AGREEMENT AND THE BENEFITS THEREOF, THE ADMINISTRATIVE AGENT, ANY ISSUER AND ANY LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS SUBORDINATION AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BORROWER OR SUCH SUBORDINATED CREDITOR AND EACH SUCH PERSON ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS CONTINUING TO MAKE CREDIT EXTENSIONS UNDER THE CREDIT AGREEMENT AND FOR THE SUBORDINATED CREDITOR ENTERING INTO THIS SUBORDINATION AGREEMENT. SECTION 20. EXECUTION IN COUNTERPARTS. This Subordination Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. -11- 172 IN WITNESS WHEREOF, the parties have caused this Subordination Agreement to be duly executed and delivered as of the date first above written. KEEBLER FOODS COMPANY By:________________________ Name: Title: [NAME OF SUBSIDIARY] By:________________________ Name: Title: Address:_____________________ _____________________ Facsimile No.: (___) ___-____ Attention:___________________ -12- 173 EXHIBIT H SOLVENCY CERTIFICATE KEEBLER FOODS COMPANY This Certificate (this "CERTIFICATE") is delivered pursuant to Section 5.1.8 of the Credit Agreement, dated as of September 28, 1998 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Keebler Foods Company, a Delaware corporation (the "BORROWER"), the various financial institutions as are or may become parties thereto (collectively, the "LENDERS"), The Bank of Nova Scotia, as Administrative Agent and The First National Bank of Chicago, as Syndication Agent. Unless otherwise defined herein, terms used herein have the meanings provided in the Credit Agreement. The undersigned hereby certifies that he is the chief financial Authorized Officer (in such capacity, the "CFO") of the Borrower, and that, as such, he is authorized to execute this Certificate on behalf of the Borrower. Any term or provision hereof to the contrary notwithstanding, the CFO is executing this Certificate in his capacity as an officer of, and solely on behalf of, the Borrower and its Subsidiaries, and not in his individual capacity. On behalf of the Borrower and its Subsidiaries, the CFO further certifies that: (a) The CFO has knowledge of, and has participated in, the preparation and negotiation of the Credit Agreement, each other Loan Document, and the Purchase Agreement and the agreements executed in connection therewith and the transactions, including the Acquisition, contemplated thereunder. (b) The CFO is familiar with the finances of the Borrower and its Subsidiaries and has participated in the preparation of all financial statements of each of the Borrower and its Subsidiaries, including the Pro Forma Balance Sheet and related statements of earnings and cash flow. The CFO has also participated in the development of financial projections for the Borrower and its Subsidiaries giving effect to the Acquisition and the financing and transactions contemplated pursuant to and in connection with the Credit Agreement. (d) Based upon the foregoing and on a PRO FORMA basis after giving effect to the transactions, including the Acquisition, contemplated under the Credit Agreement, as of the date of the initial Credit Extension under the Credit Agreement: (i) the fair value of the assets of the Borrower and each of its Subsidiaries will exceed the total amount of liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Borrower and each such Subsidiary, on a going-concern basis; 174 (ii) the present fair salable value of the assets of the Borrower and each of its Subsidiaries will exceed the probable total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Borrower and each such Subsidiary as they become absolute and matured; (iii) the Borrower and each of its Subsidiaries will be able to pay its debts, including contingent liabilities, as they mature and become due; (iv) the Borrower and each of its Subsidiaries is not, and will not be, engaged in a business for which its capital is, or would be, unreasonably small; and (v) the Borrower and each of its Subsidiaries has not incurred (by way of assumption or otherwise) any obligation or liability (contingent or otherwise) under the Credit Agreement or any other Loan Documents to which it is a party, nor has it made any conveyance pursuant to or in connection therewith, with actual intent to hinder, delay or defraud either present or future creditors of the Borrower or any of its Subsidiaries or Affiliates, as the case may be. (e) A copy of the Pro Forma Balance Sheet as of the date of the initial Credit Extension under the Credit Agreement, after giving effect to the consummation of the Sunshine Acquisition and all the transactions contemplated by the Credit Agreement (including the increased Commitment Amounts thereunder) is attached hereto as ANNEX I. -2- 175 IN WITNESS WHEREOF, the undersigned chief financial Authorized Officer has caused the Certificate to be duly executed and delivered as of the date first above written. KEEBLER FOODS COMPANY By:__________________________________ Title: -3- -----END PRIVACY-ENHANCED MESSAGE-----