-----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, Bw8EAGpy+IoXpPTdzijb5THvMPYjH8mXVMWBnBKvc4WY4vaoIODpR/i+gEx5TwaI /iq0Ppt77Ek+Sm/xgzrM6A== /in/edgar/work/20000727/0001029506-00-000028/0001029506-00-000028.txt : 20000921 0001029506-00-000028.hdr.sgml : 20000921 ACCESSION NUMBER: 0001029506-00-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000714 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RALCORP HOLDINGS INC /MO CENTRAL INDEX KEY: 0001029506 STANDARD INDUSTRIAL CLASSIFICATION: [2040 ] IRS NUMBER: 431766315 STATE OF INCORPORATION: MO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12619 FILM NUMBER: 680313 BUSINESS ADDRESS: STREET 1: 800 MARKET STREET STREET 2: SUITE 2900 CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3148777000 MAIL ADDRESS: STREET 1: 800 MARKET STREET STREET 2: SUITE 2900 CITY: ST LOUIS STATE: MO ZIP: 63101 FORMER COMPANY: FORMER CONFORMED NAME: NEW RALCORP HOLDINGS INC DATE OF NAME CHANGE: 19961223 8-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 14, 2000 Ralcorp Holdings, Inc. (Exact name of registrant as specified in its charter) Missouri 1-12619 43-1766315 (State or other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) 800 Market Street, Suite 2900 St. Louis, MO 63101 (Address of principal (Zip Code) executive offices) (314) 877-7000 (Registrant's telephone number, including area code) Item 2. Acquisition of Assets On July 14, 2000 Ralcorp Holdings, Inc., through one of its subsidiaries, purchased all issued and outstanding capital stock of RHM Holdings (USA), Inc. for $132.5 million in cash, subject to certain post-closing adjustments related to the closing net working capital. RHM Holdings (USA), Inc. owns The Red Wing Company, Inc. which manufactures shelf-stable, wet filled food products. The purchase was effected through a stock purchase agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of June 16, 2000, a copy of which is included as Exhibit 2.1(a) hereof. The Registrant financed the acquisition through borrowings under a $200 million credit facility with Bank One, N.A., Wachovia Bank, N.A., and PNC Bank, National Association a copy of which is included as Exhibit 2.2 hereto. Item 7. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. Financial statements required by this item will be filed no later than 60 days from the date of this report. (b) Pro Forma Financial Information. Financial statements required by this item will be filed no later than 60 days from the date of this report. (c) Exhibits Exhibit 2.1(a) Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of June 16, 2000. Exhibit 2.1(b) Amendment No. 1 to Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of July 14, 2000. Exhibit 2.1(c) Amendment No. 2 to Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of July 14, 2000. Exhibit 2.2 Credit Agreement among Ralcorp Holdings, the lenders named herein, and Bank One, N.A., as Agent dated as of July 10, 2000. Exhibit 99.1 Press Release dated July 16, 2000 announcing the consummation of the purchase of The Red Wing Company, Inc. 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. RALCORP HOLDINGS, INC. (Registrant) Date: July 27, 2000 By: /s/ T. G. Granneman ------------------- T. G. Granneman Duly Authorized Signatory and Chief Accounting Officer EXHIBIT INDEX Exhibit Number Description - ------ ----------- Exhibit 2.1(a) Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of June 16, 2000. Exhibit 2.1(b) Amendment No. 1 to Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of July 14, 2000. Exhibit 2.1(c) Amendment No. 2 to Stock Purchase Agreement between Tomkins Overseas Holdings S.A. and RH Financial Corporation dated as of July 14, 2000. Exhibit 2.2 Credit Agreement among Ralcorp Holdings, the lenders named herein, and Bank One, N.A., as Agent dated as of July 10, 2000. Exhibit 99.1 Press Release dated July 16, 2000 announcing the consum- mation of the purchase of The Red Wing Company, Inc. EX-2.1(A) 2 0002.txt STOCK PURCHASE AGREEMENT EXECUTION COPY STOCK PURCHASE AGREEMENT between TOMKINS OVERSEAS HOLDINGS S.A., and RH FINANCIAL CORPORATION Dated as of June 16, 2000 STOCK PURCHASE AGREEMENT -------------------------- STOCK PURCHASE AGREEMENT, dated as of June 16, 2000 (this "Agreement"), between Tomkins Overseas Holdings S.A., a company organized under the laws of Luxembourg (the "Seller"), and RH Financial Corporation, a Nevada corporation (the "Buyer"). WHEREAS, the Seller owns all of the outstanding shares of capital stock of RHM Holdings (USA) Inc., a Delaware corporation (the "Company"); and WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to purchase from the Seller, 1,103 shares (the "Shares") of common stock, par value $1.00 per share, representing all of the issued and outstanding shares of the Company, upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I --------- SALE OF STOCK --------------- Section 1.1 Purchase and Sale. Upon the terms and subject ----------- to the conditions of this Agreement, at the Closing (as hereinafter defined), the Seller will sell, convey, assign, transfer and deliver to the Buyer, and the Buyer will purchase, acquire and accept from the Seller the Shares, in consideration for which, at the Closing, the Buyer will pay to the Seller an amount equal to $132.5 million dollars in cash less Indebtedness (as hereinafter defined) on the Closing Date (as hereinafter defined) (the "Initial Purchase pursuant to Section 1.2 (as so adjusted, the "Pre-Closing Purchase Price"), by Price"), subject to adjustment wire transfer of immediately available funds to an account or accounts designated by the Seller prior to the Closing. The Pre-Closing Purchase Price shall be subject to adjustment as set forth in Section 1.3 (as so adjusted, the "Purchase Price"). The transactions contemplated by this Section 1.1 are sometimes herein referred to as the "Stock Purchase." Section 1.2 Pre-Closing Purchase Price Adjustment -------------------------------------- (a) On or before the fifth business day prior to the Closing Date, the Seller shall cause to be prepared and delivered to the Buyer a certificate (the "Estimated Net Working Capital Certificate") signed by a senior officer of the Seller setting forth a calculation of the estimated Net Working Capital (as defined below) of the Company as of the Closing Date (the "Estimated Closing Net Working Capital") which shall be prepared in accordance with generally accepted accounting principles in the United Kingdom as consistently applied by the Company in the preparation of its statutory accounting package for Tomkins PLC ("U.K. GAAP") and the Company Accounting Policies (as defined herein). The Buyer shall have forty-eight hours to review the Estimated Net Working Capital Certificate, after which, unless objected to by the Buyer on the basis of fraud or manifest error, for purposes of this Section 1.2, the Estimated Net Working Capital Certificate delivered by the Seller shall be binding on the Buyer and the Seller. In the event that the Buyer objects to the Estimated Net Working Capital Certificate (as provided above), the Buyer and the Seller and their respective representatives shall resolve such objection in a mutually agreeable manner. In order to determine the Pre-Closing Purchase Price, the Initial Purchase Price shall be (i) increased dollar-for-dollar by the amount by which the Estimated Closing Net Working Capital exceeds $36.9 million (the "Base Net Working Capital") or (ii) decreased dollar-for-dollar by the amount by which the Estimated Closing Net Working Capital is less than the Base Net Working Capital. (b) For purposes of this Agreement, "Net Working Capital" means "Total Current Assets" minus "Total Current Liabilities" where: (i) "Total Current Assets" means inventory, trade receivables and cash (for the sake of clarity, book cash inclusive of deposit and other bank credits in transit, if any, and net of outstanding checks and other bank debits not yet cleared) on the Company's consolidated balance sheet (prepared in accordance with U.K. GAAP and the Company Accounting Policies), and (ii) "Total Current Liabilities" means current payables (less than one year) and provisions for liabilities and charges but excluding stay bonus amounts. The parties agree that income taxes, deferred taxes and intercompany accounts payable and receivables will not be included in the foregoing calculation, but third-party long-term Indebtedness other than Indebtedness deducted from the Pre-Closing Purchase Price will be included. For avoidance of doubt, the parties agree that Net Working Capital shall be calculated in the form and based upon (x) the accounts set forth on Exhibit A hereto and (y) the Company Accounting Policies. The parties also agree that there will be no reserves reflected on the certificate setting forth the Closing Net Working Capital in respect of the Aurora Obligation (as defined herein) and in respect of the environmental matters set for in Schedule 4.13 and it being understood that the gross amount of the Aurora Obligation will be reflected on the certificate setting forth the Closing Net Working Capital. Section 1.3 Post-Closing Purchase Price Adjustment ----------------------------------------- (a) As promptly as practicable, but no later than 45 days after the Closing Date, the Seller will cause to be prepared and delivered to the Buyer a certificate of a senior officer of the Seller, setting forth the Net Working Capital of the Company as of the Closing Date (the "Closing Net Working Capital") and the amount of any adjustment to the Pre-Closing Purchase Price pursuant to this Section 1.3, together with supporting calculations (the "Adjustment Certificate"). The Adjustment Certificate shall (x) be accompanied by a draft auditor's report thereon from the Seller's accountants and (y) present fairly in all material respects the Net Working Capital of the Company as of the close of business on the Closing Date (without giving effect to the sale and purchase of the Shares or any subsequent transaction contemplated hereby). Following the Closing, the Buyer shall afford the Seller and its accountants full and complete access to the Company's employees and the work papers of the Company's accountants (subject to the execution of customary confidentiality and other undertakings) on reasonable prior notice throughout the 45 day period following the Closing in order to prepare the Adjustment Certificate. The Buyer shall have 45 days from the date on which the Adjustment Certificate is delivered to it to review such documents (the "Review Period"). The Buyer and its accountants shall be provided with customary access to the work papers of the Seller's accountants in connection with such review, subject to the execution of customary confidentiality and other undertakings. If the Buyer disagrees in any respect with any item or amount shown or reflected in the Adjustment Certificate or with the calculation of the Closing Net Working Capital (other than the definition of such term as set forth in this Agreement), the Buyer may, on or prior to the last day of the Review Period, deliver a notice to the Seller setting forth, in reasonable detail, each disputed item or amount and the basis for the Buyer's disagreement therewith (the "Dispute Notice"). The Dispute Notice shall set forth the Buyer's position as to the proper Closing Net Working Capital. If no Dispute Notice is received by the Seller on or prior to the last day of the Review Period, the Adjustment Certificate shall be deemed accepted by the Buyer. In the event that the Buyer delivers a Dispute Notice to the Seller, the Buyer will concurrently pay to the Seller or the Seller will concurrently pay to the Buyer, as the case may be, any undisputed portion of the amount which would be payable pursuant to the first sentence of Section 1.3(d) if the Adjustment Certificate (and the amount of the Closing Net Working Capital derived therefrom) were deemed accepted by the Buyer, with interest on such amount as provided in Section 1.3(e). All payments made by the Seller or the Buyer pursuant to the preceding sentence shall be made by wire transfer of immediately available funds to an account or accounts designated by the respective party for such purpose. (b) For 30 days after the Seller's receipt of a Dispute Notice, the parties shall endeavor in good faith to resolve by mutual agreement all matters in the Dispute Notice. In the event the parties are unable to resolve by mutual agreement any matter in the Dispute Notice within such 30-day period, the Buyer and the Seller hereby agree that they shall engage KPMG LLP as the "Accountant" (if KPMG LLP is unable or unwilling to serve as the Accountant, the parties shall, within 15 days of the end of such 15-day period, agree on an alternate independent accounting firm or have such selection made pursuant to the rules of the American Arbitration Association (the "AAA") in the event they are unable to agree within such allotted time period) in respect of this Section 1.3. The Seller and the Buyer shall submit the disputed matters, as described in the Dispute Notice, together with a statement of facts agreed to by the Seller and the Buyer and such arguments as either of them choose to make in connection therewith in writing to the Accountant within 20 days after the Accountant's engagement. (c) The Seller and the Buyer shall use reasonable best efforts to cause the Accountant to resolve the disputed matters based upon the materials submitted to it pursuant to the last sentence of Section 1.3(b) within 30 days following the submission of such materials and the Accountant shall not make any other determination. In connection with its resolution of the dispute, the Accountant shall deliver to the Seller and the Buyer a report (the "Adjustment Report") in which the Accountant shall, after considering all matters set forth in the Dispute Notice, determine what adjustments, if any, should be made to the Adjustment Certificate in order for it to comply with this Section 1.3 and shall determine the appropriate Closing Net Working Capital on that basis. The Adjustment Report shall set forth, in reasonable detail, the Accountant's determination with respect to each of the disputed items or amounts specified in the Dispute Notice, and the revisions, if any, to be made to the Adjustment Certificate and the Closing Net Working Capital, together with supporting calculations. All fees and expenses relating to this work of the Accountant shall be borne by the Seller and the Buyer in inverse proportion as they may prevail on the matters resolved by the Accountant, which proportionate allocation will also be determined by the Accountant and be included in the Adjustment Report. The Adjustment Report shall be final and binding upon the Buyer and the Seller, shall be deemed a final arbitration award that is binding on each of the Buyer and the Seller, and no party shall seek further recourse to courts, other tribunals or otherwise, other than to enforce the Adjustment Report. Judgment may be entered to enforce the Adjustment Report in any court having jurisdiction over the party against which such determination is to be enforced. (d) Effective upon the end of the Review Period (if a timely Dispute Notice is not delivered), or upon the resolution of all matters set forth in the Dispute Notice by mutual agreement of the parties or by the issuance of the Adjustment Report (if a timely Dispute Notice is delivered), the Pre-Closing Purchase Price shall be (i) increased dollar-for-dollar by the amount by which the Closing Net Working Capital exceeds the Estimated Closing Net Working Capital or (ii) decreased dollar-for-dollar by the amount by which the Closing Net Working Capital is less than the Estimated Closing Net Working Capital. Any adjustment to the Purchase Price pursuant to this Section 1.3 shall be paid by the Buyer or the Seller, as the case may be, together with interest as provided in Section 1.3(e), (i) on the fifth business day following the end of the Review Period (if a timely Dispute Notice is not delivered), or (ii) (A) with respect to undisputed amounts paid pursuant to the last sentence of Section 1.3(a), concurrently with the delivery of a Dispute Notice to the Seller and (B) giving effect to any payment made by the Buyer or the Seller as described in the foregoing clause (A), five business days after resolution of all matters set forth in the Dispute Notice by mutual agreement of the parties or five business days after the date on which the Adjustment Report has been received by the Seller and the Buyer (if a timely Dispute Notice is delivered). Any such payment shall be made by wire transfer of immediately available funds to an account or accounts designated by the Buyer or the Seller, as the case may be, prior to the applicable payment date. (e) Any interest payable pursuant to Section 1.3(a) or 1.3(d) shall be paid at an annual rate equal to the "Prime Rate" as reported in the Wall Street Journal on the Closing Date and shall be calculated on the basis of - -------------------- the actual days elapsed between the Closing Date and the payment date over 360 days. Section 1.4 Time and Place of Closing ---------------------------- Upon the terms and subject to the conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, at 9:00 a.m. (New York City time) on the third business day following the date on which all the conditions that are susceptible to being satisfied prior to the Closing to each party's obligations hereunder have been satisfied or waived, or at such other date, place or time as the parties may agree. The Closing will be effective at 11:59 P.M., New York City time, on the Closing Date. The date on which the Closing occurs and the transactions contemplated hereby become effective is referred to herein as the "Closing Date." Section 1.5 Deliveries by the Seller --------------------------- Subject to the terms and conditions hereof, at the Closing, the Seller will deliver the following to the Buyer: (a) A certificate or certificates representing the Shares, accompanied by stock powers duly endorsed in blank or accompanied by duly executed instruments of transfer; (b) The resignations of all members of the board of directors of the Company and its Subsidiaries (as hereinafter defined) and all officers of the Company and its Subsidiaries who are employees of the Seller; (c) A "FIRPTA" certificate substantially in the form set forth as Exhibit B hereto; (d) The officer's certificate provided for in Section 5.3(c); (e) The opinions of counsel to the Seller, substantially in the form of Exhibits C-1 and C-2 hereto; (f) The Seller shall have delivered or to the Buyer a certificate from an appropriate officer setting forth the authorization of the execution of the Agreement and all agreements, documents and instruments to be executed in connection herewith and the taking of any and all actions deemed necessary or advisable to consummate the transactions contemplated herein; and (g) All other documents, instruments and writings required to be delivered by the Seller at or prior to the Closing Date pursuant to this Agreement. Section 1.6 Deliveries by the Buyer -------------------------- Subject to the terms and conditions hereof, at the Closing, the Buyer will deliver the following to the Seller: (a) The Pre-Closing Purchase Price, in immediately available funds, in the manner set forth in Section 1.1 hereof; (b) The officer's certificate provided for in Section 5.2(c); and (c) All other documents, instruments and writings required to be delivered by the Buyer at or prior to the Closing Date pursuant to this Agreement. Section 1.7 Books and Records of the Company ------------------------------------- The Seller agrees to deliver to the Buyer or the Company at the Closing, as requested by the Buyer, all books and records of the Company and its Subsidiaries, including, but not limited to, correspondence, memoranda, minute books, shareholder lists, books of account, personnel and payroll records and the like, in electronic or paper formats, provided, however, that neither the -------- ------- Buyer nor any of its affiliates shall have the right to receive or obtain any information relating to Taxes (as hereinafter defined) or Tax Returns (as hereinafter defined) of the Seller, any of its affiliates, or any of their respective predecessors other than information relating solely to the Company or its Subsidiaries; however, data or work papers of the Company and any Subsidiary of the Company contained in consolidated, combined or unitary Tax Returns shall be made available to Buyer. As used in this Agreement, a "Subsidiary" of any person means another person, (a) an amount of the voting securities, other voting ownership or voting partnership or membership interests of which is sufficient to elect at least a majority of its board of directors or other governing body is owned or controlled directly or indirectly by such person or (b) 50% or more of the equity interests of which is owned or controlled directly or indirectly by such person. Section 1.8 Transition Services -------------------- Except as agreed to in writing by the Seller and the Buyer, at the Closing all data processing, accounting, insurance (except for insurance policies of the Seller which provide coverage with respect to pre-Closing occurrences to the Company), banking, personnel, legal, communications and other products and services provided to the Company and its Subsidiaries by the Seller or any affiliate of the Seller (other than the Company or any of its Subsidiaries) (including those identified in Section 2.18 of the disclosure schedule of the Seller (the "Company Disclosure Schedule") including any agreements or understandings (written or oral) with respect thereto, will terminate without any further action or liability on the part of the parties thereto. Notwithstanding the foregoing, in the absence of a written agreement, the provision of any services (similar to those contemplated by the preceding sentence) by the Seller to the Company or any of its Subsidiaries from and after the Closing shall be for the convenience, and at the expense, of the Buyer only and shall be furnished without any liability on the part of the Seller with respect thereto. Section 1.9 Intercompany Accounts ---------------------- Prior to the Closing Date, all intercompany accounts (including, without limitation, intercompany loans) between the Company or one of its Subsidiaries, on the one hand, and the Seller and its affiliates (excluding the Company and its Subsidiaries), on the other hand, shall be settled through a cash payment of the full amount of the respective obligation by the obligor to the creditor party. Section 1.10 Treatment of Seller Guaranties ------------------------------ Following the Closing, the Buyer shall cause the Company to use its reasonable best efforts to release and cancel the agreements set forth on Section 1.10 of the Company Disclosure Schedule (the "Seller Guaranties"); provided, however, that to the extent that any of the Seller Guaranties cannot --- ------- be so released and cancelled, the Buyer shall use its reasonable best efforts to cause itself to be substituted for the Seller or any of its affiliates in respect of such Seller Guaranties (or if not possible, added as the primary obligor with respect thereto). In any event, the Buyer shall indemnify, defend and hold harmless the Seller or its affiliates with respect to all liabilities or expenses that might arise or be incurred by the Seller or its affiliates with respect to the Seller Guaranties. For purposes of this Section 1.10, "reasonable best efforts" shall not be deemed to require the payment of money to any lenders, bond holders, trustees or their legal counsel or the payment of any increased interest or other charges to said entities in an amount exceeding in the aggregate $100,000. The Buyer agrees to make payments, up to an aggregate of $100,000 to any lenders, bond holders, trustees or their legal counsel in order to have the Seller Guarantees released and cancelled and the Seller agrees to make any payments in excess of $100,000 in connection therewith. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER ------------------------------------------------- The Seller hereby represents and warrants to the Buyer as follows: Section 2.1 Organization; Etc. ------------------- (a) Each of the Company and its Subsidiaries: (i) is a corporation validly existing and in good standing under the laws of its jurisdiction of organization; (ii) has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business substantially as it is now being conducted; and (iii) is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership, operation or leasing of its properties makes such qualification necessary (each of such jurisdictions being listed in Section 2.1 of the Company Disclosure Schedule), except where the failure to be existing and in good standing, to have such power and authority or to be so qualified would not, individually or in the aggregate, have a Company Material Adverse Effect (as hereinafter defined). Section 2.1 of the Company Disclosure Schedule sets forth a complete list, as of the date of this Agreement and the Closing Date, of all of the Subsidiaries of the Company and their respective jurisdictions of organization and capitalization. Except as set forth in Section 2.1 of the Company Disclosure Schedule, the Company does not own any equity interest in any corporation or other entity. The Seller has previously delivered to the Buyer true and correct copies of the certificate of incorporation and by-laws or comparable organizational documents of the Company and its Subsidiaries (collectively, the "Organizational Documents") as in effect on the date hereof. Neither the Company nor any of its Subsidiaries is in default of, or in violation of, any provision of its respective Organizational Documents or resolutions of its Board of Directors. (b) As used in this Agreement, the term "Company Material Adverse Effect" shall mean a material adverse change in, or effect on, the business, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole; provided, however, that in -------- ------- determining whether a Company Material Adverse Effect has occurred, the effects of changes that exist on the date hereof and have been reflected in this Agreement or disclosed in the Company Disclosure Schedule or that are generally applicable to the industries in which the Company and its Subsidiaries operate or to the United States economy generally shall be excluded from such determination. Section 2.2 Authority Relative to this Agreement ---------------------------------------- The Seller has the corporate power and authority to execute, perform and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of the Seller. This Agreement has been duly and validly executed and delivered by the Seller and (assuming this Agreement has been duly authorized, executed and delivered by the Buyer) constitutes a valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally and (b) enforcement of this Agreement, including, among other things, the remedy of specific performance and injunctive and other forms of equitable relief, may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Section 2.3 Capitalization; Ownership of Shares -------------------------------------- (a) The Shares represent all of the outstanding capital stock in the Company. All Shares are validly issued, fully paid and nonassessable. Except for the Shares, there are not, and at the Closing there will not be, any capital stock or other equity interests in the Company issued or outstanding or any subscriptions, voting trusts or other voting agreements, options, purchase agreements, warrants, calls, rights, convertible securities or other agreements or commitments of any character obligating the Company to issue, transfer or sell any of its capital stock or other equity interests, or any agreements, arrangements, or understandings granting any person any rights in the Company similar to capital stock or other equity interests. (b) All of the Shares are owned of record and beneficially by the Seller free and clear of all liens, easements, pledges, charges, claims, options, security interests, conditional sale or other encumbrances, except for liens relating to Taxes not yet due and payable (collectively, "Liens"). The consummation of the Stock Purchase will convey to the Buyer good title to the Shares, free and clear of all Liens, except for those created by the Buyer or arising out of ownership of the Shares by the Buyer. (c) Except as set forth in Section 2.3(c) of the Company Disclosure Schedule, all of the outstanding shares of capital stock of each of the Company's Subsidiaries are beneficially owned by the Company, directly or indirectly, and all such shares are validly issued, fully paid and nonassessable and are owned by either the Company or one of its Subsidiaries free and clear of all Liens. Except for the shares of capital stock referred to in the preceding sentence, there are not, and at the Closing there will not be, any capital stock or other equity interests in any Subsidiary of the Company issued or outstanding or any subscriptions, voting trusts or other voting agreements, options, purchase agreements, warrants, calls, rights, convertible securities or other agreements or commitments of any character obligating such Subsidiary or any of its affiliates to issue, transfer or sell any capital stock or other equity interests, or any agreements, arrangements or understandings granting any person any rights in such Subsidiary similar to capital stock or other equity interests. Section 2.4 Consents and Approvals; No Violations ----------------------------------------- Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "H-S-R Act"), or as set forth in Section 2.4 of the Company Disclosure Schedule, neither the execution and delivery of this Agreement by the Seller, nor the consummation by the Seller or the Company of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws or comparable organizational documents of the Seller, the Company or any Subsidiary of the Company, (b) result in a material violation or breach of, or constitute (with or without due notice or lapse of time or both) a material default (or give rise to any right of termination, renegotiation, cancellation or acceleration) under, or require any material consent or notice under, any material indenture, license, contract, agreement or other instrument or obligation to which the Seller, the Company or any Subsidiary of the Company is a party or by which any of them or any of their respective properties or assets are bound, (c) materially violate any order, writ, injunction, judgment, decree or award rendered by any Governmental Entity (as hereinafter defined) or any statute, rule, code, treaty or regulation (collectively, "Laws" and, individually, a "Law") applicable to the Seller, the Company or any Subsidiary of the Company or any of their respective properties or assets, or (d) require any material filing with, or the obtaining of any material notice, registration, report, permit, authorization, consent or approval of, any governmental or regulatory authority or court, domestic or foreign (a "Governmental Entity"), except in the case of clauses (b), (c) and (d) of this Section 2.4 for any such violations, breaches, defaults, rights of termination, cancellation or acceleration or requirements that, individually or in the aggregate, (x) would not adversely affect the ability of the Seller to consummate the transactions contemplated by this Agreement or (y) become applicable as a result of the business or activities in which the Buyer is or proposes to be engaged (in each case, other than activities of the Company and its Subsidiaries) or as a result of any acts or omissions by, or the status of or any facts pertaining to, the Buyer. Section 2.5 Financial Statements --------------------- (a) Section 2.5(a) of the Company Disclosure Schedule contains the audited consolidated balance sheets of the Company as of April 29, 2000, May 1, 1999, May 2, 1998, and May 3, 1997 and the related audited profit and loss account of the Company for the periods then ended (collectively, the "Annual Financial Statements"). The Annual Financial Statements present fairly in all material respects the consolidated financial condition of the Company and its Subsidiaries as of such date and the results of its operations for the fiscal periods then ended. (b) The Annual Financial Statements, including the related schedules thereto, have all been prepared in accordance with (i) the Company's accounting policies consistently applied to the periods included therein as set forth in Section 2.5(b) of the Company Disclosure Schedule (the "Company Accounting Policies") and (ii) U.K. GAAP consistently applied throughout the periods included therein except as may be indicated in the notes thereto. (c) Section 2.5(c) of the Company Disclosure Schedule contains the Company's statement of cash flows for periods covered by the Financial Statements (the "Cash Flow Statements"). The Cash Flow Statements (i) have been prepared from the books and records of the Company; (ii) were prepared in accordance with the Company Accounting Policies; and (iii) present fairly in all material respects the cash flows of the Company for the periods presented. Section 2.6 Absence of Undisclosed Liabilities ------------------------------------- Except for (a) current liabilities or current obligations incurred in the ordinary course of business and consistent with past practice since January 29, 2000, (b) liabilities or obligations to the extent accrued or reserved against in the Financial Statements or (c) liabilities or obligations disclosed herein or in the Company Disclosure Schedule, the Company and its Subsidiaries have no liabilities or obligations (whether direct, indirect, accrued, contingent or otherwise) that individually or in the aggregate would have a Company Material Adverse Effect. Section 2.7 Absence of Certain Changes ---------------------------- Except as set forth in Section 2.7 of the Company Disclosure Schedule or as otherwise contemplated by this Agreement, since January 29, 2000 through the date of this Agreement and the Closing Date, (i) the business of the Company and its Subsidiaries has been conducted only in the ordinary course, (ii) there has not been any development or event that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, and (iii) to the knowledge of the Seller, there has not been any transaction, act, circumstance or event that if it occurred after January 29, 2000 without the prior consent of the Buyer would constitute a breach of Section 4.1 assuming that Section 4.1 is applicable only for the specific purposes of this representation. Section 2.8 Litigation ---------- Section 2.8 of the Company Disclosure Schedule sets forth, as of the date hereof, all actions, hearings, suits, complaints, appeals, arbitrations, written employee grievances, claims, proceedings (collectively, "Legal Proceedings") or, to the knowledge of the Seller, governmental investigations pending or, to the knowledge of the Seller, threatened against the Seller, the Company or any of the Company's Subsidiaries or that challenge or that may have the effect of preventing, delaying, making illegal or otherwise interfering with consummation of the transactions contemplated by this Agreement, by or before any court or Governmental Entity. Since the date hereof to the Closing, except as set forth in Section 2.8 of the Company Disclosure Schedule, no Legal Proceedings shall have been filed or, to the knowledge of the Seller, governmental investigations instituted, or to the knowledge of the Seller, threatened against the Seller, the Company or any of the Company's Subsidiaries or that challenge or that may have the effect of preventing, delaying, making illegal or otherwise interfering with consummation of the transactions contemplated by this Agreement, by or before any court or Governmental Entity. Section 2.9 Compliance with Law --------------------- (a) The business of the Company and its Subsidiaries is not being and has not been conducted in material violation of any applicable Law (other than Environ- mental Laws (as defined in Section 2.19(b)) which are the subject of the representations and warranties set forth in Section 2.19) or (with or without the lapse of time or giving of notice) any order, decision, finding, citation, subpoena, verdict, writ, injunction or decree of any court, arbitrator or Governmental Entity. The Company and its Subsidiaries have (i) all permits, licenses, waivers and other governmental authorizations, consents, and approvals necessary to conduct their business as currently conducted (collectively, the "Permits"), or (ii) are capable of obtaining all Permits without incurring, individually or in the aggregate, any material fine, penalty or liability. Neither the Company nor any of its Subsidiaries is in violation of the terms of any Permit, except for violations that, alone or in the aggregate, would not have a Company Material Adverse Effect. The Company is not subject to any unpaid fine for any continuing sanction or noncompliance with any Law. (b) To the knowledge of the Seller, there is no investigation or review pending or threatened by any Governmental Entity with respect to the Company or its Subsidiaries or any of their business facilities, operations, agreements, products or labels. (c) All of the packaging and labels therein (including, but not limited to, nutritional, net weight, ingredient declaration and claims) used by the Company and its Subsidiaries comply in all material respects with applicable Law. (d) The Company and its Subsidiaries have not received any written notice or written communication alleging material noncompliance by the Company or any of its Subsidiaries with any Law or Permit that has not been cured. Section 2.10 Employee Benefit Plans ------------------------ (a) Section 2.10(a) of the Company Disclosure Schedule contains a true and complete list, as of the date of this Agreement and as of the Closing Date, of each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity compensation or ownership plan, program, agreement or arrangement, each severance or termination pay, medical, surgical, hospitalization, life insurance and other "welfare" plan, fund or program (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other "pension" plan, fund or program (within the meaning of Section 3(2) of ERISA); each employment, retention, consulting, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by the Company or any of its Subsidiaries, or to which the Company or any of its Subsidiaries is a party or is financially responsible, for the benefit of any employee or director or former employee or director (or any of their respective beneficiaries), of the Company or its Subsidiaries (the "Company Plans"). (b) With respect to each Company Plan, the Seller has heretofore delivered or made available to the Buyer true and complete copies of all of the following documents: (i) a copy of the Company Plan and any amendments thereto; (ii) a copy of the most recent annual report on Internal Revenue Service Form 5500 and actuarial report, if required under ERISA, and the most recent report prepared with respect thereto in accordance with Statement of Financial Accounting Standards No. 87; (iii) a copy of the most recent Summary Plan Description required under ERISA with respect thereto; (iv) if the Company Plan is funded through a trust or any third-party funding vehicle, a copy of the trust or other funding agreement and the latest financial statements thereof and all related agreements; and (v) the most recent determination letter or pending determination letter received from the Internal Revenue Service with respect to each Company Plan intended to qualify under Section 401 or 501(c) of the Internal Revenue Code of 1986, as amended (the "Code"). (c) No liability under Title IV or Section 302 of ERISA has been incurred by the Company or any of its Subsidiaries that has not been satisfied in full, and no condition exists that presents a material risk to the Company or any of its Subsidiaries of incurring any such liability, other than liability for premiums due the Pension Benefit Guaranty Corporation (the "PBGC") (which premiums have been paid when due). No Company Plan has, to the knowledge of the Seller, engaged in a "prohibited transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA), no Company Plan subject to Title IV of ERISA (a "Title IV Company Plan") has been terminated by the PBGC or has been the subject of a "reportable event" (as defined in Section 4043 of ERISA and the regulations thereunder) for which the 30-day notice requirement has not been waived and the Company has not received any notice of intent by the PBGC to terminate any such Company Plan. (d) With respect to each Title IV Company Plan, the present value of accrued benefits under such Title IV Company Plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such Title IV Company Plan's actuary with respect to such Title IV Company Plan did not exceed, as of its latest valuation date, the then current value of the assets of such Title IV Company Plan allocable to such accrued benefits. (e) No Title IV Company Plan or any trust established thereunder has incurred any "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each Title IV Company Plan ended prior to the Closing Date. (f) Neither the Company nor any ERISA Affiliate (as defined below) has withdrawn (including a partial withdrawal) from any multi-employer plan within the meaning set forth in Section 3(37) of ERISA ("Multi-Employer Plan") with respect to which there is or could reasonably expected to be any outstanding liability. No event has occurred or circumstance exists (including the consummation of the transaction contemplated in this Agreement) that could reasonably be expected to result in liability to the Buyer, the Company or any of its Subsidiaries with respect to a Multi-Employer Plan. "ERISA Affiliate" means the Company and any other entity that, together with the Company, would be treated as a single employer under Section 414 of the Code. (g) Each Company Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including but not limited to ERISA and the Code, and each Company Plan intended to be "qualified" under Section 401(a) of the Code either has received a favorable determination letter from the Internal Revenue Service to such effect or a request for such letter is pending. To the knowledge of the Seller, there is no fact, condition or set of circumstances existing that would adversely affect such favorable determination. To the knowledge of the Seller, there are no investigations pending or threatened in respect of any Company Plan by any governmental entity. (h) Except as set forth on Schedule 2.10(h), no Company Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees (or their beneficiaries) of the Company or any of its Subsidiaries for periods extending beyond their respective dates of retirement or other termination of service, other than (i) coverage mandated by applicable law, (ii) death benefits under any "pension plan" or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). (i) Section 2.10(i) of the Company Disclosure Schedule sets forth in reasonable detail the calculation, on an individual by individual basis, of any amounts payable or that could become payable under the Company Plans that may fail to be deductible for Federal income tax purposes by virtue of Section 280G of the Code. (j) The consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee, director or officer of the Company or any of its Subsidiaries to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee, director or officer or (iii) require the immediate funding or financing of any compensation or benefits. (k) Except as set forth in Section 2.10(k) of the Company Disclosure Schedule, there are no pending, or to the knowledge of the Seller, threatened or anticipated claims by or on behalf of any Company Plan, by any employee or beneficiary covered under any such Company Plan, or otherwise involving any such Company Plan (other than routine claims for benefits). (l) No statement, either written or oral, has been made by the Company or its Subsidiaries or the Seller or its affiliates to any person with regard to any Company Plan that was not in accordance with the applicable Company Plan and that would be reasonably likely to have an adverse economic consequence to the Buyer, or the Company or its Subsidiaries. Section 2.11 Labor Relations ---------------- Except as set forth in Section 2.11 of the Company Disclosure Schedule, (a) the Company and its Subsidiaries are and have been, in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health, and are not engaged in any unfair labor practices as defined in the National Labor Relations Act or other applicable Law; (b) there is no labor strike, labor arbitration or grievance, slowdown, stoppage, lockout or other labor dispute actually pending, or, to the knowledge of the Seller, threatened against or affecting the Company or any of its Subsidiaries; (c) neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining or similar agreement with any labor organization; (d) no unfair labor practice charge has been properly served on the Company or any of its Subsidiaries by any employee of the Company or union with the National Labor Relations Board in accordance with applicable Law or other legal requirements; (e) to the knowledge of the Seller, there are no activities or proceedings of any labor union or labor organization to organize any of the employees of the Company or any of its Subsidiaries; and (f) to the knowledge of the Seller, there are no other arrangements (whether written or oral) between the Company or its Subsidiaries and any union other than those collective bargaining agreement or Company Plans set forth on Section 2.10 of the Company Disclosure Schedule. Section 2.12 Taxes ----- Except as would not have a Company Material Adverse Effect or as set forth on Section 2.12 of the Company Disclosure Schedule: (a) The Company and each of its Subsidiaries (i) has filed (or there has been filed on its behalf) with the appropriate taxing authorities all Tax Returns (as defined in Section 4.7) required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects, and (ii) has paid or made adequate provision in the Closing Balance Sheet for the payment of all Taxes (as defined in Section 4.7) shown to be due and payable on such Tax Returns; (b) There are no outstanding waivers in writing regarding the application of any statute of limitations in respect of Taxes of the Company or any of its Subsidiaries; (c) To the knowledge of the Seller, there is no suit, audit, claim or assessment pending or proposed in writing with respect to Taxes of the Company or any of its Subsidiaries; (d) There are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries, except for Liens for Taxes being contested in good faith; and (e) There are no written assessments of Taxes from any taxing authority against the Company or its Subsidiaries except for those reflected on the Interim Balance Sheet or the Closing Balance Sheet. Section 2.13 Contracts --------- (a) Section 2.13(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, all written or oral contracts and agreements to which the Company or any of its Subsidiaries is a party or by which any of its properties or assets are bound that are material to the business, properties or assets of the Company and its Subsidiaries, taken as a whole, including, without limitation: (i) employment, personal services, consulting, non-competition, severance, golden parachute or director or officer indemnification agreements or any employee indemnification agreement; (ii) contracts granting a right of first refusal or first negotiation with respect to any assets or line of business of the Company or any of its Subsidiaries or which restrict the Company and its Subsidiaries from engaging in any business or from competing with other persons in any territories or businesses; (iii) partnership, profit sharing or joint venture agreements; (iv) agreements for the acquisition, sale or lease of properties, ingredients or fixed assets of the Company or any of its Subsidiaries (by merger, purchase or sale of assets or stock or otherwise) entered into since June 30, 1999 for aggregate consideration per agreement of $50,000 or more; (v) contracts or agreements with any Governmental Entity; (vi) leases for the Leased Real Property (as hereinafter defined); (vii) commodity forward purchase contracts for the aggregate consideration per agreement of $50,000 or more; (viii) any broker, distributor, agency or consulting agreement that cannot be cancelled by the Company without penalty, payment or premium on notice of 30 days or less; (ix) any contract or arrangement under which the Company has made a loan to any director, officer, employee, customer or supplier; (x) any contract providing for the payment in excess of $50,000 to or by any person based on sales, purchases or profits in the nature of a commission but not direct payments for the sale of goods; (xi) any contract regarding any Indebtedness; (xii) all collective bargaining agreements; (xiii) each contract for capital expenditures with a remaining balance of $50,000; (xiv) any contract in the nature of a rebate, discount, bonus, slotting allowance or other payment with respect to the sale of any finished goods under which the Company or any of its Subsidiaries is obligated to pay more than $50,000; (xv) any agreement restricting how or where the Company or any of its Subsidiaries can conduct their business; and (xvi) all amendments or supplements of, or commitments and agreements to enter into, any of the foregoing (collectively, together with any such contracts entered into in accordance with Section 4.1 hereof, the "Contracts"). The parties acknowledge and agree that the Buyer shall not be entitled to assert a breach of this Section 2.13(a) in the nature of recovering amounts paid by the Company after the Closing under any Contract omitted from disclosure under Section 2.13(a) of the Company Disclosure Schedule if the liability associated with such omitted Contract has been accrued as a liability in accordance with GAAP on the April 29, 2000 financial statements of the Company as such accruals may be adjusted in the calculation of the Closing Net Working Capital. As used in this Agreement, "Indebtedness" means, for any person, any liability contingent or otherwise and relating to: (i) indebtedness, including interest and any prepayment penalties, expenses, or fees thereon created, issued or incurred by such person for borrowed money (whether by loan or the issuance and sale of debt securities or the sale of property to another person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such person); (ii) obligations of such person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable arising, and accrued expenses incurred, in the ordinary course of business and consistent with such person's customary trade practices; (iii) indebtedness of another person secured by a Lien on the property of such person; whether or not the respective Indebtedness so secured has been assumed by such person; (iv) payment obligations of such person in respect of letters of credit, bankers' acceptances or similar instruments issued or accepted by banks and other financial institutions for account of such person; (v) capital lease obligations of such person; and (vi) indebtedness of others guaranteed by such person. (b) Except as set forth in Section 2.13(b) of the Company Disclosure Schedule: (i) there is no material default under any Contract by the Company or any of its Subsidiaries or, to the knowledge of the Seller, by any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material default thereunder by the Company or any of its Subsidiaries, or to the knowledge of the Seller, any other party; (ii) no party to any such Contract has given notice to the Company or any of its Subsidiaries of or made a claim against the Company or any of its Subsidiaries with respect to any material breach or default thereunder; (iii) as of the date hereof, the Company is not currently in active renegotiation discussions pursuant to any Contract except for Contracts with customers who have purchase orders at a fixed price that may be cancelled by such customers at their convenience; (iv) no Contract contains a provision that expressly permits a party to the Contract to renegotiate the terms of such Contract which would be triggered as a result of the consummation of the transactions contemplated herein; and (v) assuming such Contracts have been duly authorized, executed and delivered by the respective other parties thereto, all the Contracts are valid, binding and enforceable (except as such enforceability may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally) obligations of the Company or one of its Subsidiaries. Section 2.14 Real Property -------------- (a) Section 2.14 of the Company Disclosure Schedule sets forth a list of all real property and interests in real property owned in fee by the Company and its Subsidiaries (the "Owned Real Property") and contracts to purchase real property in fee. Section 2.14 of the Company Disclosure Schedule also sets forth a list of all real property leased or subleased by the Company and its Subsidiaries and the leases with respect thereto (the "Leased Real Property"). With respect to each parcel of Leased Real Property, the Company has not entered into any written sublease, license, option, right, concession or other agreement or arrangement granting to any person the right to use such parcel of Leased Real Property or any portion thereof or interest therein, except as disclosed in Section 2.14 of the Company Disclosure Schedule. The Company or one of its Subsidiaries holds good and marketable title to the Owned Real Property and has valid leasehold interests in the Leased Real Property, free and clear of any Liens, except for the Permitted Liens (as hereinafter defined). As used herein, the term "Permitted Liens" means (i) Liens which are being contested in good faith and by appropriate proceedings; (ii) carriers', warehouseman's, mechanic's, materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are less than $100,000 in amount in the aggregate and which are being contested in good faith and by appropriate proceedings; (iii) recorded easements, rights-of-way, encroachments, restrictions, conditions and other similar encumbrances incurred or suffered in the ordinary course of business that do not materially restrict the current use of the Owned Real Property or Leased Real Property; and (iv) other nonmaterial title defect or Liens that are capable of being cured without expenditures in excess of $25,000. To the knowledge of the Seller, the use and operation of the Owned Real Property and the Leased Real Property, and, to the knowledge of the persons set forth in Section 2.14 of the Company Disclosure Schedule, the planned use of the Owned Real Property and the Leased Real Property as of the date of this Agreement do not violate any order of any Governmental Entity affecting or relating to the Owned Real Property or the Leased Real Property, or any building, zoning, subdivision or other land use or similar Law. There are no pending, or to the knowledge of the Seller, threatened condemnation proceedings relating to the Owned Real Property or the Leased Real Property that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. (b) The Company's facilities located in the City of Dunkirk, New York and referred to as 118 Stegelski Avenue and 26-30 Talcott Street are located on the properties described in Section 7.2 to the Company Disclosure Schedule. To the extent the surveys received by the Buyer as contemplated in Section 4.22 confirm the accuracy of this Section 2.14(b), then the parties agree that such representation shall terminate immediately upon the Closing. To the extent the surveys received by the Buyer as contemplated in Section 4.22 do not confirm the accuracy of this Section 2.14(b), then the parties agree that such representation shall survive the Closing and shall terminate on the second anniversary of the Closing and the terms of Section 7.2(b)(i) shall not apply to a breach of this Section 2.14(b). Section 2.15 Intellectual Property ---------------------- (a) Except as set forth in Section 2.15(a) of the Company Disclosure Schedule, the Company or one of its Subsidiaries has, or will as of the Closing have, such ownership of or such rights by license or other valid and enforceable agreement to use all inventions, patents and patent applications, trademarks and service marks, trademark and service mark registrations and applications, trade names, trade dress, logos, company names, Internet domain names, copyrights, copyright registrations and applications, trade secrets, know-how, production processes (including all technology and equipment used therein), proprietary recipes and formulae and computer software programs (including all data and related documentation) and all common law rights to the foregoing that are used or held for use by the Company and are necessary to permit the Company and its Subsidiaries to conduct their business in substantially the same manner as currently conducted (collectively, the "Intellectual Property"). Section 2.15(a) of the Company Disclosure Schedule lists all (i) trademark and service mark registrations and applications, patent and patent applications and copyright registrations and applications owned by the Company and its Subsidiaries and (ii) material third party patents, copyrights, trademarks and service marks used by the Company and its Subsidiaries, as of the date of this Agreement. (b) The conduct of the business of the Company and its Subsidiaries as currently conducted does not infringe in any material respect upon the proprietary Intellectual Property rights of any third party. To the knowledge of the Seller, there are no present or threatened material infringements of the Intellectual Property by any third party. Except as set forth in Section 2.15(b) of the Company Disclosure Schedule, there are no pending or, to the knowledge of Seller, threatened proceedings or litigation or other adverse claims by any person against the use by the Company or one of its Subsidiaries of any Intellectual Property that is owned by the Company or one of its Subsidiaries or licensed to the Company or one of its Subsidiaries. (c) All computer software programs included in the Intellectual Property (i) were developed by employees of the Company or one of its Subsidi- aries within the scope of their employment, (ii) were developed as "works-made- for-hire" as that term is defined under Section 101 of the United States copyright laws, pursuant to a valid and enforceable written agreement, (iii) were assigned to the Company or one of its Subsidiaries pursuant to a valid and enforceable written agreement or (iv) are duly licensed to the Company or one of its Subsidiaries for use in its business as currently conducted. (d) Section 2.15(d) of the Company Disclosure Schedule sets forth a list of all material Intellectual Property licensed by the Company or any of its Subsidiaries to an unaffiliated party. Section 2.16 Year 2000 Compliance ---------------------- As of the date of this Agreement, the Seller is not aware of any Year 2000 compliance problem in any of its mission critical internal systems and software. In addition, the Seller has not received any notification from any supplier of products and services to the Company of any Year 2000-related disruption in such suppliers' businesses. Section 2.17 Assets ------ Except as set forth in Section 2.17(a) of the Company Disclosure Schedule, the Company and its Subsidiaries have good and marketable title to, or a valid leasehold interest in or right to use by license or otherwise, the properties and assets used or held for use by it on or immediately prior to the date hereof, or reflected in the Financial Statements or acquired after the date thereof (collectively, the "Assets"), free and clear of all Liens, except for (i) properties and assets disposed of in the ordinary course of business consistent with past practice and not in violation of Section 4.1, (ii) Liens for Taxes that are being contested in good faith and (iii) Liens that are not material to the value of the properties or assets encumbered and that do not impair in any material respect the current use or operation of such properties and assets. (b) Except as set forth in Section 2.17(b) of the Company Disclosure Schedule, the Assets include or will include as of the Closing Date, without limitation, all personal property, both tangible and intangible, necessary to conduct the business of the Company and its Subsidiaries substantially in the same manner as conducted by the Company and its Subsidiaries on or immediately prior to the date hereof. Section 2.18 Affiliate Transactions ----------------------- Section 2.18 of the Company Disclosure Schedule sets forth a complete and correct list as of the date hereof of all contracts and agreements (including the products and services provided to the Company by the Seller as referred to in Section 1.8) to which the Company or any of its Subsidiaries, on the one hand, and the Seller or any of its affiliates (other than the Company and its Subsidiaries), on the other hand, are a party that are in effect as of the date hereof. Section 2.19 Environmental Matters ---------------------- (a) Except as set forth in Section 2.19 of the Company Disclosure Schedule: (i) each of the Company and its Subsidiaries is, and have been, in compliance in all material respects with all applicable Environmental Laws and neither the Company nor its Subsidiaries are subject to any order, decree, consent or rule relating to Environmental Laws; (ii) there is no Environmental Claim pending or, to the knowledge of the Seller, threatened, against (A) the Company or any of its Subsidiaries, or (B) any real or personal property or operations which the Seller owns, leases or operates or, to the knowledge of the Seller, formerly owned, operated or leased, in whole or in part; (iii) There have been no storage, treatment or Releases of any Hazardous Materials by the Company or any of its Subsidiaries, or, to the knowledge of the Seller, by any other person that would be reasonably likely to form the basis of any Environmental Claim against the Company or any of its Subsidiaries; (iv) No Hazardous Materials are stored or have been stored by the Company or any of its Subsidiaries, or, to the knowledge of the Seller, by any other person at the Company's Owned Real Estate or Leased Real Estate other than those Hazardous Materials that are (A) necessary to conduct the Company's operations, (B) in quantities reasonably related to the Company's size of operations and (C) not in violation of Environmental Law; (v) the Company and its Subsidiaries possess all Permits required under any Environmental Laws and are in compliance with such Permits in all material respects; and (vi) the Seller has provided the Buyer with accurate copies of all reasonably relevant documents relating to environmental matters. (b) For purposes of this Agreement: (i) "Environmental ClaimEnvironmental Claim" means any and all administrative or judicial actions, demands, information requests, directives, claims, liens, investigations, proceedings or notices of noncompliance, violation or status as a potentially responsible person or otherwise liable party by any person (including, without limitation, any Governmental Entity) relating to or alleging potential liability (including, without limitation, for investigatory or cleanup costs, natural resources damages, property damages, personal injuries or penalties) arising out of or resulting from (A) the presence, or Release or threatened Release into the environment, of any Hazardous Materials at any location; or (B) any violation or alleged violation of any Environmental Law. (ii) "Environmental LawsEnvironmental Laws" means all applicable foreign, federal, state and local Laws and judicial opinions or decisions by administrative law judges in effect on the date hereof and relating to pollution, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or protection of human health including, without limitation, laws and regulations relating to Hazardous Materials. (iii) "Hazardous MaterialsHazardous Materials" means any chemicals, materials or substances, which are defined as "hazardous substanceshazardous substances," "hazardous wasteshazardous wastes," "Hazardous Materialshazardous materials," "asbestos," "extremely hazardous substancesextremely hazardous substances," "toxic," "radioactive materials," "toxic substancestoxic substances," "pollutantspollutants,contaminantspollutants," "contaminants," "petroleum" or "oils" or regulated as such under any Environmental Law; (iv) "ReleaseRelease" means any release, spill, emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including, without limitation, ambient air, soil, surface water, or groundwater) or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or property; and (v) "Remediation Standard" means a numerical standard that defines the concentrations of Hazardous Materials that may be permitted to remain in any environmental media after an investigation, removal, remediation or containment of a Release or threatened Release of Hazardous Materials. Section 2.20 Brokers; Finders and Fees --------------------------- Except for Warburg Dillon Read, whose fees will be paid by the Seller, neither the Seller nor the Company or any of its Subsidiaries has employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees in connection with this Agreement or the transactions contemplated hereby. Section 2.21 Inventory --------- All inventory, finished goods, raw materials, packaged goods or work-in-progress reflected in the Financial Statements as currently owned by the Company and all of its Subsidiaries in the aggregate (a) have been valued at cost or at market, whichever is lower, in accordance with U.K. GAAP, and (b) are of a quality and quantity usable and salable in the ordinary course of business. Section 2.22 Insurance --------- All of the insurance maintained by the Seller on behalf of the Company provides coverage on an occurrence basis except for director and officer liability insurance which is provided on a claims made basis. As of the date hereof, no loss limits of the Seller's insurance policies have been exhausted or materially impaired and except as set forth on Schedule 2.22 of the Company Disclosure Schedule, the Seller has no knowledge of any facts or circumstances that could reasonably be expected to exhaust such limits. All of the Seller's insurance policies which provide the Company with coverage with respect to pre-Closing occurrences will remain in full force and effect after the Closing. At no time since the acquisition of the Company by Tomkins has the Company been without substantially the same insurance coverage as presently in place so as to cause the Company or its insured persons to have a material gap in insurance coverage. Section 2.23 Customers --------- Section 2.23 of the Company Disclosure Schedule lists the top 15 customers of the Company and its Subsidiaries with respect to revenues generated from such customers as of January 31, 2000 (the "Top 15 Customers"). Except as set forth in Section 2.23 of the Company Disclosure Schedule, to the knowledge of the Seller, none of the Top 15 Customers are currently undertaking an account review with the Company or any of its Subsidiaries and the Seller does not reasonably believe that any of the Top 15 Customers are actively considering terminating their business relationship with the Company or any of its Subsidiaries. Section 2.24 Records ------- The corporate record books of the Company and each of its Subsidiaries contain accurate and complete records of all material meetings and accurately reflect all other actions taken by the stockholders and boards of directors of the Company and its Subsidiaries and have been maintained in accordance with good business practices and all applicable Law. Section 2.25 Receivables ----------- Except as set forth in Section 2.25 of the Company Disclosure Schedule, all existing accounts receivable of the Company (including those accounts receivable reflected on the Closing Balance Sheet that have not yet been collected) represent valid obligations of customers of the Company arising from bona fide transactions entered into in the ordinary course of business. Section 2.26 Bank Accounts -------------- Section 2.26 of the Company Disclosure Schedule sets forth the name of each bank, safe deposit company or other financial institution in which the Company or any of its Subsidiaries has an account, lock box or safe deposit box and the names of all persons authorized to draw thereon or have access thereto. Section 2.27 Powers of Attorney -------------------- Except as set forth on Section 2.27 of the Company Disclosure Schedule, there are no outstanding powers of attorney executed by or on behalf of the Company or any of its Subsidiaries in favor of the Seller or its affiliates or any of their respective employees, officers or directors. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER ------------------------------------------------ The Buyer hereby represents and warrants to the Seller as follows: Section 3.1 Organization; Etc. ------------------- The Buyer is a Nevada corporation validly existing and in good standing under the laws of the jurisdiction of its organization. Section 3.2 Authority Relative to this Agreement ---------------------------------------- The Buyer has the corporate power and authority to execute, perform and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of the Buyer. This Agreement has been duly and validly executed and delivered by the Buyer and (assuming this Agreement has been duly authorized, executed and delivered by the Seller) constitutes a valid and binding agreement of the Buyer, enforceable against the Buyer in accordance with its terms, except that (a) such enforcement may be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws, now or hereafter in effect, relating to or limiting creditors' rights generally and (b) enforcement of this Agreement, including, among other things, the remedy of specific performance and injunctive and other forms of equitable relief, may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Section 3.3 Consents and Approvals; No Violations ----------------------------------------- Except for applicable requirements of the H-S-R Act or as set forth in Section 3.3 of the disclosure schedule being delivered by the Buyer to the Seller concurrently herewith (the "Buyer Disclosure Schedule"), neither the execution and delivery of this Agreement by the Buyer nor the consummation by the Buyer of the transactions contemplated hereby will (a) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws of the Buyer, (b) result in a material violation or breach of, or constitute (with or without due notice or lapse of time or both) a material default (or give rise to any right of termination, renegotiation, cancellation or acceleration) under, or require any material consent or notice under, any indenture, license, contract, agreement or other instrument or obligation to which the Buyer or any of its subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound, (c) materially violate any order, writ, injunction, judgment, decree or Laws applicable to the Buyer, any of its subsidiaries or any of their respective properties or assets, or (d) require any material filing with, or the obtaining of any material notice, registration, report, permit, authorization, consent or approval of, any Governmental Entity, except in the case of clauses (b), (c) and (d) of this Section 3.3 for any such violations, breaches, defaults, rights of termination, cancellation or acceleration or requirements that, individually or in the aggregate, would not have a Buyer Material Adverse Effect (as hereinafter defined). As used in this Agreement, the term "Buyer Material Adverse Effect" shall mean an event, change or circumstance that would adversely affect the ability of the Buyer to consummate the transactions contemplated hereby or to perform its obligations hereunder. Section 3.4 Acquisition of Shares for Investment; Ability to ------------------------------------------------ Evaluate and Bear Risk ------------------------- (a) The Buyer is acquiring the Shares for investment and not with a view toward, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling such Shares. The Buyer agrees that the Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act of 1933, as amended, (the "Act") and any applicable state securities Laws, except pursuant to an exemption from such registration under the Act and such Laws. (b) The Buyer (i) is able to bear the economic risk of holding the Shares for an indefinite period, (ii) can afford to suffer the complete loss of its investment in the Shares, and (iii) has knowledge and experience in financial and business matters such that it is capable of evaluating the risks of the investment in the Shares. Section 3.5 Availability of Funds ----------------------- The Buyer has delivered, prior to the date of this Agreement, true and complete copies of the following "highly confident" letter to the Seller received in connection with the financing of the transactions (the "Financing") contemplated by this Agreement: Highly Confident Letter (the "Highly Confident Letter"), dated as of June 14, 2000, from Bank One Corporation in favor the Ralcorp Holdings, Inc. ("Buyer Parent") as in effect on the date hereof. To the knowledge of the Buyer, the Highly Confident Letter is in full force and effect. The financing pursuant to the Highly Confident Letter will provide the Buyer with sufficient funds in cash or cash equivalents to pay the Purchase Price and otherwise to consummate the transactions contemplated by this Agreement. Section 3.6 Litigation ---------- There is no claim, action, suit, proceeding or, to the knowledge of the Buyer, governmental investigation pending or, to the knowledge of the Buyer, threatened against the Buyer or any of its subsidiaries by or before any court or Governmental Entity that, individually or in the aggregate, would have or would reasonably be expected to have a Buyer Material Adverse Effect. Section 3.7 Buyer Acknowledgment --------------------- In entering into this Agreement, the Buyer acknowledges that it has relied, and shall be entitled to rely, solely upon the representations and warranties made in Article II of this Agreement as modified by the Company Disclosure Schedule (and subject to the limitations contained in this Agreement). Section 3.8 Brokers; Finders and Fees ---------------------------- Except for Schroders & Co., whose fees will be paid by the Buyer, neither the Buyer nor any of its affiliates has employed any investment banker, broker or finder or incurred any liability for any investment banking, financial advisory or brokerage fees, commissions or finders' fees in connection with this Agreement or the transactions contemplated hereby. ARTICLE IV COVENANTS OF THE PARTIES --------------------------- Section 4.1 Conduct of Business of the Company --------------------------------------- During the period from the date of this Agreement to the Closing Date, except (x) as otherwise contemplated by this Agreement or the transactions contemplated hereby, (y) for those matters set forth in Section 4.1 of the Company Disclosure Schedule, or (z) consented to by the Buyer in writing, the Seller shall cause the Company and each of its Subsidiaries: (a) to conduct its business and operations in the ordinary course consistent with past practice and, to the extent consistent therewith, use reasonable best efforts to preserve intact its current business organization, use reasonable efforts to keep available the services of its current officers and other key employees and preserve its relationships with those persons having business dealings with it to the end that its goodwill and ongoing businesses shall be unimpaired at the time of the Closing; and (b) not to (i) sell, license or dispose of any of its properties or assets, except finished goods and obsolete assets in the ordinary course of business; (ii) make any loans, advances (other than advances in the ordinary course of business or advances to the Seller) or capital contributions to, or investments in, any other person; (iii) terminate or amend any of its Contracts or licenses, provided that the Company may take such action if the Buyer has not responded to the Company's request for consent (which consent shall not be unreasonably withheld) within two days of such request; (iv) enter into any new Contracts other than renewals of existing agreements or otherwise in the ordinary course of business; (v) enter into or amend any employment, severance or retirement agreement with any employee or increase the compensation of any of the officers or other employees of the Company or any of its Subsidiaries, except for such increases as are granted in the ordinary course of business in accordance with its customary practices (which shall include normal periodic performance reviews and related compensation and benefit increases); (vi) enter into or amend any collective bargaining agreement; provided, however, that if the Buyer shall fail to consent to the Company's entering into any collective bargaining agreement then any events or circumstances that arise from or relate to the Company not entering into such agreement shall not be deemed to (A) be a Company Material Adverse Effect, (B) result in a failure of the conditions set forth in Section 5.3, and the Seller shall have no obligation to indemnify the Buyer Indemnitees for any Buyer Damages (as such terms are hereinafter defined) related thereto; (vii) hire any senior manager (other than any regional sales personnel) without first consulting with the Buyer; (viii) adopt, grant, extend or increase the rate or terms of any bonus, insurance, pension or other Company Plan, payment or arrangement made to, for or with any such officers or employees of the Company or any of its Subsidiaries, except (A) increases required by any applicable Law, and (B) any other benefits payable in any form by the Seller; (ix) make any change in any of its present accounting methods and practices, except as required by changes in U.K. GAAP; (x) license, terminate or allow to lapse any Intellectual Property rights to or from any third party pursuant to an arrangement other than in the ordinary course of business consistent with past practice; (xi) make or authorize any capital expenditures other than in accordance with its annual plan or other than capital expenditures not exceeding $25,000 individually or $100,000 in the aggregate; (xii) settle or compromise any material Tax liability or make any material Tax election, except in the ordinary course of business or consistent with past practice; (xiii) incur any Indebtedness other than from the Seller, issue any debt securities or assume, guarantee or endorse the obligations of any other persons, or mortgage or encumber any of their respective properties or assets; (xiv) amend its certificate of incorporation or by-laws; (xv) issue, sell, pledge or transfer, or propose to issue, sell, pledge or transfer, any shares of its capital stock, or securities convertible into or exchangeable or exercisable for, or options with respect to, or warrants to purchase or rights to subscribe for, any shares of its capital stock or otherwise change its capital stock; (xvi) engage in any transaction with the Seller or any affiliate of the Seller (other than the Company and its Subsidiaries) other than transactions on an arms-length basis or transactions on a basis consistent with past practice; (xvii) cancel or waive any litigation, claims or rights with a value to the Company or any Subsidiary of $25,000; or (xviii) take, or agree to take, any of the foregoing actions. Section 4.2 Access to Information for the Buyer ---------------------------------------- (a) From the date of this Agreement to the Closing, the Seller will cause the Company and its Subsidiaries to (i) give the Buyer and its authorized representatives reasonable access to all books, records, personnel, offices and other facilities and properties of the Company and its Subsidiaries and the Company's accountants, (ii) permit the Buyer to make such copies and inspections thereof as the Buyer may reasonably request and (iii) cause the officers of the Company and its Subsidiaries to furnish the Buyer with such financial and operating data and other information with respect to the business and properties of the Company and its Subsidiaries as the Buyer may from time to time reasonably request; provided, however, that any such access shall be conducted -------- ------- at the Buyer's expense, at a reasonable time, under the supervision of the Seller's or the Company's or its Subsidiaries' personnel and in such a manner as to maintain the confidentiality of this Agreement and the transactions contemplated hereby and not to interfere unreasonably with the normal operation of the business of the Seller, the Company or any Subsidiary of the Company. (b) All such information and access shall be subject to the terms and conditions of the letter agreement (the "Confidentiality Agreement"), between the Buyer and the Seller, dated September 22, 1999. Notwithstanding anything to the contrary contained in this Agreement, none of the Company, any Subsidiary of the Company, the Seller or any affiliate of the Seller shall have any obligation to make available or provide to the Buyer or its representatives a copy of any consolidated, combined or unitary Tax Return filed by the Seller, or any of its affiliates or predecessors, or any related materials. However, data or work papers of the Company and any Subsidiary of the Company contained in such consolidated, combined or unitary Tax Return shall be made available to Buyer. Section 4.3 Consents; Cooperation ---------------------- Each of the Seller and the Buyer shall cooperate, and use its best efforts, to make all filings and obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities and other third parties necessary to consummate the transactions contemplated by this Agreement, including, without limitation, under the H-S-R Act. Each of the Seller and the Buyer shall use its best efforts to make all necessary filings with Governmental Entities contemplated by the preceding sentence no later than five business days after the date hereof and shall furnish each other as promptly as possible such information as is necessary or appropriate in connection with the preparation of such filings or requests from any Governmental Entity for additional information. In addition to the foregoing, the Buyer agrees to provide such assurances as to financial capability, resources and creditworthiness as may be reasonably requested by any third party whose consent or approval is sought hereunder. Section 4.4 No Solicitation ---------------- Neither the Seller nor any of its affiliates (including the Company and its Subsidiaries), or any officers, directors, employees, stockholders, affiliates, agents or representatives of the Seller or any of its affiliates will, directly or indirectly, solicit, initiate or encourage the submission of any proposal or offer from any person other than the Buyer or its directors, officers, employees, or other affiliates or representatives, enter into or continue any discussions or negotiations with, or provide any information to, any person other than the Buyer or its directors, officers, employees or other affiliates or representatives, relating to any (i) merger, consolidation or other business combination involving the Company or any of its Subsidiaries, (ii) restructuring, recapitalization or liquidation of the Company or any of its Subsidiaries, or (iii) acquisition or disposition of any material assets of the Company and its Subsidiaries (taken as a whole) or any of their securities (any such proposal or offer being hereinafter referred to as an "Acquisition Proposal"). The Seller will immediately cease and cause to be terminated any activities, discussions or negotiations conducted prior to the date of this Agreement with any parties other than the Buyer with respect to any of the foregoing. Section 4.5 Best Efforts ------------- Each of the Seller and the Buyer shall cooperate and use its best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the Stock Purchase and the other transactions contemplated by this Agreement. Section 4.6 Public Announcements --------------------- Prior to the Closing, except as otherwise agreed to by the parties, the parties shall not issue any report, statement or press release or otherwise make any public statements with respect to this Agreement and the transactions contemplated hereby, except as in the reasonable judgment of the party may be required by law or in connection with its obligations as a publicly-held, exchange-listed company, in which case the parties will use their reasonable best efforts to reach mutual agreement as to the language of any such report, statement or press release. Upon execution hereof and upon the Closing, the Seller and the Buyer will consult with each other with respect to the issuance of a joint report, statement or press release with respect to this Agreement and the transactions contemplated hereby. Section 4.7 Tax Matters ----------- (a) The Seller and the Buyer hereby agree that an election under Section 338 of the Code (or any similar provision of the law of any state or other taxing jurisdiction) will not be made with respect to the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement and that for purposes of all Tax Returns and other applicable filings, the Buyer and the Seller will report the Stock Purchase as a purchase and sale, respectively, of the Shares of the Company. (b) Tax Returns. Subject to Section 4.7(f): ------------ (i) The Seller shall file or cause to be filed when due all Tax Returns that are required to be filed by or with respect to the Company and each Subsidiary for taxable years or periods ending on or before the Closing Date other than Tax Returns for taxable years or periods ending on or before the Closing Date for which the Due Date (as hereinafter defined) is after the Closing Date (such latter Tax Returns, "Post-Closing Due Tax Returns" and Tax Returns for such taxable years or periods other than Post-Closing Due Tax Returns, "Pre-Closing Due Tax Returns"). The Seller shall remit (or cause to be remitted) any Taxes due in respect of Pre-Closing Due Tax Returns. (ii) The Seller shall prepare or cause to be prepared all Post-Closing Due Tax Returns and shall submit such Post-Closing Due Tax Returns (with copies of any relevant schedules, work papers and other documentation then available) and a computation of the amount of Taxes shown as payable on such Post-Closing Due Tax Returns that constitute Excluded Taxes (as hereinafter defined) to the Buyer no later than 45 days prior to the Due Date for such Post-Closing Due Tax Returns. The Seller shall pay (or cause to be paid) to the Buyer no later than two days prior to the Due Date for such Post-Closing Due Tax Returns all Taxes shown as due and payable on such Post-Closing Due Tax Returns less Excluded Taxes as shown on Seller's submission to Buyer. The Buyer shall file or cause to be filed when due such Post-Closing Due Tax Returns as prepared by Seller (unless, and then only to the extent, in the opinion of nationally recognized tax counsel to the Buyer, filing such Post-Closing Due Tax Returns as prepared by Seller would subject the Buyer to any criminal penalty or to civil penalties under Sections 6662 through 6664 of the Code or similar provisions of applicable state, local or foreign Laws) and remit (or cause to be remitted) any Taxes due in respect of such Post-Closing Tax Returns. The Seller shall pay to the Buyer interest at the Applicable Interest Rate (as hereinafter defined), compounded daily, on any amount not paid when due under this Section 4.7(b)(ii). (iii) The Buyer shall file or cause to be filed when due all Tax Returns that are required to be filed by or with respect to the Company and each Subsidiary for taxable years or periods ending after the Closing Date and the Buyer shall remit (or cause to be remitted) any Taxes due in respect of such Tax Returns. (iv) Any Tax Return required to be filed by the Buyer relating to any taxable year or period beginning on or before and ending after the Closing Date (the "Straddle Period") shall be submitted (with copies of any relevant schedules, work papers and other documentation then available) to the Seller for the Seller's approval not less than 60 days prior to the Due Date of such Tax Return, which approval shall not be unreasonably withheld. The Buyer shall, in preparing such return, cause the items (or a portion thereof) for which the Seller is liable hereunder to be reflected in accordance with the Seller's instructions, provided to Buyer at least 15 days prior to the Due Date (unless, and then only to the extent that, in the opinion of nationally recognized tax counsel to the Buyer, complying with the Seller's instructions would subject the Buyer to any criminal penalty or to civil penalties under Sections 6662 through 6664 of the Code or similar provisions of applicable state, local or foreign Laws) and, in the absence of having received such instructions, in accordance with past practice, if any, to the extent permissible under applicable Law. The Seller shall pay (or cause to be paid) to the Buyer no later than two days prior to the Due Date of such Tax Returns all Taxes with respect to any Straddle Period which, as prepared consistently with Seller's instructions, are shown as due and payable on such Tax Returns and for which Seller is liable. (v) Within 70 days after the Closing Date, the Buyer shall cause the Company and each of its Subsidiaries to prepare and provide to the Seller a package of Tax information materials, including, without limitation, schedules and work papers (the "Tax Package") required by the Seller to enable the Seller to prepare (or prepare and file) all Tax Returns required to be prepared (or prepared and filed) by it pursuant to Sections 4.7(b)(i) and (ii). The Tax Package shall be prepared in good faith in a manner consistent with past practice. (vi) The Seller may, in its sole and absolute discretion, amend any Tax Return of the Company or any of its Subsidiaries filed or required to be filed for any taxable years or periods ending on or before the Closing Date; provided, however, that any such amendment which may reasonably be -------- ------- expected to result in increased Tax liability for the Company, its Subsidiaries or the Buyer for any Straddle Period or for any taxable year or period beginning after the Closing Date shall require the consent of the Buyer, which consent may be withheld in the sole discretion of the Buyer; provided, further, however, -------- ------- ------- that to the extent the Seller agrees to indemnify the Buyer for the amount of such increased Tax liability (as mutually agreed by the parties or as otherwise determined pursuant to Section 4.7(i)), the Seller may amend any such Tax Return. (c) Indemnification. --------------- (i) The Seller shall indemnify and hold the Buyer harmless from and against the following (net of the amount of any Tax Benefit (as hereinafter defined) realizable by the Buyer, the Company or its Subsidiaries as a result of the payment or accrual of any of the following): (A) any liability for Taxes for any period that ends on or before the Closing Date imposed on the Company or its Subsidiaries as members of the "affiliated group" (within the meaning of Section 1504(a) of the Code) that arises under Treasury Regulations Section 1.1502-6(a) or comparable provisions of foreign, state or local Law; and (B) any liability for Taxes imposed on the Company or its Subsidiaries for any taxable year or period that ends on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period deemed to end at the close of the Closing Date (as set forth in Section 4.7(d)); provided, however, that the Seller shall not be liable for and shall not - -------- ------- indemnify the Buyer for (I) any Taxes resulting from transactions or actions taken by the Company or its Subsidiaries on the Closing Date that are properly allocable to the portion of the Closing Date after the Closing except for transactions or actions undertaken in the ordinary course of business; (II) any Taxes that result from an actual or deemed election under Section 338 of the Code or any similar provisions of state law or the law of any other taxing jurisdiction with respect to the Company or any of its Subsidiaries in connection with any of the transactions contemplated by this Agreement; (III) any Transfer Taxes for which the Buyer is liable pursuant to Section 4.7(f); (IV) Taxes the liability for which is included in the calculation of Closing Net Working Capital; and (V) any Taxes that result from the Buyer not filing a Post-Closing Due Tax Return or a Straddle Period Tax Return in the manner required by Section 4.7(b)(ii) and Section 4.7(b)(iii), respectively (Taxes described in this proviso referred to herein as "Excluded Taxes"). (ii) The Buyer shall indemnify and hold the Seller and the Seller's subsidiaries and affiliates harmless from and against (net of the amount of any Tax Benefit realizable by the Seller as a result of the payment or accrual of any of the following): (A) Taxes imposed on the Company or any of its Subsidiaries for any taxable year or period that begins after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning immediately after the Closing Date; and (B) Excluded Taxes. (d) Computation of Tax Liabilities. To the extent permitted ------------------------------- or required by Law or administrative practice, (i) the taxable year of the Company or any of its Subsidiaries which includes the Closing Date shall be treated as closing on (and including) the Closing Date and, notwithstanding the foregoing, (ii) all transactions not in the ordinary course of business occurring after the effective time of the Closing shall be reported on Buyer's consolidated United States federal income Tax Return to the extent permitted by Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other Tax Returns of the Buyer or its affiliates to the extent permitted by law. For purposes of Section 4.7(c)(i) and (c)(ii), where it is necessary to apportion between the Seller and the Buyer the Tax liability of an entity for a Straddle Period (which is not treated under the immediately preceding sentence as closing on the Closing Date), such liability shall be apportioned between the period deemed to end at the close of the Closing Date, subject to Section 4.7(d)(ii), and the period deemed to begin immediately following the Closing Date on the basis of an interim closing of the books; provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the portion of the Straddle Period up to and including the Closing Date and the portion of the Straddle Period following the Closing Date in proportion to the number of days in each such period; and provided further -------- ------- that Taxes imposed on a periodic basis (such as real property Taxes) shall be allocated between the portion of the Straddle Period up to and including the Closing Date and the portion of the Straddle Period following the Closing Date in proportion to the number of days in each such period. (e) Contest Provisions. ------------------- (i) Each of the Buyer, on the one hand, and the Seller, on the other hand (the "Recipient"), shall notify the chief tax officer of the other party in writing within 15 days of receipt by the Recipient of written notice of any pending or threatened audit, notice of deficiency, proposed adjustment, assessment, examination or other administrative or court proceeding, suit, dispute or other claim which could affect the liability for Taxes of such other party (a "Tax Claim"). If the Recipient fails to give such prompt notice to the other party it shall not be entitled to indemnification for any Taxes arising in connection with such Tax Claim if and to the extent that such failure to give notice materially and adversely affects the other party's right to participate in the Tax Claim; provided, however, that one party will be -------- ------- obligated to indemnify the other party pursuant to Section 4.7(c) or otherwise only if the indemnifying party receives written notice thereof prior to the end of the applicable statute of limitations for the relevant taxable year or period. (ii) The Seller shall have the sole right to represent the Company and each of its Subsidiaries' interests in any Tax Claim relating to taxable periods ending on or before the Closing Date and to employ counsel of its choice at its expense. In the case of a Straddle Period, the Seller shall be entitled to participate at its expense in any Tax Claim relating in any part to Taxes attributable to the portion of such Straddle Period deemed to end on or before the Closing Date and, with the written consent of the Buyer (which shall not be unreasonably withheld), at the Seller's sole expense, may assume the control of such entire Tax Claim. None of the Buyer, any of its affiliates, the Company or any of the Company's Subsidiaries may settle or otherwise dispose of any Tax Claim for which the Seller may have a liability under this Agreement, or which may result in an increase in Seller's liability under this Agreement, without the prior written consent of the Seller, which consent may be withheld in the sole discretion of the Seller, unless the Buyer fully indemnifies the Seller in writing with respect to such liability in a manner satisfactory to the Seller. (f) Transfer Taxes. All excise, sales, use, transfer --------------- (including real property transfer or gains), stamp, documentary, filing, recordation and other similar taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, resulting directly from the transactions contemplated by this Agreement (the "Transfer Taxes"), shall be borne by the Buyer. Notwithstanding Section 4.7(b), which shall not apply to Tax Returns relating to Transfer Taxes, any Tax Returns that must be filed in connection with Transfer Taxes shall be prepared and filed by the Buyer. (g) Refunds. ------- (i) Any Tax refund (including any interest in respect thereof) received by the Buyer or the Company or any of its Subsidiaries, and any amounts credited against Tax to which the Buyer or the Company or any of its Subsidiaries become entitled (including by way of any amended Tax Returns), that relate to any taxable period, or portion thereof, ending on or before the Closing Date shall be for the account of the Seller, and the Buyer shall pay over to the Seller any such refund or the amount of any such credit within fifteen days after receipt or entitlement thereto. The Buyer shall pay the Seller interest at the Applicable Interest Rate, compounded daily, on any amount not paid when due under this Section 4.7(g). For purposes of this Section 4.7(g), where it is necessary to apportion a refund or credit between the Buyer and the Seller for a Straddle Period, such refund or credit shall be apportioned between the period deemed to end at the close of the Closing Date, and the period deemed to begin immediately following the Closing Date on the basis of an interim closing of the books, except that refunds or credits of Taxes imposed on a periodic basis (such as real property Taxes) shall be allocated between the portion of the Straddle Period up to and including the Closing Date and the portion of the Straddle Period following the Closing Date in proportion to the number of days in each such period. (ii) The Buyer shall cooperate, and cause the Company and its Subsidiaries to cooperate, in obtaining any refund that the Seller reasonably believes should be available, including without limitation, through filing appropriate forms with the applicable taxing authorities. (h) Certain Post-Closing Settlement Payments. ------------------------------------------- (i) Upon the exercise of an option to purchase the capital stock of Tomkins PLC (a "Seller Option") by an employee or former employee of the Company or any of its Subsidiaries and the payment of cash or other property by the Seller (or its designated agent) to the holder of the Seller Option, the Buyer shall pay or cause the Company to pay to the Seller the amount of any Tax Benefit attributable to any payment described in this Section 4.7(h)(i) within 30 days of the filing of the Tax Return upon which such Tax Benefit is reported. (ii) For purposes of this Agreement, "Tax Benefits" shall mean the sum of (A) the product of (1) the sum of any increased deductions or losses or decreases in income or gains then allowable (including by way of amended Tax Returns), and (2) 42%; (B) the sum of increased tax credits or decreases in recapture of tax credits then allowable; (C) the product of (1) the sum of the present values of any increased deductions or losses or decreases in income or gains allowable in future years determined by applying a discount rate of 8% from the earliest year in which such amounts would possibly be available, and (2) 42%; and (D) the sum of the present values of increased tax credits or decreases in recapture of tax credits allowable in future years determined by applying a discount rate of 8% from the earliest year in which such amounts would possibly be available. (iii) Any Tax Benefit required to be paid under this Section 4.7(h) that is not paid within the time prescribed by this Section 4.7(h) shall accrue interest at the Applicable Interest Rate, compounded daily. (iv) For purposes of Sections 4.7(b)(ii), (g)(i), and (h)(iii), "Applicable Interest Rate" shall mean the rate provided in Section 6621(a)(2), provided, however, that for any period during which the amount upon -------- ------- which interest is accruing pursuant to each of Sections 4.7(b)(ii), (g)(i), and (h)(iii) exceeds $100,000, for such amount "Applicable Interest Rate" shall mean the rate provided in Section 6621(c)(1). (i) Resolution of All Tax-Related Disputes. In the event ------------------------------------------ that the Seller and the Buyer cannot agree on the calculation of any amount relating to Taxes or the interpretation or application of any provision of this Agreement relating to Taxes, such dispute shall be resolved by a nationally recognized independent accounting firm or tax attorney at an independent nationally recognized law firm selected by the parties (the "Tax Arbitrator"); provided, however, that if the Buyer and the Seller cannot agree upon the choice ------- ------- of the Tax Arbitrator within 5 business days of one party providing written notice to the other party that it seeks arbitration pursuant to this Section 4.7(i), the Tax Arbitrator shall be selected pursuant to the rules of the AAA. The Tax Arbitrator's fees and expenses shall be borne by the Seller and the Buyer in inverse proportion as they may prevail on the matters resolved by the Tax Arbitrator, which proportionate allocation will also be determined by the Tax Arbitrator at the time it renders its determination on the merits of the matters submitted to it. The determination of the Tax Arbitrator shall be final and binding upon the Buyer and the Seller, shall be deemed a final arbitration award that is binding on each of the Buyer and the Seller, and no party shall seek further recourse to courts, other tribunals or otherwise, other than to enforce such determination. Judgment may be entered to enforce the Tax Arbitrator's determination in any court having jurisdiction over the party against which such determination is to be enforced. (j) Post-Closing Actions Which Affect Seller's Liability for Taxes. --------------------------------------------------------------- (i) The Buyer shall not permit the Company or any of its Subsidiaries to take any action on the Closing Date which could increase the Seller's liability for Taxes (including any liability of the Seller to indemnify the Buyer for Taxes pursuant to this Agreement). (ii) None of the Buyer or any affiliate of the Buyer shall (or shall cause or permit the Company or any of its Subsidiaries to) amend, refile or otherwise modify any Tax Return relating in whole or in part to the Company or any of its Subsidiaries with respect to any taxable year or period ending on or before the Closing Date (or with respect to any Straddle Period) without the prior written consent of the Seller, which consent may be withheld in the sole discretion of the Seller. (k) Termination of Existing Tax Sharing Agreements. Any and ----------------------------------------------- all existing Tax sharing agreements or arrangements, written or unwritten, between the Seller and the Company or Subsidiaries of the Company, shall be terminated as of the Closing. (l) Assistance and Cooperation. After the Closing Date, each -------------------------- of the Seller and the Buyer shall (and shall cause their respective affiliates to): (i) timely sign and deliver such certificates or forms as may be necessary or appropriate to establish an exemption from (or otherwise reduce), or file Tax Returns or other reports with respect to Transfer Taxes; (ii) assist the other party in preparing any Tax Returns which such other party is responsible for preparing and filing in accordance with Section 4.7(b); (iii) cooperate fully in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns of the Company and its Subsidiaries; (iv) make available to the other and to any taxing authority as reasonably requested in connection with any Tax Return described in Section 4.7(b) or any proceeding described in Section 4.7(e), all information relating to any Taxes or Tax Returns of the Company and its Subsidiaries; and (v) furnish the other with copies of all correspondence received from any taxing authority in connection with any Tax audit or information request with respect to any such taxable period. Notwithstanding the foregoing or any other provision in this Agreement, neither the Buyer nor any of its affiliates shall have the right to receive or obtain any information relating to Taxes of the Seller, any of its affiliates, or any of its predecessors other than information relating solely to the Company and its Subsidiaries. (m) Adjustment to Purchase Price. For all Tax purposes, any ----------------------------- payment by the Buyer or the Seller under this Agreement shall be treated as an adjustment to the Purchase Price. (n) Certain Definitions. For purposes of this Agreement, -------------------- "Due Date" shall mean, with respect to any Tax Return, the date such return is due to be filed (taking into account any valid extensions); "Tax" or "Taxes" shall mean taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees, including, income, gross receipts, ad valorem, value added, excise, real property or property, asset, sales, use, license, payroll, transaction, capital, net worth, withholding, estimated, social security, utility, workers' compensation, severance, production, unemployment compensation, occupation, premium, windfall profits, transfer and gains taxes or other governmental taxes imposed or payable to the United States, or any state, county, local or foreign government or subdivision or agency thereof, together with any interest, penalties or additions with respect thereto and any interest in respect of such additions or penalties; and "Tax Returns" shall mean all returns, reports, statements, declarations, estimates and forms or other documents (including any related or supporting information), required to be filed with respect to any Taxes. Section 4.8 Knowledge of Breach; Prior Knowledge ---------------------------------------- No breach by the Seller of any representation, warranty, covenant, agreement or condition of this Agreement shall be deemed to be a breach of this Agreement for any purpose hereunder, and neither the Buyer nor any affiliate of the Buyer shall have any claim or recourse against the Seller or its directors, officers, employees, affiliates, controlling persons, agents, advisors or representatives with respect to such breach, under Article VII or otherwise, if any of the representatives of the Buyer set forth in Section 4.8 of the Company Disclosure Schedule had actual knowledge prior to the Closing of such breach or of the threat of such breach or the circumstances giving rise to such breach. Section 4.9 Employees; Employee Benefits ---------------------------- (a) If any employee of the Company or any of its Subsidiaries becomes a participant in any employee benefit plan, practice or policy of the Buyer or any of its affiliates, such employee shall be given credit under such plan for all service prior to the Closing Date with the Company and its Subsidiaries or any predecessor employer (to the extent such credit was given by the Seller, the Company or any predecessor employer), and all service with the Company and its Subsidiaries or the Buyer following the Closing Date but prior to the time such employee becomes such a participant, for purposes of determining eligibility and vesting and for all other purposes for which such service is either taken into account or recognized; provided, however, such service need not be credited to -------- ------- the extent it would result in a duplication of benefits, including, without limitation, benefit accrual under defined benefit plans. Such service also shall apply for purposes of satisfying any waiting periods, evidence of insurability requirements, or the application of any preexisting condition limitations. Employees shall be given credit for amounts paid under a corresponding benefit plan during the same period for purposes of applying deductibles, copayments and out-of-pocket maximums as though such amounts had been paid in accordance with the terms and conditions of the of the comparable Buyer employee benefit plan. This Section 4.9(a) shall not apply to employees governed by collective bargaining agreements. (b) In the event that any person who is an employee of the Company or any of its Subsidiaries immediately prior to the Closing (an "Affected Employee") is discharged by the Company or such Subsidiary as of or after the Closing, then the Buyer shall be responsible for any and all severance costs for such Affected Employee. Notwithstanding the foregoing, the Seller shall be responsible for the initial $1.5 million (in the aggregate) in enhanced severance costs actually paid by the Company or the Buyer under The Red Wing Company, Inc. Special Retention Plan for Key Senior Management Employees and The Red Wing Company, Inc. Special Retention Plan for Key Employees) (collectively the "Special Retention Plans"); provided that the Seller shall have no liability for enhanced severance amounts in excess of $1.5 million in the aggregate under the Special Retention Plans. Except as expressly provided in this Section 4.9(b), the Buyer shall be responsible for all severance costs in respect of all Affected Employees, including in connection with the Special Retention Plans. The Buyer shall be responsible and assume all liability for all notices or payments due to any Affected Employees, and all notices, payments, fines or assessments due to any government authority, pursuant to any applicable foreign, federal, state or local law, common law, statute, rule or regulation with respect to the employment, discharge or layoff of employees by the Company and its Subsidiaries after the Closing, including but not limited to the Worker Adjustment and Retraining Notification Act and C.O.B.R.A. and any rules or regulations as have been issued in connection with the foregoing. (c) From and after the Closing, the Buyer shall be responsible for, and shall defend, indemnify and hold harmless the Seller and its affiliates and their officers, directors, employees, affiliates and agents and the fiduciaries (including plan administrators) of the Company Plans, from and against any and all claims, losses, damages, costs and expenses (including, without limitation, attorneys' fees and expenses) and other liabilities and obligations relating to or arising out of (i) all salaries, wages, commissions, employee incentive or other compensation, severance, holiday, vacation, health, dental or retirement benefits accrued but unpaid as of the Closing, post-Closing bonuses due to any Affected Employee under the Company Plans and all payments required to be made under The Red Wing Company Inc. Bonus Plan, (ii) the liabilities assumed by the Buyer under this Section 4.9 or any failure by the Buyer to comply with the provisions of this Section 4.9 and (iii) any claims of, or damages or penalties sought by, any Affected Employee, or any Governmental Entity on behalf of or concerning any Affected Employee, with respect to any act or failure to act by Buyer to the extent arising from the employment, discharge, constructive discharge, layoff or termination of any Affected Employee who becomes an employee of the Buyer or becomes or remains an employee of the Company or any of the Company's Subsidiaries on or after the Closing. (d) From and after the Closing, the Buyer shall cause the Company to continue in full force and effect all collective bargaining agreements listed in Section 2.11 of the Company Disclosure Schedule and all successor agreements thereto entered into prior to the Closing to which the Buyer has consented. Section 4.10 Indemnification --------------- Following the Closing, the Buyer shall cause the Company and its Subsidiaries not to make any changes to their certificate of incorporation or by-laws or comparable organizational documents that would adversely affect the rights of persons who are currently or were officers and directors of the Company or any of its Subsidiaries to claim indemnification from such entity under the terms of such certificate of incorporation or by-laws as in effect on the date hereof for acts taken prior to the Closing. The Buyer shall pay (to the extent not paid by the Company or any of its Subsidiaries) any payments required under such indemnification provisions relating to facts or circumstances occurring prior to the Closing, unless such facts and circumstances relate to matters constituting a breach of this Agreement by Seller, in which case the Seller shall pay such indemnification payments. Section 4.11 Maintenance of Books and Records ------------------------------------ Each of the parties hereto shall preserve, until at least the third anniversary of the Closing Date, all pre-Closing Date records possessed or to be possessed by such party relating to the Company, except with respect to Tax records (which the parties shall preserve until at least the seventh anniversary of the Closing Date). After the Closing Date and up until at least the third anniversary of the Closing Date (or the seventh anniversary of the Closing Date, with respect to Taxes only), upon any reasonable request from a party hereto or its representatives, the party holding such records shall, subject to the confidentiality provisions of Section 4.2(b), (x) provide to the requesting party or its representatives reasonable access to such records during normal business hours and (y) permit the requesting party or its representatives to make copies of such records, in each case at no cost to the requesting party or its representatives (other than for reasonable out-of-pocket expenses). Such records may be sought under this Section 4.11 for any reasonable purpose, including, without limitation, to the extent reasonably required in connection with the audit, accounting, Tax, litigation, federal securities disclosure or other similar needs of the party seeking such records. Notwithstanding the foregoing, any and all such records may be destroyed by a party if such destroying party sends to the other parties hereto written notice of its intent to destroy such records, specifying in reasonable detail the contents of the records to be destroyed; such records may then be destroyed after the 30th day following such notice unless another party hereto notifies the destroying party that such other party desires to obtain possession of such records (subject to the confidentiality provisions of Section 4.2(b) above), in which event the destroying party shall transfer the records to such requesting party and such requesting party shall pay all reasonable expenses of the destroying party in connection therewith. Section 4.12 Seller's Trademarks and Logos ----------------------------- Notwithstanding anything to the contrary contained in this Agreement, it is expressly agreed that (i) the Buyer is not purchasing, acquiring or otherwise obtaining, and the Company and its Subsidiaries will not be entitled to retain following the Closing Date, any right, title or interest in any trade names, trademarks, identifying logos or service marks employing the word "Tomkins" or any part or variation of such word or anything confusingly similar thereto (collectively, the "Seller's Trademarks and Logos") and (ii) neither the Company and its Subsidiaries nor the Buyer or its affiliates shall make any use of the Seller's Trademarks and Logos from and after the Closing. Section 4.13 Environmental Indemnity ------------------------ (a) To the extent such matters have not been addressed by the Seller or the Company to the Buyer's reasonable satisfaction prior to the Closing and subject to the limitations set forth in Sections 4.13(c) and 4.13(d), the Seller agrees to reimburse the Buyer for (i) all out-of-pocket expenses incurred by the Buyer to clean up and/or remediate ("Cleanup Costs") each of the environmental matters set forth on Schedule 4.13(a) of the Company Disclosure Schedule and (ii) all fines, charges, penalties or other regulatory assessments incurred whether prior to or after the Closing for the failure of the Company and the Subsidiaries prior to the Closing Date to be in compliance with any Environmental Laws in effect as of and enforceable as of the Closing Date with respect to the environmental matters set forth on Schedule 4.13(a) of the Company Disclosure Schedule. Notwithstanding the foregoing, the Seller shall not be required to reimburse the Buyer under clause (i) above of this Section 4.13(a) for (A) amounts in excess of $162,000 in the aggregate, less amount expended prior to the Closing, to clean up and remedy any of the environmental matters contemplated in this Section 4.13(a) and (B) all other out-of-pocket expenses that the Buyer incurs for environmental matters set forth in Section 4.13(a). (b) Notwithstanding anything to the contrary contained in Article VII and subject to the limitations set forth in Section 7.2(b), the Seller's obligation to indemnify and hold harmless the Buyer Indemnitees (as defined in Section 7.2) pursuant to Article VII from and against all Buyer Damages (as defined in Section 7.2) asserted against or incurred by any Buyer Indemnitee as a result of or arising out of a breach of any representation or warranty of the Seller contained in Section 2.19 shall be limited to (i) all Cleanup Costs incurred by the Buyer to remediate or arising from or related to a breach of Section 2.19 and (ii) fines, charges, penalties or other regulatory assessments incurred for the failure of the Company and the Subsidiaries prior to the Closing Date to be in compliance with any Environmental Laws in effect as of and enforceable as of the Closing Date, and further shall be subject to the limitations set forth in Sections 4.13(c), 4.13(d) and 4.13(e). (c) With respect to Cleanup Costs, the Seller shall only be required to indemnify and hold harmless the Buyer Indemnitees to the extent that: (i) cleanup of the Hazardous Materials is required by a Governmental Entity under an applicable Environmental Law that is in effect as of and is enforceable as of the Closing Date; (ii) the Remediation Standards that must be met in order to satisfy the requirements of the applicable Environmental Law or Governmental Entity (A) are no more stringent than the Remediation Standards that were in effect as of and were enforceable as of the Closing Date under the applicable Environmental Law that is the source of the obligation to conduct a cleanup, or, where no such Remediation Standards had been promulgated and were enforceable as of the Closing Date, Remediation Standards that were applied, within one year prior to the Closing Date, on a case-by-case basis, to properties that are most similar to the property that is subject to a cleanup and (B) are also those Remediation Standards that would be the least stringent Remediation Standards that would be applicable given the use of the property as of the day before the Closing Date; (iii) such cleanup is for substances that were designated as Hazardous Materials and would have been subject to cleanup under an applicable Environmental Law had such cleanup been initiated on or before the Closing Date; and (iv) such cleanup is conducted using the most cost effective methods for investigation, removal, remediation and/or containment consistent with applicable Environmental Law or the requirements of a Governmental Entity. To the extent that the Cleanup Costs incurred in connection with a cleanup covered by Sections 4.13(a) or 4.13(b) are in excess of the Cleanup Costs that would be incurred for a cleanup meeting the conditions set forth in this Section 4.13(c), the Seller shall have no obligation to indemnify Buyer Indemnitees for such excess Cleanup Costs. (d) Notwithstanding anything to the contrary herein, the Seller and the Buyer agree that the Seller's indemnity obligations shall be subject to the following limitations: (i) if the cost of cleanup or correcting a non-compliance with the Environmental Law subject to indemnity by the Seller are increased after the Closing Date due to an act or omission in violation of any Environmental Law by a person or entity other than the Seller or its affiliates or any of their respective employees or representatives, the Seller shall not be responsible for any such increase in costs; and (ii) the Seller shall not be responsible for any costs for indemnification obligations under Sections 4.13(a) or 4.13(b) due to (A) any change related to the property or the Company and the Subsidiaries resulting or arising from the closure or sale of a facility or business, (B) a change in use of the facilities from manufacturing to any other use or (C) any construction of new structures or equipment, modifications to existing structures or equipment, or the excavation or movement of soil if such activities are related to the circumstances set forth in clauses (A) and (B) of this Section 4.13(d)(ii). (e) Indemnification shall be available under Section 4.13(b) only with respect to those specific claims for which Buyer has provided written notice to the Seller by the third anniversary of the Closing Date. Such notice must include, based on reasonably available evidence, the following: (i) location; (ii) the extent of contamination and the impacted media, if known; (iii) a copy of any notices filed with or received from any Governmental Entity or other person, or, if no such notice has been filed or received, the basis upon which the claimant seeks indemnification; and (iv) whether the cleanup was or will be consistent with the conditions set forth in Section 4.13(b). Claims relating to fines, charges, penalties or other regulatory assessments within the scope of Section 4.13(b) shall be subject to the procedures for indemnification set forth in Section 7.4 for Third-Party Claims (as defined in Section 7.4). For claims relating to Cleanup Costs within the scope of Section 4.13(b), the Seller shall have the right to assume responsibility for managing the cleanup and related matters thereto, by providing notice to the Buyer within 45 days of receipt of the written notice required under this subsection (e). If the Seller assumes responsibility for management of a cleanup under this subsection (e), the Seller shall be obligated to comply with all applicable legal requirements with respect to such cleanup, provided, that Seller reserves the right to seek -------- reimbursement of the Cleanup Costs that are incurred for work that is in excess of work that would be required in accordance with the conditions set forth in Sections 4.13(c) or 4.13(d) but only to the extent the Buyer consented to the work in excess of that set forth in Sections 4.13(c) or 4.13(d). Where the Seller has assumed responsibility for management of a cleanup under this Section 4.13(e), the Buyer may participate, at its own cost and expense, in activities related to the cleanup, including, but not limited to, participation in meetings with respect to the determination of applicable Remediation Standards or methods for conducting the cleanup. The Seller will manage such cleanup in a manner and using appropriate third parties as consented to by the Buyer whose consent shall not be unreasonably withheld. (f) Notwithstanding anything to the contrary in this Agreement, the Buyer hereby agrees that its sole and exclusive remedy against the Seller, with respect to any and all matters arising under or related to Environmental Law, Hazardous Materials or the environment shall be as provided in this Section 4.13 (excluding fraud or willful misconduct by the Seller as determined by a court or Governmental Entity). Except as provided in subsections (a), (b), (c), (d) and (e) of this Section 4.13, the Buyer hereby waives, to the fullest extent permitted under applicable Law, and forever releases the Seller, in connection with the business of the Company and its Subsidiaries, from, and indemnifies and holds harmless the Seller Indemnitees (as defined in Section 7.3) against, any and all Seller Damages (as defined in Section 7.3) that (i) relate to the environmental matters set forth in Section 2.19 of the Company Disclosure Schedule that are not also set forth in Section 4.13 of the Company Disclosure Schedule, or (ii) arise under Environmental Laws or common law or relating to Hazardous Materials or the environment. (g) Notwithstanding anything to the contrary in this Agreement, and except for the Seller's representation that the Seller has provided to the Buyer copies of all reasonably relevant material documents relating to environmental matters at the properties, described below, the parties agree that the Seller is making no representations or warranties regarding the properties identified in Section 4.13(g) of the Company Disclosure Schedule and the Seller shall have no indemnification obligations to the Buyer Indemnities with respect to such properties. Section 4.14 Other Matters -------------- Subject to the terms of the Highly Confident Letter, the Buyer shall take all actions necessary to consummate the Financing on the terms set forth in the Highly Confident Letter and shall use its best efforts to consummate such Financing on or prior to July 19, 2000. The Buyer agrees not to undertake or enter into any transaction that would prevent the consummation of the transactions contemplated hereby or prevent the Buyer from obtaining the Financing set forth in the Highly Confident Letter. Section 4.15 Confidentiality --------------- Beginning on the Closing Date and continuing for three years thereafter, the Seller agrees to hold all Company Confidential Information (as hereinafter defined) with at least the same degree of skill and care that they would exercise in similar circumstances in carrying out their own business to prevent the disclosure or accessability to others (including to any entity that controls the Seller) of the Company Confidential Information and agrees not to reveal, report, publish, disclose or transfer any Company Confidential Information to any person or entity (other than the Buyer). The Seller represents that during the past three years none of the Company's material Confidential Information relating to Intellectual Property has been revealed, disclosed or transferred to the Seller of any of its affiliates. For the purposes of this Agreement, "Company Confidential Information" means any non-public information relating to the Company; provided, however, that Company Confidential Information shall not -------- ------- be deemed to include (i) information that was already publicly known and in the public domain prior to the time of its initial disclosure to the Seller or any of its Subsidiaries or (ii) information that is or becomes available to the Seller or any of its Subsidiaries on a non-confidential basis from a non-confidential source; provided, further, the Seller and its Subsidiaries may -------- ------- reveal, report, publish, disclose or transfer any Company Confidential Information pursuant to a subpoena or order issued by a court of competent jurisdiction or by a judicial or administrative or legislative body or committee. Section 4.16 Non-Competition --------------- For a period of two years from the Closing (the "Non-Competition Period"), each Subsidiary of the Seller that is incorporated under the laws of a state in the United States as of the date of this Agreement (the "U.S. Subsidiaries") shall not, directly or indirectly, operate or own any interest in (other than a passive interest of less than 5%), or engage in, a Competitive Business (as hereinafter defined) in the United States; provided, however, that nothing set -------- ------- forth in this Section 4.16 shall: (a) prohibit or otherwise restrict the Seller or any of its Subsidiaries (including the U.S. Subsidiaries) from acquiring an interest, by joint venture, merger or other business combination, in a business (the "Acquired Business") that includes a Competitive Business so long as the aggregate revenues derived by the Competitive Business included in the Acquired Business during the four most recently completed fiscal quarters for such Acquired Business prior to the date on which the definitive agreement for the acquisition of the Acquired Business is entered into do not exceed thirty-three percent of the aggregate revenues derived by the Acquired Business during such four fiscal quarters; (b) be deemed to apply to any person or entity, or the affiliates of such person or entity, that directly or indirectly (i) acquires all or any portion of the capital stock or other equity securities of the Seller, or any of its Subsidiaries (including the U.S. Subsidiaries) or Tomkins plc, (ii) acquires all or substantially all of the assets of the Seller, or any of its Subsidiaries (including the U.S. Subsidiaries) or Tomkins plc, or (iii) consummates any merger, consolidation, business combination, share exchange, reorganization or similar transaction involving the Seller, or any of its Subsidiaries (including the U.S. Subsidiaries) or Tomkins (each of clauses (i)-(iii) being an "Acquisition Transaction"); or (c) be deemed to apply to Tomkins plc, the Seller or the U.S. Subsidiaries following an Acquisition Transaction. A "Competitive Business" shall mean engaging in the production of private label packaged food products operating in the shelf stable, wet fill category. Section 4.17 Stock Certificates ------------------ The Seller agrees that, for as long as it is obligated to indemnify the Buyer Indemnitees pursuant to Article VII, it shall, and shall cause its affiliates to, hold in Tomkins Corporation's United States headquarters located in Dayton, Ohio and Denver, Colorado, the stock certificates of the subsidiaries of Tomkins Corporation that are incorporated under the laws of a state in the United States as of the date of this Agreement in the United States to the extent such subsidiaries are indirectly wholly-owned subsidiaries of Tomkins plc; provided, however, that nothing in this Section 4.17 shall not prevent or otherwise limit Tomkins Corporation, the Seller or any of their affiliates from directly or indirectly transferring any such stock certificates in connection with a sale, merger, consolidation, reorganization or similar transaction. Section 4.18 Insurance --------- Following the Closing, the Buyer shall, and shall cause the Company to, comply with all of the Company's obligations under insurance policies in effect prior to the Closing that the Company participates in, including payment of the self insured portion of any loses payable by the Company thereunder. Section 4.19 Estoppel Certificates ---------------------- Subject to and in accordance with Section 4.5, the parties shall use their best efforts to obtain estoppel certificates from the landlords of leasehold interests set forth on Section 2.14 of the Company Disclosure Schedule. Section 4.20 Preclosing Transaction ----------------------- Prior to the Closing, the Seller shall take or cause to be taken such actions as are necessary to cause the transfer all of the capital stock of Carriage House Fruit Company ("Carriage House") to an entity other than the Company or one of its Subsidiaries. Notwithstanding the foregoing, the Buyer shall cause the Company to continue to pay, and to administer the payment of, all outstanding obligations of Carriage House in respect worker's compensation and pension liabilities in respect of former Carriage House employees. To the extent the Buyer is required to make any payments pursuant to this Section 4.20 which, in the aggregate, exceed the amount reserved therefore on the Annual Financial Statements, the Seller agrees to indemnify the Buyer for such excess amounts without regard to the provisions of Section 7.2(b). Section 4.21 Aurora Account Receivable -------------------------- For a period of six months after the Closing (the "Collection Period"), the Buyer agrees to use it best efforts to pursue payment in full of the Aurora Foods ("Aurora") account receivables that exist as of the Closing as set forth on the Closing Net Working Capital (the "Aurora Obligation"). If the Buyer is unable to collect the full amount of the Aurora Obligation within the Collection Period, the Seller shall indemnify the Buyer of any portion of the Aurora Obligation that has not been collected by the Buyer; provided, however, that the -------- ------- Seller shall not be responsible for any uncollected amounts resulting from the impairment of the Aurora Obligation as a result of any action or inaction by, or on behalf of, the Buyer. To the extent that the Aurora Obligation has not been paid in full during the Collection Period, the Buyer agrees to assign to the Seller the amount of the Aurora Obligation which remains unpaid at the termination of the Collection Period. During the Collection Period, the Buyer also agrees to not institute any involuntary bankruptcy or insolvency proceeding or action against Aurora or otherwise take or fail to take action which could reasonably be expected to result in impairment of the Aurora Obligation. Section 4.22 Real Property Survey ---------------------- Promptly following the date hereof, the Buyer agrees to obtain a complete real estate survey of the properties set forth on Section 7.2(b) of the Company Disclosure Schedule. ARTICLE V CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE ------------------------------------------------------ The respective obligations of each party to consummate the transactions contemplated hereby is subject to the satisfaction at or prior to the Closing Date of the following conditions: (a) No statute, rule, regulation, executive order, decree, or injunction shall have been enacted, entered, promulgated or enforced by any court or Governmental Entity that remains in force and prohibits the consummation of the Stock Purchase; (b) There shall not be any suit, action, or other proceeding pending by any Governmental Entity or administrative agency or commission that seeks to enjoin or otherwise prevent consummation of the transactions contemplated hereby, other than suits, actions or proceedings that, in the reasonable opinion of counsel to the parties hereto, are unlikely to result in an adverse judgment; provided, however, that the provisions of this Section -------- ------- 5.1(b) shall not apply to any party that has directly or indirectly encouraged such suit, action or proceeding; and (c) Any waiting periods applicable to the transactions contemplated by this Agreement under the H-S-R Act shall have expired or been terminated. Section 5.2 Further Conditions to the Seller's Obligations ---------------------------------------------- The obligation of the Seller to consummate the transactions contemplated hereby are further subject to satisfaction or waiver of the following conditions: (a) The representations and warranties of the Buyer contained in this Agreement (without giving effect to any "materiality" or Buyer Material Adverse Effect qualification or exception contained therein) shall be true and correct at and as of the Closing Date as though such representations and warranties were made at and as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except where the failure of such representations and warranties to be so true and correct (i) does not have, individually or in the aggregate, a Buyer Material Adverse Effect or (ii) results from changes specifically permitted by this Agreement or from any transaction expressly consented to in writing by the Buyer and the Seller; (b) The Buyer shall have performed and complied in all material respects with all agreements and obligations required by this Agreement to be performed or complied with by it on or prior to the Closing; (c) The Buyer shall have delivered or tendered to the Seller an officer's certificate to the effect that each of the conditions specified above in Sections 5.2(a) and (b) is satisfied; and (d) Each of the documents referred to in Section 1.6 shall have been executed by the Buyer and delivered to the Seller. Section 5/3 Further Conditions to the Buyer's Obligations ---------------------------------------------- The obligation of the Buyer to consummate the transactions contemplated hereby are further subject to the satisfaction or waiver at or prior to the Closing Date of the following conditions: (a) The representations and warranties of the Seller contained in this Agreement (without giving effect to any "materiality" or Company Material Adverse Effect qualification or exception contained therein) shall be true and correct at and as of the Closing Date as though such representations and warranties were made at and as of such date (except to the extent expressly made as of an earlier date, in which case, as of such date), except where the failure of such representations and warranties to be so true and correct (i) does not have, individually or in the aggregate, a Company Material Adverse Effect or (ii) results from changes specifically permitted by this Agreement or from any transaction expressly consented to in writing by the Buyer and the Seller; (b) The Seller shall have performed and complied in all material respects with all agreements and obligations required by this Agreement to be performed or complied with by it on or prior to the Closing; (c) The Seller shall have delivered or tendered to the Buyer an officer's certificate to the effect that each of the conditions specified above in Sections 5.3(a) and (b) is satisfied; (d) The Buyer will have obtained Title Insurance that will insure over or will delete as exceptions to coverage to its reasonable satisfaction, the matters set forth in Section 5.3 of the Company Disclosure Schedule; and (e) Each of the documents referred to in Section 1.5 shall have been executed by the Seller and delivered to the Buyer. ARTICLE VI TERMINATION AND ABANDONMENT ----------------------------- Section 6.1 Termination ----------- This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date: (a) by mutual written consent of the Seller and the Buyer; (b) by the Seller or the Buyer at any time after 60 days from the date of this Agreement if the Closing shall not have occurred by such date; provided, however, that the right to terminate this Agreement under this Section - -------- ------- 6.1(b) shall not be available to (i) the Seller, if the Seller has breached any of its representations, warranties or covenants hereunder in any material respect and such breach has been the cause of or resulted in the failure of the Closing to occur on or before such date or (ii) the Buyer, if the Buyer has breached any of its representations, warranties or covenants hereunder in any material respect and such breach has been the cause of or resulted in the failure of the Closing to occur on or before such date; provided, further, -------- ------- however, that this Agreement may be extended not more than 15 days by either the Seller or the Buyer by written notice to the other party if (i) the Stock Purchase shall not have been consummated as a direct result of the Seller or the Buyer having failed to receive all regulatory approvals required to be obtained under Section 5.1(c), (ii) the parties are endeavoring in good faith to obtain all outstanding regulatory approvals required under Section 5.1(c), and (iii) the reason that such outstanding regulatory approvals have not been obtained within 60 days from the date of this Agreement is not due to a breach by the party seeking to extend this Agreement under this proviso of its obligations under this Agreement; and (c) by the Seller or the Buyer if the other shall have breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 5.2 or 5.3(a) or (b), as applicable, and (ii) cannot be or has not been cured within 30 days after the giving of written notice to the Seller or the Buyer, as applicable. Section 6.2 Procedure for and Effect of Termination -------------------------------------------- In the event of termination of this Agreement and abandonment of the transactions contemplated hereby by the parties hereto pursuant to Section 6.1 hereof, written notice thereof shall be given by a party so terminating to the other party and this Agreement shall forthwith terminate and shall become null and void and of no further effect, and the transactions contemplated hereby shall be abandoned without further action by the Seller or the Buyer. If this Agreement is terminated pursuant to Section 6.1 hereof: (a) each party shall redeliver all documents, work papers and other materials of the other parties relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same, and all confidential information received by any party hereto with respect to the other party shall be treated in accordance with the Confidentiality Agreement and Section 4.2(b) hereof; (b) all filings, applications and other submissions made pursuant hereto shall, to the extent practicable, be withdrawn from the agency or other person to which made; and (c) there shall be no liability or obligation hereunder on the part of the Seller or the Buyer or any of their respective directors, officers, employees, affiliates, controlling persons, agents or representatives, except with respect to a breach of Section 3.5 hereof and except that the Seller or the Buyer, as the case may be, may have liability to the other party if the basis of termination is a willful, material breach by the Seller or the Buyer, as the case may be, of one or more of the provisions of this Agreement, and except that the obligations provided for in Sections 4.2(b), 6.2 and 8.8 hereof shall survive any such termination. ARTICLE VII SURVIVAL AND INDEMNIFICATION ------------------------------ Section 7.1 Survival Periods ----------------- Each of the representations and warranties made by the parties in this Agreement shall terminate on the second anniversary of the Closing; provided, however, -------- ------- that (i) the representations and warranties contained in Sections 2.1, 2.2, 2.3, 2.20, 3.2, 3.4 and 3.7 shall survive the Closing without limitation (subject to any applicable statutes of limitations), other than the termination of this Agreement, (ii) the representations and warranties contained in Section 2.12 shall terminate upon the Closing, (ii) the representations and warranties contained in Section 2.19 shall survive until the third anniversary of the Closing Date and be subject to indemnification as set forth in Section 4.13 exclusively. Except as provided in clause (i), (ii) or (iii) above, the parties intend to shorten the statute of limitations and agree that no claims or causes of action may be brought against the Seller or the Buyer based upon, directly or indirectly, any of the representations, warranties or agreements contained in Articles II and III hereof after the applicable survival period or, except as provided in Section 6.2(c) hereof, any termination of this Agreement. This Section 7.1 shall not limit any covenant or agreement of the parties that contemplates performance after the Closing, including, without limitation, the covenants and agreements set forth in Sections 4.7, 4.9, 4.10 and 4.13 hereof. Section 7.2 Seller's Agreement to Indemnify ------------------------------- (a) Subject to the terms and conditions set forth herein, from and after the Closing, the Seller shall indemnify and hold harmless the Buyer and its directors, officers, employees, affiliates, controlling persons and representatives (collectively, the "Buyer Indemnitees") from and against all liability, demands, claims, actions or causes of action, assessments, losses, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) (collectively, the "Buyer Damages") asserted against or incurred by any Buyer Indemnitee as a result of or arising out of (i) a breach of any representation or warranty of the Seller contained in this Agreement that survives the Closing pursuant to (and subject to the terms of) Section 7.1 or that is contained in any certificate delivered to the Buyer by the Seller pursuant to this Agreement; (ii) a breach of any covenant or agreement on the part of the Seller under this Agreement; or (iii) any real property, entity (including any corporation, partnership, limited liability company or joint venture) or business owned (or leased in the case of real property) by the Company or any Subsidiary of the Company prior to Closing (including, except as provided in Section 4.20, Carriage House Fruit Company and the assets and real properties located in Geneva and Portland Indiana but sold to Red Gold, Inc. or one or more of its affiliates) but not owned by the Company or any Subsidiary of the Company on the Closing Date. (b) The Seller's obligation to indemnify the Buyer Indemnitees pursuant to Section 7.2(a) hereof is subject to the following limitations: (i) No indemnification pursuant to clause (i) of Section 7.2(a) shall be made by the Seller unless the aggregate amount of Buyer Damages incurred exceeds $1,200,000 and, in such event, indemnification shall be made by the Seller only to the extent Buyer Damages incurred exceed $1,200,000 (except that matters arising from a breach of Section 2.14 in respect of the Owned Real Property set forth in Section 7.2 of the Company Disclosure Schedule shall not be subject to the limitation in this section 7.2(b)(i)); (ii) In no event shall the Seller's aggregate obligation to indemnify the Buyer Indemnitees exceed $70,000,000; (iii) The amount of any Buyer Damages shall be reduced by (A) any amount received by a Buyer Indemnitee with respect thereto under any insurance coverage (net of any retroactive premium adjustments) or from any other party alleged to be responsible therefor and (B) the amount of any Tax Benefit available to the Buyer Indemnitee relating thereto. The Buyer Indemnitees shall use reasonable efforts to collect any amounts available under such insurance coverage or from such other party alleged to have responsibility. If a Buyer Indemnitee receives an amount under insurance coverage or from such other party with respect to Buyer Damages at any time subsequent to any indemnification provided by the Seller pursuant to this Section 7.2, then such Buyer Indemnitee shall promptly reimburse the Seller for any payment made or expense incurred by the Seller in connection with providing such indemnification up to such amount received by the Buyer Indemnitee, provided, however, that the Buyer Indemnitees may retain an amount from proceeds received under insurance coverage or from such other party with respect to Buyer Damages to the extent that the Seller has not indemnified the Buyer for the full value of its claim; (iv) The Seller shall be obligated to indemnify the Buyer Indemnitees pursuant to clause (i) of Section 7.2(a) only for those claims giving rise to Buyer Damages as to which the Buyer Indemnitees have given the Seller written notice thereof prior to the end of the applicable survival period (as provided for in Section 7.1). Any written notice delivered by a Buyer Indemnitee to the Seller with respect to Buyer Damages shall set forth with as much specificity as is reasonably practicable the basis of the claim for Buyer Damages and, to the extent reasonably practicable, a reasonable estimate of the amount thereof; and (v) Notwithstanding anything to the contrary in this Agreement, the Seller shall have no obligation to indemnify any Buyer Indemnitee for incidental, consequential, exemplary, special or punitive damages; provided that Buyer Indemnitees shall be entitled to recover consequential damages payable in respect of a Third-Party Claim (as hereinafter defined) to the extent they are awarded by Governmental Entity. Section 7.3 The Buyer's Agreement to Indemnify -------------------------------------- (a) Subject to the terms and conditions set forth herein, from and after the Closing, the Buyer shall indemnify and hold harmless the Seller and its directors, officers, employees, affiliates, controlling persons and representatives and their successors and assigns (collectively, the "Seller Indemnitees") from and against all liability, demands, claims, actions or causes of action, assessments, losses, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) (collectively, "Seller Damages") asserted against or incurred by any Seller Indemnitee as a result of or arising out of (i) a breach of any representation or warranty of the Buyer contained in this Agreement or that is contained in any certificate delivered to the Seller by the Buyer pursuant to this Agreement; and (ii) a breach of any covenant or agreement on the part of the Buyer under this Agreement. (b) The Buyer's obligation to indemnify the Seller Indemnitees pursuant to Section 7.3(a) hereof is subject to the following limitations: (i) No indemnification pursuant to clause (i) of Section 7.3(a) shall be made by the Buyer unless the aggregate amount of Seller Damages incurred exceeds $1,200,000 and, in such event, indemnification shall be made by the Buyer only to the extent that the aggregate amount of Seller Damages incurred exceed $1,200,000; (ii) In no event shall the Buyer's aggregate obligation to indemnify the Seller Indemnitees under clauses (i) and (ii) of Section 7.3(a) exceed $70,000,000; (iii) The amount of any Seller Damages shall be reduced by (A) any amount received by a Seller Indemnitee with respect thereto under any insurance coverage (net of any retroactive premium adjustments) or from any other party alleged to be responsible therefor and (B) the amount of any Tax Benefit available to the Seller Indemnitee relating hereto. The Seller Indemnitees shall use reasonable efforts to collect any amounts available under such insurance coverage or from such other party alleged to have responsibility. If a Seller Indemnitee receives any amount under insurance coverage or from such other party with respect to Seller Damages at any time subsequent to any indemnification provided by the Buyer pursuant to this Section 7.3, then such Seller Indemnitee shall promptly reimburse the Buyer for any payment made or expense incurred by the Buyer in connection with providing such indemnification up to such amount received by the Seller Indemnitee, provided, however that the Seller Indemnitees may retain an amount from proceeds received under insurance coverage or from such other party with respect to Seller Damages only to the extent that the Buyer has not indemnified the Seller for the full value of its claim; (iv) The Buyer shall be obligated to indemnify the Seller Indemnitees pursuant to clause (i) of Section 7.3(a) only for those claims giving rise to Seller Damages as to which the Seller Indemnitees have given the Buyer written notice thereof prior to the end of the applicable survival period (as provided for in Section 7.1). Any written notice delivered by a Seller Indemnitee to the Indemnifying Party with respect to Seller Damages shall set forth with as much specificity as is reasonably practicable the basis of the claim for Seller Damages and, to the extent reasonably practicable, a reasonable estimate of the amount thereof; and (v) Notwithstanding anything to the contrary in this Agreement, the Buyer shall have no obligation to indemnify any Seller Indemnitee for incidental, consequential, exemplary, special or punitive damages; provided that Seller Indemnitees shall be entitled to recover consequential damages payable in respect of a Third-Party Claim to the extent they are awarded by a Governmental Entity. Section 7.4 Third-Party Indemnification --------------------------- Except with respect to Tax matters governed by Section 4.7, the obligations of the Seller to indemnify the Buyer Indemnitees under Section 7.2 hereof with respect to Buyer Damages and the obligations of the Buyer to indemnify the Seller Indemnitees under Section 7.3 with respect to Seller Damages, in either case resulting from the assertion of liability by third parties (each, as the case may be, a "Third-Party Claim"), will be subject to the following terms and conditions: (a) Any party against whom any Third-Party Claim is asserted will give the indemnifying party written notice of any such Third-Party Claim promptly after learning of such Third-Party Claim, and the indemnifying party may at its option undertake the defense thereof by representatives of its own choosing. Failure to give prompt notice of a Third-Party Claim hereunder shall not affect the indemnifying party's obligations under this Article VII, except to the extent the indemnifying party is materially prejudiced by such failure to give prompt notice. If the indemnifying party, within 30 days after notice of any such Third-Party Claim, or such shorter period as is reasonably required, fails to assume the defense of such Third-Party Claim, the Buyer Indemnitee or the Seller Indemnitee, as the case may be, against whom such claim has been made will (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement (subject to the terms of Section 7.4(c)) of such claim on behalf of and for the account and risk, and at the expense, of the indemnifying party, subject to the right of the indemnifying party to assume the defense of such Third-Party Claim at any time prior to settlement, compromise or final determination thereof. (b) So long as the indemnifying party has assumed the defense of any Third-Party Claim in the manner set forth above and in a good faith and diligent manner, the indemnifying party shall have the exclusive right to contest, defend and litigate such Third-Party Claim and, except as expressly provided in Section 7.4(c), shall have the exclusive right, in its sole discretion, to settle any such claim, either before or after the initiation of litigation at such time and on such terms as the indemnifying party deems appropriate. If the indemnifying party elects not to assume the defense of any such Third-Party Claim (which shall be without prejudice to its right at any time to assume subsequently such defense), the indemnifying party will nonetheless be entitled, at its own expense, to participate in such defense. The indemnified party shall have the right to participate, with separate counsel (which counsel shall act in an advisory capacity only), in any such contest, defense, litigation or settlement conducted by the indemnifying party. After notice from the indemnifying party to such indemnified party of the indemnifying party's election to assume the defense of such Third-Party Claim, the indemnifying party will not be liable to such indemnified party for any expenses of the indemnified party's counsel that are subsequently incurred in connection with the defense thereof; provided, however, that the expense of such -------- ------- indemnified party's counsel shall be paid by the indemnifying party if (i) the indemnifying party requested such separate counsel to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a significant conflict of interest exists between the indemnifying party, on the one hand, and the indemnified party, on the other hand, that would make such separate representation clearly advisable. (c) Without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld or delayed), the indemnifying party shall not admit any liability with respect to, or settle, compromise or discharge, any Third-Party Claim or consent to the entry of any judgment with respect thereto, except in the case of any settlement that includes as an unconditional term thereof the delivery by the claimant or plaintiff to the indemnified party of a written release from all liability in respect of such Third-Party Claim. In addition, whether or not the indemnifying party shall have assumed the defense of the Third-Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, any Third-Party Claim or consent to the entry of any judgment with respect thereto, without the prior written consent of the indemnifying party (which consent shall not be unreasonably withheld or delayed), and the indemnifying party will not be subject to any liability for any such admission, settlement, compromise, discharge or consent to judgment made by an indemnified party without such prior written consent of the indemnifying party. (d) Upon execution of this Agreement and delivery of the Company Disclosure Schedule, the Seller shall be deemed to have satisfied the notice requirement of Section 7.4(a) with respect to all matters set forth in Section 2.8 of the Company Disclosure Schedule. (e) The indemnifying party and the indemnified party shall cooperate fully in all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement or discharge of any claim in respect of which indemnity is sought pursuant to this Article VII, including, but not limited to, by providing the other party with reasonable access to employees and officers (including as witnesses) and other information. Section 7.5 Insurance --------- The indemnifying party shall be subrogated to the rights of the indemnified party in respect of any insurance relating to Buyer Damages or Seller Damages, as the case may be, to the extent of any indemnification payments made hereunder. Section 7.6 No Duplication; Sole Remedy ---------------------------- (a) Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement. (b) The Buyer's and the Seller's respective rights to indemnification as provided for in Sections 7.2 and 7.3, as applicable, for a breach of the other's representations or warranties contained in this Agreement, shall constitute such party's sole remedy for such a breach and the breaching party shall have no other liability or damages to the other party resulting from the breach; provided, however, that nothing contained herein shall prevent an -------- ------- indemnified party from pursuing remedies as may be available to such party under applicable law in the event of an indemnifying party's failure to comply with its indemnification obligations hereunder or in the event of a claim of fraud by the indemnified party against the indemnifying party. Section 7.7 Indemnification Matters Governed by this Article VII ---------------------------------------------------- Except as otherwise provided in this Section 7.7, Section 4.7 shall govern and control the indemnification of all matters relating to Taxes. The indemnification and other provisions of this Article VII shall govern the procedure for all indemnification matters under this Agreement, except to the extent otherwise expressly provided in the preceding sentence or in Sections 4.9(d), 4.13, 4.20 and 8.8. The limitations on indemnification set forth in Sections 7.2(b) and 7.3(b) shall not apply to the indemnification matters set forth in Sections 4.7, 4.9(d), 4.20 and 8.8 but shall apply to the indemnification matters set forth in Section 4.13 (other than Section 4.13(a)). ARTICLE VIII MISCELLANEOUS PROVISIONS ------------------------- Section 8.1 Entire Agreement ---------------- This Agreement (including the Company Disclosure Schedule and the Buyer Disclosure Schedule) and the Confidentiality Agreement constitute the entire agreement of the parties relating to the subject matter hereof and supersede other prior agreements and understandings between the parties both oral and written regarding such subject matter. Section 8.2 Severability ------------ Any provision of this Agreement that is held by a court of competent jurisdiction to violate applicable law shall be limited or nullified only to the extent necessary to bring the Agreement within the requirements of such law. Section 8.3 Notices ------- Any notice required or permitted by this Agreement must be in writing and must be sent by facsimile, by nationally recognized commercial overnight courier, or mailed by United States registered or certified mail, addressed to the other party at the address below or to such other address for notice (or facsimile number, in the case of a notice by facsimile) as a party gives the other party written notice of in accordance with this Section 8.3. Any such notice will be effective as of the date of receipt: (a) if to the Seller, to Tomkins Overseas Holdings S.A. 23-25 rue Notre Dame L-2240 Luxemburg Telecopy: 011-352-228-020 Attention: General Counsel with a copy to: Tomkins Industries, Inc. 4801 Springfield Street Dayton, Ohio 45431 Telecopy: (937) 253-6436 Attention: General Counsel and Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Telecopy: (212) 735-2000 Attention: Eric J. Friedman, Esq. (b) if to the Buyer, to Ralcorp Holdings, Inc. P.O. Box 618 St. Louis, Missouri 63188 Telecopy: (314) 877-7748 Attention: Robert Lockwood Section 8.4 Governing Law; Jurisdiction --------------------------- This Agreement shall be governed by, enforced under and construed in accordance with the laws of the State of New York, without giving effect to any choice or conflict of law provision or rule thereof. Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America in each case located in the County of New York for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts) and further agrees that service of any process, summons, notice or document by U.S. registered mail to its respective address set forth in Section 8.3 (or to such other address for notice that such party has given the other party written notice of in accordance with Section 8.3) shall be effective service of process for any litigation brought against it in any such court. Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any litigation arising out of this Agreement or the transactions contemplated hereby in the courts of the State of New York or of the United States of America in each case located in the County of New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such litigation brought in any such court has been brought in an inconvenient forum. Section 8.5 Descriptive Headings --------------------- The descriptive headings herein are inserted for convenience of reference only and shall in no way be construed to define, limit, describe, explain, modify, amplify, or add to the interpretation, construction or meaning of any provision of, or scope or intent of, this Agreement nor in any way affect this Agreement. Section 8.6 Counterparts ------------ This Agreement may be signed in counterparts and all signed copies of this Agreement will together constitute one original of this Agreement. This Agreement shall become effective when each party hereto shall have received counterparts thereof signed by all the other parties hereto. Section 8.7 Assignment ---------- Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Notwithstanding the preceding sentence, the Seller may delegate all or any part of its obligations under this Agreement to any of its agents, affiliates or other designees. No such delegation shall relieve the Seller of any of its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Section 8.8 Fees and Expenses ------------------ Whether or not this Agreement and the transactions contemplated hereby are consummated, and except as otherwise expressly set forth herein, each of the parties hereto shall bear its own costs and expenses (including legal and financial advisory fees and expenses) incurred in connection with, or in anticipation of, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses; provided, however, that if (a) -------- ------- this Agreement is terminated pursuant to Section 6.1(b) hereof and (b) the Buyer shall have breached the representation and warranty set forth in Section 3.5 hereof, the Buyer shall pay the Seller an amount equal to all fees, costs, and expenses incurred by the Seller in connection with the transactions contemplated by this Agreement. Such payment shall not constitute liquidated damages and shall be in addition to any other legal or equitable remedies available to the Seller. Each of the Seller, on the one hand, and the Buyer, on the other hand, shall indemnify and hold harmless the other party from and against any and all claims or liabilities for financial advisory and finders' fees incurred by reason of any action taken by such party or otherwise arising out of the transactions contemplated by this Agreement by any person claiming to have been engaged by such party. Section 8.9 Interpretation -------------- Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable. Unless otherwise specified, all references herein to "Section" shall refer to corresponding provisions of this Agreement. Whenever the words "include," "includes" or including" are used in this Agreement, they are deemed to be followed by the words "without limitation." The phrase "to the knowledge of the Seller" or any similar phrase shall mean such facts and other information that as of the date hereof are actually known to, or which could reasonably be expected to be known after a reasonably diligent inquiry of the relevant facts and circumstances by, any executive officer or director of the Seller or the Company and those persons set forth in Section 8.9 of the Company Disclosure Schedule. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. Section 8.10 No Third-Party Beneficiaries ---------------------------- Except as expressly provided in this Agreement, this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto; provided, however, that this Agreement will be binding upon, -------- ------- inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns. Section 8.11 No Waivers; Modification -------------------------- No Waivers; Modification. Any waiver of any right or default hereunder will be - -------------------------- effective only in the instance given and will not operate as or imply a waiver of any other or similar right or default on any subsequent occasion. No waiver, modification or amendment of this Agreement or of any provision hereof will be effective unless in writing and signed by the party against whom such waiver, modification or amendment is sought to be enforced. Section 8.12 Specific Performance --------------------- The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or equity. IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly signed as of the date first above written. TOMKINS OVERSEAS HOLDINGS S.A. By: /s/ C. Mark H. Thompson ----------------------- Name: C. Mark H. Thompson Title: Authorized Signor RH FINANCIAL CORPORATION By: /s/ J. R. Micheletto -------------------- Name: J. R. Micheletto Title: Chief Executive Officer GUARANTY In order to induce Tomkins Overseas Holdings S.A. (the "Seller") to enter into the Stock Purchase Agreement (the "Agreement"), dated as of June 16, 2000, between the Seller and RH Financial Corporation (the "Buyer"), Ralcorp Holdings, Inc., a Delaware corporation, irrevocably and unconditionally guarantees the prompt, complete and punctual performance, compliance and payment of all the obligations of the Buyer under the Agreement. Ralcorp further agrees that its obligations under the Agreement shall not be affected by any event, condition or circumstance whatsoever (with or without notice to, or knowledge of, the Buyer or Ralcorp) including without limitation any which constitutes, or might be construed to constitute, a legal or equitable discharge of the Buyer for its obligations under the Agreement or of Ralcorp of its guaranty hereunder. In furtherance of the foregoing and without limiting the generality thereof, Ralcorp agrees that (a) this Guaranty is a guaranty of payment and performance when due and not collectability; (b) this Guaranty is a primary obligation of Ralcorp and not merely a contract of surety; and (c) payment or performance by Ralcorp of a portion, but not all, of the obligations under the Agreement shall in no way limit, affect, modify or abridge any liability of Ralcorp for any portion of the obligations which have not been paid or performed. Ralcorp waives all diligence, presentment, protest and demand, and also notice of dishonor, demand, protest and nonpayment. No failure by the Seller to assert any right or pursue any remedy with respect to the Buyer or under this Guaranty shall relieve Ralcorp from its obligations hereunder. Ralcorp agrees that this Guaranty shall not be diminished or affected, in any way, by any bankruptcy, reorganization, arrangement, liquidation or similar proceeding with respect to the Buyer or by dissolution of the Buyer. This Guaranty shall continue in full force and effect, notwithstanding any merger, consolidation, sale of assets or any other similar transaction by the Buyer or Ralcorp. Ralcorp further agrees to pay all reasonable costs and expenses, including without limitation, reasonable attorneys' fees, at any time paid or incurred by or on behalf of the Seller in enforcing this Guaranty. June 16, 2000 RALCORP HOLDINGS, INC. By: /s/ J. R. Micheletto -------------------- Name: J. R. Micheletto Title: Chief Executive Officer EXHIBIT B FIRPTA CERTIFICATE ------------------- Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that a transferee of a United States real property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon the acquisition of an interest in RHM Holdings (USA) Inc., a Delaware corporation (the "Company"), the undersigned hereby certifies that he is an officer of the Company and that, as such, he is authorized to execute and deliver this certificate on behalf of the Company, and further certifies as follows: 1. The Company is not and has not been a "United States real property holding corporation" within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code; 2. Interests in the Company are not "United States real property interests" by reason of section 897(c)(1)(A)(ii) of the Code; 3. The Company's United States employer identification number is #; and 4. The Company's address is #. The undersigned understands that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment or both. Under penalties of perjury, the undersigned declares that he has examined this certification and, to his knowledge and belief, it is true, correct and complete, and he further declares that he has authority to sign this document on behalf of the Company. Dated this # day of #, ____. RHM HOLDINGS (USA) INC. By: Name: Title: TABLE OF CONTENTS PAGE ARTICLE I SALE OF STOCK Section 1.1. Purchase and Sale 1 Section 1.2. Pre-Closing Purchase Price Adjustment 1 Section 1.3. Post-Closing Purchase Price Adjustment 2 Section 1.4. Time and Place of Closing 5 Section 1.5. Deliveries by the Seller 5 Section 1.6. Deliveries by the Buyer 6 Section 1.7. Books and Records of the Company 6 Section 1.8. Transition Services 7 Section 1.9. Intercompany Accounts 7 Section 1.10. Treatment of Seller Guaranties 7 ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER Section 2.1. Organization; Etc. 8 Section 2.2. Authority Relative to this Agreement 8 Section 2.3. Capitalization; Ownership of Shares 9 Section 2.4. Consents and Approvals; No Violations 10 Section 2.5. Financial Statements 10 Section 2.6. Absence of Undisclosed Liabilities 11 Section 2.7. Absence of Certain Changes 11 Section 2.8. Litigation 11 Section 2.9. Compliance with Law 12 Section 2.10. Employee Benefit Plans 13 Section 2.11. Labor Relations 16 Section 2.12. Taxes 16 Section 2.13. Contracts 17 Section 2.14. Real Property 19 Section 2.15. Intellectual Property 20 Section 2.16. Year 2000 Compliance 21 Section 2.17. Assets 21 Section 2.18. Affiliate Transactions 21 Section 2.19. Environmental Matters. 21 Section 2.20. Brokers; Finders and Fees 23 Section 2.21. Inventory 23 Section 2.22. Insurance 24 Section 2.23. Customers 24 Section 2.24. Records 24 Section 2.25. Receivables 24 Section 2.26. Bank Accounts 24 Section 2.27. Powers of Attorney 25 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER Section 3.1. Organization; Etc. 25 Section 3.2. Authority Relative to this Agreement 25 Section 3.3. Consents and Approvals; No Violations 25 Section 3.4. Acquisition of Shares for Investment; Ability to Evaluate and Bear Risk 26 Section 3.5. Availability of Funds 26 Section 3.6. Litigation 27 Section 3.7. Buyer Acknowledgment 27 Section 3.8. Brokers; Finders and Fees 27 ARTICLE IV COVENANTS OF THE PARTIES Section 4.1. Conduct of Business of the Company 27 Section 4.2. Access to Information for the Buyer 29 Section 4.3. Consents; Cooperation 29 Section 4.4. No Solicitation 30 Section 4.5. Best Efforts 30 Section 4.6. Public Announcements 30 Section 4.7. Tax Matters 30 Section 4.8. Knowledge of Breach; Prior Knowledge 39 Section 4.9. Employees; Employee Benefits 39 Section 4.10. Indemnification. 41 Section 4.11. Maintenance of Books and Records 41 Section 4.12. Seller's Trademarks and Logos 42 Section 4.13. Environmental Indemnity 42 Section 4.14. Other Matters 45 Section 4.15. Confidentiality 46 Section 4.16. Non-Competition 46 Section 4.17. Stock Certificates 47 Section 4.19. Estoppel Certificates. 47 Section 4.20. Preclosing Transaction. 47 Section 4.21. Aurora Account Receivable. 48 ARTICLE V CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE Section 5.1. Conditions to Each Party's Obligations to Consummate the Stock Purchase 48 Section 5.2. Further Conditions to the Seller's Obligations 49 Section 5.3. Further Conditions to the Buyer's Obligations 49 ARTICLE VI TERMINATION AND ABANDONMENT Section 6.1. Termination 50 Section 6.2. Procedure for and Effect of Termination 51 ARTICLE VII SURVIVAL AND INDEMNIFICATION Section 7.1. Survival Periods 52 Section 7.2. Seller's Agreement to Indemnify 52 Section 7.3. The Buyer's Agreement to Indemnify 54 Section 7.4. Third-Party Indemnification 56 Section 7.5. Insurance 57 Section 7.6. No Duplication; Sole Remedy 58 Section 7.7. Indemnification Matters Governed by this ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1. Entire Agreement 58 Section 8.2. Severability 58 Section 8.3. Notices 59 Section 8.4. Governing Law; Jurisdiction 60 Section 8.5. Descriptive Headings 60 Section 8.6. Counterparts 60 Section 8.7. Assignment 60 Section 8.8. Fees and Expenses 61 Section 8.9. Interpretation 61 Section 8.10. No Third-Party Beneficiaries 61 Section 8.11. No Waivers; Modification 62 Section 8.12. Specific Performance 62 Exhibit A A-1 Exhibit B B-1 Exhibit C-1 C-1 Exhibit C-2 C-2 EX-2.1(B) 3 0003.txt AMENDMENT NO. 1 AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT Amendment No.1 ("Amendment No. 1"), dated as of July 14, 2000, amending the Stock Purchase Agreement, dated as of June 16, 2000 (the "Agreement"), by and between Tomkins Overseas Holdings S.A., a company organized under the laws of Luxembourg (the "Seller"), and RH Financial Corporation, a Nevada corporation (the "Buyer"). WHEREAS, in accordance with Section 8.11 of the Agreement, the parties hereto desire to amend the Agreement to clarify the parties agreement that the Seller agrees to indemnify the Buyer for certain excess amounts in respect of worker's compensation and pension liabilities in connection with the former Carriage House employees. NOW, THEREFORE, in consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definitions. Capitalized terms used herein and not otherwise ----------- defined herein shall have the meaning provided therefor in the Agreement. 2. Amendment to Agreement. The Agreement is hereby amended as ------------------------ set forth in this Section 2: The third sentence of Section 4.20 of the Agreement is hereby amended to read in its entirety as follows: "To the extent the Buyer is required to make any payments pursuant to this Section 4.20 which, in the aggregate, exceed the amount reserved therefore in the certificate setting forth the Closing Net Working Capital, the Seller agrees to indemnify the Buyer for such excess amounts without regard to the provisions of Section 7.2(b)." 3. Miscellaneous. Except as expressly amended hereby, the terms ------------- and conditions of the Agreement shall continue in full force and effect. This Amendment No. 1 is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the Agreement or any of the documents referred to therein. Wherever "Agreement" is referred to in the Agreement or in any other agreements, documents and instruments, such reference shall be to the Agreement as amended hereby. 4. Counterparts. This Amendment No. 1 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 but all of which taken together shall constitute one and the same agreement. 5. Governing Law. This Amendment No. 1 shall be governed by, and ------------- construed in accordance with, the laws of the State of New York without regard to the conflict of laws rules thereof. IN WITNESS WHEREOF, the Seller and the Buyer have caused this Amendment No. 1 to be executed as of the date first written above by their respective officers thereunto duly authorized. SELLER: TOMKINS OVERSEAS HOLDINGS S.A. By:________________________________ Name: Title: BUYER: RH FINANCIAL CORPORATION By:_________________________________ Name: Title: EX-2.1(C) 4 0004.txt AMENDMENT NO. 2 AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT Amendment No. 2 ("Amendment No. 2"), dated as of July 14, 2000, amending the Stock Purchase Agreement, dated as of June 16, 2000, as amended by Amendment No. 1, dated as of July 13, 2000 (the "Agreement"), by and between Tomkins Overseas Holdings S.A., a company organized under the laws of Luxembourg (the "Seller"), and RH Financial Corporation, a Nevada corporation (the "Buyer"). WHEREAS, in accordance with Section 8.11 of the Agreement, the parties hereto desire to amend the Agreement to clarify the parties agreement that the Seller reimburse the Buyer for certain bonuses payable to the Company's employees and certain indemnification matters relating to title exceptions on the Talcott Street property. NOW, THEREFORE, in consideration of the mutual agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definitions. Capitalized terms used herein and not otherwise ----------- defined herein shall have the meaning provided therefor in the Agreement. 2. Amendment to Agreement. The Agreement is hereby amended as ------------------------ set forth in this Section 2: a. Section 7.2(b)(i) of the Agreement is hereby amended to read in its entirety as follows: "No indemnification pursuant to clause (i) of Section 7.2(a) shall be made by the Seller unless the aggregate amount of Buyer Damages incurred exceeds $1,200,000 and, in such event, indemnification shall be made by the Seller only to the extent Buyer Damages incurred exceed $1,200,000 (except that matters arising from a breach of Section 2.14 in respect of (i) the Owned Real Property set forth on Section 7.2 of the Company Disclosure Schedule and (ii) the title exceptions to the Talcott Street property contained in Exhibit D attached hereto shall not be subject to the limitation in this Section 7.2(b)(i));" b. Section 4.9(b) of the Agreement is hereby amended by adding the following paragraph thereto: "(e) Buyer hereby agrees to pay the extraordinary bonus amounts (the "Extraordinary Bonus") set forth in the Special Retention Plans and the bonus amount the "Bonus" and together with the Extraordinary Bonus, the "Stay Bonuses") in The Red Wing Company plan set forth in Item 40 of the Company Disclosure Schedule (the "Salesman Bonus Plan") and the Seller hereby agrees to reimburse the Buyer for the entire amount of the non-discretionary portions of the Stay Bonuses. In addition, Buyer agrees to pay the discretionary bonus amounts determined by the Seller as called for in the Special Retention Plans and the Salesman Bonus Plan (the "Discretionary Bonuses") and the Seller agrees to reimburse the Buyer for the amount of the Discretionary Bonuses net of any Tax Benefit to Buyer, provided that the Company or Buyer shall have exercised its discretion with respect to the payment of the Discretionary Bonuses at the direction and sole discretion of the Seller." 3. Miscellaneous. Except as expressly amended hereby, the terms ------------- and conditions of the Agreement shall continue in full force and effect. This Amendment No. 2 is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the Agreement or any of the documents referred to therein. Wherever "Agreement" is referred to in the Agreement or in any other agreements, documents and instruments, such reference shall be to the Agreement as amended hereby. 4. Counterparts. This Amendment No. 2 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 but all of which taken together shall constitute one and the same agreement. 5. Governing Law. This Amendment No. 2 shall be governed by, and ------------- construed in accordance with, the laws of the State of New York without regard to the conflict of laws rules thereof. IN WITNESS WHEREOF, the Seller and the Buyer have caused this Amendment No. 2 to be executed as of the date first written above by their respective officers thereunto duly authorized. SELLER: TOMKINS OVERSEAS HOLDINGS S.A. By:________________________________ Name: Title: BUYER: RH FINANCIAL CORPORATION By:_________________________________ Name: EX-2.2 5 0005.txt CREDIT AGREEMENT $200,000,000 CREDIT AGREEMENT AMONG RALCORP HOLDINGS, INC. as Borrower, THE LENDERS NAMED HEREIN, and BANK ONE, NA, as Agent DATED AS OF July 10, 2000 BANC ONE CAPITAL MARKETS, INC., as Arranger and WACHOVIA BANK, N.A., as Syndication Agent PNC BANK, NATIONAL ASSOCIATION as Documentation Agent TABLE OF CONTENTS ----------------- ARTICLE I DEFINITIONS 1 ARTICLE II THE FACILITY 2.1. The Facility. 14 2.2. Advances. 15 2.3. Availability of Funds 16 2.4. Commitment Fee; Reductions in Aggregate Commitment. 16 2.5. Minimum Amount of Each Advance 16 2.6. Optional Principal Payments. 17 2.7. Changes in Interest Rate, etc. 17 2.8. Rates Applicable After Default. 17 2.9. Method of Payment 17 2.10. Notes; Telephonic Notices. 18 2.11 Interest Payment Dates; Interest and Fee Basis 17 2.12. Notification of Advances, Interest Rates, Prepayments, Commitment Reductions and Issuance Requests 18 2.13. Lending Installations. 18 2.14. Non-Receipt of Funds by the Agent 18 2.15. Taxes. 19 2.16. Agent's Fees 20 ARTICLE III CHANGE IN CIRCUMSTANCES 3.1. Yield Protection 20 3.2. Changes in Capital Adequacy Regulations 21 3.3. Availability of Types of Advances 21 3.4. Funding Indemnification 21 3.5. Lender Statements; Survival of Indemnity 22 ARTICLE IV CONDITIONS PRECEDENT 4.1 Initial Loans 22 4.2. Each Future Advance 24 ARTICLE V REPRESENTATIONS AND WARRANTS 5.1. Corporate Existence and Standing 24 5.2. Authorization and Validity 25 5.3. Compliance with Laws and Contracts 25 5.4. Governmental Consents. 25 5.5. Financial Statements 25 5.6. Material Adverse Change 26 5.7. Taxes 26 5.8. Litigation and Contingent Obligations 26 5.9. Subsidiaries and Capitalization 26 5.10. ERISA 27 5.11. Defaults. 27 5.12. Federal Reserve Regulations 27 5.13. Investment Company; Public Utility Holding Company Act 27 5.14. Certain Fees. 27 5.15. Solvency 28 5.16. Ownership of Properties 28 5.17. Indebtedness 28 5.18. Subordinated Indebtedness 28 5.19. Employee Controversies 28 5.20. Material Agreements 28 5.21. Environmental Laws 29 5.22. Insurance 29 5.23. Disclosure 29 ARTICLE VI COVENANTS 30 6.1. Financial Reporting 30 6.2. Use of Proceeds 31 6.3. Notice of Default 31 6.4. Conduct of Business 31 6.5. Taxes 32 6.6. Insurance 32 6.7. Compliance with Laws 32 6.8. Maintenance of Properties 32 6.9. Inspection. 32 6.10. Capital Stock and Dividends 32 6.11. Indebtedness 33 6.12. Merger 33 6.13. Sale of Assets 33 6.14. Sale of Accounts 33 6.15. Investments and Purchases 34 6.16. Contingent Obligations 35 6.17. Liens 35 6.18. Lease Rentals 36 6.19. Affiliates 36 6.20. Subordinated Indebtedness; Other Indebtedness 36 6.21. Environmental Matters 37 6.22. Change in Corporate Structure; Fiscal Year 37 6.23. Inconsistent Agreements 37 6.24. Financial Covenants 37 6.25. ERISA Compliance. 37 6.26. Material Subsidiaries 38 ARTICLE VII DEFAULTS 38 ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1. Acceleration 40 8.2. Amendments 40 8.3. Preservation of Rights 41 ARTICLE IX GENERAL PROVISIONS 41 9.1. Survival of Representations 41 9.2. Governmental Regulation 41 9.3. Taxes 41 9.4. Headings 41 9.5. Entire Agreement 41 9.6. Several Obligations; Benefits of this Agreement 42 9.7. Expenses; Indemnification 42 9.8. Numbers of Documents 42 9.9. Accounting 42 9.10. Severability of Provisions 42 9.11. Nonliability of Lenders. 42 9.12. CHOICE OF LAW 43 9.13. CONSENT TO JURISDICTION 43 9.14. WAIVER OF JURY TRIAL 43 9.15. Disclosure 43 9.16. Counterparts 44 9.17. Confidentiality 44 ARTICLE X THE AGENT 44 10.1. Appointment 44 10.2. Powers 45 10.3. General Immunity 45 10.4. No Responsibility for Loans, Recitals, etc. 45 10.5. Action on Instructions of Lenders 45 10.6. Employment of Agents and Counsel 45 10.7. Reliance on Documents; Counsel 46 10.8. Agent's Reimbursement and Indemnification 46 10.9. Notice of Default 46 10.10. Rights as a Lender 46 10.11. Lender Credit Decision. 46 10.12. Successor Agent 47 10.13. Documentation Agent 47 ARTICLE XI SETOFF; RATABLE PAYMENTS 47 11.1. Setoff 47 11.2. Ratable Payments 47 ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 48 12.1. Successors and Assigns 48 12.2. Participations. 48 12.3. Assignments. 49 12.4. Dissemination of Information 50 12.5. Tax Treatment 50 ARTICLE XIII NOTICES 50 13.1. Giving Notice. 50 13.2. Change of Address 50 EXHIBITS -------- Exhibit A - Note Exhibit B - Compliance Certificate Exhibit C - Assignment Agreement Exhibit D - Form of General Counsel Opinion SCHEDULES --------- Schedule 1 - Commitments Schedule 5.8 - Material Contingent Obligations Schedule 5.9 - Subsidiaries and Capitalization Schedule 5.10 - ERISA Schedule 5.14 - Brokers' Fees Schedule 5.16 - Properties Schedule 5.17 - Indebtedness Schedule 6.15 - Investments Schedule 6.17 - Liens CREDIT AGREEMENT This Credit Agreement, dated as of July 10, 2000, is among RALCORP HOLDINGS, INC., a Missouri corporation (the "Borrower"), the Lenders and BANK -------- ONE, NA, a national banking association having its principal office in Chicago, Illinois, individually and as Agent. R E C I T A L S: - - - - - - - - A. RH Financial Corporation, a Nevada corporation and a Wholly-Owned Subsidiary of the Borrower ("RH Financial") is party to a certain Stock Purchase ------------ Agreement (as hereinafter defined), pursuant to which RH Financial has agreed to purchase all of the outstanding shares of stock of RHM Holdings (USA) Inc., a Delaware corporation (the "RHM Acquisition"). ---------------- B. The Borrower has requested that the Lenders make financial accommodations to it in an initial aggregate principal amount of $200,000,000, the proceeds of which the Borrower will use to finance (i) the RHM Acquisition, (ii) general corporate needs of the Borrower and its Subsidiaries (including, but not limited to, repurchasing its capital stock), (iii) working capital for the Borrower and its Subsidiaries, and (iv) non-hostile acquisitions by the Borrower. C. The Lenders are willing to extend such financial accommodations on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Agent hereby agree as follows: ARTICLE I DEFINITIONS ----------- As used in this Agreement: "Accounts Receivable Financing Program" means a program of sales or securitization of, or transfers of interests in, accounts receivable and related contract rights ("Receivables") by the Borrower or any Subsidiary on a limited ----------- recourse basis pursuant to which the aggregate amount of financing thereunder shall not exceed $50,000,000 at any time outstanding, provided that such sale or -------- transfer qualifies as a sale under Agreement Accounting Principles. "Adjusted EBITDA" means, for any applicable computation period, the sum of (a) EBIT for such period plus (b) the Borrower's and Subsidiaries' amortization and ---- depreciation deducted in determining Net Income for such period; provided, -------- however, that (i) Adjusted EBITDA shall be calculated giving pro forma effect for any Permitted Purchase during such period as though such Permitted Purchase occurred on the first day of such period, and (ii) in the event that the Borrower sells or otherwise disposes of all or any portion of the capital stock of Vail Resorts, Inc. during such period, then Adjusted EBITDA shall be calculated by subtracting (adding) all equity earnings (losses) attributable to such divested interest for such period. "Adjusted Net Income" means, for any computation period (a) Net Income for such period, minus (plus) (b) earnings (losses) during such period attributable to ----- ---- the equity investment by the Borrower and its Subsidiaries in Vail Resorts, Inc. and included in the computation of Net Income for such period, plus (c) to the ---- extent not included in the computation of Net Income for such period, the sum of all proceeds in excess of book value (net of related costs, expenses, fees and taxes) received by the Borrower or any Subsidiary of the Borrower during such period from the sale or other disposition of the capital stock of Vail Resorts, Inc. "Adjusted Net Worth" means at any date (a) Net Worth minus (b) the value of the ----- equity investment of the Borrower and its Subsidiaries in Vail Resorts, Inc. included in the computation of Net Worth at such date. "Advance" means a borrowing hereunder consisting of the aggregate amount of the several Loans made by the Lenders to the Borrower at the same time, of the same Type and for the same Eurodollar Interest Period. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means Bank One in its capacity as agent for the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor - ---------- Agent appointed pursuant to Article X. ---------- "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders hereunder. The initial Aggregate Commitment is $200,000,000 as of the date hereof, as adjusted from time to time pursuant to the terms of this Agreement. "Agreement" means this Credit Agreement, as it may be amended, modified or restated and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with those used in preparing the Financial Statements; provided, however, that for purposes of -------- ------- all computations required to be made with respect to compliance by the Borrower with Section 6.24, such term shall mean generally accepted accounting principles ------------ as in effect on the date hereof, applied in a manner consistent with those used in preparing the Financial Statements. "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (a) the Prime Rate for such day and (b) the Federal Funds Effective Rate most recently determined by the Agent plus of 1% per annum. "Alternate Base Rate Advance" means an Advance which bears interest at the Alternate Base Rate. "Alternate Base Rate Loan" means a Loan which bears interest at the Alternate Base Rate. "Applicable Commitment Fee Percentage" means 0.20%. "Applicable Eurodollar Margin" means (a) at any time prior to the Revolving Credit Termination Date, the greater of (i) 1.00% and (ii) the sum of (A) the "Applicable Eurodollar Margin" then in effect pursuant to the Existing Credit Agreement, plus (B) 0.125% and (b) at any time on or after the Revolving Credit ---- Termination Date, the greater of (i) 1.25% and (ii) the sum of (A) the "Applicable Eurodollar Margin" then in effect pursuant to the Existing Credit Agreement, plus (B) 0.375%. ---- "Arranger" means Banc One Capital Markets, Inc. and its successors. "Article" means an article of this Agreement unless another document is specifically referenced. "Asset Disposition" means any sale, transfer or other disposition of any asset of the Borrower or any Subsidiary in a single transaction or in a series of related transactions (other than the sale of inventory or unused or obsolete equipment in the ordinary course). "Authorized Officer" means any of the president, chief financial officer, treasurer or controller of the Borrower, acting singly. "Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors. "Bankruptcy Code" means Title 11, United States Code, sections 1 et seq., as the -- --- same may be amended from time to time, and any successor thereto or replacement therefor which may be hereafter enacted. "Borrower" means Ralcorp Holdings, Inc., a Missouri corporation. "Borrowing Date" means a date on which an Advance is made. "Borrowing Notice" is defined in Section 2.2.3. -------------- "Business Day" means (a) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and on which dealings in United States dollars are carried on in the London interbank market, and (b) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities. "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Change" is defined in Section 3.2. ------------ "Change in Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, including without limitation any acquisition effected by means of any transaction contemplated by Section 6.12, of beneficial ------------- ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of the Borrower, or (b) during any period of 25 consecutive calendar months, commencing on the date of this Agreement, the ceasing of those individuals (the "Continuing Directors") who (i) were directors -------------------- of the Borrower on the first day of each such period or (ii) subsequently became directors of the Borrower and whose initial election or initial nomination for election subsequent to that date was approved by a majority of the Continuing Directors then on the board of directors of the Borrower, to constitute a majority of the board of directors of the Borrower. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding the amount set forth in Schedule 1 hereto and as set forth in any Notice of Assignment relating to any assignment which has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time --------------- pursuant to the terms hereof. "Condemnation" is defined in Section 7.8. ------------ "Consolidated" or "consolidated", when used in connection with any calculation, means a calculation to be determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with Agreement Accounting Principles. "Consolidated Interest Expense" means, with respect to any period, the sum (without duplication) of (i) Consolidated interest expense of the Borrower and its Consolidated Subsidiaries for such period before the effect of interest income, as reflected on the Consolidated statements of income for the Borrower and its Consolidated Subsidiaries for such period, and (ii) Consolidated interest, yield or discount accrued during such period on the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of (or of interests in) receivables of the Borrower and its Consolidated Subsidiaries in connection with a revolving Accounts Receivable Financing Program (regardless of the accounting treatment of such Accounts Receivable Financing Program). "Consolidated Person" means, for the taxable year of reference, each Person which is a member of the affiliated group of the Borrower if Consolidated returns are or shall be filed for such affiliated group for federal income tax purposes or any combined or unitary group of which the Borrower is a member for state income tax purposes. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement or take-or-pay contract or application for a Letter of Credit. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Conversion/Continuation Notice" is defined in Section 2.7. ------------ "Default" means an event described in Article VII. ------------ "EBIT" means, for any applicable computation period, the Borrower's and Subsidiaries' Net Income on a consolidated basis, plus (a) consolidated Federal, ---- state, local and foreign income and franchise taxes paid or accrued during such period and (b) Consolidated Interest Expense for such period, minus (or plus) ----- ---- equity earnings (or losses) during such period attributable to equity investments by the Borrower and its Subsidiaries in the capital stock or other equity interests in any Person which is not a Subsidiary (other than Vail Resorts, Inc.). "Environmental Claims" means all claims, investigations, litigation, administrative proceedings, notices, requests for information, whether pending or threatened, or judgements or orders, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for any violation of any Environmental Laws, or for any Release or injury to the environment. "Environmental Laws" means all federal, state and local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, direct duties, requests, licenses, approvals, certificates, decrees, standards, permits and other authorizations of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety and land use matters, including without limitations, chemical substances, air emissions, effluent discharges and the storage, treatment, transport and disposal of Hazardous Materials. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Eurodollar Advance" means an Advance which bears interest at a Eurodollar Rate requested by the Borrower pursuant to Section 2.2.3. -------------- "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Eurodollar Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Eurodollar Interest Period, and having a maturity equal to such Eurodollar Interest Period, provided that, (i) if Reuters Screen FRBD is not -------- available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Eurodollar Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Eurodollar Interest Period, and having a maturity equal to such Eurodollar Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Eurodollar Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Eurodollar Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Eurodollar Interest Period. "Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a period of seven days or one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. A Eurodollar Interest Period of one, two, three or six months shall end on (but exclude) the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically corresponding day in - -------- ------- such next, second, third or sixth succeeding month, such Eurodollar Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If a Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall end on the next succeeding Business Day; provided, however, that if, with respect to a -------- ------- Eurodollar Interest Period of one, two, three or six months, said next succeeding Business Day falls in a new month, such Eurodollar Interest Period shall end on the immediately preceding Business Day. "Eurodollar Loan" means a Loan requested by the Borrower pursuant to Section ------- 2.2.3 which bears interest at a Eurodollar Rate. - ----- "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Eurodollar Interest Period, plus (b) the Applicable Eurodollar Margin. The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a multiple. "Existing Credit Agreement" means that certain credit agreement among Bank One, as agent, the financial institutions party thereto, and Ralcorp Holdings, Inc. dated as of April 28, 1999, as amended, restated, replaced or refinanced. "Facility Termination Date" means April 10, 2001, as such date may be extended pursuant to Section 2.1.4. -------------- "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "Financial Statements" is defined in Section 5.5. ------------ "Fiscal Quarter" means one of the four three-month accounting periods comprising a Fiscal Year. "Fiscal Year" means the twelve-month accounting period ending September 30 of each year. "Governmental Authority" means any government (foreign or domestic) or any state or other political subdivision thereof or any governmental body, agency, authority, department or commission (including without limitation any taxing authority or political subdivision) or any instrumentality or officer thereof (including without limitation any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned or controlled by or subject to the control of any of the foregoing. "Guarantors" means Bremner, Inc., Cascade Cookie Company, Inc., Flavor House Products, Inc., James P. Linette, Inc., Martin Gillet & Co., Inc., Nutcracker Brands, Inc., RH Financial Corporation, Ripon Foods, Inc., Sugar Kake Cookie Inc., Wortz Company, and each other Material Subsidiary. "Hazardous Materials" means any toxic or hazardous waste, substance or chemical or any pollutant, contaminant, chemical or other substance defined or regulated pursuant to any Environmental Laws, including, without limitation, asbestos, petroleum or crude oil. "Indebtedness" of a Person means such Person's (a) obligations for borrowed money, (b) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or similar instruments, (e) Capitalized Lease Obligations, (f) Rate Hedging Obligations, (g) Contingent Obligations, (h) the face amount of any Letter of Credit, (i) obligations under so-called "synthetic leases" and (j) repurchase obligations or liabilities of such Person with respect to accounts or notes receivable sold by such Person. "Interest Expense Coverage Ratio" means for any applicable computation period of the Borrower, the ratio of EBIT to the Borrower's Consolidated Interest Expense for such period, all as determined in accordance with Agreement Accounting Principles. "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade), deposit account or contribution of capital by such Person to any other Person or any investment in, or purchase or other acquisition of, the stock, partnership interests, notes, debentures or other securities of any other Person made by such Person. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Agent, any office, branch, subsidiary or affiliate of such Lender or the Agent. "Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "Leverage Ratio" means, with respect to the Borrower on a consolidated basis with its Subsidiaries, at the end of any Fiscal Quarter, the ratio of (a) Total Debt at the end of such Fiscal Quarter to (b) Adjusted EBITDA for the four Fiscal Quarters then ending. "Lien" means any security interest, lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's portion of any Advance and "Loans" means, with respect to the Lenders, the aggregate of all Advances. "Loan Documents" means this Agreement, the Notes, the Subsidiary Guaranty and the other documents and agreements contemplated hereby and executed by the Borrower in favor of the Agent or any Lender. "Margin Stock" has the meaning assigned to that term under Regulation U. "Material Adverse Effect" means a material adverse effect on (a) the business, Property, condition (financial or other) and results of operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under the Loan Documents, or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. "Material Subsidiary" means a Subsidiary of the Borrower organized under the laws of a jurisdiction located within the United States and at any time having assets with a fair market value in excess of $10,000,000; provided, however, -------- ------- that any special purpose Subsidiary established for the purpose of entering into the Accounts Receivable Financing Program shall not be a Material Subsidiary. "Moody's" means Moody's Investor Services, Inc. "Net Income" means, for any computation period, with respect to the Borrower on a consolidated basis with its Subsidiaries (other than any Subsidiary which is restricted from declaring or paying dividends or otherwise advancing funds to its parent whether by contract or otherwise), cumulative net income earned during such period as determined in accordance with Agreement Accounting Principles, but (i) excluding any non-cash charges or gains which are unusual, non-recurring or extraordinary and (ii) including, to the extent not otherwise included in the determination of Net Income, all cash dividends and cash distributions received by the Borrower or any Subsidiary from any Person in which the Borrower or such Subsidiary has made an Investment pursuant to Section ------- 6.15(j). - ------- "Net Worth" means at any date the consolidated common stockholders' equity of the Borrower and its consolidated Subsidiaries determined in accordance with Agreement Accounting Principles. "Note" means a promissory note in substantially the form of Exhibit A hereto, --------- duly executed and delivered to the Agent by the Borrower for the account of each Lender and payable to the order of a Lender in the amount of its Commitment, including any amendment, modification, renewal or replacement of such promissory note. "Notice of Assignment" is defined in Section 12.3.2. --------------- "Obligations" means all unpaid principal of and accrued and unpaid interest on the Notes, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent or any indemnified party hereunder arising under any of the Loan Documents. "Participants" is defined in Section 12.2.1. --------------- "Payment Date" means the last day of each March, June, September and December. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Permitted Purchase" means an acquisition permitted by Section 6.15(m). --------------- "Person" means any natural person, corporation, firm, joint venture, partnership, association, enterprise, limited liability company, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" means an employee pension benefit plan, as defined in Section 3(2) of ERISA, as to which the Borrower or any member of the Controlled Group may have any liability. "Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "pro-rata" means, when used with respect to a Lender, and any described aggregate or total amount, an amount equal to such Lender's pro-rata share or portion based on its percentage of the Aggregate Commitment or if the Aggregate Commitment has been terminated, its percentage of the aggregate principal amount of outstanding Advances. "Purchase" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (a) acquires any ongoing business or all or substantially all of the assets of any firm, corporation or division or line of business thereof, whether through purchase of assets, merger or otherwise, or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding partnership interests of a partnership. "Purchasers" is defined in Section 12.3.1. --------------- "Ralston Obligations" means the indemnification obligations of the Borrower existing on the date hereof in favor of Ralston Purina Company with respect to its guaranty of the obligations of Ralston Resorts, Inc. under the Sports Facilities Refunding Revenue Bonds identified on Schedule 5.8. ------------- "Rate Hedging Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all agreements, devices or arrangements designed to protect at least one of the parties thereto from the fluctuations of interest rates, exchange rates or forward rates applicable to such party's assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants, and (b) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to depositary institutions. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of such Board of Governors relating to the extension of credit by securities brokers and dealers for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and shall include any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by the specified lenders for the purpose of purchasing or carrying margin stocks applicable to such Persons. "Release" is defined in the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. 39601 et seq. -- --- "Rentals" of a Person means the aggregate fixed amounts payable by such Person under any operating lease of Property. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, that a failure to meet the minimum -------- funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, 51% of the aggregate unpaid principal amount of the outstanding Loans. "Reserve Requirement" means, with respect to a Eurodollar Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Revolving Credit Termination Balance" means the aggregate principal amount of Advances outstanding on the Revolving Credit Termination Date after giving effect to any Advances repaid on such date. "Revolving Credit Termination Date" means April 10, 2001 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof. "RH Financial" is defined in the Recitals to this Agreement. "RHM Acquisition" is defined in the Recitals to this Agreement. "RHM Acquisition Documents" means the Stock Purchase Agreement and the other documents, certificates and agreements delivered in connection with the RHM Acquisition. "Risk-Based Capital Guidelines" is defined in Section 3.2. ------------ "S&P" means Standard & Poor's Ratings Group, a division of the McGraw-Hill Companies. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Single Employer Plan" means a Plan subject to Title IV of ERISA maintained by the Borrower or any member of the Controlled Group for employees of the Borrower or any member of the Controlled Group, other than a Multiemployer Plan. "Solvent" means, when used with respect to a Person, that (a) the fair saleable value of the assets of such Person is in excess of the total amount of the present value of its liabilities (including for purposes of this definition all liabilities (including loss reserves as determined by such Person), whether or not reflected on a balance sheet prepared in accordance with Agreement Accounting Principles and whether direct or indirect, fixed or contingent, secured or unsecured, disputed or undisputed), (b) such Person is able to pay its debts or obligations in the ordinary course as they mature and (c) such Person does not have unreasonably small capital to carry out its business as conducted and as proposed to be conducted. "Solvency" shall have a correlative meaning. "Stock Purchase Agreement" means that certain Stock Purchase Agreement, dated as of June 15, 2000 between Tomkins Overseas Holdings S.A., a company organized under the laws of Luxembourg, and RH Financial. "Subordinated Indebtedness" of a Person means any Indebtedness of such Person the payment of which is subordinated to payment of the Obligations to the written satisfaction of the Agent. "Subsidiary" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any partnership, association, joint venture, limited liability company or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "Subsidiary Guaranty" means that certain Guaranty, dated as of the date hereof, duly executed and delivered by the Guarantors in favor of the Agent, on behalf of the Lenders, as the same may be amended, supplemented or otherwise modified from time to time. "Substantial Portion" means, with respect to the Property of the Borrower and its Subsidiaries, Property which (a) represents more than 15% of the consolidated tangible assets of the Borrower and its Subsidiaries, as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the end of the Fiscal Quarter next preceding the date on which such determination is made, or (b) is responsible for more than 5% of the consolidated Net Income from continuing operations of the Borrower and its Subsidiaries for the 12-month period ending as of the end of the Fiscal Quarter next preceding the date of determination. "Termination Event" means, with respect to a Plan which is subject to Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or any other member of the Controlled Group from such Plan during a plan year in which the Borrower or any other member of the Controlled Group was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the termination of such Plan, the filing of a notice of intent to terminate such Plan or the treatment of an amendment of such Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Plan or (e) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Plan. "Thomson" means Thomson BankWatch Inc. "Total Debt" means (a) all Indebtedness of the Borrower and its Subsidiaries, on a consolidated basis, reflected on a balance sheet prepared in accordance with Agreement Accounting Principles, plus, without duplication (b) ---- the face amount of all outstanding Letters of Credit in respect of which the Borrower or any Subsidiary has any reimbursement obligation and the principal amount of all Contingent Obligations of the Borrower and its Subsidiaries, plus ---- (c) the aggregate principal amount of all Indebtedness of a special purpose Subsidiary of the Borrower formed in connection with the sale of accounts receivable and other forms of off-balance sheet financing, minus (d) to the ----- extent included in clause (b) above, (i) up to $15,000,000 in aggregate face or principal amount of surety bonds and Letters of Credit relating to workers' compensation and similar benefits and (ii) the Ralston Obligations. "Transferee" is defined in Section 12.4. ------------- "Type" means, with respect to any Advance, its nature as an Alternate Base Rate Advance or Eurodollar Advance. "UCC" means the Illinois Uniform Commercial Code as amended or modified and in effect from time to time. "Unfunded Liability" means the amount (if any) by which the present value of all vested and unvested accrued benefits under a Single Employer Plan exceeds the fair market value of assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, association, joint venture, limited liability company or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II THE FACILITY ------------ 2.1. The Facility. ------------- 2.1.1. Description of Facility. The Lenders hereby establish in favor ------------------------ of the Borrower a revolving credit facility pursuant to which, and upon the terms and subject to the conditions herein set out. Each Lender severally agrees to make Loans to the Borrower in accordance with Section 2.2 in amounts ----------- not to exceed in the aggregate at any one time outstanding the amount of its Commitment. 2.1.2. Facility Amount. In no event may the aggregate principal amount --------------- of all outstanding Advances at any time exceed the Aggregate Commitment. If at any time the aggregate amount of the Loans exceeds the Aggregate Commitment, the Borrower shall repay immediately its then outstanding Loans in such amount as may be necessary to eliminate such excess. 2.1.3. Availability of Facility. Subject to the terms of this Agreement, -------------------------- from and including the date hereof to, but not including the Revolving Credit Termination Date the Borrower may borrow, repay and reborrow Advances hereunder. The Commitments to lend hereunder shall expire on the Revolving Credit Termination Date. Principal payments made after the Revolving Credit Termination Date may not be reborrowed. 2.1.4. Required Payments; Termination. Any outstanding Advances and all -------------------------------- other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date; provided that if Borrower (a) provides notice of extension of -------- the Facility Termination Date not less than 5 Business Days and not more than 30 Business Days prior to the Revolving Credit Termination Date and (b) on the date that Borrower provides such notice, Borrower pays an extension fee to the Agent for the ratable benefit of the Lenders, equal to 0.10% of the aggregate amount of Loans outstanding on the unextended Facility Termination Date, then, if and only if on the unextended Facility Termination Date no Default or Unmatured Default shall have occurred and be continuing, then on such date the Facility Termination Date shall be extended to January 10, 2002 with respect to the Revolving Credit Termination Balance. Any portion of the Revolving Credit Termination Balance remaining unpaid on January 10, 2002 shall be repaid in full on such date. 2.2. Advances. -------- 2.2.1. Advances. Each Advance hereunder shall consist of borrowings -------- made from the several Lenders ratably in proportion to the amounts of their respective Commitments. The Borrower's obligation to pay the principal of, and interest on, the Advances shall be evidenced by the Notes. Although the Notes shall be dated the date of the initial Advance, interest in respect thereof shall be payable only for the periods during which the Loans evidenced thereby are outstanding and, although the stated amount of each Note shall be equal to the applicable Lender's Commitment, each Note shall be enforceable, with respect to the Borrower's obligation to pay the principal amount thereof, only to the extent of the unpaid principal amount of the Loans at the time evidenced thereby. 2.2.2 Advance Rate Options. The Advances may be Alternate Base Rate ---------------------- Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Section 2.2.3 or 2.2.4. No Advance may mature -------------- ----- after, or have a Eurodollar Interest Period which extends beyond, the Facility Termination Date. 2.2.3. Method of Selecting Types and Eurodollar Interest Periods for --------------------------------------------------------------------- Advances. The Borrower shall select the Type of each Advance and, in the case of each Eurodollar Advance, the Eurodollar Interest Period applicable to such Advance from time to time. The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing ---------------- Date of each Alternate Base Rate Advance and three Business Days before the Borrowing Date for each Eurodollar Advance. A Borrowing Notice shall specify: (a) the Borrowing Date, which shall be a Business Day, of such Advance; (b) the aggregate amount of such Advance, which, when added to all outstanding Advances and after giving effect to the repayment of any such outstanding Advances or Loans out of the proceeds of the requested Advance, shall not exceed the Aggregate Commitment; (c) the Type of Advance selected; and (d) in the case of each Eurodollar Advance, the Eurodollar Interest Period applicable thereto (which may not end after the Facility Termination Date). 2.2.4. Conversion and Continuation of Outstanding Advances. Alternate ---------------------------------------------------- Base Rate Advances shall continue as Alternate Base Rate Advances unless and until such Alternate Base Rate Advances are converted into Eurodollar Advances. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Eurodollar Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into an Alternate Base Rate Advance unless the Borrower shall have given the Agent a Conversion/Continuation Notice requesting that, at the end of such Eurodollar Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Eurodollar Interest Period. Subject to the terms of Section 2.5, the Borrower ----------- may elect from time to time to convert all or any part of an Advance of any Type into any other Type or Types of Advances; provided that any conversion of any -------- Eurodollar Advance shall be made on, and only on, the last day of the Eurodollar Interest Period applicable thereto. The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an Advance or continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least one Business Day, in the case of a conversion into an Alternate Base Rate Advance, or at least three Business Days, in the case of a conversion into or continuation of a Eurodollar Advance, prior to the date of the requested conversion or continuation, specifying: (a) the requested date, which shall be a Business Day, of such conversion or continuation; (b) the aggregate amount and Type of Advance which is to be converted or continued; and (c) the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of an Eurodollar Advance, the duration of the Eurodollar Interest Period applicable thereto. 2.3. Availability of Funds. Not later than noon (Chicago time) on each ----------------------- Borrowing Date, each Lender shall make available its Loan or Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders available to the Borrower at the Agent's aforesaid address. 2.4. Commitment Fee; Reductions in Aggregate Commitment. ------------------------------------------------------- (a) The Borrower agrees to pay to the Agent for the ratable account of each Lender a commitment fee equal to the Applicable Commitment Fee Percentage per annum on the daily unborrowed portion of such Lender's Commitment from the date hereof to and including the Revolving Credit Termination Date, payable in arrears on each Payment Date hereafter and on the Revolving Credit Termination Date. (b) The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders, in a minimum amount of $10,000,000 or any integral multiple of $1,000,000 in excess thereof, upon at least three Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction; provided, however, that the amount of the Aggregate Commitment -------- ------- may not be reduced below the aggregate principal amount of the outstanding Loans. All accrued commitment fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. 2.5. Minimum Amount of Each Advance. Each Advance shall be in the ---------------------------------- minimum amount of $10,000,000 (and in integral multiples of $1,000,000 if in excess thereof); provided, however, that (a) any Alternate Base Rate Advance may -------- ------- be in the amount of the unused Aggregate Commitment and (b) in no event shall more than six (6) Eurodollar Advances be permitted to be outstanding at any time. 2.6. Optional Principal Payments. The Borrower may from time to time pay, --------------------------- without penalty or premium, all outstanding Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Advances upon one Business Day's prior notice to the Agent in the case of an Alternate Base Rate Advance or three Business Days' prior notice to the Agent in the case of a Eurodollar Advance. Any prepayment of a Eurodollar Advance prior to the last day of the applicable Eurodollar Interest Period shall be subject to the indemnity provisions of Section 3.4. - ------------ 2.7. Changes in Interest Rate, etc. Each Alternate Base Rate Advance -------------------------------- shall bear interest at the Alternate Base Rate from and including the date of such Advance or the date on which such Advance was converted into an Alternate Base Rate Advance to (but not including) the date on which such Alternate Base Rate Advance is paid or converted to a Eurodollar Advance. Changes in the rate of interest on that portion of any Advance maintained as an Alternate Base Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest from and including the first day of the Eurodollar Interest Period applicable thereto to, but not including, the last day of such Eurodollar Interest Period at the interest rate determined as applicable to such Eurodollar Advance. No Eurodollar Interest Period may end after the Facility Termination Date. 2.8. Rates Applicable After Default. Notwithstanding anything to the -------------------------------- contrary contained in Section 2.2.3 and 2.2.4, no Advance may be made as, -------------- ----- converted into or continued as a Eurodollar Advance (except with the consent of the Agent and the Required Lenders) when any Default or Unmatured Default has occurred and is continuing. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest - ------------ rates), declare that each Eurodollar Advance and Alternate Base Rate Advance shall bear interest (for the remainder of the applicable Eurodollar Interest Period in the case of Eurodollar Advances) at a rate per annum equal to the rate otherwise applicable plus two percent (2%) per annum; provided, however, that -------- ------- such increased rate shall automatically and without action of any kind by the Lenders become and remain applicable until revoked by the Required Lenders in the event of a Default described in Section 7.6 or 7.7. ------------ --- 2.9. Method of Payment. All payments of the Obligations hereunder shall be ----------------- made, without setoff, deduction or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at ------------ any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (Chicago time) on the date when due and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a ------------ notice received by the Agent from such Lender. The Agent is hereby authorized to charge the account of the Borrower maintained with Bank One for each payment of principal, interest and fees as it becomes due hereunder, if the Agent has provided the Borrower with notice of each such payment at least one day prior to its becoming due hereunder. 2.10. Notes; Telephonic Notices. Each Lender is hereby authorized to ------------------------- record the principal amount of each of its Loans and each repayment on the schedule attached to its Note; provided, however, that neither the failure to so -------- ------- record nor any error in such recordation shall affect the Borrower's obligations under such Note. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer or another management level employee designated in writing by an Authorized Officer to the Agent. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.11. Interest Payment Dates; Interest and Fee Basis. Interest accrued on ------------------------------------------------ each Alternate Base Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which an Alternate Base Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Eurodollar Interest Period, on any date on which the Eurodollar Advance or Absolute Rate Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having a Eurodollar Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Eurodollar Interest Period. Interest and commitment fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (Chicago time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.12. Notification of Advances, Interest Rates, Prepayments, Commitment ----------------------------------------------------------------- Reductions and Issuance Requests. Promptly after receipt thereof, the Agent - ----------------------------------- will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.13. Lending Installations. Each Lender may book its Loans at any ---------------------- Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Notes shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written or telex notice to the Agent and the Borrower, designate a Lending Installation through which Loans will be made by it and for whose account Loan payments are to be made. 2.14. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender, ----------------------------------- as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the proceeds of a Loan, or (b) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If the Borrower has not in fact made such payment to the Agent, the Lenders shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to the Federal Funds Effective Rate for such day. If any Lender has not in fact made such payment to the Agent, such Lender or the Borrower shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (a) in the case of payment by a Lender, the Federal Funds Effective Rate for such day, or (b) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. 2.15. Taxes. ----- (a) Any payments made by the Borrower under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes or any other tax based upon any income imposed on the Agent or any Lender by the jurisdiction in which the Agent or such Lender is incorporated or has its principal place of business. If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Agent or any Lender hereunder, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in or pursuant to this Agreement; 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 U.S. or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this Section 2.15. Whenever ------------ any Non-Excluded Taxes are payable by the Borrower, as promptly as practicable thereafter the Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any such failure. The agreements in this Section 2.15 shall survive the termination of this Agreement and the payment of - ------------- all other amounts payable hereunder. (b) At least five Business Days prior to the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is not incorporated under the laws of the United States of America, or a state thereof, agrees that it will deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent two additional copies of such form (or a successor form) on or before the date that such form expires (currently, three successive calendar years for Form 1001 and one calendar year for Form 4224) or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent, in each case certifying that such Lender is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. 2.16. Agent's Fees. The Borrower shall pay to the Agent those fees, in ------------ addition to the commitment fees referenced in Section 2.4(a), in the amounts and -------------- at the times separately agreed to between the Agent and the Borrower. ARTICLE III CHANGE IN CIRCUMSTANCES ----------------------- 3.1. Yield Protection. If, after the date hereof, the adoption of or any ----------------- change in any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any interpretation thereof, or the compliance of any Lender therewith, (a) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from the Borrower (excluding taxation of the overall net income of any Lender or applicable Lending Installation imposed by the jurisdiction in which such Lender or Lending Installation is incorporated or has its principal place of business), or changes (excluding increases in the income tax rates imposed by the jurisdiction in which the applicable Lender or Lending Installation is incorporated or has its principal place of business) the basis of taxation of principal, interest or any other payments to any Lender or Lending Installation in respect of its Loans or other amounts due it hereunder, or (b) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (c) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with any Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Loans held or interest received by it, by an amount deemed material by such Lender, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender that portion of such increased expense incurred or resulting in an amount received which such Lender determines is attributable to making, funding and maintaining its Loans and its Commitment. 3.2. Changes in Capital Adequacy Regulations. If a Lender determines the ------------------------------------------ amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its obligation to make Loans (after taking into account such Lender's policies as to capital adequacy). "Change" means (a) any change after the date ------ of this Agreement in the Risk-Based Capital Guidelines, or (b) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" ----------------------------- means (a) the risk-based capital guidelines in effect in the United States on the date of this Agreement and (b) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices entitled "International Convergence of Capital Measurements and Capital Standards" and any amendments to such regulations adopted prior to the date of this Agreement. 3.3. Availability of Types of Advances. If any Lender determines that ---------------------------------- maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (a) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available, or (b) the interest rate applicable to a Type of Advance does not accurately or fairly reflect the cost of making or maintaining such Advance, then the Agent shall suspend the availability of the affected Type of Advance until such circumstance no longer exists and require any Eurodollar Advances of the affected Type to be repaid. 3.4. Funding Indemnification. If any payment of a Eurodollar Advance ------------------------ occurs on a date which is not the last day of the applicable Eurodollar Interest Period, whether because of acceleration, prepayment or otherwise, or any such Advance is not made on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify the Agent and each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Advance. 3.5. Lender Statements; Survival of Indemnity. To the extent reasonably - ---- -------------------------------------------- possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of ------------- --- Advance under Section 3.3, so long as such designation is not disadvantageous to ----------- such Lender. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable - ------------ --- --- detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of the written statement. The obligations of the Borrower under Sections 3.1, 3.2 and 3.4 ------------ --- --- shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV CONDITIONS PRECEDENT -------------------- 4.1 Initial Loans. The Lenders shall not be required to make the initial -------------- Advances hereunder unless the Borrower has furnished the following to the Agent with sufficient copies for the Lenders and the other conditions set forth below have been satisfied, in each case on or before August 15, 2000: (a) RHM Acquisition. Copies of the material RHM Acquisition Documents ---------------- and such other information with respect to the RHM Acquisition as the Agent may reasonably request, which shall be in form and substance satisfactory to the Agent, and a certificate of the Secretary or President of the Borrower confirming that all conditions precedent thereunder or otherwise to the consummation of the RHM Acquisition shall have been satisfied (and not waived in any material respect) and that the RHM Acquisition has been or is substantially contemporaneously being consummated. (b) Charter Documents; Good Standing Certificates. Copies of the ------------------------------------------------- certificate of incorporation of the Borrower, together with all amendments and other modifications thereto, certified by the appropriate governmental officer in its jurisdiction of incorporation, together with a good standing certificate issued by the Secretary of State of the jurisdiction of its incorporation and such other jurisdictions as shall be requested by the Agent. (c) By-Laws and Resolutions. Copies, certified by the Secretary or ------------------------- Assistant Secretary of the Borrower, of its by-laws and of its Board of Directors' resolutions authorizing the execution, delivery and performance of the Loan Documents to which the Borrower is a party. (d) Secretary's Certificate. An incumbency certificate, executed by the ------------------------ Secretary or Assistant Secretary of the Borrower, which shall identify by name and title and bear the signature of the officers of the Borrower authorized to sign the Loan Documents and to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (e) Officer's Certificate. A certificate, dated the date hereof, signed by ---------------------- an Authorized Officer of the Borrower, in form and substance satisfactory to the Agent, to the effect that: (i) on the initial Borrowing Date (both before and after giving effect to the making of any Loans no Default or Unmatured Default has occurred and is continuing; (ii) no injunction or temporary restraining order which would prohibit the making of any Loans or other litigation which could reasonably be expected to have a Material Adverse Effect is pending or, to the best of such Person's knowledge, threatened; (iii) each of the representations and warranties set forth in Article V of this Agreement is true --------- and correct on and as of the initial Borrowing Date; and (iv) since September 30, 1999, no event or change has occurred that has caused or evidences a Material Adverse Effect. (f) Legal Opinions. A written opinion of R. W. Lockwood, General Counsel --------------- for the Borrower and the Guarantors, addressed to the Agent and the Lenders in the form of Exhibit D attached hereto. ---------- (g) Notes. Notes payable to the order of each of the Lenders duly executed ----- by the Borrower. (h) Loan Documents. Executed originals of this Agreement and each of the --------------- Loan Documents, which shall be in full force and effect, together with all schedules, exhibits, certificates, instruments, opinions, documents and financial statements required to be delivered pursuant hereto and thereto. (i) Letters of Direction. Written money transfer instructions with respect --------------------- to Advances in form and substance acceptable to the Agent and its counsel addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (j) Guarantor Charter Documents; Good Standing Certificates. Copies of the -------------------------------------------------------- articles or certificates of incorporation of each Guarantor, together with all amendments thereto, both certified by the Secretary or Assistant Secretary of such Guarantor, together with a good standing certificate issued by the Secretary of State of the jurisdiction of its incorporation and such other jurisdictions as shall be requested by the Agent. (k) Guarantor By-Laws and Resolutions. Copies, certified by the Secretary ----------------------------------- or Assistant Secretary of each Guarantor, of its by-laws and Board of Directors' resolutions of such Guarantor (and resolutions of other bodies, if any are deemed necessary by counsel for the Agent) authorizing the execution, delivery and performance of the Loan Documents to which each such Guarantor is a party. (l) Guarantor Secretary's Certificate. An incumbency certificate, executed ---------------------------------- by the Secretary or Assistant Secretary of each Guarantor, which shall identify by name and title and bear the signature of the officers of such Guarantor authorized to sign the Loan Documents upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower. (m) Certificate Under Existing Credit Agreement. A copy of the certificate -------------------------------------------- executed by the chief financial officer, treasurer or controller of the Borrower and delivered to Bank One pursuant to Section 6.15(m) of the Existing Credit Agreement. (n) Fees. Payment of fees as set forth in that certain commitment letter, ---- dated as of June 15, 2000, between the Agent and the Borrower. (o) Other. Such other documents as the Agent, any Lender or their counsel ----- may have reasonably requested. 4.2. Each Future Advance. The Lenders shall not be required to make any --------------------- Advance unless on the applicable Borrowing Date: (a) There exists no Default or Unmatured Default and none would result from such Advance; (b) The representations and warranties contained in Article V are true and --------- correct as of such Borrowing Date; (c) A Borrowing Notice, as applicable, shall have been properly submitted; and (d) All legal matters incident to the making of such Advance shall be satisfactory to the Lenders and their counsel. Each Borrowing Notice with respect to each such Advance shall constitute a representation and warranty by the Borrower that the conditions contained in Section 4.2 have been satisfied. Any Lender may require a duly completed - ------------ compliance certificate in substantially the form of Exhibit B hereto as a --------- condition to making an Advance. ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ The Borrower represents and warrants to the Agent and the Lenders that: 5.1. Corporate Existence and Standing. The Borrower and each Material --------------------------------- Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation and is duly qualified and in good standing as a foreign corporation and is duly authorized to conduct its business in each jurisdiction in which its business is conducted or proposed to be conducted except where the failure to be so qualified or authorized could not reasonably be expected to have a Material Adverse Effect. 5.2. Authorization and Validity. The Borrower and each Guarantor have --------------------------- all requisite power and authority (corporate and otherwise) and legal right to execute and deliver (or file, as the case may be) each of the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery (or filing, as the case may be) by the Borrower and each Guarantor of the Loan Documents to which it is a party and the performance of their respective obligations thereunder have been duly authorized by proper corporate proceedings and the Loan Documents constitute legal, valid and binding obligations of the Borrower or such Guarantor, as applicable, enforceable against the Borrower or such Guarantor, as applicable, in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity. 5.3. Compliance with Laws and Contracts. The Borrower and its -------------------------------------- Subsidiaries have complied in all material respects with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Neither the execution and delivery by the Borrower or any Guarantor of the Loan Documents to which it is a party, the application of the proceeds of the Loans, the consummation of any transaction contemplated in the Loan Documents, nor compliance with the provisions of the Loan Documents will, or at the relevant time did, (a) violate any law, rule, regulation (including Regulations T, U and X), order, writ, judgment, injunction, decree or award binding on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's charter, articles or certificate of incorporation or by-laws, (b) violate the provisions of or require the approval or consent of any party to any indenture, instrument or agreement to which the Borrower or any Subsidiary is a party or is subject, or by which it, or its property, is bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien (other than Liens permitted by, the Loan Documents) in, of or on the property of the Borrower or any Subsidiary pursuant to the terms of any such indenture, instrument or agreement, or (c) require any consent of the stockholders of any Person. 5.4. Governmental Consents. No order, consent, approval, ---------------------- qualification, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of, Governmental Authority, or any subdivision thereof, any securities exchange or other Person is or at the relevant time was required to authorize, or is or at the relevant time was required in connection with the execution, delivery, consummation or performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents, the application of the proceeds of the Loans or any other transaction contemplated in the Loan Documents. 5.5. Financial Statements. The Borrower has heretofore furnished to --------------------- each of the Lenders (a) the September 30, 1999 audited consolidated financial statements of the Borrower and its Subsidiaries, and (b) the unaudited consolidated financial statements of the Borrower and its Subsidiaries through March 31, 2000 (collectively, the "Financial Statements"). Each of the --------------------- Financial Statements was prepared in accordance with Agreement Accounting Principles and fairly presents the consolidated financial condition and operations of the Borrower and its Subsidiaries at such dates and the consolidated results of their operations for the respective periods then ended (except, in the case of such unaudited statements, for normal year-end audit adjustments). 5.6. Material Adverse Change. Since September 30, 1999, there has been ----------------------- no change from that reflected in the Financial Statements, in the business, Property, condition (financial or otherwise) or results of operations of the Borrower and its Subsidiaries taken as a whole which could reasonably be expected to have a Material Adverse Effect. 5.7. Taxes. The Borrower and its Subsidiaries have filed or caused to ----- be filed in correct form all United States federal and applicable foreign, state and local tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes which could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are in accordance with Agreement Accounting Principles. 5.8. Litigation and Contingent Obligations. There is no litigation, ---------------------------------------- arbitration, proceeding, inquiry or governmental investigation (including, without limitation, by the Federal Trade Commission) pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any Subsidiary or any of their respective Properties which could reasonably be expected to have a Material Adverse Effect or to prevent, enjoin or unduly delay the making of the Loans under this Agreement. Neither the Borrower nor any Subsidiary has any material Contingent Obligations except as set forth on Schedule 5.8. - ------------- 5.9. Subsidiaries and Capitalization. Schedule 5.9 hereto contains an -------------------------------- ------------ accurate list of all of the existing Subsidiaries as of the date of this Agreement, setting forth their respective jurisdictions of incorporation and the percentage of their capital stock owned by the Borrower or other Subsidiaries. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable, and are free and clear of all Liens, other than the Liens created by the Loan Documents. No authorized but unissued or treasury shares of capital stock of the Borrower or any Subsidiary are subject to any option, warrant, right to call or commitment of any kind or character. Except as set forth on Schedule 5.9, ------------ neither the Borrower nor any Subsidiary has any outstanding stock or securities convertible into or exchangeable for any shares of its capital stock, or any right issued to any Person (either preemptive or other) to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to any of its capital stock or any stock or securities convertible into or exchangeable for any of its capital stock other than as expressly set forth in the certificate or articles of incorporation of the Borrower or such Subsidiary. Neither the Borrower nor any Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any convertible securities, rights or options of the type described in the preceding sentence except as otherwise set forth on Schedule 5.9. Except as set forth on Schedule 5.9, as of the date ------------ ------------ hereof the Borrower does not own or hold, directly or indirectly, any capital stock or equity security of, or any equity or partnership interest in any Person other than such Subsidiaries and Vail Resorts, Inc. 5.10. ERISA. Except as disclosed on Schedule 5.10, neither the ----- -------------- Borrower nor any other member of the Controlled Group maintains any Single Employer Plans, and no Single Employer Plan has any Unfunded Liability. Neither the Borrower nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to any Multiemployer Plan which could reasonably be expected to have a Material Adverse Effect. Each Plan complies in all respects with all applicable requirements of law and regulations, except where the failure to so comply could not reasonably be expected to cause the relevant Plan to become disqualified under the Code. Neither the Borrower nor any member of the Controlled Group has, with respect to any Plan, failed to make any contribution or pay any amount required under Section 412 of the Code or Section 302 of ERISA or the terms of such Plan. There are no pending or, to the knowledge of the Borrower, threatened claims, actions, investigations or lawsuits against any Plan, any fiduciary thereof, or the Borrower or any member of the Controlled Group with respect to a Plan which could reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any member of the Controlled Group has engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Plan which would subject such Person to any material liability. Within the last five years neither the Borrower nor any member of the Controlled Group has engaged in a transaction which resulted in a Single Employer Plan with an Unfunded Liability being transferred out of the Controlled Group. No Termination Event has occurred or is reasonably expected to occur with respect to any Plan which is subject to Title IV of ERISA. 5.11. Defaults. No Default or Unmatured Default has occurred and is -------- continuing. 5.12. Federal Reserve Regulations. Neither the Borrower nor any ----------------------------- Subsidiary is engaged, directly or indirectly, principally, or as one of its important activities, in the business of extending, or arranging for the extension of, credit for the purpose of purchasing or carrying Margin Stock. Neither the making of any Advance hereunder, nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, Regulation U or Regulation X. Following the application of the proceeds of the Loans, less than 25% of the value (as determined by any reasonable method) of the assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder taken as a whole have been, and will continue to be, represented by Margin Stock. 5.13. Investment Company; Public Utility Holding Company Act. Neither ------------------------------------------------------- the Borrower nor any Subsidiary is, or after giving effect to any Advance will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Neither the Borrower nor any Subsidiary is 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. 5.14. Certain Fees. Other than as disclosed on Schedule 5.14, no ------------- ------------- broker's or finder's fee or commission was, is or will be payable by the Borrower or any Subsidiary with respect to the transactions contemplated by this Agreement. The Borrower hereby agrees to indemnify the Agent and the Lenders against and agrees that it will hold each of them harmless from any claim, demand or liability for broker's or finder's fees or commissions alleged to have been incurred by the Borrower in connection with any of the transactions contemplated by this Agreement and any expenses (including, without limitation, attorneys' fees and time charges of attorneys for the Agent or any Lender, which attorneys may be employees of the Agent or any Lender) arising in connection with any such claim, demand or liability. 5.15. Solvency. As of the date hereof, after giving effect to the -------- consummation of the transactions contemplated by the Loan Documents and the payment of all fees, costs and expenses payable by the Borrower or its Subsidiaries with respect to the transactions contemplated by the Loan Documents, each of the Borrower and each Guarantor is Solvent. 5.16. Ownership of Properties. Except as set forth on Schedule 5.16 ------------------------- ------------- hereto, the Borrower and its Subsidiaries have a subsisting leasehold interest in, or good and marketable title, free of all Liens, other than those permitted by Section 6.17 or by any of the other Loan Documents, to all of the properties ------------ and assets reflected in the Financial Statements as being owned by it, except for assets sold, transferred or otherwise disposed of in the ordinary course of business since the date thereof. To the knowledge of the Borrower, there are no actual, threatened or alleged defaults with respect to any leases of real property under which the Borrower or any Subsidiary is lessee or lessor which could reasonably be expected to have a Material Adverse Effect. The Borrower and its Subsidiaries own or possess rights to use all material licenses, patents, patent applications, copyrights, service marks, trademarks and trade names necessary to continue to conduct their business as heretofore conducted, and no such license, patent or trademark has been declared invalid, been limited by order of any court or by agreement or is the subject of any infringement, interference or similar proceeding or challenge, except for proceedings and challenges which could not reasonably be expected to have a Material Adverse Effect. 5.17. Indebtedness. Attached hereto as Schedule 5.17 is a complete and ------------ ------------- correct list of all Indebtedness of the Borrower and its Subsidiaries outstanding on the date of this Agreement (other than Indebtedness in a principal amount not exceeding $100,000 for a single item of Indebtedness and $500,000 in the aggregate for all such Indebtedness listed), showing the aggregate principal amount which was outstanding on such date. 5.18. Subordinated Indebtedness. The principal of and interest on the -------------------------- Notes and all other Obligations will constitute "senior debt" as that or any similar term is or may be used in any other instrument evidencing or applicable to any Subordinated Indebtedness of the Borrower. 5.19. Employee Controversies. There are no strikes, work stoppages or ----------------------- controversies pending or threatened between the Borrower or any Subsidiary and any of its employees, other than strikes, work stoppages or controversies arising in the ordinary course of business, which, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 5.20. Material Agreements. Neither the Borrower nor any Subsidiary is -------------------- a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect or which restricts or imposes conditions upon the ability of the Borrower or any Subsidiary to (a) pay dividends or make other distributions on its capital stock (b) make loans or advances to the Borrower, (c) repay loans or advances from Borrower or (d) grant Liens to the Agent to secure the Obligations. Neither the Borrower nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect. 5.21. Environmental Laws. The Borrower and its Material Subsidiaries ------------------- each conduct in the ordinary course of business a review of the effects of then existing Environmental Laws and then existing Environmental Claims on its business, condition (financial and other), results of operations and Property, and as a result thereof the Borrower and its Material Subsidiaries have reasonably concluded that the application of such Environmental Laws and the existence of such Environmental Claims, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 5.22. Insurance. The Borrower and its Subsidiaries maintain with --------- financially sound and reputable insurance companies insurance on their Property in such amounts and covering such risks as is consistent with sound business practice. 5.23. Disclosure. None of the (a) information, exhibits or reports ---------- furnished or to be furnished by the Borrower or any Subsidiary to the Agent or to any Lender in connection with the negotiation of the Loan Documents, or (b) representations or warranties of the Borrower or any Subsidiary contained in this Agreement, the other Loan Documents or any certificate or other written information furnished to the Agent or the Lenders by or on behalf of the Borrower or any Subsidiary pursuant to a request from the Agent or the Lenders permitted hereunder and for use in connection with the transactions contemplated by this Agreement, contained, contains or will contain any untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. The pro forma financial information contained in such materials is based upon good faith estimates and assumptions believed by the Borrower to be reasonable at the time made. There is no fact known to the Borrower (other than matters of a general economic nature) that has had or could reasonably be expected to have a Material Adverse Effect and that has not been disclosed herein or in such other documents, certificates and other written information furnished to the Lenders for use in connection with the transactions contemplated by this Agreement. 5.24. Acquisition. The Borrower has delivered to the Agent true, ----------- complete and correct copies of the RHM Acquisition Documents (including all schedules, exhibits, annexes, amendments, supplements, modifications and all other documents delivered pursuant thereto or in connection therewith). The RHM Acquisition Documents as originally executed and delivered by the parties thereto have not been amended, waived, supplemented or modified in any material respect without the consent of the Agent. The representations and warranties of the Borrower set forth therein and, to the knowledge of the Borrower, the representations and warranties of the other parties set forth therein are true and correct in all material respects as of the date thereof. On the date of this Agreement, neither the Borrower nor any other party to any of the RHM Acquisition Documents is in default in the performance of or compliance with any provisions under the RHM Acquisition Documents. The RHM Acquisition has been consummated or is being consummated substantially contemporaneously with the execution of this Agreement and in accordance with applicable laws and regulations. ARTICLE VI COVENANTS --------- During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1. Financial Reporting. The Borrower will maintain, for itself and -------------------- each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, consistently applied, and furnish to the Lenders: (a) As soon as practicable and in any event within 95 days after the close of each of its Fiscal Years, an unqualified audit report certified by independent certified public accountants, acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and its Subsidiaries, including balance sheets as of the end of such period and related statements of income, retained earnings and cash flows (but not consolidating statements of retained earnings or cash flows) accompanied by a certificate of said accountants that, in the course of the examination necessary for their certification of the foregoing, they have obtained no knowledge of Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (b) As soon as practicable and in any event within 50 days after the close of the first three Fiscal Quarters of each of its Fiscal Years, for itself and its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating statements of income, retained earnings and cash flows (but not consolidating statements of retained earnings or cash flows)for the period from the beginning of such Fiscal Year to the end of such quarter, all certified by its chief financial officer, controller or treasurer. (c) As soon as available, but in any event not later than the last Business Day in November of each year, a copy of the plan and forecast of the Borrowers, and its Subsidiaries for the next Fiscal Year organized by individual lines of business (including a projected consolidated and consolidating balance sheet, income statement and funds flow statement). (d) Together with the financial statements required by clauses (a) and (b) ----------- --- above, a compliance certificate in substantially the form of Exhibit B hereto --------- signed by its chief financial officer, controller or treasurer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (e) Within 270 days after the close of each Fiscal Year, a statement of the Unfunded Liabilities of each Single Employer Plan, certified as correct by an actuary enrolled under ERISA. (f) As soon as possible and in any event within 10 days after the Borrower knows that any Termination Event has occurred with respect to any Plan, a statement, signed by the chief financial officer, treasurer or controller of the Borrower, describing said Termination Event and the action which the Borrower proposes to take with respect thereto. (g) As soon as possible and in any event within 10 days after the Borrower learns thereof, notice of the assertion or commencement of any claims, action, suit or proceeding against or affecting the Company or any Subsidiary which could reasonably be expected to have a Material Adverse Effect. (h) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (i) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission. (j) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Borrower will, and will cause each ----------------- Subsidiary to, use the proceeds of the Advances to meet the general corporate and working capital needs of the Borrower and its Subsidiaries, including the making of stock redemptions and repurchases, dividends on its capital stock, the RHM Acquisition, Investments and non-hostile Purchases, all as permitted hereunder. The Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U) or to finance the Purchase of any Person which has not been approved and recommended by the board of directors (or functional equivalent thereof) of such Person. 6.3. Notice of Default. The Borrower will give prompt notice in -------------------- writing to the Lenders of the occurrence of (a) any Default or Unmatured Default and (b) of any other event or development, financial or other, relating specifically to the Borrower or any of its Subsidiaries (and not of a general economic or political nature) which could reasonably be expected to have a Material Adverse Effect. 6.4. Conduct of Business. The Borrower will, and will cause each --------------------- Subsidiary to, carry on and conduct its business in substantially the same manner as is presently conducted or in other consumer products markets and the manufacturing of ingredients therefor, and to do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to maintain such authority could not reasonably be expected to have a Material Adverse Effect. 6.5. Taxes. The Borrower will, and will cause each Subsidiary to, ----- timely file complete and correct United States federal and applicable foreign, state and local tax returns required by applicable law and pay when due all material taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside. 6.6. Insurance. The Borrower will, and will cause each Subsidiary to, --------- maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice for similarly situated businesses in the industries in which the Borrower and its Subsidiaries operate, and the Borrower will furnish to the Agent and any Lender upon request full information as to the insurance carried. 6.7. Compliance with Laws. The Borrower will, and will cause each ---------------------- Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, the failure to comply with which could reasonably be expected to have a Material Adverse Effect. 6.8. Maintenance of Properties. The Borrower will, and will cause each ------------------------- Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.9. Inspection. The Borrower will, and will cause each Subsidiary to, ---------- permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, corporate books and financial records of the Borrower and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lenders may designate. The Borrower will keep or cause to be kept, and cause each Subsidiary to keep or cause to be kept, appropriate records and books of account in which complete entries are to be made reflecting its and their business and financial transactions, such entries to be made in accordance with Agreement Accounting Principles consistently applied. 6.10. Capital Stock and Dividends. The Borrower will not, nor will it ---------------------------- permit any Subsidiary to, (a) issue or have outstanding any preferred stock, other than preferred stock not having mandatory redemption, retirement and other repurchase dates commencing less than 91 days after the Facility Termination Date then in effect or (b) declare or pay any dividends or make any distributions on its capital stock (other than dividends payable in its own capital stock) or redeem, repurchase or otherwise acquire or retire any of its capital stock or any options or other rights in respect thereof at any time outstanding, except that (i) any Subsidiary may declare and pay dividends or make distributions to the Borrower or to a Guarantor, (ii) so long as no Default or Unmatured Default exists before or after giving effect to the declaration or payment of such dividends or repurchase or redemption of such stock, the Borrower may repurchase or redeem its capital stock or declare and, within 45 days thereafter, pay dividends on its capital stock in an amount which, when added to the amount of all prior dividends and stock repurchases or redemptions from and after the date hereof does not exceed 20% of Net Worth at such time (before giving effect to such dividend, repurchase or redemption). 6.11. Indebtedness. The Borrower will not, nor will it permit any ------------ Subsidiary to, create, incur or suffer to exist any Indebtedness, except: (a) the Loans; (b) Indebtedness existing on the date hereof and described in Schedule 5.17; ------------- (c) Contingent Obligations permitted by Section 6.16; ------------- (d) Rate-Hedging Obligations incurred in the ordinary course of business; (e) Indebtedness arising in connection with the Accounts Receivable Financing Program; (f) Indebtedness pursuant to the Existing Credit Agreement; and (g) other Indebtedness so long as immediately after giving effect to the incurrence of such Indebtedness, the Borrower is in compliance with the financial covenants set forth in Section 6.24. ------------- 6.12. Merger. The Borrower will not, nor will it permit any Subsidiary ------ to, merge or consolidate with or into any other Person, except that (a) a Wholly-Owned Subsidiary may merge into the Borrower or any Wholly-Owned Subsidiary of the Borrower, (b) the Borrower or any Subsidiary may merge or consolidate with any other Person so long as the Borrower or such Subsidiary is the continuing or surviving corporation and, prior to and after giving effect to such merger or consolidation, no Default or Unmatured Default shall exist, and (c) any Subsidiary may enter into a merger or consolidation as a means of effecting a disposition permitted by Section 6.13. ------------- 6.13. Sale of Assets. The Borrower will not, nor will it permit any ---------------- Subsidiary to, lease, sell, transfer or otherwise dispose of its Property to any other Person except for (a) sales of inventory or unused or obsolete equipment in the ordinary course of business, and (b) leases, sales, transfers or other dispositions of its Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold, transferred or otherwise disposed of (other than inventory or unused or obsolete equipment sold in the ordinary course of business and accounts receivables transactions permitted by Section 6.14) as permitted by this Section 6.13 since the date hereof, do not - ------------- ------------ constitute a Substantial Portion of the Property of Borrower and its Subsidiaries. 6.14. Sale of Accounts. The Borrower will not, nor will it permit any ----------------- Subsidiary to, sell or otherwise dispose of any notes receivable or accounts receivable, with or without recourse, except that the Borrower or any Subsidiary may sell or otherwise grant an interest in its accounts receivable to other Persons, in each case pursuant to an Accounts Receivable Financing Program; provided, however, that any such sales or granting of interests in accounts - -------- ------- receivable shall, for all purposes of this Agreement, and regardless of the treatment thereof by the Borrower on its financial statements, be deemed an incurrence of Indebtedness. 6.15. Investments and Purchases. The Borrower will not, nor will it --------------------------- permit any Subsidiary to, make or suffer to exist any Investments (including, without limitation, loans and advances to, and other Investments in, Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Purchases, except: (a) Short-term obligations of, or fully guaranteed by, the United States of America and short-term obligations of United States government agencies; (b) Commercial paper rated A-1 or better by S&P or P-1 or better by Moody's; (c) Demand deposit and money market bank accounts maintained in the ordinary course of business with commercial banks which are members of the Federal Deposit Insurance Corporation; (d) Bankers acceptances and certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) rated B or better by Thomson, A or better by S&P or A2 or better by Moody's; (e) Repurchase agreements with commercial banks (whether domestic or foreign) rated B or better by Thomson, A or better by S&P or A2 or better by Moody's, so long at least 102% of the principal amount of each repurchase agreement is collateralized by obligations of, or fully guaranteed by, the United States of America or by commercial paper rated A-1 or better by S&P or P-1 or better by Moody's; (f) Loan participations and master notes with corporations rated A-1 or better by S&P or P-1 or better by Moody's and with commercial banks rated B or better by Thomson, A or better by S&P or A2 or better by Moody's; (g) Money market preferred stock accounts in corporations rated A or better by S&P or A2 or better by Moody's or in other corporations so long as such Investments are secured by Letters of Credit issued by commercial banks rated B or better by Thomson, A or better by S&P or A2 or better by Moody's; (h) Existing Investments in Subsidiaries and additional Investments in Guarantors; (i) Other Investments in existence on the date hereof and described in Schedule 6.15 hereto; --------- (j) Other Investments in Persons or Subsidiaries which are not Guarantors (including, without limitation, (i) any Investment in a joint venture and (ii) the creation of and the Investment in any Subsidiary that is not a Guarantor) in an aggregate amount not exceeding $20,000,000; (k) Investments in, and the creation of, any special purpose Subsidiary created for the purpose of entering into the Accounts Receivable Financing Program; (l) Additional equity Investments in Vail Resorts, Inc. necessary to permit the Borrower to retain equity accounting treatment for such Investment; (m) The RHM Acquisition; and (n) (i) Purchases not exceeding $15,000,000 in the case of any single Purchase or series of related Purchases, provided that there shall exist no -------- Default or Unmatured Default either immediately before or immediately after giving effect to any such Purchase, or (ii) Purchases in excess of $15,000,000 in the case of any single Purchase or series of related Purchases, provided -------- that (A) there shall exist no Default or Unmatured Default either immediately before or immediately after giving effect to any such Purchases and (B) the Borrower submits a certificate executed by the chief financial officer, treasurer or controller of the Borrower prior to closing any such transaction showing that the pro forma Leverage Ratio calculated after giving effect to such transaction for the period consisting of the four consecutive Fiscal Quarters then most recently ended (treating such Purchase as having occurred on the first day of such four-quarter period) does not exceed 2.50:1. 6.16. Contingent Obligations. The Borrower will not, nor will it ----------------------- permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (a) by endorsement of instruments for deposit or collection in the ordinary course of business, (b) the Subsidiary Guaranty and (c) the Ralston Obligations. 6.17. Liens. The Borrower will not, nor will it permit any Subsidiary ----- to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (a) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with generally accepted principles of accounting shall have been set aside on its books; (b) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure the payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books; (c) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d) Liens arising out of good faith deposits in connection with or to secure performance of statutory obligations, surety and appeal bonds, government contracts, leases otherwise permitted hereunder, performance and return of money bonds and other similar obligations incurred in the ordinary course of business; (e) Easements, minor defects or irregularities in title, building restrictions and such other encumbrances or charges against real property, all of which as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or the Subsidiaries; (f) Liens existing on the date hereof and described in Schedule 6.17 hereto, ------------- including extensions, renewals and replacements thereof in whole or in part, so long as the principal amount of the Indebtedness secured thereby at the time of such extension, renewal or replacement is limited to all or any part of the Property (including improvements thereon) securing the Lien so extended, renewed or replaced; (g) Liens on the Property of a Subsidiary of the Borrower and exclusively securing Indebtedness of such Subsidiary to the Borrower or any Guarantor; (h) Liens of purchasers or providers of financing under an Accounts Receivable Financing Program in accordance with Section 6.14 herein; ------------- (i) Liens securing Indebtedness under the Existing Credit Agreement; provided that such Liens shall equally and ratably secure the Obligations; and (j) Other Liens securing aggregate principal Indebtedness at no time exceeding $25,000,000. 6.18. Lease Rentals. The Borrower will not, nor will it permit any -------------- Subsidiary to, create, incur or suffer to exist obligations for Rentals in excess of $30,000,000 during any one Fiscal Year on a non-cumulative basis in the aggregate for the Borrower and its Subsidiaries. 6.19. Affiliates. The Borrower will not, and will not permit any ---------- Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except (a) in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms-length transaction, (b) transactions among the Borrower and Guarantors and (c) in connection with the Accounts Receivable Financing Program. 6.20. Subordinated Indebtedness; Other Indebtedness. The Borrower will --------------------------------------------- not, and will not permit any Subsidiary to, make any amendment or modification to the indenture, note or other agreement evidencing or governing any Subordinated Indebtedness, or directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness. 6.21. Environmental Matters. The Borrower shall and shall cause each ---------------------- of its Material Subsidiaries to conduct in the ordinary course of its business reviews of the effects of then existing Environmental Laws and then existing Environmental Claims on its business, condition (financial and other), results of operations and Property and to take all actions required by such Environmental Laws and in respect of such Environmental Claims, except where the failure to so act could not reasonably be expected to have a Material Adverse Effect. 6.22. Change in Corporate Structure; Fiscal Year. The Borrower shall -------------------------------------------- not, nor shall it permit any Subsidiary to, (a) permit any amendment or modification to be made to its certificate or articles of incorporation or by-laws which is materially adverse to the interests of the Lenders or (b) change its Fiscal Year to end on any date other than September 30 of each year. 6.23. Inconsistent Agreements. Other than the Existing Credit ------------------------ Agreement, the Borrower shall not, nor shall it permit any Subsidiary to, enter into any indenture, agreement, instrument or other arrangement which, (a) directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence of the Obligations, the granting of Liens to secure the Obligations, the provision of the Subsidiary Guaranty, the amending of the Loan Documents or the ability of any Subsidiary (other than a special purpose Subsidiary created for the purpose of entering into the Accounts Receivable Financing Program) to (i) pay dividends or make other distributions on its capital stock, (ii) make loans or advances to the Borrower or (iii) repay loans or advances from the Borrower or (b) contains any provision which would be violated or breached by the making of Advances or by the performance by the Borrower or any Subsidiary of any of its obligations under any Loan Document. The Borrower will promptly notify the Agent of any amendments, modification or waiver of the Existing Credit Agreement and, if requested to do so by the Agent, will promptly enter into a similar amendment, modification or waiver of this Agreement. 6.24. Financial Covenants. The Borrower on a consolidated basis with -------------------- its Subsidiaries shall: 6.24.1. Adjusted Net Worth. At all times after the date hereof, ------------------ maintain a minimum Adjusted Net Worth at least equal to the sum of (a) $193,300,000, plus (b) the sum of all cash proceeds (net of related costs, ---- expenses, fees and taxes) received by the Borrower or any Subsidiary of the Borrower from the issuance of its capital stock, plus (c) for each Fiscal ---- Quarter ending after the date of the Existing Credit Agreement and prior to the time of determination, 50% of the Borrower's positive Adjusted Net Income for such Fiscal Quarter. 6.24.2. Leverage Ratio. As of the end of each Fiscal Quarter, --------------- maintain a Leverage Ratio of not more than 3.00:1.00 6.24.3. Interest Expense Coverage Ratio. As of the end of each four -------------------------------- Fiscal Quarters ending after the date hereof, maintain an Interest Expense Coverage Ratio of not less than 3.00:1.00 6.25. ERISA Compliance. ----------------- With respect to any Plan, neither the Borrower nor any Subsidiary shall: (a) engage in any "prohibited transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code in excess of $2,000,000 could be imposed; (b) incur any "accumulated funding deficiency" (as such term is defined in Section 302 of ERISA) in excess of $2,000,000, whether or not waived, or permit any Unfunded Liability to exceed $2,000,000; (c) permit the occurrence of any Termination Event which could result in a liability to the Borrower or any other member of the Controlled Group in excess of $2,000,000; or (d) permit the establishment or amendment of any Plan or fail to comply with the applicable provisions of ERISA and the Code with respect to any Plan which could result in liability to the Borrower or any other member of the Controlled Group which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 6.26. Material Subsidiaries. The Borrower shall cause each of its ---------------------- Subsidiaries which becomes a Material Subsidiary on or after the date hereof to join the Subsidiary Guaranty as a Guarantor pursuant to a joinder agreement in the form attached to the Subsidiary Guaranty within thirty (30) days of such Person becoming a Material Subsidiary. ARTICLE VII DEFAULTS -------- The occurrence of any one or more of the following events shall constitute a Default: 7.1. Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any other Loan Document, any Loan or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be false in any material respect on the date as of which made or deemed made. 7.2. Nonpayment of (a) any principal of any Note when due, or (b) any interest upon any Note or any commitment fee or other fee or obligations under any of the Loan Documents within five days after the same becomes due. 7.3. The breach by the Borrower of any of the terms or provisions of Section 6.2, Section 6.3(a) or Sections 6.10 through 6.24. - ------------ --------------- -------------- ---- 7.4. The breach by the Borrower (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of ----------- --- --- this Agreement which is not remedied within thirty (30) days after written notice from the Agent or any Lender. 7.5. Failure of the Borrower or any of its Subsidiaries to pay any Indebtedness aggregating in excess of $25,000,000 when due; or the default by the Borrower or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement or agreements under which any such Indebtedness was created or is governed, or the occurrence of any other event or existence of any other condition, the effect of any of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the stated maturity thereof. 7.6. The Borrower or any of its Subsidiaries shall (a) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate action to authorize or effect any of the foregoing actions set forth in this Section 7.6, (f) fail to contest in good faith any appointment ----------- or proceeding described in Section 7.7 or (g) become unable to pay, not pay, or ----------- admit in writing its inability to pay, its debts generally as they become due. 7.7. Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(d) -------------- shall be instituted against the Borrower or any of its Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of thirty consecutive days. 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of (each a "Condemnation"), ------------ all or any portion of the Property of the Borrower and its Subsidiaries which, when taken together with all other Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion. 7.9. The Borrower or any of its Subsidiaries shall fail within thirty days to pay, bond or otherwise discharge any judgments or orders for the payment of an aggregate amount in excess of $10,000,000, which is not covered by undisputed insurance or stayed on appeal or otherwise being appropriately contested in good faith and as to which no enforcement actions have been commenced. 7.10. Any Change in Control shall occur. 7.11. The Subsidiary Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Subsidiary Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of the Subsidiary Guaranty, or any Guarantor denies that it has any further liability under the Subsidiary Guaranty, or gives notice to such effect. ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ---------------------------------------------- 8.1. Acceleration. If any Default described in Section 7.6 or 7.7 ------------ ----------- --- occurs with respect to the Borrower, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives. If, within ten Business Days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or - ------------ --- decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination. 8.2. Amendments. Subject to the provisions of this Article VIII, the ---------- ------------ Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, -------- ------- without the consent of each Lender: (a) Extend the final maturity of any Loan or Note or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest or fees thereon; (b) Reduce the percentage specified in the definition of Required Lenders; (c) Reduce the amount of or extend the date for the mandatory payments required under Section 2.1.2 or increase the amount of the Commitment of any -------------- Lender hereunder; (d) Subject to Section 2.1.4, extend the Facility Termination Date; -------------- (e) Amend this Section 8.2; ------------ (f) Release any Guarantor from the Subsidiary Guaranty; or (g) Permit any assignment by the Borrower of its Obligations or its rights hereunder. No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any -------------- other party to this Agreement. 8.3. Preservation of Rights. No delay or omission of the Lenders or ------------------------ the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only ----------- to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX GENERAL PROVISIONS ------------------ 9.1. Survival of Representations. All representations and warranties ----------------------------- of the Borrower contained in this Agreement or of the Borrower or any Subsidiary contained in any Loan Document shall survive delivery of the Notes and the making of the Loans herein contemplated. 9.2. Governmental Regulation. Anything contained in this Agreement to ------------------------ the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3. Taxes. Any stamp, documentary or similar taxes, assessments or ----- charges payable or ruled payable by any governmental authority in respect of the Loan Documents shall be paid by the Borrower, together with interest and penalties, if any. 9.4. Headings. Section headings in the Loan Documents are for -------- convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.5. Entire Agreement. The Loan Documents embody the entire agreement ----------------- and understanding among the Borrower, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent, and the Lenders relating to the subject matter thereof other than the fee letter dated June 15, 2000 in favor of Bank One. 9.6. Several Obligations; Benefits of this Agreement. The respective ------------------------------------------------- obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. 9.7. Expenses; Indemnification. The Borrower shall reimburse the Agent ------------------------- and the Arranger for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent and the Arranger, which attorneys may be employees of the Agent or the Arranger) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, review, amendment, modification, syndication and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent, the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent, the Arranger and the Lenders, which attorneys may be employees of the Agent, the Arranger or the Lenders) paid or incurred by the Agent, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. The Borrower further agrees to indemnify the Agent, the Arranger and each Lender, its directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger or any Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or thereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder, except to the extent that they arise out of the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrower under this Section shall survive the termination of this Agreement. 9.8. Numbers of Documents. All statements, notices, closing documents, -------------------- and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders. 9.9. Accounting. Except as provided to the contrary herein, all ---------- accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles. 9.10. Severability of Provisions. Any provision in any Loan Document ---------------------------- that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.11. Nonliability of Lenders. The relationship between the Borrower ------------------------- and the Lenders and the Agent shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information supplied to the Borrower by the Agent or the Lenders is for the protection of the Agent and the Lenders and neither the Borrower nor any other Person is entitled to rely thereon. The Borrower agrees that neither the Agent nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any punitive, special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby or the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith. 9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A ------------- CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS ----------------------- TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED, THAT SUCH PROCEEDINGS MAY BE BROUGHT IN OTHER COURTS IF -------- JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS. 9.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER ----------------------- HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 9.15. Disclosure. The Borrower and each Lender hereby (a) acknowledge ---------- and agree that Bank One and/or its Affiliates from time to time may hold other investments in, make other loans to or have other relationships with the Borrower, including, without limitation, in connection with any interest rate hedging instruments or agreements or swap transactions, and (b) waive any liability of Bank One or such Affiliate to the Borrower or any Lender, respectively, arising out of or resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Bank One or its Affiliates. 9.16. Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent and the Lenders and each party has notified the Agent that it has taken such action. 9.17. Confidentiality. Each Lender agrees to take normal and --------------- reasonable precautions and exercise due care to maintain the confidentiality of all information provided to it by the Borrower, or by the Agent on the Borrower's behalf, in connection with this Agreement or any other Loan Document, and no Lender shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement, except to the extent such information (a) was or becomes generally available to the public other than as a result of a disclosure by such Lender, or (b) was or becomes available on a non-confidential basis from a source other than the Borrower, provided that such source is not bound by a confidentiality agreement with the - -------- Borrower or its agents known to such Lender; provided, further, however, that -------- ------- ------- any Lender may disclose such information (i) after being advised by counsel (including internal counsel), at the request or pursuant to any requirement of any governmental or regulatory authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (ii) pursuant to subpoena or other court process, provided that, if it is lawful to -------- do so, such Lender shall give prompt notice to the Borrower of service thereof so that the Borrower may seek a protective order or other appropriate remedy or waive compliance with the provisions of this Section 9.17; (iii) after being ------------ advised by counsel (including internal counsel), when required to do so in accordance with the provisions of any applicable requirement of law; (iv) to the extent reasonably required in connection with any litigation or proceeding involving the Borrower or any of its Subsidiaries to which the Agent, any Lender or their respective Affiliates may be party, (v) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document, (vi) to such Lender's independent auditors and other professional advisors as to which such information has been identified as confidential, and (vii) to such Lender's Affiliates which have agreed to be bound by the same confidentiality obligations as apply to such Lender. ARTICLE X THE AGENT --------- 10.1. Appointment. Bank One is hereby appointed Agent hereunder and ----------- under each other Loan Document, and each of the Lenders authorizes the Agent to act as the agent of such Lender. The Agent agrees to act as such upon the express conditions contained in this Article X. The Agent shall not have a --------- fiduciary relationship in respect of the Borrower or any Lender by reason of this Agreement. 10.2. Powers. The Agent shall have and may exercise such powers under ------ the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder, except any action specifically provided by the Loan Documents to be taken by the Agent. 10.3. General Immunity. Neither the Agent nor any of its directors, ----------------- officers, agents or employees shall be liable to the Borrower or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except for its or their own gross negligence or willful misconduct. 10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent ---------------------------------------------- nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder, (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except ---------- receipt of items required to be delivered to the Agent and not waived at closing, or (d) the validity, effectiveness, sufficiency, enforceability or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 10.5. Action on Instructions of Lenders. The Agent shall in all cases ---------------------------------- be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or, to the extent required by Section 8.2, all Lenders), and ----------- such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Notes. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6. Employment of Agents and Counsel. The Agent may execute any of ---------------------------------- its duties as Agent hereunder and under any other Loan Document by or through employees, agents and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document. 10.7. Reliance on Documents; Counsel. The Agent shall be entitled to -------------------------------- rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8. Agent's Reimbursement and Indemnification. The Lenders agree to ------------------------------------------ reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (a) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (b) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents, and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents; provided, that no Lender shall be liable for any of the foregoing to the extent - -------- they arise from the gross negligence or willful misconduct of the Agent. The obligations of the Lenders under this Section 10.8 shall survive payment of the ------------ Obligations and termination of this Agreement. 10.9. Notice of Default. The Agent shall not be deemed to have ------------------- knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 10.10. Rights as a Lender. In the event the Agent is a Lender, the --------------------- Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender. 10.11. Lender Credit Decision. Each Lender acknowledges that it has, ------------------------ independently and without reliance upon the Agent or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12. Successor Agent. The Agent may resign at any time by giving ---------------- written notice thereof to the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. Upon any such resignation, the Required Lenders shall have the right to appoint, on behalf of the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. If the Agent has resigned and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the effectiveness of the resignation of the Agent, the resigning Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation of an Agent, the provisions of this Article X shall continue in --------- effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. 10.13. Documentation Agent; Syndication Agent. Any Lender identified ---------------------------------------- in this Agreement as a Documentation Agent or Syndication Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Agent in Section ------- 10.11. - ----- ARTICLE XI SETOFF; RATABLE PAYMENTS ------------------------ 11.1. Setoff. In addition to, and without limitation of, any rights of ------ the Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default or Unmatured Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, ---------------- has payment made to it upon its Loans (other than payments received pursuant to Section 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of such - ----------- --- --- Loans, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. If an amount to be setoff is to be applied to Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by any of the Notes held by such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by such Notes. ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ------------------------------------------------- 12.1. Successors and Assigns. The terms and provisions of the Loan ------------------------ Documents shall be binding upon and inure to the benefit of the Borrower and the Lenders and their respective successors and assigns, except that (a) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents, and (b) any assignment by any Lender must be made in compliance with Section 12.3. Notwithstanding clause (b) of this Section, any Lender may ------------- ---------- at any time, without the consent of the Borrower or the Agent, assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank; provided, however, that no such assignment to a Federal Reserve Bank shall -------- ------- release the transferor Lender from its obligations hereunder. The Agent may treat the payee of any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 12.3 in the case of an assignment ------------ thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 12.2. Participations. -------------- 12.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary -------------------------------- course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests ------------ in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2. Voting Rights. Each Lender shall retain the sole right to approve, -------------- without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver which effects any of the modifications referenced in clauses (a) through (g) of Section 8.2. ------------ 12.2.3. Benefit of Setoff. The Borrower agrees that each Participant shall be ------------------ deemed to have the right of setoff provided in Section 11.1 in respect of its ------------ participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents; provided, that each Lender shall retain -------- the right of setoff provided in Section 11.1 with respect to the amount of ------------ participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received ------------ pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. ------------- 12.3. Assignments. ----------- 12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of ---------------------- its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and ---------- obligations under the Loan Documents; provided, however, that in the case of an -------- ------- assignment to an entity which is not a Lender or an Affiliate of a lender, such assignment shall be in a minimum amount of $5,000,000. Such assignment shall be substantially in the form of Exhibit C hereto or in such other form as may be --------- agreed to by the parties thereto. The consent of the Agent and, so long as no Default is continuing, the Borrower shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof. Such consent shall not be unreasonably withheld. 12.3.2. Effect; Effective Date. Upon (a) delivery to the Agent of a notice of ----------------------- assignment, substantially in the form attached as Exhibit I to Exhibit C hereto --------- (a "Notice of Assignment"), together with any consents required by Section ---------------------- ------- 12.3.1, and (b) payment of a $3,500 fee to the Agent for processing such - ------ assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. On and after the effective date of such assignment, (a) such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and (b) the transferor Lender shall be released with respect to the percentage of the Aggregate Commitment and Loans assigned to such Purchaser without any further consent or action by the Borrower, the Lenders or the Agent. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent -------------- and the Borrower shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case, to the extent applicable, in principal amounts reflecting their Commitment, as adjusted pursuant to such assignment. 12.4. Dissemination of Information. The Borrower authorizes each ------------------------------ Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and ---------- any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries. 12.5. Tax Treatment. If any interest in any Loan Document is -------------- transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 2.15. ------------- ARTICLE XIII NOTICES ------- 13.1. Giving Notice. Except as otherwise permitted by Section 2.10 -------------- ------------ with respect to borrowing notices, all notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing, by facsimile, first class U.S. mail or overnight courier and addressed or delivered to such party at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with first class postage prepaid, return receipt requested, shall be deemed given three (3) Business Days after deposit in the U.S. mail; any notice, if transmitted by facsimile, shall be deemed given when transmitted; and any notice given by overnight courier shall be deemed given when received by the addressee. 13.2. Change of Address. The Borrower, the Agent and any Lender may ------------------- each change the address for service of notice upon it by a notice in writing to the other parties hereto. [signature pages to follow] IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of the date first above written. RALCORP HOLDINGS, INC. By: ___________________________________ Print Name: _____________________________ Title: ___________________________________ Address: 800 Market Street St. Louis, Missouri 63101 Attn: _______________ Telecopy: (314) 877-7729 Telephone: (314) 877-____ BANK ONE, NA, Individually and as Agent By:_______________________________________ Print Name:________________________________ Title: _____________________________________ Address: 1 Bank One Plaza Suite IL1-0173 Chicago, Illinois 60670 Attn: William J. Oleferchik Telecopy: (312) 732-3888 Telephone: (312) 732-2947 WACHOVIA BANK, N.A., Individually as a Lender By:_______________________________________ Print Name: Walter R. Gillikin Title: Senior Vice President Address: 191 Peachtree Street, N.E. Atlanta, Georgia 30303 Phone: (404) 332-5747 Fax: (404) 332-6898 PNC BANK, NATIONAL ASSOCIATION Individually as a Lender By:---------_______________________________________ Print Name:________________________________ Title: _____________________________________ Address: One South Wacker Drive Suite 2980 Chicago, IL 60606 Attn: Robert A. Krasnow Telecopy: (312) 338-5620 Telephone: (312) 338-5693 SCHEDULE 1 LENDER COMMITMENT ------ ---------- Bank One, NA $ 85,000,000 Wachovia Bank, NA $ 75,000,000 PNC Bank, National Association $ 40,000,000 AGGREGATE COMMITMENT: $200,000,000 719383.5 719383.5 EX-99.1 6 0006.txt PRESS RELEASE Immediate Thomas Granneman 314/877-7730 RALCORP HOLDINGS, INC. COMPLETES ACQUISITION OF THE RED WING COMPANY, INC. ANNUALIZED SALES NOW AT $1.1 BILLION ST. LOUIS, MO, JULY 14, 2000 - Ralcorp Holdings, Inc. (NYSE: RAH) announced today that it has completed the purchase of the Red Wing Company, Inc. for $132.5 Million. Red Wing is a leading manufacturer of private label shelf-stable wet filled type products with sales of $348 million for its fiscal year ended April 29, 2000. Last month, Ralcorp announced that it had signed a definitive agreement to purchase Red Wing from a subsidiary of Tomkins PLC. -----END PRIVACY-ENHANCED MESSAGE-----