-----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, GvcLZYNJ60NUnKjFGnw4qTmKw9PGrDi3zKdpLkaWD/2vUYjU/+eVio3JZoeyJwLF vSRT2/t9H/1E2xR478+oLg== 0000950131-96-002101.txt : 19960513 0000950131-96-002101.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950131-96-002101 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVAL CO CENTRAL INDEX KEY: 0000860194 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD APPLIANCES [3630] IRS NUMBER: 133327021 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20274 FILM NUMBER: 96559903 BUSINESS ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 BUSINESS PHONE: 8169434100 MAIL ADDRESS: STREET 1: 800 E 101ST TERRACE CITY: KANSAS CITY STATE: MO ZIP: 64131 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1996. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _______________________ Commission file number 0-20274 ------- THE RIVAL COMPANY - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 43-0794462 - --------------------------------------- --------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 800 E. 101st Terrace, Kansas City, MO 64131 - ---------------------------------------------- --------------------------- (Address of principal executive offices) (Zip Code) (816) 943-4100 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (l) Yes X No ----- ----- (2) Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. As of April 26, 1996, the registrant had 9,726,047 shares of common stock, par value $.01 per share, outstanding. THE RIVAL COMPANY FORM 10-Q QUARTER ENDED MARCH 31, 1996 INDEX
PART I. - FINANCIAL INFORMATION Page ITEM 1. Financial Statements (1) Condensed Consolidated Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of March 31, 1996, March 31, 1995 and June 30, 1995. 3 Condensed Consolidated Statements of Earnings for the three months and nine months ended March 31, 1996 and 1995. 4 Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 1996 and 1995. 5 (2) Notes to Condensed Consolidated Financial Statements. 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 9
2 PART I - FINANCIAL INFORMATION THE RIVAL COMPANY AND SUBSIDIARIES ----------------------- CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 1996 and 1995 and June 30, 1995 (amounts in thousands) (unaudited)
03/31/96 03/31/95 06/30/95 -------- -------- -------- ASSETS Currents assets: Cash $ 320 $ 214 $ 193 Accounts receivable 55,809 34,586 43,492 Inventories 88,229 52,144 81,104 Deferred income taxes 860 985 860 Prepaid expenses 1,479 928 835 -------- -------- -------- Total current assets 146,697 88,857 126,484 Property, plant and equipment, net 36,242 21,733 27,072 Goodwill 46,968 37,849 48,186 Other assets 6,499 2,943 2,626 -------- -------- -------- $236,406 $151,382 $204,368 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 56,200 $ 4,000 $ 37,627 Current portion of long-term debt 4,000 4,000 4,000 Trade accounts payable 17,376 9,364 14,972 Income taxes payable 1,821 1,032 577 Other payables and accrued expenses 8,735 5,752 9,015 -------- -------- -------- Total current liabilities 88,132 24,148 66,191 Long-term debt, less current portion 38,000 42,000 42,000 Deferred income taxes 3,438 2,237 2,372 Other 262 -- -- Stockholders' equity: Common stock 97 93 97 Paid-in capital 45,396 40,196 45,366 Retained earnings 61,709 47,901 49,047 Treasury stock, at cost (310) (4,764) (310) Foreign currency translation adjustments (318) (429) (395) -------- -------- -------- Total stockholders' equity 106,574 82,997 93,805 -------- -------- -------- $236,406 $151,382 $204,368 ======== ======== ========
See accompanying notes to condensed consolidated financial statements. 3 THE RIVAL COMPANY AND SUBSIDIARIES ----------------------- CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three months and nine months ended March 31, 1996 and March 31, 1995 (amounts in thousands, except per share amounts) (unaudited)
Three months ended Nine months ended ------------------ ------------------ 03/31/96 03/31/95 03/31/96 03/31/95 -------- -------- -------- -------- Net sales $61,916 $39,624 $233,263 $179,109 Cost of sales 45,258 28,592 167,879 128,304 ------- ------- -------- -------- Gross profit 16,658 11,032 65,384 50,805 Selling expenses 9,039 4,978 27,612 19,847 General and administrative expenses 2,780 1,906 8,313 6,612 Amortization of goodwill 407 317 1,219 951 ------- ------- -------- -------- Operating income 4,432 3,831 28,240 23,395 Interest expense 1,656 821 4,816 2,942 Other expense, net 59 59 203 158 ------- ------- -------- -------- Earnings before income taxes 2,717 2,951 23,221 20,295 Income tax expense 1,145 1,201 9,100 7,845 ------- ------- -------- -------- Net earnings $ 1,572 $ 1,750 $ 14,121 $ 12,450 ======= ======= ======== ======== Weighted average common and common equivalent shares outstanding 9,959 9,330 9,940 9,441 ======= ======= ======== ======== Net earnings per common share $ 0.16 $ 0.19 $ 1.42 $ 1.32 ======= ======= ======== ========
See accompanying notes to condensed consolidated financial statements. 4 THE RIVAL COMPANY AND SUBSIDIARIES ----------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended March 31, 1996 and March 31, 1995 (amounts in thousands) (unaudited)
Nine months ended ------------------- 03/31/96 03/31/95 -------- -------- Cash flows from operating activities: Net earnings $ 14,121 $ 12,450 Adjustments to reconcile net earnings to net cash used by operating activities: Depreciation and amortization 5,899 5,009 Other (43) -- Changes in assets and liabilities, net of acquisitions: Accounts receivable (6,106) 171 Inventories 569 (1,868) Prepaid expenses 337 124 Accounts payable and accruals (1,478) (3,004) Income taxes payable 1,244 626 -------- -------- Net cash provided by operating activities 14,543 13,508 -------- -------- Cash flows from investing activities: Capital expenditures (3,995) (3,395) Acquisition of business (23,532) -- Other (13) 119 -------- -------- Net cash used by investing activities (27,540) (3,276) -------- -------- Cash flows from financing activities: Net borrowings (repayments) under working capital loans 18,573 (600) Payment of long term debt (4,000) (4,000) Repurchase of common stock -- (4,454) Dividends paid (1,459) (1,103) Other 10 20 -------- -------- Net cash provided (used) by financing activities 13,124 (10,137) -------- -------- Net increase in cash 127 95 Cash at beginning of period 193 119 -------- -------- Cash at end of period $ 320 $ 214 ======== ========
See accompanying notes to condensed consolidated financial statements. 5 THE RIVAL COMPANY AND SUBSIDIARIES ----------------------- Notes to Condensed Consolidated Financial Statements Nine Months Ended March 31, 1996 and March 31, 1995 Note 1 - ------ In the opinion of Management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position of the Company as of March 31, 1996 and 1995 and the results of its operations and its cash flows for the periods ended March 31, 1996 and 1995. The June 30, 1995, condensed consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. These financial statements have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by generally accepted accounting principles for complete financial statements are contained in or consistent with the audited consolidated financial statements incorporated by reference in the Company's Form 10-K for the year ended June 30, 1995, such information and footnotes have not been duplicated herein. Note 2 - ------ The results of operations for the nine months ended March 31, are not indicative of the results to be expected for the full year due to the seasonal nature of the Company's operations. Note 3 Inventories - ------------------ The following is a summary of inventories at March 31, 1996 and 1995 and June 30, 1995 (in thousands):
Mar. 31, 1996 Mar. 31, 1995 June 30, 1995 ------------- ------------- ------------- Raw Materials $ 33,946 $ 16,666 $ 33,221 Work in progress 3,334 744 1,741 Finished goods 55,906 39,046 49,924 --------- --------- --------- 93,186 56,456 84,886 Less LIFO allowance (4,957) (4,312) (3,782) --------- --------- --------- $ 88,229 $ 52,144 $ 81,104 ========= ========= =========
Note 4 Acquisition of Fasco Consumer Products, Inc. - --------------------------------------------------- On January 2, 1996, the Company acquired 100% of the common stock of Fasco Consumer Products, Inc. ("Fasco"), from H.S. Investments, Inc., a subsidiary of BTR Dunlop, Inc. Fasco is a manufacturer of heating, ventilating and other convenience products that are distributed through wholesale and retail markets with annual sales of approximately $40 million. The acquisition was accounted for as a purchase and, accordingly, the purchase price was allocated to the assets acquired based upon their respective fair values. The total purchase price of Fasco and the allocation of that purchase price to assets acquired and liabilities assumed is summarized as follows (in thousands): Current assets $14,900 Property, plant and equipment 9,300 Non-compete agreement 4,000 ------- Fair value of assets acquired 28,200 Accounts payable and accrued liabilities assumed (4,700) Purchase price $23,500 ======= 6 The non-compete agreement is being amortized over its eight year term. The operating results of Fasco have been included in the consolidated results of the Company since the date of acquisition. The table below presents certain combined statement of earnings data on a pro forma basis as if the acquisition had occurred on the first day of each period presented. The pro forma information has been developed based upon certain assumptions relative to the integration of the companies' operations and may not reflect the operating results which would have occurred if Rival and Fasco had operated as a single entity for the entire periods presented. Amounts are in thousands except per share amounts.
Pro Forma Nine Months ended 03/31/96 03/31/95 ---------------------------- Net sales $ 253,258 $ 214,925 Net earnings 13,322 14,126 Net earnings per common share $ 1.34 $ 1.50 Weighted average common and common equivalent shares outstanding 9,940 9,441
Note 5 Subsequent Events - ------------------------- Acquisition of Bionaire, Inc. - ----------------------------- On April 2, 1996 the Company, through its indirect wholly-owned Canadian Subsidiary, RC Acquisition Inc., (the "Offeror"), paid for and took up the shares of Bionaire, Inc. ("Bionaire") which had been validly deposited under a tender offer which was commenced on March 4, 1996. A total of 14,284,911 common shares, representing 95% of the issued and outstanding common shares of Bionaire were tendered. On April 2, 1996, the Offeror also deposited sufficient funds with the stock transfer agent, Montreal Trust Company to acquire the balance of the issued and outstanding shares of Bionaire and circulated a Compulsory Acquisition Notice Pursuant to the Provisions of Section 206 of The Canada Business Corporations Act to the remaining shareholders. Bionaire, which is headquartered in Lachine, Quebec develops, manufactures and markets products designed to improve the environment and air quality in homes and offices, including air purifiers, humidifiers and related accessories such as replacement filters. Bionaire has annual sales of approximately $57 million. Approximately 60% of its products are sold in the U.S., 25% are sold in Canada and the balance is sold elsewhere, primarily in Europe. The Company intends to continue to use the assets of Bionaire for the manufacture and distribution of air cleaners, humidifiers and related accessories. The Company paid CDN $2.25 per share for the Common Stock of Bionaire (U.S. $24,993,000 in the aggregate). The acquisition will be accounted for as a purchase, and accordingly, the purchase price will be allocated to Bionaire's assets and liabilities based upon their respective fair values. The operating results of Bionaire will be included in the consolidated results of the Company beginning on the date of acquisition (April 2, 1996). Notes Payable and Long-Term Debt - -------------------------------- On April 19, 1996, the Company sold $50 million in unsecured notes in a private placement. The notes bear interest at a rate of 7.21%, and have a final maturity in 2008. In conjunction with the sale of these notes, the Company entered into an interest rate swap transaction with Bank of America, N.A. in the nominal amount of $25 million. The effect of the swap transaction was to convert the interest payment stream on $25 million of the notes to a variable rate which is approximately 0.45% above the prevailing six month LIBOR rate. 7 On April 15, 1996, the Company entered into a $75 million unsecured revolving credit facility with a group of banks. This credit facility expires on June 30, 1999 and replaces a similar credit facility with the same banks. On April 17, 1996, the Company through an indirect wholly-owned subsidiary, entered into a revolving credit facility with a Canadian bank for the Canadian Dollar equivalent of U.S. $10 million. The proceeds of this credit facility were used to retire secured indebtedness of Bionaire, Inc. which was assumed in the acquisition and will be used to fund seasonal working capital requirements of the Company's Canadian operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales were $61.9 million in the quarter ended March 31, 1996 compared to $39.6 million in the prior year. Patton Electric, which was acquired in April 1995 and Fasco Consumer Products, which was acquired in January 1996, together contributed $16.3 million of the increase in sales. Sales of the Company's other products increased 15%, with especially strong growth in kitchen heating appliances such as toasters and slow cookers. For the nine months ended March 31, 1996, sales were $233.3 million compared to $179.1 million in the prior year. Patton and Fasco contributed $36.9 million of the increase and sales of the Company's other products grew by nearly 10%. Sales by product category were as follows (in millions):
Three months ended Nine months ended ------------------ ----------------- 03/31/96 03/31/95 03/31/96 03/31/95 -------- -------- -------- -------- Kitchen heating appliances $ 19.8 $ 15.5 $ 98.6 $ 82.4 Kitchen motor-driven appliances 6.2 6.6 29.4 32.9 Other electric appliances 23.9 7.3 79.2 40.4 Water products 12.0 10.2 26.1 23.4 -------- -------- -------- -------- $ 61.9 $ 39.6 $ 233.3 $ 179.1 ======== ======== ======== ========
Gross profit was $16.7 million (26.9% of sales) for the quarter ended March 31, 1996 compared to $11.0 million (27.8% of sales) in the prior year. For the first nine months of the current fiscal year, gross profit was $65.4 million (28.0% of sales) compared to $50.8 million (28.4% of sales) in the prior year. The decline in gross margin percentage was primarily the result of sales mix. Selling expenses were $9.0 million (14.6% of sales) for the quarter ended March 31, 1996 compared to $5.0 million (12.6% of sales) in the prior year. For the nine months ended March 31, 1996 such expenses were $27.6 million (11.8% of sales) compared to $19.8 million (11.1% of sales) in the prior year. The increase in selling expenses as a percentage of sales is the result of increased advertising expenditures and selling expenses related to Fasco which are higher than the Company's other business units. General and administrative expenses were $2.8 million for the March 1996 quarter compared to $1.9 million in the prior year. For the nine months ended March 31, 1996, general and administrative expenses were $8.3 million compared to $6.6 million in the prior year. The higher expenses reflect increases in product engineering as well as management and clerical personnel required to support recent growth. Interest expense was $4.8 million for the nine months ended March 31, 1996 compared to $2.9 million in the prior year as a result of higher borrowings required to finance the April 1995 acquisition of Patton Electric, and the January 1996 acquisition of Fasco Consumer Products. 8 Net earnings for the quarter ended March 31, 1996 were $1.6 million ($0.16 per share) compared to $1.8 million ($0.19 per share) for the same period in the prior year. For the nine months ended March 31, 1996, net earnings were $14.1 million ($1.42 per share) compared to $12.5 million ($1.32 per share) in the prior year. LIQUIDITY AND CAPITAL RESOURCES The Company has in place $42 million of 6.42% unsecured term notes having a final maturity of January 2003 with required payments of $4 million per year in fiscal 1997 and 1998. In April 1996, the Company issued an additional $50 million in unsecured term notes with no scheduled principal payments until the year 2004 and a final maturity in 2008. Additionally, as a result of an agreement finalized on April 15, 1996, the Company has a $75 million, unsecured revolving credit facility which expires in June 1999 and bears interest at a floating rate of LIBOR plus .75%. The Company historically requires a significant amount of cash each fall to fund its build-up in inventories and accounts receivable during its peak selling season. These cash requirements are funded through borrowings on the working capital line. Upon completion in April 1996 of the financing transactions as well as the acquisition of Bionaire both of which are more fully described in Note 5, the Company had approximately $40 million available under its revolving credit facilities. The Company plans to make capital expenditures of approximately $5.0 million to $6.0 million during fiscal 1996. Management believes that cash generated from operations and its bank credit facility will be sufficient to meet its cash requirements for the foreseeable future. PART II - OTHER INFORMATION --------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits. 10(k) Note Purchase Agreement for $50,000,000 Senior Unsecured Notes dated as of April 15, 1996 between the Company and The Purchasers listed therein. 10(l) Credit Agreement for a $75,000,000 Revolving Credit Facility dated as of April 15, 1996 between the Company, the banks listed therein and, NationsBank of Texas, N.A. as agent. 11 Schedule regarding computation of per share earnings. (b) Reports on Form 8-K. On April 12, 1996, the Company filed a Report on Form 8-K with respect to the acquisition of the stock of Bionaire, Inc. The items reported on the Form 8-K were Item 2, Acquisition or Disposition of Assets and Item 7, Financial Statements and Exhibits. 9 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. THE RIVAL COMPANY Dated: May 3, 1996 By: _______________________ Thomas K. Manning President and CEO (Duly Authorized Officer) Dated: May 3, 1996 By: ________________________ William L. Yager Senior Vice-President of Finance and Administration, Chief Financial Officer 10 EX-10.(K) 2 NOTE PURCHASE AGREEMENT ________________________________________________________________________________ THE RIVAL COMPANY _______________________ NOTE PURCHASE AGREEMENT _______________________ DATED AS OF APRIL 15, 1996 $50,000,000 7.21% SENIOR UNSECURED NOTES DUE 2008 ________________________________________________________________________________ TABLE OF CONTENTS
PAGE Section 1. Notes; Payments................................... 1 1.1 Issuance.......................................... 1 1.2 Payments; Prepayments............................. 1 1.3 Registration...................................... 2 1.4 Transfer or Exchange.............................. 2 1.5 Replacement....................................... 3 1.6 Payments.......................................... 3 Section 2. Sale and Purchase of Notes........................ 3 2.1 Agreement......................................... 3 2.2 Purchasers' Representations....................... 3 Section 3. Closing........................................... 5 Section 4. Conditions Precedent.............................. 5 4.1 Opinions.......................................... 5 4.2 Certificates...................................... 6 4.3 Approvals......................................... 6 4.4 Fees.............................................. 6 4.5 Operative Documents............................... 7 4.6 Legal Investment.................................. 7 4.7 Proceedings and Documents......................... 7 4.8 Bank Financing.................................... 7 4.9 Other Materials................................... 7 4.10 Private Placement Number.......................... 7 Section 5. Representations and Warranties.................... 7 5.1 Corporate Existence............................... 7 5.2 Corporate Authority............................... 8 5.3 No Default........................................ 8 5.4 Validity of Agreements............................ 8 5.5 Litigation........................................ 8 5.6 Compliance with Laws; Consents.................... 9 5.7 Defaults Under Other Documents.................... 9 5.8 Judgments......................................... 9 5.9 Disclosure........................................ 9 5.10 Securities Laws................................... 9 5.11 Margin Stock...................................... 10 5.12 Regulations of Federal Reserve System............. 10 5.13 Title to Property; Leases......................... 10 5.14 Debt.............................................. 10 5.15 Pari Passu Ranking................................ 10 5.16 Transaction Regulations........................... 10
i TABLE OF CONTENTS (cont.) PAGE 5.17 Taxes............................................. 11 5.18 Zoning............................................ 11 5.19 OSHA.............................................. 11 5.20 Environmental Matters............................. 11 5.21 ERISA............................................. 12 5.22 Material Contracts................................ 13 5.23 Employment Liabilities............................ 13 5.24 Intellectual Property............................. 13 5.25 Company Status.................................... 13 5.26 Product Liability................................. 14 5.27 Insurance......................................... 14 Section 6. General Affirmative Covenants..................... 14 6.1 Financial Data.................................... 14 6.2 Inspection of Properties and Books................ 15 6.3 Payments.......................................... 15 6.4 Notices........................................... 16 6.5 Corporate Matters................................. 16 6.6 Accounting........................................ 17 6.7 Maintenance of Property........................... 17 6.8 Corporate Existence............................... 17 6.9 Intellectual Property............................. 17 6.10 Taxes............................................. 17 6.11 Governmental Regulations.......................... 17 6.12 Use of Proceeds................................... 18 6.13 Expenses.......................................... 18 6.14 Bank Financing Amendments......................... 18 6.15 Payment of Claims................................. 18 Section 7. General Negative Covenants........................ 19 7.1 ERISA............................................. 19 7.2 Merger and Consolidation.......................... 19 7.3 Sales or Other Dispositions of Assets............. 20 7.4 Additional Stock.................................. 20 7.5 Other Agreements.................................. 21 7.6 Negative Pledge................................... 21 7.7 Additional Subsidiaries........................... 21 7.8 Affiliate Transactions............................ 21 7.9 Business Practices................................ 22 7.10 Restricted Payments............................... 22 7.11 Subsidiary Guarantee.............................. 22 ii TABLE OF CONTENTS (cont.) PAGE Section 8. Financial Covenants............................. 22 8.1 Minimum Adjusted Net Worth...................... 22 8.2 Funded Debt..................................... 22 8.3 Current Debt.................................... 22 8.4 Fixed Charge Coverage........................... 22 8.5 Restricted Subsidiary Indebtedness.............. 23 Section 9. Events of Default............................... 23 9.1 Payments........................................ 23 9.2 Other Obligations............................... 23 9.3 Other Debt...................................... 23 9.4 Undischarged Final Judgments.................... 24 9.5 False Representations........................... 24 9.6 Negative and Financial Covenants................ 24 9.7 Affirmative Covenants........................... 24 9.8 Involuntary Bankruptcy Proceedings.............. 24 9.9 Voluntary Petitions............................. 24 9.10 Assignments for Benefit of Creditors............ 25 9.11 ERISA Violation................................. 25 Section 10. Remedies........................................ 25 10.1 Acceleration.................................... 25 10.2 Other Remedies.................................. 25 10.3 Remedies in General............................. 25 Section 11. Definitions..................................... 26 11.1 Adjusted Consolidated Net Worth................. 26 11.2 Affiliate....................................... 26 11.3 Agreement....................................... 26 11.4 Bank Financing.................................. 26 11.5 Bankruptcy Code................................. 26 11.6 Business Day.................................... 27 11.7 Capital Lease................................... 27 11.8 Capital Lease Obligation........................ 27 11.9 CERCLA.......................................... 27 11.10 Closing......................................... 27 11.11 Closing Date.................................... 27 11.12 Code............................................ 27 11.13 Company......................................... 27 11.14 Consolidated Income Available for Fixed Charges. 27 11.15 Consolidated Net Income......................... 27 11.16 Current Debt.................................... 28 iii TABLE OF CONTENTS (cont.) PAGE 11.17 Debt.......................................... 28 11.18 Environmental Laws............................ 28 11.19 ERISA......................................... 28 11.20 Event of Default.............................. 28 11.21 Financial Statements.......................... 28 11.22 Fiscal Quarter................................ 28 11.23 Fiscal Year................................... 29 11.24 Fixed Charges................................. 29 11.25 Funded Debt................................... 29 11.26 GAAP.......................................... 29 11.27 Guarantee..................................... 29 11.28 Hazardous Materials........................... 30 11.29 Intellectual Property......................... 30 11.30 Interest Expense.............................. 30 11.31 Investment.................................... 30 11.32 Liens......................................... 30 11.33 Make-Whole Premium............................ 30 11.34 Margin Security............................... 31 11.35 Margin Stock.................................. 31 11.36 Material Adverse Change or Effect............. 31 11.37 Multiemployer Plan............................ 31 11.38 NAIC Annual Statement......................... 31 11.39 Noteholders................................... 31 11.40 Notes......................................... 31 11.41 Obligations................................... 31 11.42 Operating Lease............................... 32 11.43 Operating Lease Rentals....................... 32 11.44 Operative Documents........................... 32 11.45 Permitted Investments......................... 32 11.46 Permitted Liens............................... 32 11.47 Person........................................ 34 11.48 Plan.......................................... 34 11.49 Potential Event of Default.................... 34 11.50 Private Placement Memorandum.................. 34 11.51 Purchasers.................................... 34 11.52 QPAM.......................................... 34 11.53 QPAM Exemption................................ 34 11.54 Rating Agencies............................... 34 11.55 Related Person................................ 34 11.56 Release....................................... 34 11.57 Restricted Investments........................ 34 11.58 Restricted Payments........................... 34 iv TABLE OF CONTENTS (cont.) PAGE 11.59 Restricted Subsidiary............................ 35 11.60 SEC.............................................. 35 11.61 Source........................................... 35 11.62 Subsidiary....................................... 35 11.63 Successor Corporation............................ 35 11.64 Taxes............................................ 35 11.65 '34 Act.......................................... 35 11.66 '33 Act.......................................... 35 11.67 Total Capitalization............................. 35 11.68 Weighted Average Life to Maturity................ 35 Section 12. Miscellaneous.................................... 36 12.1 Entire Agreement................................. 36 12.2 Amendments; Changes and Modifications............ 36 12.3 Applicable Law: Submission to Jurisdiction....... 36 12.4 Notices.......................................... 36 12.5 Captions......................................... 37 12.6 Counterparts..................................... 37 12.7 Assignment....................................... 37 12.8 Survival of Representations and Warranties....... 37 12.9 Consents: Noteholder Action...................... 37 12.10 Reproduction of Documents........................ 38 12.11 No Third Party Beneficiaries..................... 38 Schedule I -- Purchasers Schedule II -- Other Financial Data Schedule III -- Disclosure Schedule Exhibit 1.1 -- Form of Note Exhibit 4.1(a) -- Company Outside Counsel Opinion v NOTE PURCHASE AGREEMENT THIS NOTE PURCHASE AGREEMENT is made as of April 15, 1996 among THE RIVAL COMPANY (the "Company") and the purchasers set forth in Schedule I (the "Purchasers"). In consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree: Section 1. Notes; Payments. ---------------- 1.1 Issuance. The Company will authorize the issuance and sale of $50,000,000 in aggregate principal amount of its senior unsecured notes (the "Notes") due as provided in Section 1.2(a). The Notes shall bear interest at the rate of 7.21% per annum payable semiannually as provided in Section 1.2(a). The Notes shall be in the form of Exhibit 1.1. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Interest on any overdue principal (including any overdue prepayment of principal); on the Make-Whole Premium, if any; to the extent permitted by applicable law, on any unpaid and overdue interest; and on other Obligations shall be paid at the rate per annum 2% above the otherwise applicable rate. 1.2 Payments; Prepayments. ---------------------- (a) Required Payments. On April 15, 2004 and on each April 15 thereafter to and including April 15, 2007, the Company shall prepay $10,000,000 principal amount (or such lesser principal amount as shall then be outstanding) of the Notes at par. The Company shall make its final payment of principal of the Notes on April 15, 2008. The Company shall make semiannual payments, in arrears, of all accrued interest on April 15 and October 15 of each year commencing on October 15, 1996. All payments and prepayments of principal, interest and Make-Whole Premium, if any, shall be made in immediately available funds on the date specified therefor (or, if such day is not a Business Day, on the succeeding Business Day), before 12:00 noon, New York time, and to the account of each Noteholder, respectively, as set forth in Schedule I, or such other account as each Noteholder may designate in writing from time to time. The Company shall give each Noteholder contemporaneous notice of each payment made to such Noteholder, such notice to be made to the address indicated on Schedule I, or such other address as each Noteholder may designate in writing from time to time. All such payments shall be made, without setoff or counterclaim and without reduction for, and free from, any and all present or future taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions or conditions of any nature imposed by any government or any political subdivision or taxing authority thereof (but excluding any taxes measured by the overall net income of any Noteholder). (b) Optional Prepayments. On any interest payment date, the Company may prepay, in full or in part, the Notes; provided, that such prepayment is accompanied by payment of all accrued interest to the date of prepayment and a Make-Whole Premium, if any, determined as of the date of the prepayment; and provided further, that in no 1 event shall such prepayment be less than the principal being prepaid plus all accrued interest to the date of prepayment. Prepayments with respect to fewer than all holders are not permitted. Partial prepayments shall be made pro rata to all holders of Notes. The Company shall give notice to each Noteholder at least 30 days, but not more than 60 days, prior to the intended prepayment date. Such notice shall specify the prepayment date, and, as to each Note being prepaid, the outstanding principal amount thereof, the accrued interest thereon (through the scheduled prepayment date) and an estimate of the applicable Make-Whole Premium due in respect of such prepayment. Such notice shall contain such data and detailed calculations as are necessary to confirm the computation of the estimated Make-Whole Premium set forth therein. The amount of the Make-Whole Premium actually paid shall be adjusted from the foregoing estimate based on the most recent information available as of the day prior to the date of prepayment as required by Section 11.33. On the day prior to the date of prepayment, the Company shall give to each Noteholder notice of the actual amount of Make-Whole Premium. Such notice shall contain such data and detailed calculations as are necessary to confirm the computation of the actual Make-Whole Premium contained therein. Any partial prepayment under this Agreement applied to the Notes shall reduce in inverse order of maturity all remaining scheduled payments of principal, pro rata to all holders of Notes to which such prepayment applied. (c) Note Purchases. The Company will not, and will not permit any Subsidiary or Affiliate to, acquire, directly or indirectly by purchase or prepayment or otherwise, any of the outstanding Notes, except in accordance with the terms of this Agreement and the Notes. 1.3 Registration. The Company shall maintain at its principal office a register with respect to ownership and transfers of the Notes. The Company may in good faith rely on the register for the purpose of making payments on the Notes and for all other purposes related to actions taken and notices given in respect of the Notes. For purposes of this Agreement, the Person in whose name a Note is registered shall be deemed the "holder" of the Note and a Noteholder hereunder. 1.4 Transfer or Exchange. Upon written request of the holder of any Note and the surrender of such Note for transfer or exchange, the Company shall, without charge: (a) issue a new Note or Notes in respect thereof, in such denominations as may be requested by the holder to equal the unpaid principal balance of the Note surrendered, and made payable to the holder, its nominee(s) or the transferee, as requested by the holder, provided that the holder may not request a new Note in a denomination less than $500,000 or, if the outstanding principal of such Note is less than $500,000, in a denomination less than the outstanding principal amount of such Note; and (b) register such new Note(s) in the name of the party to whom it is made payable. Any transferee shall by its acceptance of a Note be deemed to make for the benefit of the Company the representations set forth in Sections 2.2 (a) and (b) hereof and, furthermore, a representation that the transfer alone will not require the Notes or any portion thereof to be registered under the '33 Act. New Notes shall be of like tenor to the Notes surrendered therefor and shall be dated the date to which interest was last paid, or if no interest has been paid, the date of the issuance of the Notes surrendered, so that there is no loss of interest with respect thereto. Upon the request of any Noteholder, the Company shall, without charge, provide such data as may be reasonably necessary to enable such Noteholder, upon a transfer of any Note, to comply with Rule 144A (or similar safe harbor 2 provision) of the SEC. Such data shall be provided within 15 days after request by the Noteholder. 1.5 Replacement. In the case of the loss, theft, or destruction of any Note, the holder thereof shall be entitled, without charge, to a replacement Note by delivering to the Company the affidavit of a responsible officer or representative of the holder, testifying that the Note has been lost, stolen or destroyed, as applicable, and an unsecured indemnity agreement with respect to the lost, stolen or destroyed Note. In the case of the mutilation of any Note, the holder thereof shall be entitled, without charge, to a replacement Note by delivering to the Company such mutilated Note along with a written request for replacement. Replacement Notes shall be issued in the amount of the unpaid principal balance of the original Notes, shall be of like tenor to the original Notes and shall be dated the date to which interest was last paid, or if no interest has been paid, the date of the issuance of the Notes surrendered, so that there is no loss of interest with respect thereto. 1.6 Payments. All payments due under the Notes or on any of the other Obligations shall be made without tender of the Notes in immediately available funds by federal wire transfer in lawful money of the United States before 12:00 noon, New York time, on the due date therefor to the account of the respective holder as set forth on the attached Schedule I or at such other account as the holder may designate in writing from time to time. Section 2. Sale and Purchase of Notes. -------------------------- 2.1 Agreement. The Company agrees to issue and sell to each Purchaser, and each Purchaser agrees to purchase from the Company, Notes in the principal amount set forth in Schedule I with respect to such Purchaser. The purchase price for the Notes shall be 100% of the principal amount thereof. 2.2 Purchasers' Representations. Each Purchaser hereby represents and warrants, as to itself, that: (a) Purchase for Investment. The Purchaser is purchasing the Notes for its own account or for one or more separate accounts maintained by it, in each case for investment and not with a view to distributing or selling any of the Notes; provided, that disposition of the Notes shall at all times be within the control of the Purchaser. (b) Source of Funds. As to such Purchaser, at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used to pay the purchase price of the Notes to be purchased by such Purchaser hereunder: (i) if such Purchaser is an insurance company, the Source is such Purchaser's general account, and, in reliance upon the Company's representations set forth in Section 5.21, the amount of the reserves and liabilities for the general account contracts (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the "NAIC Annual Statement")) held by or on behalf of any Plan together with the amount of the reserves and liabilities for the general account 3 contracts held by or on behalf of any other Plans maintained by the same employer (or affiliate thereof, as such term is defined in section V of DOL Prohibited Transaction Exemption 95-60 (60 FR 35925, July 12, 1995)) or by the same employee organization (as defined in ERISA) in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with the state of domicile of the insurance company; for purposes of the percentage limitation in this clause (i), the amount of reserves and liabilities for the general account contracts held by or on behalf of a Plan shall be determined before reduction for credits on account of any reinsurance ceded on a coinsurance basis; or (ii) if such Purchaser is an insurance company, the Source does not include assets allocated to any separate account maintained by such Purchaser in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with its fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; or (iii) the Source is either (1) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 29, 1990), or (2) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Company in writing pursuant to this clause (iii), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (iv) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (1) the identity of such QPAM and (2) the names of all employee benefit plans whose assets are included in such investment fund 4 have been disclosed to the Company in writing pursuant to this clause (iv); or (v) the Source is a governmental plan; or (vi) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (vi); or (vii) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in the preceding Sections 2.2(a) and 2.2(b), the terms "separate account," "employee benefit plan" and "governmental plan" shall have the respective meanings assigned to them in Section 3 of ERISA. (c) Fees. The Purchaser has not dealt with any broker or finder besides NationsBanc Capital Markets, Inc. in respect of the transaction contemplated hereby. Section 3. Closing. The sale and purchase of the Notes contemplated by Section 2 shall be consummated at a closing (the "Closing") to occur at 10:00 a.m. (Hartford time) on April 19, 1996. The Closing shall take place at the offices of Hebb & Gitlin in Hartford, Connecticut. At the Closing, the Company shall deliver to each Purchaser the Notes to be purchased by such Purchaser. Such Notes shall be delivered to each Purchaser in the form of a single note (or such greater number of Notes as the Purchaser may request) to be purchased by the Purchaser, shall be dated the Closing Date, and shall be made payable to and registered in the name of that Purchaser or its nominee(s) as required by the Purchaser. Upon tender of delivery of the Notes, and satisfaction of the conditions precedent set forth in Section 4, each Purchaser shall pay to the Company, in immediately available funds, the purchase price for the Notes sold to such Purchaser. Failure of the Company to tender delivery of the Notes or failure of the respective person or persons to satisfy any condition precedent in Section 4 shall, at the option of the Purchasers or any of them, relieve the Purchasers of all further obligations hereunder or operate as a waiver of the Purchasers' rights hereunder. In such event, the Purchasers shall also have all other rights and remedies available at law or in equity. Section 4. Conditions Precedent. The obligations of the Purchasers to purchase the Notes are subject to satisfaction of the following conditions precedent: 4.1 Opinions. -------- (a) Counsel to the Company. Each Purchaser shall have received from Hillix, Brewer, Hoffhaus, Whittaker & Wright, counsel to the Company, a favorable opinion addressed to the Purchasers, covering all matters reasonably requested by the Purchasers or their counsel, including, without limitation, the due and valid authorization, execution and delivery of the Company's Operative Documents, that such Operative Documents constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms, and certain other matters set forth in Section 5. Such opinion shall be satisfactory in form and substance to the Purchasers and their counsel, and shall be substantially in the form of Exhibit 4.1 5 (a). (b) Special Counsel to the Purchasers. Each Purchaser shall have received from Hebb & Gitlin, special counsel to the Purchasers, a favorable opinion addressed to the Purchasers, covering all matters requested by the Purchasers. Such opinion shall be satisfactory in form and substance to the Purchasers. 4.2 Certificates. ------------ (a) Corporate Certificates. Each of the Purchasers shall have received: (i) a certificate dated the Closing Date of the Secretary of the Company as to a copy of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of its Operative Documents, a copy of its certificate of incorporation and by-laws, the absence of any amendment thereto, the incumbency and signatures of the officers of the Company signing, and the satisfaction of all requisite corporate approvals for the consummation of the transactions contemplated by this Agreement; (ii) a certificate dated within 30 days of the Closing Date from the Secretary of State of the State of Delaware as to the certificate of incorporation of the Company and its good standing under the laws of such state; (iii) a certificate dated within 30 days of the Closing Date from the Secretary of State of Missouri, as to the good standing and qualification to do business in such state of the Company; and (iv) certificates dated within 30 days of the Closing Date from the Secretaries of State or similar officer of the states or provinces of incorporation of each of the Restricted Subsidiaries (except Waverly Products Company Limited, Patton Electric Company Hong Kong, Ltd., Bionaire International B.V., Bionaire France s.a.r.l. and Bionaire Worldwide Management Inc.) as to the certificate of incorporation of such Restricted Subsidiary and its good standing under the laws of such state or province. (b) Closing Certificate. Each of the Purchasers shall have received a certificate from the chief financial officer or treasurer of the Company certifying that as of the Closing Date, and after giving effect to the issuance and the application of proceeds of the Notes, all representations and warranties of the Company contained in its Operative Documents are true and correct, and that no Event of Default or Potential Event of Default exists under this Agreement. Such certificate shall also certify that since June 30, 1995 there has been no Material Adverse Change. 4.3 Approvals. Any and all requisite consents, approvals, authorizations and orders of, or qualifications with, any courts, regulatory authorities, or other governmental bodies that are required for the consummation of the transactions contemplated by this Agreement shall have been obtained. 6 4.4 Fees. The Company shall have paid the statements rendered at Closing for all fees and expenses of Hebb & Gitlin, special counsel to the Purchasers, in respect of negotiating and preparing this Agreement and the documents contemplated hereby, rendering the opinion set forth in Section 4.1(b), and in respect of otherwise advising the Purchasers as to the transactions contemplated by this Agreement. 4.5 Operative Documents. The Operative Documents shall have been duly authorized, executed and delivered and shall be in full force and effect. Each Purchaser's obligation to purchase its Note(s) is further subject to the condition that contemporaneously with such Purchaser's purchase, the Company shall issue and sell, and each other Purchaser shall purchase, the Notes identified to such other Purchasers on Schedule I. 4.6 Legal Investment. As of the Closing Date, each Purchaser shall have determined that its purchase of the Notes shall be permitted by the laws and regulations of the jurisdiction to which it is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment. 4.7 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to the Purchasers and their counsel and the Purchasers shall have received such counterpart originals or certified or other copies of such documents and instruments as they may reasonably request. 4.8 Bank Financing. The Company and the Banks shall have entered into the Bank Financing and the Company shall have delivered to you copies of the Bank Financing Documents, in form and substance satisfactory to you, and each other document executed in connection therewith requested by you, certified as true and correct by the treasurer of the Company. 4.9 Other Materials. The Purchasers shall have received such other documents, certificates and information with respect to the matters contemplated by this Agreement as they shall have reasonably requested. 4.10 Private Placement Number. The Company shall have obtained and provided to each Purchaser a private placement number for the Notes from Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners). Section 5. Representations and Warranties. To induce each of the Purchasers to acquire the Notes, the Company hereby makes the following representations and warranties to each Purchaser: 5.1 Corporate Existence. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and in good standing in the states identified in Section 5.1 of Schedule III and in every other state in which it is doing business or engaging in activities which in each case require qualification in such state, except where the failure to be so qualified or in good standing would not have a 7 Material Adverse Effect, and it has full power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business. As of the Closing Date, the Company has no Subsidiaries other than as identified in Section 5.1 of Schedule III. Each Subsidiary (and in the event that the Company subsequently forms or acquires any additional Subsidiary or Subsidiaries to the extent permitted by this Agreement, each such additional Subsidiary) is (and will be) a corporation duly organized, validly existing and in good standing under the laws of the state or other jurisdiction of its incorporation, is (and will be) duly qualified and in good standing in every other state or other jurisdiction in which it is doing business or engaging in activities which require qualification in such state or other jurisdiction, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect, and has (or will have) full power and authority to own and operate its properties and to carry on its business. The Company has good title to the shares of stock it owns in each Subsidiary, free and clear of any Liens, and such stock is fully paid and non-assessable. 5.2 Corporate Authority. The Company has full corporate power, authority and legal right to execute, deliver and perform the Operative Documents to which it is a party, and all other instruments and agreements contemplated hereby and thereby, and to perform its obligations hereunder and thereunder and such actions have been duly authorized by all necessary corporate action. No notice to or consent, approval, vote or other authorization of the shareholders of the Company is required in connection with this Agreement, the Operative Documents or the transactions contemplated hereby or thereby. 5.3 No Default. The execution, delivery and performance of the Company's Operative Documents will not result in the imposition of a Lien on any property of the Company or its Subsidiaries and will not conflict with or constitute a default under (a) any provision of applicable law, rule or regulation or any order, judgment or decree of any court or other governmental agency or instrumentality or its certificate of incorporation or by-laws or (b) the provisions of any indenture, contract, instrument or agreement to which it is a party or by which it or its Subsidiaries or any of their property may be bound. 5.4 Validity of Agreements. The Operative Documents have been duly authorized, executed and delivered by the Company, the Notes have been duly issued and the Operative Documents constitute its legal, valid and binding agreements, enforceable against the Company in accordance with their respective terms (except to the extent that enforcement thereof may be limited by any applicable bankruptcy, reorganization, moratorium or similar laws now or hereafter in effect, or by principles of equity). 5.5 Litigation. Except as set forth in Section 5.5 of Schedule III, neither the Company nor any of its Subsidiaries is a party to, or subject to, any pending lawsuit, administrative proceeding, arbitration, labor dispute, or governmental inspection or investigation, which could have a material adverse effect upon the transactions contemplated hereby or could result in a Material Adverse Change, nor is the Company aware of any threatened lawsuit, administrative proceeding, arbitration, labor dispute or governmental inspection or investigation to which it or any of its Subsidiaries may become a party or subject, which, if instituted or adversely determined as to any entity, could have a material adverse effect upon the transactions contemplated hereby or could result in a Material Adverse Change. None of the Company, its Subsidiaries, or any of their officers or directors have been temporarily or 8 permanently enjoined or barred by any court, tribunal, governmental or administrative agency or self-regulatory body from engaging in or continuing any conduct or practice in connection with the businesses in which the Company or its Subsidiaries is engaged. Neither the Company nor any of its Subsidiaries is in default under any material order, license, demand, writ, injunction or decree of any court, tribunal, governmental or administrative agency or self-regulatory body. There is no continuing order, judgment or decree of any court, tribunal, governmental or administrative agency or self-regulatory body enjoining the Company or its Subsidiaries from taking or requiring them to take any action of any kind or to which any such entity or any of their businesses, properties or assets are subject or by which they are bound. The Company is not aware of any state of facts, circumstances, or contemplated events that are likely to give rise to any material lawsuit, administrative proceeding, arbitration, labor dispute, or governmental inspection or investigation involving the Company or any of its Subsidiaries. 5.6 Compliance with Laws; Consents. Neither the Company nor any of its Subsidiaries is in violation of any laws, regulations, ordinances, rules, orders or judicial or governmental decrees in any respect which has or could have any material adverse effect whatsoever upon the validity or enforceability of or ability of the Company to perform any of the terms of the Operative Documents or which is or could result in a Material Adverse Change. No consent, approval, authorization or giving of notice to, registration with, order of or qualification or filing with any court, regulatory authority or other governmental body, or the taking of any other action in respect of the transactions contemplated by the Operative Documents is required by or on behalf of the Company or any of its Subsidiaries, except such consents, approvals, authorizations, notices, registrations, orders, qualifications, filings, or other actions as have been effected, given or obtained. 5.7 Defaults Under Other Documents. Neither the Company nor any of its Subsidiaries is in default or in violation (nor has any event occurred which, with notice or lapse of time or both, would constitute a default or violation) under (i) any agreement or instrument to which they may be a party or under which they or any of their properties may be bound and the result of which could have a material adverse effect upon the transactions contemplated hereby or could result in a Material Adverse Change, or (ii) any charter document. Upon the issuance of the Notes there is no condition or event in effect which would constitute an Event of Default or Potential Event of Default hereunder. 5.8 Judgments. There are no outstanding or unpaid judgments which could have a Material Adverse Effect. 5.9 Disclosure. The Financial Statements were prepared in accordance with GAAP and fairly and accurately present the consolidated financial condition of the Company and its Subsidiaries as of the dates reflected therein, and the results of their operations and cash flows for the periods then ended, in accordance with GAAP. The Financial Statements, the Private Placement Memorandum and the other written material furnished to the Purchasers by the Company prior to Closing and identified on Schedule II do not, as of their respective dates, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. There has been no Material Adverse Change since June 30, 1995 except as may be reflected in the Financial Statements, the Private Placement Memorandum or the other written material 9 furnished to the Purchasers by the Company and identified on Schedule II. 5.10 Securities Laws. The Company has not, nor has any Person acting or purporting to act on behalf of it, directly or indirectly, offered the Notes for sale to, or solicited any offer to buy the Notes from, or otherwise negotiated in respect thereof with, any Person other than the Purchasers and not more than 90 other institutional investors, or done (or omitted to do) any other act, nor will it do any act, so as to bring the issuance or sale of the Notes within the registration requirements of the '33 Act, and the Company has complied with or is exempt from the registration provisions of all state securities or "blue sky" laws applicable to the issuance or sale of the Notes. 5.11 Margin Stock. The Company will issue the Notes in the ordinary course of its business and use the proceeds thereof solely for the purposes set forth in Section 6.12. No part of the proceeds of the Notes will be used to purchase or carry any Margin Stock or any Margin Security, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or Margin Security. No part of the proceeds of the Notes will be used for any purpose that violates, or which is inconsistent with, the provisions of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System of the United States. 5.12 Regulations of Federal Reserve System. The Company and its Subsidiaries are not engaged in the business of extending or obtaining credit for the purchase or carrying of any Margin Stock nor do they own any Margin Security. No action will otherwise be taken or permitted by the Company which would result in violation of Regulations G, T, U or X or any similar regulation of the Board of Governors of the Federal Reserve System of the United States or a violation of Section 7 of the '34 Act, in each case as at the time in effect. 5.13 Title to Property; Leases. The Company and its Subsidiaries have good, indefeasible and marketable title to their assets and properties reflected in the Financial Statements (excluding leased or licensed property and excluding assets sold in the ordinary course of business of the Company and its Subsidiaries after the respective dates of such Financial Statements) and none of such assets or properties (including their interests in leased and licensed property) are subject to Liens except Permitted Liens. The Company and its Subsidiaries enjoy and are entitled to quiet, peaceful and undisturbed possession of all their leased property and all leases with respect to such property are valid, subsisting and in full force and effect. 5.14 Debt. The Company and its Subsidiaries are not obligated with respect to any Debt other than as set forth in Section 5.14(a) of Schedule III. The Company and its Subsidiaries are not subject to any material contingent liabilities other than as set forth in Section 5.14(b) of Schedule III. 5.15 Pari Passu Ranking. Except to the extent noted in Section 5.15 of Schedule III, the Company's payment obligations on the Notes rank at least pari passu with the Company's payment obligations in respect of all other Debt set forth in Sections 5.14(a) and 5.14(b) of Schedule III. 5.16 Transaction Regulations. The Company is not subject to regulation under any statute or regulation that limits the amount of borrowing of money by the Company or the amount of 10 the Notes that may be issued hereunder. Neither the issuance and sale of the Notes nor the Company's use of the proceeds thereof as contemplated by this Agreement will violate any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any ruling issued thereunder or any enabling legislation or Presidential Executive Order in connection therewith. 5.17 Taxes. The Company and its Subsidiaries have made timely filings of all tax returns which are required to be filed, have paid all Taxes that are due and payable (other than those being diligently contested in good faith by appropriate proceedings and with respect to which adequate reserves in accordance with GAAP have been established), and have made adequate accruals, reserves and provisions for the payment of all current Taxes in accordance with GAAP. All federal income tax liabilities of the Company and its Subsidiaries have been finally determined by the Internal Revenue Service and satisfied, or the time for audit has expired, for all fiscal periods through February 29, 1992. 5.18 Zoning. The Company and its Subsidiaries are in material compliance with all zoning, land use, subdivision, fire and building code, historic preservation and similar statutes, regulations, ordinances and rules that are material to the possession, use and operation of their property. 5.19 OSHA. The Company and its Subsidiaries are in compliance with the Occupational Safety and Health Act of 1970, as amended, and all rules and regulations thereunder, and with all similar federal and state statutes, rules and regulations, and there are no investigations or citations outstanding against the Company or its Subsidiaries thereunder, except in each case where the failure to comply or the investigation or citation would not have a Material Adverse Effect or materially impair the Company's performance of its Obligations. 5.20 Environmental Matters. (a) Each of the Company and its Subsidiaries has obtained all environmental, health and safety permits, licenses and other authorizations required under all Environmental Laws to carry on its business as now being conducted, except where failure to obtain such permits, licenses or authorizations would not, individually or in the aggregate, have a Material Adverse Effect. Each of such permits, licenses and authorizations is in good standing and each of the Company and its Subsidiaries is in substantial compliance with the terms and conditions of all such permits, licenses and authorizations, and is also in substantial compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Environmental Law or in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except to the extent failure to comply individually or in the aggregate therewith would not have a Material Adverse Effect. (b) In addition, except as set forth in Section 5.20(b) of Schedule III: (i) no notice, notification, demand, request for information, citation, summons or order has been issued, no complaint has been served, no penalty has been assessed and no investigation or review is pending or, to the 11 knowledge of the Company, threatened by any governmental or other entity with respect to any alleged failure by the Company or any of its Subsidiaries to have any environmental, health or safety permit, license or other authorization required under any Environmental Law in connection with the conduct of the business of the Company or any of its Subsidiaries or with respect to any generation, treatment, storage, recycling, transportation, discharge or disposal, or any Release of any Hazardous Materials generated by the Company or any of its Subsidiaries; (ii) neither the Company nor any of its Subsidiaries is a treatment, storage or disposal facility requiring a permit under the Resource Conservation and Recovery Act or under any comparable state or local statute; and, to the knowledge of the Company, (1) no polychlorinated biphenyls (PCB's) are present at any property owned or leased by the Company or any of its Subsidiaries; (2) no asbestos or asbestos-containing materials are present at any property owned or leased by the Company or any of its Subsidiaries, which, under any applicable Environmental Laws, would require encapsulation, removal, an operations and maintenance program, or other remedial action; (3) there are no underground storage tanks or surface impoundments for Hazardous Materials (excluding, for purposes of this Section 5.20(b)(ii)(3), petroleum and petroleum products), active or abandoned, at any property owned or leased by the Company or any of its Subsidiaries; and (4) during the time the Company and its Subsidiaries have owned, leased or operated their respective properties, no Hazardous Materials have been Released, in a reportable quantity under statutes, ordinances, rules, regulations or orders in effect at the time of Release which established such quantity, at, on or under any property now or previously owned by the Company or any of its Subsidiaries; (iii) to the knowledge of the Company, neither the Company nor any of its Subsidiaries has transported or arranged for the transportation of any Hazardous Material to any location that is listed on the National Priorities List under CERCLA, or on any similar state or local list or that is the subject of Federal, state or local enforcement actions or other investigations that may lead to environmental claims against the Company or any of its Subsidiaries; and (iv) no Liens have been filed under or pursuant to any Environmental Laws on any of the real property or properties owned or leased by the Company or any of its Subsidiaries, and to the knowledge of the Company no government actions have been taken or are in process that could subject any of such properties to such Liens and neither the Company nor any of its Subsidiaries 12 would be required to place any notice or restriction relating to the presence of Hazardous Materials at any property owned by it in any deed to such property. 5.21 ERISA. The Company, its Subsidiaries and their Related Persons have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code (except for the adoption of certain amendments for which the remedial amendment period under Section 401(b) of the Code has not expired), and have not incurred any material liability to the Pension Benefit Guaranty Corporation or any Plan (including any Multiemployer Plan), other than an obligation to fund or make contributions to any such Plan in accordance with its terms and in the ordinary course of business. The execution and delivery of this Agreement and the Operative Documents and the sale of the Notes to the Purchasers will not involve any transaction subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed under Section 4975 of the Code. The foregoing representation is made by the Company in reliance on the purchasers' representations in Section 2.2(b). If the name of any employee benefit plan has been disclosed to the Company pursuant to Section 2.2(b) the Company is not a party in interest with respect to any such plan and securities of the Company are not employer securities with respect to any such plan. The Company has delivered to the Purchasers a list of all employee benefit plans (other than welfare plans) with respect to which the Company is party in interest and with respect to which its securities are employer securities. As used in this section the terms "employee benefit plan," "welfare plan," "party in interest" and "employer securities" have the meanings assigned to them in ERISA. 5.22 Material Contracts. There is no pending or threatened breach or declaration of default under any material management agreement, consulting agreement or any other agreement between the Company or its Subsidiaries and their respective shareholders, directors, officers or other Persons exercising significant control or policy-making authority over or within the Company or its Subsidiaries and all other material contracts which individually or in the aggregate would have a Material Adverse Effect. 5.23 Employment Liabilities. The Company and its Subsidiaries have complied in all material respects with all federal, state and local statutes, regulations, ordinances, rules and orders respecting employment, employment practices, terms and conditions of employment, wages and hours, and benefits. The Company and its Subsidiaries have withheld all amounts required by law to be withheld from their employees' wages and salaries and are not liable for any arrears of wages or any taxes, interest or penalties for failure to comply with the foregoing. 5.24 Intellectual Property. The Company and its Subsidiaries own or have the right to use, without payment to any third party, all Intellectual Property material to the operation of their business. Except as disclosed in Section 5.24 of Schedule III, to the best of the knowledge of the Company, there are no Liens encumbering the Intellectual Property and no such Intellectual Property owned or used by the Company or its Subsidiaries infringes the patent, copyright, trademark, trade secret or other proprietary rights of any third party and the Company is not aware of any such claim of infringement by any third party. Except as disclosed in Section 5.24 of Schedule III, to the best of the Company's knowledge, no third party has materially infringed or threatened to infringe the patent, copyright, trademark, trade secret and other proprietary rights of the Company or its Subsidiaries in their Intellectual 13 Property. 5.25 Company Status. Neither the Company nor any of its Subsidiaries is: (a) an "investment company," or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (b) a "holding company" or a "subsidiary company" 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; or (c) a "public utility" within the meaning of the Federal Power Act, as amended. 5.26 Product Liability. To the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is subject to any material liability, regardless of whether arising in contract, tort or otherwise, including strict liability, related to or arising from any product or the packaging therefor produced, sold or distributed by the Company or any Subsidiary. 5.27 Insurance. The Company has in full force and effect insurance which complies with the provisions of Section 6.7 hereof. Section 6. General Affirmative Covenants. The Company hereby covenants with the Noteholders: 6.1 Financial Date. The Company shall deliver to the Noteholders: (a) within 45 days after the end of each of the first three Fiscal Quarters in the Company's Fiscal Year, copies of the unaudited consolidated financial statements (balance sheet, statement of earnings, and statement of cash flows) for the Company and its Subsidiaries for such period and for the corresponding period of the prior Fiscal Year, which statements of earnings and cash flows shall also set forth figures for the period from the beginning of the current Fiscal Year to the end of such quarter; (b) within 45 days after the end of each of the first three Fiscal Quarters in the Company's Fiscal Year, a certificate of the chief financial officer or treasurer of the Company to the effect that the financial statements provided pursuant to clause (a) above fairly and accurately present the consolidated financial condition of the Company and its Subsidiaries as of the date indicated and the results of its operations and its cash flows for the periods indicated, subject to normal changes resulting from year-end audit adjustments, and were prepared in accordance with GAAP, that such officer has reviewed and understands the terms of this Agreement, that the Company is in compliance with its covenants of this Agreement and that no Event of Default or Potential Event of Default exists hereunder, such certificate to contain in reasonable detail such calculations as are necessary to confirm the Company's compliance with Section 7.2, Section 7.3, Section 7.6, Section 7.10, Sections 8.1 through 8.5 and Section 11.46 and to contain the listing of all Restricted Subsidiaries and the listing of all Subsidiaries which are not Restricted Subsidiaries; (c) within 90 days after the end of the Company's Fiscal Year, copies of the audited consolidated financial statements (balance sheet, statement of earnings, statement of stockholders' equity and statement of cash flows) for the Company and its Subsidiaries and unaudited consolidating statements (only balance sheet and 14 statement of earnings) for the Company and its Restricted Subsidiaries on a consolidated basis for such Fiscal Year and the prior Fiscal Year, together with an unqualified opinion by KPMG Peat Marwick or other independent accountants of nationally recognized standing, which opinion certificate shall state that the financial statements fairly present, in all material respects, the financial position of the Company and its Subsidiaries as of the date indicated and the results of their operations and their cash flows for the periods indicated, all in accordance with GAAP, and that the audit by such accountants in connection with such financial statements was made in accordance with generally accepted auditing standards; (d) within 90 days after the end of the Company's Fiscal Year, a certificate from the chief financial officer or treasurer of the Company to the effect that the financial statements provided pursuant to clause (c) above fairly and accurately present the consolidated financial condition of the Company and its Subsidiaries as of the date indicated and the results of its operations and its cash flows for the periods indicated, and were prepared in accordance with GAAP, that such officer has reviewed and understands the terms of this Agreement, that the Company is in compliance with its covenants in this Agreement and that no Event of Default or Potential Event of Default exists hereunder, such certificate to contain in reasonable detail such calculations as are necessary to confirm the Company's compliance with Section 7.2, Section 7.3, Section 7.6, Section 7.10, Sections 8.1 through 8.5 and Section 11.46 and to contain the listing of all Restricted Subsidiaries and the listing of all Subsidiaries which are not Restricted Subsidiaries; a certificate of the independent accountants that audited the financial statements referenced in clause (c) above that, in the course of their examination necessary to their certification of the foregoing, they have obtained no knowledge of any Event of Default or Potential Event of Default, or if, in the opinion of such accountants, any Event of Default or Potential Event of Default shall exist, stating the nature and status thereof; and a copy of the auditor's letters to management, if any, in connection with the audit referenced in clause (c); (e) immediately following the completion by its independent auditors of any interim or special audit of the Company, a copy of any opinion furnished to the Company by such auditors and a copy of the auditor's letters to management, if any, in connection with any such audit; and (f) from time to time, such other information as any one or more of the Noteholders may reasonably request. 6.2 Inspection of Properties and Books. The Company shall, and shall cause its Subsidiaries to, recognize and honor the right of any Noteholder, upon reasonable notice and at its own expense, to visit and inspect any of the properties of, to examine and to take extracts from the books, accounts and records of, and to discuss the affairs, finances or accounts of, the Company and its Subsidiaries and to be advised as to the same by the officers and senior management of the Company and the independent public accountants for the Company who are hereby expressly authorized and directed to undertake such actions, at such times, in such detail and through such agents and representatives as such Noteholder may reasonably desire; provided, however, that any discussions by the Noteholders with the independent public accountants of the Company shall be conducted upon reasonable notice 15 to the Company, which shall have the right to participate in such discussions; and, provided further, that such discussions shall be limited to the extent necessary to preserve the accountant-client privilege as to any matters related to pending litigation by or against the Company. The cost of such discussions shall be borne by the Noteholders except to the extent such amounts are indemnified costs under Section 6.13 hereof. 6.3 Payments. The Company shall pay all monetary Obligations when due and before they become delinquent. 6.4 Notices. The Company shall give each of the Noteholders: (a) immediate notice of the Company's obtaining knowledge of: (i) the occurrence of any Event of Default or Potential Event of Default hereunder; (ii) any occurrence constituting an event of default or any occurrence which with notice or the passage of time or both may constitute an event of default under the Bank Financing Documents; (iii) the occurrence of a reportable event (as such term is defined in Section 4043 of ERISA) or a prohibited transaction (as such term is defined in Section 4975 of the Code) in connection with any Plan relating to the Company or any Related Person, or any other claim or occurrence constituting a breach of Section 7.1 or which with notice or passage of time or both may constitute an Event of Default under Section 9.11; (iv) the commencement of, or any threatened lawsuit, proceeding, arbitration, labor dispute or governmental claim, inspection or investigation involving the Company or any Subsidiary, which if adversely determined as to such entity, could have a Material Adverse Effect; (v) the accrual of any material unpaid assessments for Taxes against the Company or any Subsidiary or the assets, property or revenue of any of them, if in excess of adequate reserves therefor; (vi) any environmental investigation by any governmental authority to quantify levels of Hazardous Materials located on premises which have at any time been owned, leased or occupied by the Company or any of its Subsidiaries; (vii) a threat that the Company or any Subsidiary may be named, or the naming of such entity, as a potentially responsible party for contamination of real property or ground water (including past and present waste disposal sites) with Hazardous Materials; and (viii) any change in or discharge of the independent accountants used by the Company; (b) prompt notice of: (i) the Company's obtaining knowledge that the opinion of its independent accountants with respect to its annual financial statements will not be unqualified; (ii) the acquisition of any Subsidiary; (iii) the Company's obtaining knowledge of the accrual of or occurrence of any event giving rise to any material contingent liability of the Company or any Subsidiary or which does or which with notice or the passage of time or both would constitute an event of default under any other material document, instrument or agreement to which the Company or any of its Subsidiaries is a party or by which they or their property may be bound; and (iv) the Company's obtaining knowledge of any Material Adverse Change which results in any of the representations and warranties in Sections 5.1 through 5.27 becoming untrue or incorrect at any time; (c) 60 days' prior written notice of any material change in general business operations and prompt written notice of any change or intended change of control of 16 the Company or any Subsidiary; and (d) such other notices as may be specifically required elsewhere in this Agreement, at the times there specified. 6.5 Corporate Matters. The Company shall provide the Noteholders with notice of changes in its Fiscal Year and with copies of all notices (including, without limitation, notice of annual and special meetings), waivers of notice, proxies, consents, reports and other documents, instruments, agreements and materials provided, filed or received by the Company, its officers or directors, with or from the SEC or any other governmental authority. All such materials shall be provided to the Noteholders contemporaneously with the effective date of any change in the Company's Fiscal Year and, as to SEC and other governmental filings, by the due date of their filing with, or promptly upon receipt from, the SEC or other governmental authority. 6.6 Accounting. The Company shall, and shall cause its Subsidiaries to, keep true books of record and accounts in which full and correct entries will be made of all their business and financial transactions, and shall reflect in their financial statements adequate accruals and appropriations to reserves, all in accordance with GAAP. 6.7 Maintenance of Property. The Company shall, and shall cause its Subsidiaries to, maintain their property in good condition, repair and working order, and make all necessary renewals, replacements, additions, betterments and improvements thereto and shall maintain insurance with financially sound and reputable insurers having at least an "A-" rating with A.M. Best on their property and business (including, without limitation, property and casualty, liability, business interruption, leasehold and data processing insurance), consistent with sound business practice and as is customary in the case of corporations or entities of established reputation in the same or a similar business and similarly situated. 6.8 Corporate Existence. The Company shall, and shall cause its Subsidiaries to, do or cause to be done all things necessary to preserve and keep in full force and effect their corporate existence, good standing and permits and licenses in their respective states of incorporation and their good standing and qualification to do business in all states in which they are doing business or engaging in activities which require qualification; provided, however, that the Company and its Subsidiaries may enter into consolidations and mergers permitted by Section 7.2 and may engage in liquidations of Subsidiaries where all of the assets of the liquidated Subsidiary are transferred to the Company or another wholly owned Restricted Subsidiary. 6.9 Intellectual Property. The Company shall, and shall cause its Subsidiaries to, in accordance with the standards of ordinary business practices in its industry, maintain the right to use, refrain from transfer, disposition or encumbrance of, protect against and prosecute material third party infringements of, and defend against material third party claims challenging their rights and interests in, their Intellectual Property to the extent that failure to comply with this Section 6.9 would create a Material Adverse Change and in no event shall the Company transfer its material Intellectual Property to a Subsidiary which is not a Restricted Subsidiary. 17 6.10 Taxes. The Company shall and shall cause its Subsidiaries to pay all Taxes imposed upon them before any penalties or interest accrue thereon; provided, however, that no such Taxes need be paid for so long as they are being diligently contested in good faith by appropriate proceedings and with respect to which adequate reserves in accordance with GAAP have been established. 6.11 Governmental Regulations. The Company shall, and shall cause its Subsidiaries to comply in all material respects with all applicable laws, regulations, ordinances, rules, orders and judicial or governmental decrees (including, without limitation, environmental), and, in any event, with all laws, regulations, ordinances, rules, orders and judicial or governmental decrees, the violation of which could have any material adverse effect whatsoever on the validity or enforceability of any of its Operative Documents or which could have a Material Adverse Effect. 6.12 Use of Proceeds. Proceeds of the Notes shall be used by the Company for the purpose of repaying existing indebtedness as set forth on Section 5.14(a) of Schedule III and for other general corporate purposes. 6.13 Expenses. The Company shall, regardless of whether Closing occurs, pay and indemnify the Noteholders for all reasonable costs and expenses incurred by the Noteholders in connection with this Agreement, the Operative Documents and the transactions contemplated hereby and thereby, including, without limitation: (a) out-of-pocket costs and expenses incurred in connection with preparing, negotiating and reproducing this Agreement and the Operative Documents, along with all opinions and certificates referenced herein and the specific fees set forth in Section 4.4; (b) costs and expenses including, without limitation, out-of-pocket costs incurred in connection with any Company-requested amendments hereto or to the Operative Documents (whether or not entered into), or in connection with any waiver or consent requested by the Company (whether or not granted); (c) costs and expenses, including, without limitation, out-of-pocket costs incurred in connection with or as a result of any Potential Event of Default or Event of Default hereunder or in connection with any enforcement by any Noteholder of its rights hereunder or under any Operative Document, including, without limitation, the costs of any inspection pursuant to Section 6.2 after the occurrence of an Event of Default or Potential Event of Default (but excluding routine costs and expenses pertaining to administration of this Agreement prior to an Event of Default or Potential Event of Default); and (d) documentary, stamp, or similar taxes (including interest and penalties, if any) payable in respect of this Agreement or any Note, regardless of when assessed. Except as otherwise provided herein, any such costs and expenses shall be due and payable within ten days after the due date thereof. In addition, the Company shall pay all fees of NationsBanc Capital Markets, Inc. and any other broker's or finder's fees in respect of the 18 transaction contemplated hereby. 6.14 Bank Financing Amendments. The Company shall give each of the Noteholders a substantially contemporaneous notice and a copy of any amendment to or waiver of the terms of the Bank Financing Documents actually made or granted. 6.15 Payment of Claims. The Company shall, and shall cause its Subsidiaries to, pay claims of carriers, warehousemen, workmen and materialmen and judgment liens prior to such time as nonpayment thereof (a) could result in a Lien on or loss of the use of property employed by the Company or any one or more of its Subsidiaries in the conduct of such entity's business (other than those being diligently contested in good faith by appropriate procedures and with respect to which adequate reserves in accordance with GAAP have been established) or (b) could result in a Material Adverse Change. Section 7. General Negative Covenants. 7.1 ERISA. The Company shall not, and shall not permit any of its Subsidiaries or any Related Person to: (a) (i) engage in any transaction in connection with which the Company, any Subsidiary or any Related Person could be subject to either section 502(i) of ERISA or a tax imposed by section 4975 of the Code, (ii) fail to make full payment when due of all amounts which would be deductible by the Company, the Subsidiary or any Related Person and which, under the provisions of any Plan, applicable law or applicable collective bargaining agreement, the Company, the Subsidiary or any Related Person is required to pay as contributions thereto, or (iii) permit to exist any accumulated funding deficiency, whether or not waived, with respect to any Plan, if, in the case of any of subdivision (i), (ii) or (iii) above, such penalty or tax, or the failure to make such payment, or the existence of such deficiency, as the case may be, could have a Material Adverse Effect; (b) permit the amount of unfunded benefit liabilities (within the meaning of section 4001(a)(18) of ERISA) under all Plans maintained at such time by the Company, its Subsidiaries or any of its Related Persons to exceed $5 million; or (c) permit the aggregate complete or partial withdrawal liability under Title IV of ERISA with respect to all Multiemployer Plans incurred by the Company, its Subsidiaries or any Related Person to exceed $5 million. 7.2 Merger and Consolidation. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consolidate with or merge into any other entity or permit any other entity to consolidate with or merge into it. Notwithstanding the foregoing, any Restricted Subsidiary may merge into the Company or into another wholly owned Restricted Subsidiary. Furthermore, notwithstanding the foregoing, the Company may enter into such a consolidation or merger transaction with any Person so long as: (a) the successor formed by such consolidation or the survivor of such merger, as the case may be (the "Successor Corporation"), shall be a solvent corporation 19 organized and existing under the laws of a state of the United States of America, with its principal place of business in the United States, and doing business primarily in the United States and/or Canada; (b) if the Company is not the Successor Corporation, such corporation shall have executed and delivered to each Noteholder its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes (pursuant to such agreements and instruments as shall be reasonably satisfactory to the Noteholders holding at least 51% in principal amount of the aggregate outstanding Notes), and the Company shall have caused to be delivered to each Noteholder an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Noteholders holding at least 51% in principal amount of the aggregate outstanding Notes, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; (c) no Event of Default or Potential Event of Default has occurred and is continuing and, immediately after the consummation of such transaction, no Event of Default or Potential Event of Default would exist hereunder; and (d) immediately after giving effect to such transaction the Successor Corporation could, without the occurrence of an Event of Default hereunder, incur at least $1 of additional Funded Debt owing to a Person other than a Restricted Subsidiary of the Successor Corporation. 7.3 Sales or Other Dispositions of Assets. Except as expressly provided in Section 7.4, during any Fiscal Year the Company shall not, and shall not permit any of its Restricted Subsidiaries to, sell, lease or otherwise dispose of any of its assets (including, without limitation, the stock, other voting securities of or evidence of indebtedness from any Subsidiary) other than in the ordinary course of business unless the aggregate book value of assets sold, leased or otherwise disposed of in such Fiscal Year by the Company and its Restricted Subsidiaries does not exceed 10% of the total assets of the Company and its Restricted Subsidiaries as of the end of the Fiscal Year most recently ended. In no event shall the Company sell stock of a Subsidiary if the remaining stock held by the Company shall be less than 51% of the outstanding stock of such Subsidiary. The foregoing shall not prohibit sales by the Company or any Restricted Subsidiary of: (a) assets the proceeds of which are used within 180 days to acquire productive assets used in the ordinary course of business of the Company or a Restricted Subsidiary and having at least substantially comparable value or used to pay down Debt of the Company or its Restricted Subsidiaries which is not subordinate to the Obligations hereunder; (b) receivables pursuant to a securitization program, provided that: (i) the aggregate amount of receivables sold pursuant to this Section 7.3(b) shall not exceed $10 Million in any twelve-month period, and 20 (ii) the purchasers of such receivables shall have no Lien, assignment, hypothecation, charge, adverse claim or other encumbrance on non- purchased receivables; or (c) assets that are leased-back by the Company or its Restricted Subsidiaries within 180 days following the acquisition or completion of construction of such property or assets. 7.4 Additional Stock. The Company shall not: (i) permit any of its Restricted Subsidiaries to issue any additional shares of capital stock, voting or non- voting, any warrants, options or other rights to acquire capital stock, or any securities convertible into capital stock, except to the Company or to another wholly owned Restricted Subsidiary; or (ii) sell, transfer or otherwise dispose of any capital stock, voting or non-voting, warrants, options or other rights to acquire capital stock, or any securities convertible into capital stock, of any Restricted Subsidiary except to another wholly owned Restricted Subsidiary or except as provided in Section 7.3. 7.5 Other Agreements. The Company shall not, and shall not permit any of its Subsidiaries to, enter into any other agreements which violate the terms and conditions of this Agreement or which, after giving effect thereto or upon the performance of any covenant contained therein, would constitute, or upon notice or the passage of time would constitute, an Event of Default, or which would restrict the ability of one or more Subsidiaries to pay dividends to the Company. 7.6 Negative Pledge. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume, permit or suffer to exist with respect to any of the assets of property of the Company (including, without limitation, its stock in and evidences of debt from Subsidiaries) or any Restricted Subsidiary, or any income, revenue, or profits therefrom, all whether now owned or possessed or hereafter acquired, any Lien, assignment, hypothecation, charge, adverse claim or other encumbrance thereon, excepting only Permitted Liens (whether or not the Company complies with the last sentence of this Section 7.6). Except as permitted by Sections 7.3 and 7.4, the Company shall not transfer or convey any of the assets or property of the Company (including, without limitation, its stock in Subsidiaries) nor permit the transfer or conveyance of the assets or property of any Restricted Subsidiary, or any income, revenue, or profits therefrom, all whether now owned or possessed or hereafter acquired, for the purpose, or with the effect, of subjecting the same to payment of any Debt or other obligation in priority of payment over its general creditors. The Company shall not, and shall not permit any of its Subsidiaries to, suffer to exist any Debt or obligation which may, by law, if unpaid or in the event of bankruptcy or insolvency, or otherwise be given priority in payment over its general creditors, nor shall the Company or any Subsidiary make any agreement or arrangement to subordinate the payment of the Notes to any other Debt. Without limiting the generality of the foregoing, if the Company or any of its Restricted Subsidiaries shall create, incur, assume, permit or suffer to exist any Lien (other than Permitted Liens) upon any of its or their property or assets, the Company shall make or cause to be made effective provision for the Notes to be secured equally and ratably with any Debt secured by such Lien, so long as such other Debt shall be so secured; provided, however, that such Lien shall constitute a breach of this Section 7.6 regardless of the Company's compliance with this last sentence. 21 7.7 Additional Subsidiaries. Prior to the acquisition of any additional Restricted Subsidiary, the Company shall provide to each Noteholder a certificate from the chief financial officer or treasurer of the Company certifying that as of, and immediately after, the acquisition of such Restricted Subsidiary, the representations and warranties contained in Section 5 are and will be true and correct as to such Subsidiary and no Event of Default or Potential Event of Default exists or, upon such acquisition, will exist. 7.8 Affiliate Transactions. The Company shall not, and shall not permit any Restricted Subsidiary to enter into any transaction with any Affiliate, their shareholders, the Affiliates of their shareholders, or the executive officers or directors or any of the foregoing entities unless the same shall be conducted in the ordinary course of business on an arms' length basis for fair value in accordance with reasonable commercial standards and on terms no less favorable than those available to third parties generally. 7.9 Business Practices. The Company shall not, and shall not permit its Restricted Subsidiaries to, (a) conduct any line of business which is not related to their business as conducted on the Closing Date and described in the Private Placement Memorandum, or (b) take any act or acts which would result in a substantial change (taken as a whole for the Company and the Restricted Subsidiaries) in the general nature of the business of the Company and its Restricted Subsidiaries in effect on the Closing Date. 7.10 Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any Restricted Payments if: (a) the cumulative amount of such Restricted Payments made after June 30, 1995 would exceed the sum of (i) $22,000,000; and (ii) 75% of Consolidated Net Income (or minus 100% in the case of a deficit) computed on a cumulative basis from June 30, 1995; and (iii) net proceeds of the issuance or sale of common stock of the Company after June 30, 1995; and (iv) any net return of capital, in cash, from a Restricted Investment after June 30, 1995; or (b) at the time of or as a result of, such Restricted Payment, any Event of Default would exist. Notwithstanding the foregoing, any Subsidiary may make a Restricted Payment to the Company at any time. 7.11 Subsidiary Guarantee. No Subsidiary shall enter into a Guarantee of the Debt of the Company under its Bank Financing unless such Subsidiary, simultaneously therewith executes and delivers to the Noteholders a Guarantee of the Company's Obligations which is equal and ratable to the Guarantee issued in connection with the Bank Financing. Any such Guarantee for the benefit of the Noteholders shall be in a form reasonably satisfactory to a majority, by outstanding principal amount, of the Noteholders. Section 8. Financial Covenants. The Company hereby covenants with the Noteholders: 8.1 Minimum Adjusted Net Worth. At no time shall Adjusted Consolidated Net Worth be less than $75,000,000. 22 8.2 Funded Debt. At no time shall Funded Debt of the Company and its Restricted Subsidiaries exceed 60% of the Total Capitalization. 8.3 Current Debt. The Company shall not, and shall not permit any Restricted Subsidiary to incur or to have outstanding at any time Current Debt unless during the preceding 12 month period there shall have been a period of at least 30 consecutive days during which the sum of Current Debt and Funded Debt of the Company and its Restricted Subsidiaries did not exceed 60% of the sum of Total Capitalization and Current Debt of the Company and its Restricted Subsidiaries. 8.4 Fixed Charge Coverage. As of the end of each Fiscal Quarter, the Company and its Restricted Subsidiaries shall have Consolidated Income Available for Fixed Charges for the period of four Fiscal Quarters then ended of not less than 1.75 times Fixed Charges for such period. 8.5 Restricted Subsidiary Indebtedness. The Company shall not permit any Restricted Subsidiary to become liable for any Debt, except: (a) Debt owing to the Company or another wholly owned Restricted Subsidiary; (b) Debt of Restricted Subsidiaries existing at Closing; (c) Debt of Restricted Subsidiaries secured by Permitted Liens described under clause (f) of Section 11.46; and (d) Debt of any Restricted Subsidiary existing at the time such Restricted Subsidiary becomes a Restricted Subsidiary, provided that (i) the incurrence of such Debt was not in anticipation of such Person becoming a Restricted Subsidiary, (ii) no Potential Event of Default hereunder or Event of Default shall result therefrom, and (iii) immediately after giving effect thereto, the total amount of such Debt of all Restricted Subsidiaries shall not exceed 10% of Total Capitalization or otherwise violate one or more covenants in Section 8 hereof. Section 9. Events of Default. The following occurrences shall constitute Events of Default: 9.1 Payments. The Company fails to pay when due any scheduled principal payment or any optional prepayment after giving notice thereof, or any Make-Whole Premium, or fails to pay within five Business Days of when due any payment of interest on the Notes. 9.2 Other Obligations. The Company fails to pay any Obligation (other than those set forth in Section 9.1) within 30 days after the same become due. 9.3 Other Debt. Any one or more of the following events occur: 23 (i) the Company or any Subsidiary fails to pay when due or within any applicable grace or cure period Debt (other than the Obligations but including, without limitation, any Guarantee given by a Subsidiary as to the Company's obligations under the Bank Financing) of the Company or a Subsidiary with an outstanding principal amount of $5,000,000 or more in the aggregate, regardless of the amount of the payment in default; or (ii) the Company or any Subsidiary defaults in the performance of any other term, provision or agreement under which the Debt described in clause (i) above was created or governed, the effect of which is to permit, with the giving of notice or lapse of time, or both, the holder of such Debt to cause such Debt to become due prior to its stated maturity, unless such default is waived in writing by the holder of such Debt; provided, however, that any default described in this clause (ii) shall not become an Event of Default hereunder until 30 days after its occurrence during which period such default has not been waived in writing by the holder of such Debt; or (iii) any of such Debt shall be validly declared to be due and payable or required to be prepaid prior to the stated maturity thereof. 9.4 Undischarged Final Judgments. Final judgment or judgments for the payment of money (which are not covered by insurance), assessments or levies for the payment of taxes, or writs or warrants of attachment, is or are outstanding against the Company or any Subsidiary in an aggregate amount in excess of $5,000,000, and any such judgment, assessment, levy, writ or warrant of attachment (a) has been outstanding for more than 30 days from the date of its entry and (b) has not been discharged, paid, bonded against, released, vacated, reversed, stayed (and discharged within 30 days after expiration of any stay), or appealed and a funded (but not necessarily segregated) reserve established therefor if not otherwise bonded against. 9.5 False Representations. Any representation or warranty made by the Company (either on behalf of itself or any Subsidiary) in this Agreement or in any certificate or report delivered pursuant hereto is false or misleading in any material respect when made. 9.6 Negative and Financial Covenants. The Company (a) fails to comply with any covenant set forth in Sections 7.2, 7.3, 7.4, 7.5, 7.6, 7.9, 7.10 and 7.11 and Section 8, or (b) fails to comply with any covenant set forth in any other sections of Section 7 and such failure is not cured within 10 Business Days of the event or condition constituting such failure. 9.7 Affirmative Covenants. The Company (whether as to itself or any Subsidiary) fails to comply with any covenant set forth in Section 6 or any other covenant or agreement set forth herein (other than the covenants set forth in Section 7 and Section 8) and such failure continues for more than 30 days after the occurrence thereof. 9.8 Involuntary Bankruptcy Proceedings. (a) A receiver, liquidator or trustee of the Company or any Subsidiary or any of their property (whether real or personal, tangible or intangible) is appointed by court order and such order is not discharged within 60 days; or 24 (b) An order for relief is entered in any bankruptcy proceeding in which the Company or any Subsidiary is a "debtor" within the meaning of the Bankruptcy Code; or (c) A petition is filed against the Company or any Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within 60 days after such filing. 9.9 Voluntary Petitions. The Company or any Subsidiary files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition under any such law. 9.10 Assignments for Benefit of Creditors. The Company or any Subsidiary (a) makes an assignment for the benefit of its creditors, or (b) is generally not paying its debts as they become due, or (c) has announced that it will not pay its debts as they become due, or (d) consents to the appointment of a receiver, trustee or liquidator of the Company or any Subsidiary or of all or any part of their property. 9.11 ERISA Violation. The Company, any Subsidiary or any Related Person shall receive notice that it is in violation of ERISA, by which the Company, the Subsidiary and/or any Related Persons have incurred liability which is likely to have a Material Adverse Effect, and shall not have cured such violation within 30 days after receiving such notice. Section 10. Remedies. 10.1 Acceleration. Upon the occurrence of an Event of Default under Sections 9.8, 9.9, or 9.10, all outstanding principal and accrued interest on the Notes shall become automatically and immediately due and payable. Upon the occurrence of any Event of Default under Section 9.1, any Noteholder may, upon written notice, declare all outstanding principal, Make-Whole Premium, if any, and accrued interest on its Notes to be immediately due and payable. Upon the occurrence of any Event of Default other than under Sections 9.8, 9.9 or 9.10 any Noteholders holding at least 25% in principal amount of the aggregate outstanding Notes, upon written notice, may declare all outstanding principal and interest on all outstanding Notes to be immediately due and payable. In any of the above events, no presentment, protest, demand or notice other than that expressly provided above shall be necessary, all of which are hereby waived by the Company. Upon any acceleration of the Notes pursuant to this Section 10, there shall be added to the amount due thereunder: (a) all costs and expenses due in accordance with Section 6.13; and (b) a Make-Whole Premium determined as of the date of acceleration in accordance with Section 1.2(b) (considering the acceleration as a prepayment). Noteholders holding 51% or more in principal amount of the aggregate outstanding Notes may, in their sole and absolute discretion, rescind and annul any declaration of acceleration hereunder, other than a declaration of acceleration based on an Event of Default under Section 9.1, if: (i) the Company has made all payments of principal, interest, Make- Whole Premiums, if any, and expenses then due (other than as are due solely by reason of declaration of such acceleration); (ii) any and all other Events of Default have been cured 25 to the satisfaction of or waived by the Noteholders; and (iii) no judgment or decree has been entered for the payment of amounts due pursuant to this Agreement or the Notes. 10.2 Other Remedies. In addition to the rights set forth in Section 10.1, upon the occurrence of an Event of Default the Noteholders shall have all other rights and remedies available at law and in equity, including, without limitation, for specific performance, for injunctive relief restraining violation hereof, and in aid of the exercise of any right or power granted herein. 10.3 Remedies in General. No course of dealing between the Company and the Noteholders shall operate as a waiver of any of the Noteholders' rights hereunder or under any Note. No delay or omission on the part of the Noteholders in exercising any rights hereunder or under the Notes shall operate as a waiver of such right or any other right hereunder or as an acquiescence in any Event of Default or other event or course of conduct by the Company. No waiver or consent shall be binding or effective unless in writing and signed by the requisite number of Noteholders. No waiver on any one occasion or with respect to any one matter shall be construed as a waiver of any right or remedy as to any future occasion or any other matter. No single or partial exercise of any right or remedy hereunder, or the exercise of any other right or remedy by the Noteholders, shall preclude the exercise of any rights or remedies, hereunder or otherwise, by the Noteholders. All rights and remedies herein and in any other Operative Document shall be cumulative and may be exercised separately or concurrently. The Noteholders may exercise their rights under this Section 10 either collectively or individually in accordance with the terms of this Agreement. Section 11. Definitions. The following terms shall have the meanings set forth below. 11.1 Adjusted Consolidated Net Worth. "Adjusted Consolidated Net Worth" shall mean the consolidated stockholders' equity of the Company and its Restricted Subsidiaries appearing on a consolidated balance sheet of the Company and its Restricted Subsidiaries prepared in accordance with GAAP as of the date of determination, less the aggregate amount of all Restricted Investments held by the Company and the Restricted Subsidiaries as of the date of determination in excess of 10% of such consolidated stockholders' equity of the Company and its Restricted Subsidiaries. 11.2 Affiliate. As applied to any Person, "Affiliate" shall mean any Person, directly or indirectly controlling or controlled by or under common control with such Person, including, without limitation, any officer or director of such Person and any Person beneficially owning or holding 5% or more of any class of voting securities, provided that, for purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise, and provided further that no institutional Noteholder shall be deemed to be an Affiliate of the Company or any of its Subsidiaries solely by reason of ownership of the Notes or other securities issued in exchange for the Notes or by reason of having the benefits of any agreements or covenants of the Company contained in this Agreement. As used herein the term "Affiliate", when used without reference to any Person, means an Affiliate of the Company (other than a Restricted Subsidiary). 26 11.3 Agreement. "Agreement" shall mean this Note Purchase Agreement dated as of April 15, 1996 by and among the Purchasers and the Company. 11.4 Bank Financing. "Bank Financing" shall mean the $75 Million unsecured financing extended to the Company by NationsBank of Texas, N.A. ("NationsBank"), Bank One, Indianapolis, National Association, and Bank of America Illinois (together, the "Banks") and any similar or replacement credit facilities. "Bank Financing Documents" shall mean the Credit Agreement dated as of April 15, 1996, by and among the Company, the Banks and NationsBank as agent for the Banks, as amended from time to time, and any documents evidencing any similar or replacement credit facilities. 11.5 Bankruptcy Code. "Bankruptcy Code" shall mean the United States Bankruptcy Code, 11 U.S.C. (S)101 et seq. as amended from time to time. 11.6 Business Day. "Business Day" shall mean as to any Note any week day other than a day on which banks are authorized to be closed or insurance companies are generally closed in the city in which payments under such Note are to be made. 11.7 Capital Lease. "Capital Lease" shall mean as applied to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on a balance sheet of such Person. 11.8 Capital Lease Obligation. "Capital Lease Obligation" shall mean, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder which would, in accordance with GAAP, appear as a liability on a balance sheet of such lessee in respect of such Capital Lease. 11.9 CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. 11.10 Closing. "Closing" shall mean the consummation of the sale and purchase of the Notes pursuant to this Agreement, as further referenced in Section 3. 11.11 Closing Date. "Closing Date" shall mean the date on which the Closing occurs. 11.12 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 11.13 Company. "Company" shall mean THE RIVAL COMPANY, a Delaware corporation. 11.14 Consolidated Income Available for Fixed Charges. "Consolidated Income Available for Fixed Charges" for any period shall mean the sum of Consolidated Net Income for such period plus income tax expense, as defined according to GAAP, plus Fixed Charges, plus amortization expense related to goodwill, deferred charges and other intangible assets. 11.15 Consolidated Net Income. "Consolidated Net Income" shall mean with reference to any period, the net income (or deficit) of the Company and its Restricted Subsidiaries for such 27 period (taken as a cumulative whole), after deducting all operating expenses, provisions for all taxes and reserves (including reserves for deferred income taxes), amortization of debt discount and other deferred charges, contingency reserves, depreciation, depletion and all other proper deductions, all determined in accordance with GAAP on a consolidated basis, after eliminating all intercompany transactions and after deducting portions of income properly attributable to minority interests, if any, in the stock and surplus of any subsidiaries; provided, that there shall be excluded: (a) (i) the undistributed income (or net loss) of any entity which is not a Restricted Subsidiary, and (ii) the net income (or net loss) of any entity accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with the Company or a Restricted Subsidiary; (b) any aggregate net gain or net loss reflected during such period arising from the sale, exchange or other disposition of capital assets (such term to include all fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets, and all securities) other than in the ordinary course of business; and (c) any extraordinary, unusual or non-recurring gains or losses. 11.16 Current Debt. "Current Debt" for any period shall mean, without duplication, all Debt of any Person other than Funded Debt. 11.17 Debt. "Debt" as applied to any Person, shall mean, without duplication, the sum of (a) all indebtedness for borrowed money which such Person has directly or indirectly created, incurred or assumed, (b) all indebtedness secured by any Lien on any property or asset owned or held by such Person subject thereto, whether or not the indebtedness secured thereby shall have been assumed, (c) all indebtedness of others with respect to which such Person has become liable by way of a Guarantee, (d) Capital Lease Obligations and (e) all recourse obligations of such Person, whether absolute or contingent, matured or unmatured, including, without limitation, any Guarantee, related to asset securitization programs established by such Person to which such Person has sold any of its assets. In determining the Debt of any Person, there shall be included all indebtedness of such Person of the character referred to in clauses (a) through (e) deemed to be extinguished under GAAP but for which such Person remains legally liable. 11.18 Environmental Laws. "Environmental Laws" shall mean all applicable federal, state, and local statutes, regulations, ordinances, rules and orders as in effect from time to time pertaining to the environment (land, air, and water), pollution, asbestos, waste disposal, and the handling, use, storage or disposal of hazardous or toxic substances, whether on-site or off-site, including without limitation CERCLA, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Superfund Amendments and Reauthorization Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Safe Drinking Water Act, the Occupational Safety and Health Act and all applicable state statutes, as amended from time to time. 11.19 ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, 28 as amended from time to time. 11.20 Event of Default. "Event of Default" shall mean the occurrence of an event described in Section 9. 11.21 Financial Statements. "Financial Statements" shall mean the audited financial statements (balance sheet, statement of income, statement of cash flows) of the Company and its Subsidiaries on a consolidated basis for the Fiscal Year ended June 30, 1995, the Company's Quarterly Financial Report and Form 10-Q for the period ended December 31, 1995, the Company's Form 8-K dated January 2, 1996, and the Company's Form 10-K and Proxy Statement for the Fiscal Year ended June 30, 1995, all as provided to the Purchasers. 11.22 Fiscal Quarter. "Fiscal Quarter" shall mean any three-month fiscal period of the Company treated as a fiscal quarter by the Company. 11.23 Fiscal Year. "Fiscal Year" shall mean the annual fiscal period of the Company. 11.24 Fixed Charges. "Fixed Charges" shall mean, with reference to any period, the sum of the following for the Company and its Restricted Subsidiaries on a consolidated basis, after eliminating all intercompany items in accordance with GAAP: (a) Interest Expense properly charged or chargeable to income during such period in accordance with GAAP; and (c) all Operating Lease Rentals properly charged or chargeable to income during such period in accordance with GAAP. 11.25 Funded Debt. "Funded Debt" shall mean, at any date of determination, (a) all Debt (excluding amounts outstanding under the Bank Financing) of any Person and, if such Person is the Company, its Restricted Subsidiaries which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than one year from, or is directly or indirectly renewable or extendible at the option of the Person to a date more than one year (including an option of the Person under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year) from the date of the creation thereof; provided that Funded Debt under this Section 11.25(a) shall include, at any date of determination, any portion of such Funded Debt outstanding on such date which matures on demand or within one year from such date (whether by sinking fund, other required prepayment or final payment at maturity) and which is not directly or indirectly renewable, extendible or refundable, at the option of such Person to a date more than one year from such date; (b) the amount, if any, which does not have to be repaid during any clean-down period under the Bank Financing; and (c) as to the Bank Financing, any other amount required by GAAP to be shown as long-term debt on a consolidated balance sheet of the Company and its Restricted Subsidiaries. 11.26 GAAP. "GAAP" shall mean generally accepted accounting principles as set forth from time to time in the opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements of the Financial Accounting Standards Board or in such opinions and other entities as shall be approved by a significant segment of the 29 accounting profession, consistently applied. 11.27 Guarantee. "Guarantee" shall mean as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any indebtedness, lease, dividend or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business) or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including, without limitation, any such obligation in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or nonfurnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof. The amount of any Guarantee shall be deemed to be the maximum amount for which such Person may be liable as guarantor, upon the occurrence of any contingency or otherwise, under or by virtue of its Guarantee. 11.28 Hazardous Materials. "Hazardous Materials" shall mean, at any time, (a) any "hazardous substance" as defined in (S)l01(14) of CERCLA or applicable sections of any of the Environmental Laws at such time; (b) any "hazardous waste", "infectious waste", "hazardous product", "Hazardous Material", "pollutants" or "contaminants" as defined in applicable sections of any of the Environmental Laws at such time; and (c) any additional substances, materials or products which at such time are classified or considered to be hazardous or toxic or otherwise regulated under any of the Environmental Laws. 11.29 Intellectual Property. "Intellectual Property" shall mean any trade secret, patent, patent application, copyright, trademark, service mark, brand, brandmark, brand name, trade name, label, and every other proprietary invention, process, design, plant, work of authorship and work protectable under titles 35 or 17 of the United States Code. 11.30 Interest Expense. "Interest Expense" shall mean net interest expense, as defined according to GAAP, and presented on the income statement of any Person, and capitalized interest expense. 11.31 Investment. "Investment" shall mean as applied to any Person, (a) any direct or indirect purchase or other acquisition by such Person of stock or other securities of or any partnership interest in any other Person; (b) any direct or indirect capital contribution by such Person to any other Person; (c) any loan or advance by such Person to any other Person, including all debt and accounts receivable from such other Person which are not current assets or which did not arise from sales to such other Person in the ordinary course of business; (d) any direct or indirect purchase or other acquisition by such Person of any assets other than assets used in the ordinary course of business; and (e) any liability or obligation of such Person to make any such purchase, acquisition, loan, advance or capital contribution. 30 11.32 Liens. "Liens" shall mean as to any Person, any interest in property securing an obligation owed to, or a claim by, any other Person including, without limitation, any mortgage, lien, pledge, adverse claim, charge, security interest or other encumbrance in or on, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease with respect to, any property or asset owned or held by such Person, or the signing or filing of a financing statement which names such Person as debtor, or the signing of any security agreement authorizing any other party as the secured party thereunder to file any financing statement. For the purposes of this Agreement, a Person shall be deemed to be the owner of any assets which it has placed in trust for the benefit of the holders of Debt of such Person and such trust shall be deemed to be a Lien if such Debt is deemed to be extinguished under GAAP and such Person remains legally liable therefor. 11.33 Make-Whole Premium. "Make-Whole Premium" shall mean an amount, if any, but not less than zero, by which (a) the present value as of the date in respect of which the Make-Whole Premium is to be determined of all scheduled principal and interest payments thereafter due on the portion of the principal amount of the Note to be prepaid, discounted semiannually at a rate equal to the sum of 50 basis points and the then existing yield to maturity of U.S. Treasury Securities with an average life to maturity nearest to the remaining Weighted Average Life to Maturity of such Note, as determined by reference to (i) the yields for such U.S. Treasury Securities reported, as of 10:00 A.M. (New York City time) on the Business Day next preceding the respective payment date by the Bloomberg Financial Markets service available on the Telerate Information System (page 500, bid side) (or any successor service), or (ii) if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, as reported by the then most recent Federal Reserve Statistical Release H.15(519) which has become publicly available as of the date which is two Business Days prior to the date as of which prepayment is to be made (or, if such Statistical Release is no longer published, any publicly available source of such market data), exceeds (b) the portion of the principal amount of the Note to be prepaid. For purposes of computations under clause (a) above, if the date on which any Make-Whole Premium is due is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such date and required to be paid on such date pursuant to Section 1.2(b) or Section 10.1, as the case may be. 11.34 Margin Security. "Margin Security" shall have the meaning assigned to such term in Regulation G of the Board of Governors of the Federal Reserve System of the United States as amended from time to time. 11.34 Margin Stock. "Margin Stock" shall have the meaning assigned to such term in Regulation U of the Board of Governors of the Federal Reserve System of the United states as amended from time to time. 11.34 Material Adverse Change or Effect. "Material Adverse Change" and "Material Adverse Effect" shall mean a material adverse change or effect, respectively, with respect to the assets, business, management, operations or condition, financial or otherwise, of the Company and its Restricted Subsidiaries taken as a whole. 31 11.37 Multiemployer Plan. "Multiemployer Plan" shall mean a Plan meeting the definition of "multiemployer plan" contained in either 29 U.S.C. (S)1002(37) or 29 U.S.C. (S)1301(a)(3), or a Plan employed by more than one employer, to which contributions are or have been made by the Company or any Related Person. 11.38 NAIC Annual Statement. "NAIC Annual Statement" shall have the meaning specified in Section 2.2(b). 11.39 Noteholders. "Noteholders" shall mean the holders of the Notes, as reflected in the Note Register referenced in Section 1.3. The initial Noteholders shall be the Purchasers. 11.40 Notes. "Notes" shall mean the Notes as specified in Section 1.1 hereof. 11.41 Obligations. "Obligations" shall mean all obligations of the Company or its Subsidiaries under the Operative Documents, including without limitation all amounts due under the Notes or any Guarantees given to the Noteholders under Section 7.11 hereof. 11.42 Operating Lease. "Operating Lease" shall mean any lease of the Company or its Restricted Subsidiaries of any property (whether real, personal or mixed) which is not a Capital Lease, other than any such lease having a term (including all renewal terms, whether or not exercised) of less than 12 months from the date of inception of such lease. 11.43 Operating Lease Rentals. "Operating Lease Rentals" shall mean the total rentals due on Operating Leases for the respective period in question, including amounts payable in respect of taxes, maintenance and other similar impositions under the Operating Leases. 11.44 Operative Documents. "Operative Documents" shall mean the Notes, this Agreement, and all certificates, opinions and other documents issued or delivered in connection with the Notes and this Agreement. 11.45 Permitted Investments. "Permitted Investments" shall mean any Investment in: (a) one or more Restricted Subsidiaries or any Person which, concurrent with such Investment, becomes a Restricted Subsidiary; (b) property used in the ordinary course of the Company's business; (c) marketable direct obligations issued or guaranteed by the United States of America or issued by any agency thereof or by Canada maturing within three years from the date of acquisition thereof; (d) marketable general obligation bonds or notes issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof or of any province of Canada maturing within three years from the date of acquisition thereof and having at all times one of the top two ratings from one of the Rating Agencies; (e) certificates of deposit or banker's acceptances maturing within one year from 32 the date of acquisition thereof issued by commercial banks or trust companies organized under the laws of the United States of America, the debt obligations of which or that of its holding company, at all times, would be rated by one of the Rating Agencies in one of its top two rating categories; (f) commercial paper maturing not more than 270 days from the date of acquisition thereof and having at all times one of the two top rating classifications from one of the Rating Agencies; and (g) Investments other than as described in (a) through (f) above which are existing on the Closing Date and listed on Section 11.45 of Schedule III. 11.46 Permitted Liens. "Permitted Liens" shall mean: (a) pledges or deposits by the Company and its Restricted Subsidiaries under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt by the Company or its Restricted Subsidiaries), or leases to which the Company or its Restricted Subsidiaries are parties, or deposits of cash or United States of America Government Bonds to secure surety or appeal bonds or performance bonds to which the Company or its Restricted Subsidiaries are parties or which are issued for their account; (b) Liens imposed by law, such as carriers', warehousemen's, materialmen's and mechanics' liens, or Liens arising out of judgments or awards against the Company and its Restricted Subsidiaries with respect to which the Company and its Restricted Subsidiaries at the time shall currently be prosecuting an appeal or proceedings for review in good faith and by proper procedure and with respect to which adequate reserves have been established on the books of the Company; (c) Liens for taxes not yet subject to penalties for nonpayment and Liens for taxes the payment of which is being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established; (d) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights of way, highways and railroad crossings, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or other Liens incidental to the conduct of the business of the Company or any of its Restricted Subsidiaries or to the ownership of their property which Liens were not incurred in connection with Debt of the Company or any of its Restricted Subsidiaries, and which Liens do not individually or in the aggregate materially detract from the value of said properties or materially impair the operation of the business taken as a whole of the Company or such Restricted Subsidiaries; (e) Liens existing on the Closing Date and specified on Schedule III hereto, provided that the principal amount of Debt associated with such Liens in no event shall exceed the principal amount of such Debt on the Closing Date and do not affect the title to or 33 use of the assets encumbered thereby; (f) Purchase money Liens securing payment of the purchase price of fixed assets purchased or constructed after Closing, including Liens existing on such fixed assets at the time of acquisition thereof or at the time of acquisition by the Company or any Restricted Subsidiary of any business entity then owning such fixed assets (so long as they were not incurred or extended in contemplation of such acquisition), provided that (i) the Lien is solely on property purchased or constructed within 180 days prior to the filing of such Lien; (ii) at the time of such filing, Debt secured by the Lien does not exceed the cost of such property; and (iii) the incurrence of Debt secured by such Lien is not prohibited by any other covenant or limitation contained in this Agreement; (g) Liens securing Debt of a Restricted Subsidiary to the Company; and (h) other Liens (including potential Liens under the Bank Financing to secure reimbursement obligations on letters of credit, such potential Liens to be valued at the face amount of such outstanding letters of credit), provided that the aggregate amount of Debt secured by such other Liens shall not at any time exceed an amount equal to 10% of Adjusted Consolidated Net Worth. 11.47 Person. "Person" shall mean a corporation, association, partnership, trust, joint venture, organization, business, individual, government (or political subdivision thereof) or governmental agency. 11.48 Plan. "Plan" shall mean an "employee pension benefit plan" as defined in Section 3 of ERISA. 11.49 Potential Event of Default. "Potential Event of Default" shall mean a condition or event which, with notice or the passage of time, or both, would constitute an Event of Default. 11.50 Private Placement Memorandum. "Private Placement Memorandum" shall mean the March 1996 Private Placement Memorandum prepared by NationsBanc Capital Markets, Inc. regarding $50,000,000 of Senior Notes due in 2008, and provided to the Purchasers to induce them to purchase the Notes. 11.51 Purchasers. "Purchasers" shall mean the institutional investors who purchase the Notes and who are set forth on Schedule I. 11.52 QPAM. "QPAM" shall have the meaning specified in Section 2.2(b)(iv). 11.53 QPAM Exemption. "QPAM Exemption" shall mean Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor. 11.54 Rating Agencies. "Rating Agencies" shall mean Duff & Phelps, Inc., Moody's Investors Services and Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. 11.55 Related Person. "Related Person" shall mean any corporation or trade or business that is a member of the same controlled group of corporations (within the meaning of Section 34 414(b) of the Code) as the Company or is under common control (within the meaning of Section 414(c) of the Code) with the Company or is a member of any affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Company or is otherwise treated as part of the controlled group which includes the Company (within the meaning of Section 414(o) of the Code). 11.56 Release. "Release" or "Released" shall mean, at any time, any "release" of Hazardous Materials as defined in (S)101(22) of CERCLA or applicable sections of any of the Environmental Laws at such time and any terms similar thereto as used in any Environmental Laws at such time. 11.57 Restricted Investments. "Restricted Investments" shall mean all Investments other than Permitted Investments. 11.58 Restricted Payments. "Restricted Payments" shall mean dividends (including, without limitation, dividends payable in cash and other non-cash distributions and all accrued cumulative dividends on preferred stock, but excluding dividends payable in stock of the Person); stock redemptions and repurchases; issuances of or payments with respect to warrants, options, rights or puts; other cash distributions in respect of the capital stock of the Person, excluding dividends, stock redemptions and repurchases, warrants, options, rights and puts; other cash distributions in respect of capital stock between the Company and its Restricted Subsidiaries or between Restricted Subsidiaries; and the acquisition of any Restricted Investment. In valuing the amount of any non-cash Restricted Payment, the board of directors of the Person shall make a good faith valuation thereof and shall reflect the same in its minutes. 11.59 Restricted Subsidiary. "Restricted Subsidiary" shall mean any Subsidiary (i) of which at least 51% of the voting securities are owned by the Company and/or one or more wholly owned Restricted Subsidiaries, (ii) which is organized under the laws of the United States, any state thereof, Canada, or any province thereof, (iii) which maintains substantially all of its assets and conducts substantially all of its business within the United States and/or Canada, and (iv) which the Company has designated a Restricted Subsidiary by notice in writing given to the Noteholders, and shall also include, so long as they are Subsidiaries, Waverly Products Company Limited, Patton Electric Company Hong Kong, Ltd., Bionaire International B.V., Bionaire France s.a.r.l. and Bionaire Worldwide Management Inc. The Company's initial Restricted Subsidiaries are identified in Section 11.59 of Schedule III. 11.60 SEC. "SEC" shall mean the Securities and Exchange Commission. 11.61 Source. "Source" shall have the meaning specified in Section 2.2(b). 11.62 Subsidiary. "Subsidiary" shall mean as to any Person, any entity in which such Person and/or one or more Subsidiaries of such Person owns or controls a majority of the outstanding voting securities of the entity. As used herein the term "Subsidiary" when used without reference to any Person, means a Subsidiary of the Company. 11.63 Successor Corporation. "Successor Corporation" shall have the meaning specified in Section 7.2(a). 35 11.64 Taxes. "Taxes" shall mean all taxes, assessments and other governmental fees, charges, claims and levies, including, without limitation, any such amounts based on revenue, income, gross receipts, purchases, leases, licenses, sales, use, business, franchises, shares, operations, business occupation, capital surplus, earnings, distributions, dividends, properties, assets, wages, employment or services, and further including, without limitation, any penalties or interest thereon. 11.65 '34 Act. "34 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. 11.66 '33 Act. "33 Act" shall mean the Securities Act of 1933, as amended from time to time. 11.67 Total Capitalization. "Total Capitalization" shall mean Funded Debt of the Company and its Restricted Subsidiaries plus Adjusted Consolidated Net Worth. 11.68 Weighted Average Life to Maturity. "Weighted Average Life to Maturity" shall mean as applied to any Debt at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Debt into (b) the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the date on which such payment is to be made. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All references in this Agreement to Sections are to sections of this Agreement unless otherwise indicated. Unless otherwise indicated, all references in this Agreement to Exhibits or Schedules are to Exhibits and Schedules attached to this Agreement. All such Exhibits and Schedules shall be deemed incorporated herein by this reference. Section 12. Miscellaneous. 12.1 Entire Agreement. This Agreement is the complete and exclusive statement of the understanding between the parties and supersedes all prior offers, proposals, understandings and agreements, oral or written, between the parties relating to the subject matter hereof. 12.2 Amendments; Changes and Modifications. This Agreement may not be effectively amended, changed, modified or altered, except in writing and thereupon executed by the Company and the number of holders of all then outstanding Notes required for approvals under Section 12.9. 12.3 Applicable Law: Submission to Jurisdiction. This Agreement shall be governed by and construed pursuant to the laws of the State of Missouri. Any legal action or proceeding with respect to this Agreement or any other Operative Document may be brought in the courts of the State of Missouri or of the United States of America for the Western District of Missouri and, by execution and delivery of this Agreement, the Company hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Company irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or 36 certified mail, postage prepaid, to the Company at its address specified in Section 12.4, such service to become effective 30 days after such mailing. The Company hereby irrevocably waives trial by jury, any objection based on forum non conveniens, and any objection to venue of any action instituted hereunder and consents to the granting of such legal or equitable relief as is deemed appropriate by the court. Nothing herein shall affect the right of any Noteholder to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. 12.4 Notices. All communications under the Operative Documents shall be in writing and addressed to the parties as follows: To the Company: THE RIVAL COMPANY 800 East 101 Terrace Kansas City, Missouri 64131 Attention: Treasurer To the Noteholders: At the address shown for each Noteholder on Schedule I or such other address as the Noteholders may specify in writing from time to time. Notices shall be deemed given or made when served personally or when deposited in the United States mail (registered or certified) or with a nationally recognized express courier properly addressed with postage or delivery charges prepaid or when transmitted by telex or telegraphic means or by telecopy or facsimile transmissions, answer back confirmed. 12.5 Captions. The captions and headings are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement. 12.6 Counterparts. This Agreement may be executed in several counterparts and such counterparts together shall constitute one and the same instrument. 12.7 Assignment. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Company or any Subsidiaries which are contained in this Agreement shall bind and inure to the benefit of the successors and assigns of the Noteholders. Notwithstanding the foregoing, the Company shall not assign its rights or delegate its duties under this Agreement, except in connection with a merger or consolidation permitted by Section 7.2, without the prior written consent of each of the Noteholders. 12.8 Survival of Representations and Warranties. All representations and warranties made herein, and in the certificates delivered pursuant hereto, shall survive the execution and delivery to the Noteholders of this Agreement, any inspection, investigation or audit made by 37 or on behalf of the Noteholders, the purchase of the Notes, and the disposition of the proceeds thereof, and such representations and warranties shall continue in full force and effect so long as any Note is outstanding and unpaid or the Company has not satisfied in full its Obligations to the Noteholders. 12.9 Consents: Noteholder Action. Except as otherwise provided herein, all actions, consents, waivers and approvals by the Noteholders shall be deemed taken or given and amendments hereto deemed agreed to if the holders of more than 51% or more in principal amount of the outstanding Notes have indicated their assent. Any concessions made by the Company to any Noteholder shall be offered to and for the benefit of all Noteholders. Notwithstanding the foregoing, any amendment to or waiver of the payment terms of the Notes (including, without limitation, any amendment or waiver respecting maturity, principal amount, interest rate, Make-Whole Premium, or timing of payment of any of the foregoing, regardless of whether related to mandatory or optional payments) or any amendment or waiver to the percentage voting requirement contained herein shall require the unanimous approval of the holders of all Notes. For purposes of this Agreement, Notes held by the Company, its Subsidiaries, or their Affiliates shall not be considered in determining whether any percentage voting requirement has been satisfied. 12.10 Reproduction of Documents. This Agreement, the Operative Documents, and all documents, instruments, agreements and certificates relating thereto, including, without limitation all consents, waivers, approvals, amendments and notices which may hereafter be executed or given, all documents delivered at Closing (excluding the Notes) and all documents, materials, certificates and reports previously or hereafter provided to the Noteholders by the Company (including, without limitation, the Financial Statements and the Private Placement Memorandum) may be reproduced by the Noteholders by photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the original of any such reproduction may be destroyed. The Company hereby stipulates and agrees that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding whether or not the original is in existence and whether or not such reproduction was made in the regular course of business and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 12.11 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns, any rights remedies, obligations or liabilities under or by reason of this Agreement. (The rest of this page intentionally left blank.) 38 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of April 19, 1996. THE RIVAL COMPANY By: ------------------------- Name: Title: SCHEDULE I PURCHASERS
==================================================================================================================================== Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (CRP) - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-1; $2,000,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Bankers Trust Company Account Information New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 For further credit to A/C: The Lincoln National Life Insurance Company (CRP) Custody Account No.: 98231 - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments Bankers Trust Company Attn: Private Placement Unit P.O. Box 998 Bowling Green Station New York, NY 10274 with a copy to: Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By ---------------------------- Name: Title: - ------------------------------------------------------------------------------------------------------------------------------------
Schedule I-1
==================================================================================================================================== Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (CRP) - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor, Window #44 New York, NY 10005 Attn: Marlene Maynard, Mail Stop 4049 (in cover letter refer to account name and custody account number) - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-0472300 ====================================================================================================================================
Schedule I-2
==================================================================================================================================== Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (LFP) - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-2; $2,000,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Bankers Trust Company Account Information New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 For further credit to A/C: The Lincoln National Life Insurance Company (LFP) Custody Account No.: 98185 - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments Bankers Trust Company Attn: Private Placement Unit P.O. Box 998 Bowling Green Station New York, NY 10274 with a copy to: Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By ______________________________________ Name: Title: ===================================================================================================================================
Schedule I-3
==================================================================================================================================== Purchaser Name THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (LFP) - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor, Window #44 New York, NY 10005 Attn: Marlene Maynard, Mail Stop 4049 (in cover letter refer to account name and custody account number) - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-0472300 ====================================================================================================================================
Schedule I-4
==================================================================================================================================== PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (UIN) - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-3; $2,000,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Bankers Trust Company Account Information New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 For further credit to A/C: The Lincoln National Life Insurance Company (UIN) Custody Account No.: 98127 - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments Bankers Trust Company Attn: Private Placement Unit P.O. Box 998 Bowling Green Station New York, NY 10274 with a copy to: Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By -------------------------------------- Name: Title: ====================================================================================================================================
Schedule I-5
==================================================================================================================================== PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (UIN) - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor, Window #44 New York, NY 10005 Attn: Marlene Maynard, Mail Stop 4049 (in cover letter refer to account name and custody account number) - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-0472300 ====================================================================================================================================
Schedule I-6
==================================================================================================================================== PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (IAL) - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered THE LINCOLN NATIONAL LIFE INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-4; $10,000,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Bankers Trust Company Account Information New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 For further credit to A/C: The Lincoln National Life Insurance Company (IAL) Custody Account No.: 98194 - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments Bankers Trust Company Attn: Private Placement Unit P.O. Box 998 Bowling Green Station New York, NY 10274 with a copy to: Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By ---------------------------------------- Name: Title: - ------------------------------------------------------------------------------------------------------------------------------------
Schedule I-7
==================================================================================================================================== PURCHASER NAME THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (IAL) - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor, Window #44 New York, NY 10005 Attn: Marlene Maynard, Mail Stop 4049 (in cover letter refer to account name and custody account number) - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-0472300 ====================================================================================================================================
Schedule I-8
==================================================================================================================================== Purchaser Name LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-5; $1,000,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Account Information The Chase Manhattan Bank N.A. New York, NY ABA #: 021 00 0021 CHASE NYC/ CTR/ BNF A/C #900-9-000200 Further Credit to: G-06323 For the Account of: Lincoln Natl Health & Casualty Ins - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions LINCOLN NATIONAL HEALTH & CASUALTY INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By ------------------------------------------------- Name: Title: - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes The Chase Manhattan Bank One Chase Manhattan Plaza Level 4B; Window #9 New York, NY 10081 For Acct: G-06323 Attn: Receive Free Cage - Frank Taylor - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-1495207 ====================================================================================================================================
Schedule I-9
==================================================================================================================================== Purchaser Name AMERICAN STATES INSURANCE COMPANY - ------------------------------------------------------------------------------------------------------------------------------------ Name in Which Note is Registered SALKELD & CO - ------------------------------------------------------------------------------------------------------------------------------------ Note Registration Number; R-6; $1,750,000 Principal Amount - ------------------------------------------------------------------------------------------------------------------------------------ Payment on Account of Note Federal Funds Wire Transfer Method Account Information Bankers Trust Company; New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 Further Credit to: American States Ins Co Custodial Account: 97131 - ------------------------------------------------------------------------------------------------------------------------------------ Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ------------------------------------------------------------------------------------------------------------------------------------ Address for Notices Related to Payments American States Life Insurance Company 500 North Meridian Street Indianapolis, IN 46204 Att: Corporate Accounting - ------------------------------------------------------------------------------------------------------------------------------------ Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street; Renaissance Square Fort Wayne, IN 46802 Att: Investments/Private Placements - ------------------------------------------------------------------------------------------------------------------------------------ Other Instructions AMERICAN STATES INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By --------------------------------------- Name: Title: - ------------------------------------------------------------------------------------------------------------------------------------ Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor, Window 44 New York, NY 10005 For Acct: American States Ins Co Custodial Acct: 97131 Attention: George Flores - ------------------------------------------------------------------------------------------------------------------------------------ Tax Identification Number 35-0145400 ====================================================================================================================================
Schedule I-10
====================================================================================================================== Purchaser Name AMERICAN STATES LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered SALKELD & CO - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-7; $1,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information Bankers Trust Company; New York, NY ABA #: 021001033 Private Placement Processing A/C #: 99-911-145 Further Credit to: American Sts Life Ins Co Custodial Account: 97136 - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments American States Life Insurance Company 500 North Meridian Street Indianapolis, IN 46204 Att: Corporate Accounting - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Att: Investments/Private Placements - ---------------------------------------------------------------------------------------------------------------------- Other Instructions AMERICAN STATES LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Bankers Trust Company 14 Wall Street, 4th Floor; Window 44 New York, NY 10005 For Acct: American States Life Ins Co Custodial Acct: 97136 Attention: George Flores - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 35-1007048 ======================================================================================================================
Schedule I-11
====================================================================================================================== Purchaser Name FIRST PENN-PACIFIC LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered CUDD & CO - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-8; $2,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information The Chase Manhattan Bank N.A. New York, NY ABA #: 021000021 A/C #: 900-9-000200 Further Credit to: G-05996 First Penn-Pacific - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Lincoln Investment Management, Inc. 200 East Berry Street; Renaissance Square Fort Wayne, IN 46802 Att: Investments/Private Placements - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street; Renaissance Square Fort Wayne, IN 46802 Att: Investments/Private Placements - ---------------------------------------------------------------------------------------------------------------------- Other Instructions FIRST PENN-PACIFIC LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Chase Manhattan Bank One Chase Manhattan Plaza Level 4B Window #9 New York, NY 10081 For Account: G-05996 First Penn-Pacific Life Ins. Co. Att: Frank Taylor - Receive Free Cage - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 23-2044248 ======================================================================================================================
Schedule I-12
====================================================================================================================== Purchaser Name ALLIED LIFE INSURANCE COMPANY "A" - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered HARNY & CO - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-9; $1,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information Harris Trust & Savings, Chicago, IL ABA #: 071 000 288 Attention: Trust Collections DDA Account #: 109-211-3 Further credit: Allied Life Ins Co "A" Account No.: 23-97588 - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Harris Trust & Savings 111 W. Monroe Street Chicago, IL 60690 Attn: Private Placements For Acct: Allied Life Ins 23-97588 - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements For A/C: Allied Life Insurance Company - ---------------------------------------------------------------------------------------------------------------------- Other Instructions ALLIED LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Bank of Montreal 77 Water Street Securities Svcs - 5th Floor Attn: Rich Halleck New York, NY 10005 For A/C: Harris Trust & Savings Further Credit to: 23-97588, Allied Life Ins Co - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 42-0921353 ======================================================================================================================
Schedule I-13
====================================================================================================================== Purchaser Name SONS OF NORWAY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered VAR & CO - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-10; $500,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information First Bank N.A., Minneapolis, MN ABA #: 091 0000 22 CR: First Trust National Association A/C#: 180121167365 - TSU 020 F/C: 12601910, Sons of Norway - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Ms. Kathy Budewitz Mail Code: SPEN0402 First Trust Center 180 E. 5th St., P.O. Box 64190 St. Paul, MN 55164-0190 - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 Attn: Investments/Private Placements - ---------------------------------------------------------------------------------------------------------------------- Other Instructions SONS OF NORWAY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes First Trust National Association Physical Unit, Trade Settlement Services 9th Floor 180 E. 5th Street St. Paul, MN 55101 For Account: 12601910, Sons of Norway Attention: Tara Steenblock - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 41-0547795 ======================================================================================================================
Schedule I-14
====================================================================================================================== Purchaser Name SECURITY-CONNECTICUT LIFE INSURANCE COMPANY (SPDA) - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered SECURITY-CONNECTICUT LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-11; $1,750,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information Shawmut Bank Connecticut, N.A. 777 Main Street, Hartford, CT 06115 ABA Routing #: 011900445 For acct of: Sec-Conn Life (SPDA) Acct #: 0156196 - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Security-Connecticut Life Insurance Company 20 Security Drive Avon, CT 06001 Att: Jodi Dean - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Lincoln Investment Management, Inc. 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 Att: Investment/Private Placements - ---------------------------------------------------------------------------------------------------------------------- Other Instructions SECURITY-CONNECTICUT LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Security-Connecticut Life Insurance Company 20 Security Drive Avon, CT 06001 Att: Jodi Dean - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 35-1468921 ======================================================================================================================
Schedule I-15
====================================================================================================================== Purchaser Name ALLSTATE LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Notes are Registered ALLSTATE LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Note Registration Numbers; Principal Amounts R-12; $4,000,000 R-13; $4,000,000 R-14; $2,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Notes Method Federal Funds Wire Transfer Account Information BBK = Harris Trust and Savings Bank ABA #071000288 BNF = Allstate Life Insurance Company Collection Account #168-117-0 ORG = Rival Company - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Allstate Insurance Company Investment Operations - Private Placements 3075 Sanders Road, STE G4A Northbrook, IL 60062-7127 Telephone: (847) 402-8709 Telecopy: (847) 402-7331 - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Allstate Life Insurance Company Private Placements Department 3075 Sanders Road, STE G3A Northbrook, IL 60062-7127 Telephone: (847) 402-4394 Telecopy: (847) 402-3092 - ---------------------------------------------------------------------------------------------------------------------- Other Instructions ALLSTATE LIFE INSURANCE COMPANY By_______________________ Name: By_______________________ Name: Authorized Signatories - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Harris Trust and Savings Bank 111 West Monroe Street Institutional Custody, 5E Chicago, Illinois 60690 Attention: Lisa Cox For Allstate Life Insurance Company/Safekeeping Account No. 23-91317 - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 36-2554642 ======================================================================================================================
Schedule I-16 Schedule I-17
====================================================================================================================== Purchaser Name SECURITY FIRST LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered SECURITY FIRST LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-15; $5,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information Bank of New York 1 Wall Street New York, NY 10286 ABA No.: 021000018 Account Name: Security First Group Corporate Bond Account Account No.: 328175 - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Security First Life Insurance Company c/o London Life Insurance Company 255 Dufferin Avenue London, Ontario N6A 4K1 Attn: Manager U.S. Fixed Income (Private Placements) Securities Department - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Security First Life Insurance Company c/o London Life Insurance Company 255 Dufferin Avenue London, Ontario N6A 4K1 Attn: Manager U.S. Fixed Income (Private Placements) Securities Department - ---------------------------------------------------------------------------------------------------------------------- Other Instructions SECURITY FIRST LIFE INSURANCE COMPANY By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Bank of New York 1 Wall Street Window A, Third Floor New York, NY 10286 Re: Account Name: Security First Group Corporate Bond Account Account #: 328175 - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 540696644 ======================================================================================================================
Schedule I-18
====================================================================================================================== Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered PAN-AMERICAN LIFE INSURANCE COMPANY ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-16; $5,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information First National Bank of Commerce 210 Baronne Street New Orleans, LA 70112 ABA No.: 065-000-029 For credit to Pan-American Life Insurance Company Account No.: 1100-29496 - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments Pan-American Life Insurance Company Pan American Life Center 601 Poydras Street New Orleans, LA 70130 Attn: Investment Department - 28th Floor, Bond & Stock Accounting - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices Pan-American Life Insurance Company Pan American Life Center 601 Poydras Street New Orleans, LA 70130 Attn: Investment Department - 28th Floor, Fixed Income Securities - ---------------------------------------------------------------------------------------------------------------------- Other Instructions PAN-AMERICAN LIFE INSURANCE COMPANY By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Pan-American Life Insurance Company Pan American Life Center 601 Poydras Street New Orleans, LA 70130 Attn: Marylyn Andree, Investment Department - 28th Floor - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 72-0281240 ======================================================================================================================
Schedule I-19
====================================================================================================================== Purchaser Name NATIONSBANC CAPITAL MARKETS, INC. - ---------------------------------------------------------------------------------------------------------------------- Name in Which Note is Registered HARE & CO. - ---------------------------------------------------------------------------------------------------------------------- Note Registration Number; Principal Amount R-17; $5,000,000 - ---------------------------------------------------------------------------------------------------------------------- Payment on Account of Note Method Federal Funds Wire Transfer Account Information Bank of New York ABA # 021000018 BNF: IOC 569, GSCS, MIC Ref: Rival - ---------------------------------------------------------------------------------------------------------------------- Accompanying Information Name of Company: THE RIVAL COMPANY Description of Security: 7.21% Senior Notes due April 15, 2008 Security Number: 768020 A* 0 Due Date and Application (as among principal, premium and interest) of the payment being made: - ---------------------------------------------------------------------------------------------------------------------- Address for Notices Related to Payments NationsBanc Capital Markets, Inc. 100 N. Tryon Street, 6th Floor Charlotte, NC 28255 Attn: Syndicate - ---------------------------------------------------------------------------------------------------------------------- Address for All other Notices NationsBanc Capital Markets, Inc. 100 N. Tryon Street, 6th Floor Charlotte, NC 28255 Attn: Syndicate - ---------------------------------------------------------------------------------------------------------------------- Other Instructions NATIONSBANC CAPITAL MARKETS, INC. By_______________________ Name: Title: - ---------------------------------------------------------------------------------------------------------------------- Instructions re Delivery of Notes Bank of New York 1 Wall Street, 3rd Floor Dealers Clearance, Window B Acct: NationsBanc Capital Markets, Inc. New York, NY 10015 - ---------------------------------------------------------------------------------------------------------------------- Tax Identification Number 561684171 ======================================================================================================================
Schedule I-20 SCHEDULE II OTHER FINANCIAL DATA None. Schedule II-1 SCHEDULE III THE RIVAL COMPANY DISCLOSURE STATEMENT THE RIVAL COMPANY Disclosure Schedule is made and delivered by The Rival Company (the "Company") to the Purchasers set forth in Schedule I pursuant to the Note Purchase Agreement dated as of April 15, 1996 among such parties (the "Agreement"). Capitalized terms not defined herein shall have the meanings set forth in the Agreement. Each item disclosed herein is disclosed only in connection with the specific section within which it is contained. No statement herein is false or misleading in any material respect. The Company has not omitted to state any material fact required to make any statement herein, taken in conjunction with the Agreement, not misleading, whether or not such material fact is expressly required to be disclosed by the applicable captions. The disclosures made herein are true and accurate as of the Closing Date. The Company covenants to amend THE RIVAL COMPANY Disclosure Schedule from time to time as necessary so that the disclosures made herein remain true and accurate at all times during the period from the date hereof through and including the close of business on the Closing Date. SECTION 5.1 CORPORATE EXISTENCE. The Company is duly qualified and in good standing in each of the following states: Delaware Missouri Mississippi The Company has no Subsidiaries, except as set forth below:
================================================================================ NAME JURISDICTION OF OWNERSHIP INCORPORATION PERCENTAGE ================================================================================ Waverly Products Company Limited Jamaica 100% ================================================================================ Pollenex Corporation Missouri 100% ================================================================================ Rival Manufacturing Co. of Canada, Ltd. Canada 100% ================================================================================ Fasco Consumer Products, Inc. Delaware 100% =============================================================================== Patton Electric Company, Inc. Indiana 100% =============================================================================== Patton Electric Company Hong Kong, Ltd. Hong Kong 100% =============================================================================== RC Acquisition, Inc. Canada 100%(a) =============================================================================== Bionaire, Inc. Canada 100%(b) =============================================================================== Bionaire Corporation New Jersey 100%(c) =============================================================================== Bionaire Worldwide Management, Inc. Florida 100%(d) ===============================================================================
Schedule III-1
================================================================================ NAME JURISDICTION OF OWNERSHIP INCORPORATION PERCENTAGE ================================================================================ Bionaire International B.V. Netherlands 100%(c) ================================================================================ Bionaire France s.a.r.l. France 100%(e) ================================================================================
(a) Stock owned by Rival Manufacturing Co. of Canada Ltd. (b) Stock owned by RC Acquisition, Inc. (c) Stock owned by Bionaire, Inc. (d) Stock owned by Bionaire Corporation. Bionaire Worldwide Management, Inc. currently has no operations and will be liquidated on or before July 1, 1996. (e) Stock is 90% owned by Bionaire International B.V. and 10% owned by Bionaire, Inc. SECTION 5.5 LITIGATION. The representations and warranties of the Company and its Subsidiaries as described in Section 5.5 of the Agreement are correct, except as set forth below: None. SECTION 5.14 DEBT. (a) The Company and its Subsidiaries are not obligated with respect to any Debt other than as set forth below: 1. Indebtedness pursuant to a $75 Million Credit Agreement among The Rival Company and certain Banks with NationsBank of Texas, N.A. as agent dated as of April 15, 1996. 2. Indebtedness pursuant to the $50 Million Note Purchase Agreement dated as of July 23, 1993. 3. Indebtedness pursuant to a $15 Million Promissory Note dated March 25, 1996 between The Rival Company and NationsBank of Texas, N.A. This debt will be retired on the Closing Date. 4. Indebtedness of Bionaire, Inc. pursuant to a $10 Million unsecured Credit Facility dated as of April 17, 1996 between Bionaire, Inc. and Bank of America Canada, and guaranteed by The Rival Company. The outstanding principal amount of such Indebtedness as of the Closing Date is approximately $6,800,000. This Indebtedness replaces approximately U.S. $6.0 Million secured Indebtedness of Bionaire, Inc. which was outstanding under a Secured Revolving Credit and Term Loan Facility between Bionaire Inc. and Royal Bank of Canada. 5. Indebtedness of Patton Electric Hong Kong, Ltd. under a HK $15,000,000 (approximately U.S. $2,000,000) Credit Facility with Bank of America National Trust and Savings Association. Such facility is guaranteed by The Rival Schedule III-2 Company and is used primarily for the issuance of documentary letters of credit to suppliers in Asia. (b) The Company and its Subsidiaries are not subject to any material contingent liabilities other than as set forth below: None. SECTION 5.15 PARI PASSU RANKING. The Company's payment obligations on the Notes rank at least pari passu with the Company's payment obligations in respect of all other Debt. SECTION 5.20(B) ENVIRONMENTAL MATTERS. The exceptions referenced in 5.20(b) are as follows: Kansas City, Missouri: In June, 1992, the Company terminated the lease of its former office/warehouse facility at 36th and Bennington, Kansas City, Missouri. Upon lease termination, the landlord engaged an engineer to perform an environmental study of the property. The landlord has performed some remediation at the site and has requested reimbursement of their expenses in the amount of $108,946. The Company has not determined the extent of its responsibility, if any, for such expenses. SECTION 5.24 INTELLECTUAL PROPERTY. Except as disclosed below, to the best of the Company's knowledge, there are no Liens encumbering the Intellectual Property and no such Intellectual Property owned or used by the Company or its Subsidiaries infringes the patent, copyright, trademark, trade secret or other proprietary rights of any third party and the Company is not aware of any such claim of infringement by any third party: None. Except as disclosed below, to the best of the Company's knowledge, no third party has materially infringed or threatened to infringe the patent, copyright, trademark, trade secret and other proprietary rights of the Company or its Subsidiaries in their Intellectual Property: None. SECTION 11.45(G) PERMITTED INVESTMENTS. The following investments other than as described in Section 11.45(a) through (f) of the Agreement were existing on the Closing Date: A fractional ownership interest in Association of Home Appliance Manufacturers, a captive off-shore insurance company. Various common stock, preferred stock and debt instruments obtained through reorganization of the Company's customers. Such investments have an aggregate book value of not more than $500,000 as of the Closing Date. SECTION 11.46(E) PERMITTED LIENS. The Company is a party to the existing Liens as set Schedule III-3 forth below and the principal amount of Debt associated with such Liens does not exceed the principal amount of such Debt on the date hereof and does not affect the title to or the use of the assets encumbered thereby: Liens in favor of Royal Bank of Canada pursuant to a Credit Agreement with Bionaire, Inc. Such Liens to be released on or about the Closing Date. SECTION 11.59 RESTRICTED SUBSIDIARY. The Company's initial Restricted Subsidiaries are set forth below: Pollenex Corporation, a Missouri corporation Rival Manufacturing Co. of Canada, Ltd., a Canadian corporation Waverly Products Company, Ltd., a Jamaican corporation Fasco Consumer Products, Inc., a Delaware corporation Patton Electric Company, Inc., an Indiana corporation Patton Electric Company Hong Kong, Ltd., a Hong Kong corporation RC Acquisition, Inc., a Canadian corporation Bionaire, Inc., a Canadian corporation Bionaire Worldwide Management, Inc., a Florida corporation Bionaire International B.V., a Netherlands corporation Schedule III-4 EXHIBIT 1.1 FORM OF NOTE THE RIVAL COMPANY 7.21% SENIOR NOTE DUE APRIL 15, 2008 No. R-__ PPN: 768020 A* 0 $________ ________ __, ____ THE RIVAL COMPANY (the "Company"), a Delaware corporation, for value received, hereby promises to pay to ______ or registered assigns the principal sum of ______ DOLLARS ($______) on April 15, 2008 and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance hereof from the date of this Note at the rate of 7.21% per annum, semiannually on April 15 and October 15 in each year, commencing on October 15, 1996, until the principal amount hereof shall become due and payable; and to pay on demand interest on any overdue principal (including any overdue partial payment of principal) and Make-Whole Premium, if any, and (to the extent permitted by applicable law) on any overdue installment of interest (the due date of such payments to be determined without giving effect to any grace period), at a rate per annum equal to the lesser of (a) the highest rate allowed by applicable law or (b) 9.21% per annum. Payments of principal, Make-Whole Premium, if any, and interest shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts to the registered holder hereof at the address shown in the register maintained by the Company for such purpose, in the manner provided in the Note Purchase Agreement (defined below). This Note is one of an issue of Notes of the Company issued in an aggregate principal amount limited to $50,000,000 pursuant to the Company's Note Purchase Agreement (as amended from time to time, the "Note Purchase Agreement"), dated as of April 15, 1996, with the purchasers listed on Schedule I thereto, is entitled to the benefits thereof and subject to the terms thereof, and the terms of which are incorporated herein by reference. Capitalized terms used herein and not defined herein have the meanings specified in the Note Purchase Agreement. As provided in the Note Purchase Agreement, (i) a portion of the principal of this Note must be repaid (and will become due and payable) prior to the stated maturity hereof, (ii) all or a portion of the principal of this Note may be repaid at the option of the Company (and will, on the exercise of such option, become due and payable) prior to the stated maturity hereof and a Make- Whole Premium may be due in connection therewith, and (iii) all of the principal of this Note (together with any applicable Make-Whole Premium) may, under certain circumstances, be declared due and payable in the manner and with the effect provided in the Note Purchase Agreement. Exhibit 1.1-1 This Note is a registered Note and is transferable only by surrender thereof at the principal office of the Company as specified in the Note Purchase Agreement, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or his attorney duly authorized in writing. THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF MISSOURI. THE RIVAL COMPANY By: ---------------------------------- Name: Title: Exhibit 1.1-2 EXHIBIT 4.1(A) COMPANY OUTSIDE COUNSEL OPINION [Letterhead of Hillix, Brewer, Hoffaus, Whittaker & Wright] [Closing Date] Purchasers of Notes Shown on Attachment A Re: The Rival Company $50,000,000 Senior Notes Due 2003 Ladies and Gentlemen: We have acted as counsel to The Rival Company, a Delaware corporation (the "Company") in connection with the preparation of the Note Purchase Agreement dated as of the date hereof (the "Agreement") among the Company and the Purchasers set forth in Schedule I to the Agreement (collectively, the "Purchasers") and the "Operative Documents" referenced therein and have participated on the Company's behalf in the transaction contemplated thereby. This Opinion Letter is provided to you at the request of the Company pursuant to Section 4.1(a) of the Agreement. Capitalized terms used in this Opinion Letter are defined as set forth in the Agreement or the Accord (see below). This Opinion Letter is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord, and this Opinion Letter should be read in conjunction therewith. The Law covered by the opinions expressed herein is limited to the Law of the State of Missouri, the corporate Law of the State of Delaware and the Federal Law of the United States. Based upon and subject to the foregoing, we are of the opinion that: 1. The Company is a corporation duly organized, validly existing and in good standing under and by virtue of the Law of Delaware and is qualified, in good standing and authorized to do business as a foreign corporation in the States of Missouri and Mississippi. 2. Pollenex Corporation, Rival Manufacturing Company of Canada, Ltd., Fasco Consumer Products, Inc., Patton Electric Company, Inc., R.C. Acquisitions, Inc., Bionare, Inc. and Bionare Corporation are corporations duly incorporated, validly existing and in good Exhibit 4.1(a)-1 Purchasers of Notes Shown on Attachment A [Closing Date] Page 2 standing under and by virtue of the laws of their jurisdictions of incorporation. In providing the opinions expressed in this paragraph, with respect to Rival Manufacturing Company of Canada, Ltd., Fasco Consumer Products, Inc., Patton Electric Company, Inc., R.C. Acquisitions, Inc., Bionare, Inc. and Bionare Corporation, we have reviewed only the certificates of good standing, articles of incorporation, and by-laws relative to those corporations included in the applicable secretaries' certificates delivered to the Banks at Closing, and have made no other investigation or inquiry. 3. The Company has taken all necessary action to duly authorize the execution and delivery of the Operative Documents and the issue and sale of the Notes by the signers thereof and the transactions thereunder. 4. The Company possesses the requisite power to enter into the Operative Documents to issue and sell the Notes, and to perform its obligations thereunder. 5. Each of the Operative Documents is enforceable against the Company in accordance with its terms. 6. Execution and delivery by the Company of, and performance of its agreements in, the Operative Documents do not: (i) violate the Constituent Documents of the Company; (ii) breach, result in a default under, or result in the imposition of a lien under the Bank Financing Documents, any contracts dealing with money borrowed or future payments or receipts in excess of $1,000,000 by the Company or any Subsidiary, or, to our Actual Knowledge, any other existing agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or any of their respective assets may be bound or affected; or (iii) breach or otherwise violate any existing obligation of the Company or any Subsidiary under any Court Order. 7. Execution and delivery by the Company of, and performance by the Company of its agreements in, the Operative Documents do not violate applicable provisions of Law. 8. No authorization, consent approval, registration, license or any form of exemption of any governmental authority is required in connection with the execution, delivery and performance by the Company of its obligations under the Operative Documents or the offer, issuance or sale of any of the Notes. 9. The payment by the Company and receipt by the Noteholders of all principal, interest and premium required to be paid pursuant to the terms of the Notes will not violate the usury laws of the State of Missouri. Exhibit 4.1(a)-2 Purchasers of Notes Shown on Attachment A [Closing Date] Page 3 10. The offering and sale of the Notes under the circumstances contemplated by the Agreement are exempt from the registration provisions of the Securities Act of 1933, as amended, and the Company is not required to qualify an indenture in respect of the Notes under the Trust Indenture Act of 1939, as amended. 11. Neither the Company nor any of the Subsidiaries is: (a) an "investment company", or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (b) a "holding company" or a "subsidiary company" 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; or (c) a "public utility" within the meaning of the Federal Power Act, as amended. 12. The use of the proceeds from the issuance of the Notes, as contemplated by the Agreement, will not violate Regulations G, T, U, or X of the Board of Governors of the Federal Reserve System. 13. With respect to any "employee benefit plan" maintained by the Company or any Subsidiary, the execution and delivery of the Agreement and the Company's Operative Documents and the sale of the Notes will not involve any transaction subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed under Section 4975 of the Code. We hereby confirm to you that there are no actions or proceedings against the Company or any Subsidiary, pending or overtly threatened in writing, before any court, governmental agency or arbitrator which: (i) seek to affect the enforceability of or to enjoin the transaction contemplated by the Operative Documents; or (ii) except as has been disclosed to Hebb & Gitlin as counsel for the Purchasers by our letter dated April 12, 1996, involve an amount in controversy in excess of $1,000,000, any contract dealing with money borrowed or future payments or receipts in excess of $1,000,000 by the Company or any Subsidiary, or any claim that the Board of Directors of the Company or any Subsidiary have violated their fiduciary duties to stockholders. The General Qualifications apply to the opinions set forth in paragraphs 7 through 13 above as well as to our opinion set forth in paragraph 5 above. The phrase Primary Lawyer Group, as used in the Accord, is hereby modified and for the purposes of applying the Accord to this Opinion Letter the Primary Lawyer Group means only the lawyers in this firm who have given substantive legal attention to representation of the Company. Exhibit 4.1(a)-3 Purchasers of Notes Shown on Attachment A [Closing Date] Page 4 A copy of this opinion Letter may be delivered by you to any subsequent Noteholder or prospective Noteholder in connection with their acquisition or consideration of acquisition of a Note or Notes, and such persons may rely on this opinion letter as if it were addressed and had been delivered to them on the date hereof. In addition, a copy of this Opinion Letter may be delivered by you to and relied upon by Hebb & Gitlin P.C. for purposes of rendering its opinion to you pursuant to Section 4.1(b) of the Agreement. Subject to the foregoing, this Opinion Letter may be relied upon by you only in connection with the foregoing transaction and may not be used or relied upon by you or any other person for any purpose whatsoever, except to the extent authorized by the Accord, without in each instance our prior written consent. Very truly yours, HILLIX, BREWER, HOFFAUS, WHITTAKER & WRIGHT Exhibit 4.1(a)-4 ATTACHMENT A The Lincoln National Insurance Company 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Lincoln National Health & Casualty Insurance Company 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 American States Insurance Company 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 American States Life Insurance Company 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 First Penn-Pacific Life Insurance Company 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Allied Life Insurance Company "A" 200 East Berry Street, Renaissance Square Fort Wayne, IN 46802 Sons of Norway 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 Security-Connecticut Life Insurance Company 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 Allstate Life Insurance Company 3075 Sanders Road, STE G3A Northbrook, IL 60062-7127 Security First Life Insurance Company 255 Dufferin Avenue London, Ontario N6A 4K1 Pan-American Life Insurance Company Pan American Life Center 601 Poydras Street New Orleans, LA 70130 Exhibit 4.1(a)-5 Nationsbanc Capital Markets, Inc. 100 N. Tryon Street, 6th Floor Charlotte, NC 28255 Hebb & Gitlin One State Street Hartford, CT 06103 Exhibit 4.1(a)-6 EX-10.(L) 3 THE CREDIT AGREEMENT CREDIT AGREEMENT among THE RIVAL COMPANY and CERTAIN BANKS Agent: NATIONSBANK OF TEXAS, N.A. Dated as of April 15, 1996 TABLE OF CONTENTS ----------------- SECTION 1. DEFINITIONS................................................... 1 1.1 Defined Terms................................................. 1 1.2 Accounting Principles......................................... 10 1.3 Other Definitions; Rules of Construction...................... 10 SECTION 2. TERMS OF THE FACILITIES....................................... 11 2.1 Credit........................................................ 11 2.2 Loans/Standby Letters of Credit............................... 11 2.2.1 Loans.................................................. 11 2.2.2 Interest............................................... 11 2.2.3 Payments of Principal and Interest..................... 11 2.2.4 Borrowing Procedure.................................... 12 2.2.5 Method of Payments..................................... 14 2.2.6 Use of Proceeds........................................ 15 2.3 Provisions Applicable to All Facilities....................... 15 2.3.1 Calculation of Interest/Default Rate................... 15 2.3.2 Manner of Payment - Immediately Available Funds........ 15 2.3.3 Procedures for Electing Optional Rates................. 16 2.3.4 Fees................................................... 18 2.3.5 Non-Receipt of Funds by the Agent...................... 19 2.3.6 Interest Recapture..................................... 19 2.3.7 Maximum Rate........................................... 20 2.4 Additional Standby Letter of Credit Provisions................ 20 SECTION 3. WARRANTIES.................................................... 22 3.1 Corporation Existence and Standing............................ 22 3.2 Loan Documents - Corporate Power. Authorization and Validity.. 22 3.3 Loan Documents - Compliance with Laws and Contracts........... 22 3.4 Financial Statements.......................................... 23 3.5 Taxes......................................................... 23 3.6 Litigation.................................................... 23 3.7 ERISA......................................................... 23 3.8 Defaults...................................................... 23 3.9 Liabilities. Investments and Guarantees....................... 24 3.10 Compliance with Governmental Requirements..................... 24 3.11 Rights to Conduct Business.................................... 24 3.12 No Casualty................................................... 24 3.13 Regulation U.................................................. 24 3.14 Governmental Consents......................................... 24 3.15 Subsidiaries.................................................. 24 3.16 Environmental Compliance...................................... 24 (i) 3.17 Marketable Title.............................................. 25 3.18 Contracts of Surety........................................... 25 3.19 Insolvency.................................................... 25 3.20 Regulation.................................................... 25 3.21 Full Disclosure............................................... 25 3.22 General....................................................... 26 SECTION 4. COVENANTS..................................................... 26 4.1 Affirmative Covenants......................................... 26 4.1.1 Financial Reporting................................... 26 4.1.2 Minimum Net Worth..................................... 27 4.1.3 Fixed Charge Coverage Ratio........................... 28 4.1.4 Leverage Ratio........................................ 28 4.1.5 Notice of Material Adverse Change..................... 28 4.1.6 Conduct of Business................................... 28 4.1.7 Taxes................................................. 28 4.1.8 Insurance............................................. 28 4.1.9 Compliance with Laws.................................. 28 4.1.10 Maintenance of Properties............................. 28 4.1.11 Inspection............................................ 29 4.1.12 Trade Accounts........................................ 29 4.1.13 Use of Proceeds....................................... 29 4.1.14 Reports............................................... 29 4.1.15 Licenses.............................................. 29 4.1.16 Notice of Environmental Matters....................... 29 4.1.17 Subsidiary Guaranties................................. 30 4.2 Negative Covenants............................................ 30 4.2.1 Dispose of Property................................... 30 4.2.2 Liens................................................. 30 4.2.3 Merger, Etc........................................... 30 4.2.4 Dividends............................................. 30 4.2.5 Sell and Leaseback.................................... 31 4.2.6 Indebtedness.......................................... 31 4.2.7 Investments........................................... 31 4.2.8 Loans and Advances.................................... 31 4.2.9 Guarantees............................................ 31 4.2.10 Special Corporate Transactions........................ 32 4.2.11 Accounting Policies................................... 32 4.2.12 Change of Business.................................... 32 4.2.13 Benefit Plans......................................... 32 4.2.14 Margin Stock.......................................... 32 4.2.15 Other Agreements...................................... 32 4.2.16 Judgments............................................. 32 4.2.17 Principal Office...................................... 32 (ii) SECTION 5. CONDITIONS PRECEDENT TO LOANS................................. 32 5.1 Conditions to Initial Advance.................................. 32 5.1.1 Opinion of Counsel..................................... 33 5.1.2 Organizational Documents............................... 33 5.1.3 Corporate Resolutions.................................. 33 5.1.4 Incumbency Certificates................................ 33 5.1.5 Loan Documents......................................... 33 5.1.6 Insurance.............................................. 33 5.1.7 Facility Fees.......................................... 33 5.1.8 Repayment of Existing Bank Indebtedness................ 33 5.1.9 Additional Documentation............................... 33 5.2 Conditions to Subsequent Advances.............................. 34 SECTION 6. DEFAULT....................................................... 34 6.1 Events of Default............................................. 34 6.2 Acceleration.................................................. 36 6.3 Subrogation................................................... 36 6.4 Deposit to Secure Reimbursement Obligations................... 36 6.5 Preservation of Rights........................................ 37 SECTION 7. THE AGENT..................................................... 37 7.1 Appointment................................................... 37 7.2 Powers........................................................ 37 7.3 Exculpatory Provisions........................................ 37 7.4 Reliance by Agent............................................. 38 7.5 Defaults/Notices.............................................. 38 7.6 Non-Reliance on Agent and Other Banks......................... 38 7.7 Rights as Bank................................................ 39 7.8 Agent's Indemnification and Reimbursement..................... 39 7.9 Successor Agent............................................... 39 SECTION 8. GENERAL PROVISIONS............................................ 40 8.1 Waivers, Amendments and Remedies.............................. 40 8.2 Taxes......................................................... 40 8.3 Successors and Assigns........................................ 41 8.4 Waiver of Setoff.............................................. 41 8.5 Severability.................................................. 41 8.6 ENTIRE AGREEMENT.............................................. 41 8.7 Several Obligations........................................... 41 8.8 Costs and Expenses............................................ 41 8.9 CHOICE OF LAW................................................. 42 8.10 Headings...................................................... 42 8.11 Notices....................................................... 42 8.12 Counterparts.................................................. 43 (iii) 8.13 Participations and Assignments................................ 43 8.13.1 Participations........................................ 43 8.13.2 Assignments........................................... 43 8.14 Setoff........................................................ 44 8.15 Indemnification............................................... 44 8.16 Additional Amounts Payable.................................... 44 8.17 Banks Not in Control.......................................... 45 8.18 Adjustments................................................... 45 8.19 Application of Proceeds....................................... 45 8.20 Exceptions to Covenants....................................... 46 8.21 Survival...................................................... 46 Schedule 1.1 - Banks and Commitments Schedule 3.6 - Litigation Schedule 3.15 - Subsidiaries Schedule 3.16 - Environmental Compliance Schedule 4.2.2 - Liens Schedule 4.2.6 - Existing Indebtedness Schedule 4.2.9 - Guarantees Exhibit A - Note Exhibit B - Application for Advance Exhibit C - Standby Letter of Credit Application Exhibit D - Compliance Certificate Exhibit E - Legal Opinion of Borrower's Counsel (iv) CREDIT AGREEMENT ---------------- THIS AGREEMENT, made as of the 15th day of April, 1996, among THE RIVAL COMPANY, a Delaware corporation (the "BORROWER"), NATIONSBANK OF TEXAS, N.A., BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, BANK OF AMERICA ILLINOIS, and other financial institutions from time to time that may become parties hereto (collectively the "BANKS" or individually a "BANK"), and NATIONSBANK OF TEXAS, N.A., a national banking association as agent for the Banks hereunder (in such capacity, together with any successor in such capacity, the "AGENT"); SECTION 1. DEFINITIONS ---------------------- 1.1 Defined Terms. As used in this Agreement: "ADJUSTED LIBOR" means, for each LIBOR Loan, the rate per annum (rounded up, if necessary, to the nearest 1/16%) determined by the Agent to be equal to the quotient of (a) the LIBOR divided by (b) 1 minus the Reserve Requirement. "ADVANCE" means a disbursement of proceeds of the Loans. "AGREEMENT" means this Credit Agreement, as amended, renewed, extended, or restated from time to time. "APPLICABLE MARGIN" is determined by reference to the following table: ============================================================================== Applicable Level Leverage Ratio Margin for Applicable Standby Adjusted LIBOR Margin for Letter of Loans CD Loans Credit Fees - ------------------------------------------------------------------------------ I Less than .40 to 1.0 .45% .575% .45% - ------------------------------------------------------------------------------ II Less than or equal .50% .625% .50% to .50 to 1.0 but greater than or equal to .40 to 1.0 - ------------------------------------------------------------------------------ III Greater than .50 to .75% .875% .75% 1.0 ============================================================================== (a) Initially, the Applicable Margin shall be at Level III. (b) The Applicable Margin shall be subject to adjustment (upwards or downwards, as appropriate) on the effective date of any transaction permitted by SECTION 4.2.3 hereof based upon the Leverage Ratio determined from a pro forma Consolidated balance sheet, fairly prepared, and in form and substance satisfactory to the Agent, delivered to the Agent not less than seven (7) Banking Days prior to the scheduled effective date of any such transaction. In the event the Agent has not received the required pro forma Consolidated balance sheet within the time period provided herein, the maximum Leverage Ratio set forth in the foregoing table shall be conclusively presumed to be correct, effective on the effective date of any such transaction until the tenth (10th) Banking Day after the Agent receives such required pro forma Consolidated balance sheet, at which time the Applicable Margin shall be adjusted based upon the Leverage Ratio determined from such pro forma Consolidated balance sheet. (c) Also, the Applicable Margin shall be subject to adjustment annually (upwards or downwards, as appropriate) based upon the Leverage Ratio determined from the Borrower's most recent audited annual Consolidated financial statements (commencing with the June 30, 1996 fiscal year end) delivered to the Banks pursuant to SECTION 4.1.1 hereof. The adjustment (upwards or downwards, as appropriate), if any, to the Applicable Margin shall be effective on the tenth (10th) Banking Day after the Agent receives such audited annual Consolidated financial statements. In the event the Agent has not received the required Consolidated financial statements pursuant to SECTION 4.1.1 hereof within the time period provided therein, the maximum Leverage Ratio set forth in the foregoing table shall be conclusively presumed to be correct until the tenth (10th) Banking Day after the Agent receives such required Consolidated financial statements, at which time the Adjusted Margin shall be adjusted based upon the Leverage Ratio determined from such Consolidated financial statements. (d) In no event shall the Applicable Margin be adjusted downward if there exists a Default or Potential Default on the date on which such downward adjustment would otherwise become effective until such time as the Default or Potential Default has been cured, waived or ceases to exist. The provisions set forth in this definition are not intended to and shall not be construed as authorizing any violation by the Borrower of SECTION 4.1.4 hereof or a waiver of SECTION 4.1.4 hereof or any commitment by the Banks to waive any violation by the Borrower of SECTION 4.1.4 hereof. "APPLICATION" shall have the meaning ascribed in SECTION 2.2.4(a) hereof. "AUTHORIZED OFFICER" means the chief financial officer, the treasurer and the controller or such other officer of the Borrower whose authority to perform acts to be performed only by an Authorized Officer under the terms of this Agreement is evidenced by a certified copy of an appropriate resolution of the Board of Directors of the Borrower. "BANK AFFILIATE" means, as to any Bank, another bank (a) which directly or indirectly controls, or is controlled by, or is under common control with the subject Bank, (b) which directly or indirectly beneficially owns or holds Fifty Percent (50%) or more of any class of the voting stock of the subject Bank, (c) of which Fifty Percent (50%) or more of the voting stock of which is directly or indirectly beneficially owned or held by the subject Bank. For purposes of this definition, the term "control" means the possession, directly or indirectly, of the power 2 to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. "BANKING DAY" means, (a) for all purposes, a day on which the principal domestic office of each Bank is open for the purpose of conducting substantially all of its business activities, and (b) if the context in which the reference to this term is made relates to a LIBOR Loan, LIBOR Interest Period, or notice with respect to a LIBOR Loan, a day on which dealings in U.S. dollars deposits are carried on in the London interbank market and banks are open for business in London, and (c) if the context in which the reference to this term is made relates to a CD Rate Loan, CD Rate Interest Period, or notice with respect to a CD Rate Loan, a day on which commercial banking institutions in New York, New York are open for the purpose of conducting substantially all of their business activities. "BASE RATE" means a rate per annum equal to the greater of (i) the Prime Rate and (ii) the Federal Funds Effective Rate plus 1/2 of 1%. "CAPITALIZED LEASE" means any lease of property which would be capitalized on a balance sheet of a Person prepared in accordance with GAAP. "CAPITALIZED LEASE OBLIGATIONS" means the amount of the obligations of a Person under Capitalized Leases which would be shown as liabilities on a balance sheet of a Person prepared in accordance with GAAP. "CD RATE" means with respect to a CD Rate Loan for the relevant CD Rate Interest Period, the per annum rate of interest equal to the sum (rounded upward, if necessary, to the nearest 0.01%) of (a) the quotient obtained by dividing (i) the rate of interest determined by the Agent to be the average (rounded upward, if necessary, to the nearest 0.01%) of the prevailing rates per annum bid [at approximately 9:00 A.M. (Dallas time)] two (2) Banking Days prior to the first day of the applicable CD Rate Interest Period by two or more New York certificate of deposit dealers of recognized standing selected by the Agent for the purchase at face value from the Agent (or, at the Agent's discretion, an affiliate of the Agent) of its certificates of deposit in amounts and having maturities comparable to the amount and CD Rate Interest Period of such CD Rate Loan, by (ii) one minus the applicable Reserve Requirement (expressed as a decimal) applicable to such CD Rate Interest Period, plus (b) the actual (or, if not known, the estimated) per annum assessment rate (rounded upward, if necessary, to the nearest 0.01%) payable by the Agent to The Federal Deposit Insurance Corporation (or its successor) for insuring liability for time deposits, as in effect from time to time. "CD RATE INTEREST PERIOD" means a period commencing on any date a Permissible Increment of the Loans is to bear interest at an Optional Rate to be calculated by reference to the CD Rate, and ending, as selected by the Borrower, on the 30th, 60th, 90th or 180th (or with the consent of all Banks, the 270th or 360th) day thereafter; provided, that (a) no CD Rate Interest Period shall extend beyond the maturity date of the applicable Loan, (b) if a CD Rate Interest Period would end on a day that is not a Banking Day, such CD Rate Interest Period shall 3 be extended to the next Banking Day unless such Banking Day would fall in the next calendar month, in which event such CD Rate Interest Period shall end on the immediately preceding Banking Day, and (c) the CD Rate shall remain fixed throughout the relevant CD Rate Interest Period. "CD RATE LOAN" means any Loan when and to the extent that the interest rate therefor is determined by reference to the CD Rate. "COMMITMENT" means, for a Bank, the amount -- subject to cancellation and termination under this Agreement -- that is stated beside its name on SCHEDULE 1.1 or most recent supplement to it. "COMMITMENT PERIOD" means the period from the date hereof until June 30, 1999, unless extended by a written agreement executed by all of the Banks. "COMPLIANCE CERTIFICATE" means a Compliance Certificate, in the form of Exhibit D, duly executed by the chief financial officer or treasurer of the Borrower. "CONSOLIDATED" means a calculation or a determination for a Person and its Subsidiaries made in accordance with GAAP, including principles of consolidation. "CONSOLIDATED INDEBTEDNESS" means the Indebtedness of the Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP and as shown on the balance sheets furnished to the Banks from time to time pursuant to SECTION 4.1.1 hereof. "CONSOLIDATED NET WORTH" means the excess of the Borrower's Consolidated total assets over the Borrower's Consolidated Total Liabilities, each determined in accordance with GAAP and as shown on the balance sheets furnished to the Banks from time to time pursuant to SECTION 4.1.1 hereof. "CONSOLIDATED TOTAL LIABILITIES" means the Consolidated total liabilities of the Borrower and its Subsidiaries, determined in accordance with GAAP and as shown on the financial statements furnished to the Banks from time to time pursuant to SECTION 4.1.1 hereof. "DEFAULT" means an event described in SECTION 6.1 hereof. "DOLLARS" and the sign "$" means lawful money of the United States of America. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" means any trade or business, whether or not incorporated, which together with the Borrower would be treated as a single employer under ERISA. 4 "ENVIRONMENTAL LAWS" means all provisions of laws, statutes, ordinances, rules, regulations, permits, licenses, judgments, writs, injunctions, decrees, orders, awards and standards promulgated by any Governmental Authority concerning health, safety and protection of, or regulations of the discharge or substances into, the environment. "FACILITIES" means the Loans, the Standby Letters of Credit, and any and all participations in the Standby Letters of Credit. "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 Banking Day, for the immediately preceding Banking Day) by the Federal Reserve Bank of Dallas, or, if such rate is not so published for any day which is a Banking Day, the average of the quotations at approximately 10:00 A.M. (Dallas time) on such day on such transactions received by the Agent from three (3) Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "FIXED CHARGE COVERAGE RATIO" means the ratio of (a) the sum of (i) Consolidated net income before Consolidated interest expense, Consolidated taxes and Consolidated extraordinary items, (ii) Consolidated depreciation expense, and (iii) Consolidated amortization expense, to (b) the sum of (i) Consolidated current maturities of long term indebtedness, (ii) Consolidated capital expenditures, (iii) Consolidated income tax expense determined on a cash basis, (iv) Consolidated dividends paid or currently payable, and (v) Consolidated interest expense. The Fixed Charge Coverage Ratio shall be determined from the financial statements furnished to the Banks from time to time pursuant to SECTION 4.1.1 hereof, and will be computed for the four (4) fiscal quarters immediately preceding the date of determination. "GAAP" means generally accepted accounting principles in the United States of America in effect from time to time as promulgated by the Financial Standards Accounting Board and recognized and interpreted by the American Institute of Certified Public Accountants. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limiting the generality of the foregoing, any agency, body, commission, court or department thereof, whether federal, state, local or foreign. "GUARANTOR" means each Subsidiary which executes a Guaranty. "GUARANTY" means a continuing Guaranty, in form and substance satisfactory to the Banks, duly executed by each Guarantor to the Banks supporting the Obligations, including any amendment, modification, reaffirmation, substitution or replacement thereof. 5 "INDEBTEDNESS" means (a) all indebtedness or other obligations of a Person for borrowed money or for the deferred purchase price of property or services; (b) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services, the payment or collection of which the subject Person has guaranteed (except by reason of endorsement for collection in the ordinary course of business) or in respect of which such Person is liable, contingently or otherwise, including, without limitation, liability to reimburse draws under any letter of credit, liability by way of agreement to purchase, to provide funds for payment, to supply funds to or otherwise to invest in such other Person, or otherwise to assure a creditor against loss; (c) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance upon or in property owned by the subject Person, whether or not the subject Person has assumed or become liable for the payment of such indebtedness or obligations; and (d) Capitalized Lease Obligations of a Person. "INFORMAL REQUESTS" shall have the meaning ascribed in SECTION 2.2.4(a) hereof. "INTEREST PERIOD" means a LIBOR Interest Period or a CD Rate Interest Period, or both, as the context requires. "LEVERAGE RATIO" means the ratio of (a) Consolidated Indebtedness to (b) the sum of Consolidated Net Worth and Consolidated Indebtedness, as determined from the Borrower's most recent annual or quarterly Consolidated financial statements. "LIBOR" means, as of any time the same is to be determined by the Agent, the per annum interest rate (rounded up, if necessary, to the nearest 1/16%) at which deposits in immediately available funds of U.S. Dollars in Permissible Increments is quoted by leading banks in the London interbank market for the offering to other leading banks in that market for the applicable LIBOR Interest Period at approximately 11:00 a.m. (London time) two (2) Banking Days prior to the commencement of any LIBOR Interest Period. "LIBOR INTEREST PERIOD" means a period commencing on any date a Permissible Increment of the Loans is to bear interest at an Optional Rate to be calculated by reference to the Adjusted LIBOR, and ending, as selected by the Borrower, on the numerically corresponding day in the first, second, third, or sixth calendar month thereafter; provided, that (a) any LIBOR Interest Period that begins on the last Banking Day of the calendar month (or any day on which there is no numerically corresponding day in the appropriately subsequent calendar month) shall end on the last Banking Day of the appropriate subsequent calendar month, (b) no LIBOR Interest Period shall extend beyond the maturity date of the applicable Loan, (c) if a LIBOR Interest Period would end on a day that is not a Banking Day, such LIBOR Interest Period shall be extended to the next Banking Day unless such Banking Day would fall in the next calendar month, in which event such LIBOR Interest Period shall end on the immediately preceding 6 Banking Day, and (d) the Adjusted LIBOR shall remain fixed throughout the relevant LIBOR Interest Period. "LIBOR LOAN" means any Loan when and to the extent that the interest rate therefor is determined by reference to the Adjusted LIBOR. "LOAN DOCUMENTS" means this Agreement, the Notes, any Guaranty, any Standby Letter of Credit Applications, and any other documents or instruments now or hereafter executed and delivered by or on behalf of the Borrower or any Guarantor to any Bank or the Agent to further evidence, govern or support the Obligations, and any and all renewals, extensions, amendments, or restatements of or to any of the foregoing. "LOANS" means the loans from the Banks to the Borrower pursuant to this Agreement. "LOSS" shall have the meaning ascribed in SECTION 8.15 hereof. "MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for each Bank, the maximum non-usurious amount and the maximum non-usurious rate of interest which, under applicable law, such Bank is permitted to contract for, charge, take, reserve, or receive on the Obligations. "NATIONSBANK" means NationsBank of Texas, N.A., a national banking association. "NON-USE FEE" means the fee required to be paid by the Borrower pursuant to SECTION 2.3.4(c) hereof. "NOTES" means promissory notes in substantially the form attached as EXHIBIT A and all renewals, extensions, amendments, increases, decreases, and replacements of, to, or for any of them. "OBLIGATIONS" means all of the unpaid principal amount of, and accrued interest on, the Notes, actual and contingent reimbursement obligations under the Standby Letters of Credit, all commitment fees, Standby Letter of Credit fees, Non-Use Fees, all other obligations and liabilities of the Borrower to the Banks or to any Bank or to the Agent in connection with the Facilities of every type and description, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, or otherwise arising under the Loan Documents whether or not contemplated by the Borrower or the Banks as of the date hereof, including, without limitation, any Advances under the Loans beyond the Commitment Period or pursuant to any amendment of this Agreement or any of the other Loan Documents, all reasonable costs of collection and enforcement of any and all thereof, including reasonable attorneys' fees. "OPTIONAL RATE" means a rate selected by the Borrower to be calculated by reference to Adjusted LIBOR or the CD Rate. 7 "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to ERISA, or any successor entity. "PERMISSIBLE INCREMENT" shall mean a minimum principal amount of One Million Dollars ($1,000,000) and in minimum increments of One Hundred Thousand Dollars ($100,000) above One Million Dollars ($1,000,000). "PERMITTED ENCUMBRANCES" means (a) liens for taxes or assessments which are not yet due, liens for taxes or assessments or liens of judgments which are being contested, appealed or reviewed in good faith by appropriate proceedings which prevent foreclosure of any such lien or levy of execution thereunder and against which liens, if any, adequate insurance or reserves have been provided; (b) to the extent that the value of the collateral in the aggregate does not exceed $2,000,000, (x) pledges or deposits to secure payment of workers' compensation obligations and (y) deposits or indemnities to secure public or statutory obligations or for similar purposes, provided that, such obligations shall be unsecured except to the extent of such deposits, unless required by applicable law; (c) those minor defects which do not materially affect title to the Borrower's assets; (d) liens imposed by law, such as carrier's, warehousemen's and mechanics' liens, and other similar liens arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due, including, without limitation, liens on goods which are shipped pursuant to documentary letters of credit; (e) utility easements, building restrictions, zoning ordinances and such other encumbrances or charges against real property 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; (f) lessors' interests under Capitalized Leases; (g) those further encumbrances (if any) shown on SCHEDULE 4.2.2 attached hereto; (h) liens securing payment of the purchase price of fixed assets acquired (including on assets of businesses acquired) or constructed after the date hereof, provided that (other than liens on assets of businesses acquired) (1) the lien is solely on property acquired or constructed within 60 days prior to the filing of such lien, (2) at the time of such filing, the indebtedness secured by such lien does not exceed the cost of such property, and (3) the incurrence of indebtedness secured by such lien is not prohibited by any other covenant or limitation contained herein; (i) licenses or leases of patents, trademarks or trade names; and (j) refundings or extensions of the liens permitted above for amounts not exceeding the principal amount of indebtedness secured by such liens at the time of refunding or extension. "PERSON" means and includes an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a Governmental Authority. "PLAN" means an Employee Benefit Plan which is covered by Title 4 of ERISA or subject to the minimum lending standards under Section 412 of the Internal Revenue Service as to which the Borrower or any Subsidiary may have any liability. 8 "POTENTIAL DEFAULT" means the occurrence of an event specified in SECTION 6.1(b), (d)(vi), (e), (f) or (g) hereof, which would, if uncured, become a Default with the giving of notice or the passage of time, or both. "PREPAYMENT PREMIUM" means the excess, if any, determined by the Banks of (a) the present value, at the time of prepayment, of the interest payments which would have been payable on account of an amount prepaid from the date of prepayment until the end of the period during which interest would have accrued at an Optional Rate, but for prepayment, over (b) the present value at the time of a prepayment of interest payments calculated at the Reinvestment Rate. The discount rate used by the Banks in determining such present values shall be the Reinvestment Rate. "PRIME RATE" shall mean the rate of interest established and quoted from time to time by NationsBank as its "prime rate", such rate to change on the effective date of each change in such established and quoted rate; provided that the Prime Rate shall not necessarily be representative of the rate charged by NationsBank on any particular loan or class of loans. "PRO RATA SHARE" means, for any Bank, when used with reference to an aggregate or total amount, an amount equal to the product of (a) such aggregate or total amount, (b) a fraction, the numerator of which shall be such Bank's Commitment and the denominator of which shall be the aggregate of the Banks' Commitments. "QUALIFIED INVESTMENTS" means (a) short term obligations of, or fully guaranteed by, the United States of America or any agency thereof, (b) commercial paper rated not less than "A-1" or better by Standard & Poor's Corporation or "P-1" or better by Moody's Investors Service, Inc., (c) demand deposit accounts maintained in the ordinary course of business, (d) certificates of deposit issued by any of the Banks or by commercial banks having capital and surplus in excess of One Hundred Million Dollars ($100,000,000), and (e) bank repurchase agreements issued by a Federal Reserve member bank fully secured by short term obligations of, or fully guaranteed by, the United States of America or any agency thereof. "REINVESTMENT RATE" means a rate which the Banks estimate, at the time of a prepayment, they would receive upon reinvesting the principal amount of the prepayment in an obligation which presents a credit risk substantially similar (as determined in accordance with the commercial credit rating system then used by the Banks) to that which is then presented by the Loan or Loans for a period approximately equal to the balance of the period during which interest would accrue on the portion of the amount of the Loan or Loans prepaid bearing interest at an Optional Rate, but for prepayment. "REQUIRED BANKS" means Banks in the aggregate holding at least Sixty-Six and Two-Thirds Percent (66-2/3%) of the sum of (a) the unpaid principal amount of the Loans, and (b) the outstanding face amount of all Standby Letters of Credit; or, if no Loans or Standby Letters of Credit are outstanding, Banks in the aggregate having at least Sixty-Six and Two-Thirds Percent (66-2/3%) of the Commitments. 9 "RESERVE REQUIREMENT" means, (i) for any LIBOR Loan for any LIBOR Interest Period therefor, the daily average of the stated maximum rate (expressed as a decimal) at which reserves, including any marginal, supplemental, or emergency reserves, are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System against "EUROCURRENCY LIABILITIES" (as such term is used in Regulation D), and (ii) for any CD Rate Loan for any CD Rate Interest Period, the daily average of the stated maximum rate (expressed as a decimal) at which such reserves are required to be maintained during such CD Rate Interest Period in respect of nonpersonal time deposits in Dollars, but in each case without benefit or credit of proration, exemptions, or offsets that might otherwise be available from time to time under Regulation D. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by the Banks against any category of liabilities that includes deposits by reference to which the Adjusted LIBOR or CD Rate is to be determined or any category or extension of credit or other assets that includes LIBOR Loans or CD Rate Loans. Each determination by the Agent of the Reserve Requirement shall be presumed to be correct. "STANDBY LETTER OF CREDIT APPLICATIONS" means, collectively, each Application for Standby Letter of Credit, substantially in the form of EXHIBIT C hereto, duly executed by the Borrower in favor of NationsBank to govern a Standby Letter of Credit, as any of the same may be amended from time to time. "STANDBY LETTERS OF CREDIT" means standby letters of credit issued by NationsBank from time to time at the request of, and for the account of, the Borrower pursuant to and in accordance with SECTION 2.2.4(b) hereof. "SUBSIDIARY" means, as to any Person, a corporation of which shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such corporation are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person. 1.2 Accounting Principles. Under the Loan Documents -- unless otherwise stated -- (a) GAAP determines all accounting and financial terms and compliance with financial covenants, (b) GAAP in effect on the date of this Agreement determines compliance with financial covenants, (c) otherwise, all accounting principles applied in a current period must be comparable in all material respects to those applied during the preceding comparable period, and (d) while the Borrower has any Consolidated Subsidiaries, all accounting and financial terms and compliance with financial covenants must be on a Consolidated basis, as applicable. 1.3 Other Definitions; Rules of Construction. Terms defined in the introductory paragraph of this Agreement and used herein shall have the respective meanings ascribed in such introductory paragraph. The foregoing definitions shall be equally applicable to both the single and plural forms of the defined terms. Use of the terms "herein", "hereof", and "hereunder" shall 10 be deemed references to this Agreement in its entirety and not to the Section clause in which such term appears. SECTION 2. TERMS OF THE FACILITIES ---------------------------------- 2.1 Credit. Subject to the terms and conditions of this Agreement, the Banks will make the Facilities available to the Borrower as described in this SECTION 2. 2.2 Loans/Standby Letters of Credit. The Banks will make revolving credit loans to the Borrower as follows: 2.2.1 Loans. Subject to the terms and conditions hereof, each Bank severally agrees to make Loans to the Borrower from time to time during the Commitment Period in a principal amount not in excess of the unborrowed portion of such Bank's Commitment on the borrowing date. During the Commitment Period, the Borrower may use the Commitments by borrowing, prepaying the Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The Loans made by the Banks pursuant hereto shall be evidenced by the Notes. 2.2.2 Interest. Prior to maturity or Default, the principal amount of the Loans outstanding from time to time shall bear interest at a rate per annum equal to the Base Rate, except that at the option of the Borrower, exercised as provided in SECTION 2.3.3 hereof, interest may accrue prior to maturity on any Permissible Increment of outstanding Advances of the Loans not then subject to an Optional Rate, at the Adjusted LIBOR plus the Applicable Margin or the CD Rate plus the Applicable Margin for the LIBOR Interest Period or CD Rate Interest Period, as the case may be. At the expiration of such Optional Rate on such Permissible Increment, unless, in each case, the Borrower selects an Optional Rate as provided in SECTION 2.3.3 hereof, interest shall again accrue at the Base Rate. After maturity or Default, interest shall be calculated in accordance with SECTION 2.3.1 hereof. 2.2.3 Payments of Principal and Interest. Interest only on the outstanding Advances of the Loans from time to time which bear interest at the Base Rate shall be due and payable in arrears on the first (1st) day of each calendar quarter throughout the term of the Commitment Period. Interest on each Permissible Increment of Advances outstanding which are subject to an Optional Rate, shall be due and payable in arrears on the last day of the LIBOR Interest Period or CD Rate Interest Period to which that Permissible Increment is subject, provided that, with respect to each Permissible Increment of Advances which is subject to an Optional Rate with an Interest Period of 120 days or more, interest on such Permissible Increment of Advances shall also be due and payable in arrears on the first (1st) day of each calendar quarter throughout the term of the Commitment Period. During each fiscal year, the Borrower shall make principal payments in an amount sufficient that the outstanding principal balance of Advances 11 under the Loans shall not exceed $45,000,000 for a 45 consecutive day period chosen by the Borrower and notified to the Banks in the Compliance Certificate next following the last day of such period. Unless the Loans are sooner paid or extended by the Banks in their sole discretion, the entire principal balance of the Loans, together with all accrued and unpaid interest thereon, and all fees and charges payable in connection therewith, shall be due and payable on the last day of the Commitment Period. 2.2.4 Borrowing Procedure. (a) Loans. As the Borrower desires to obtain Loans hereunder, the Borrower shall give the Agent notice of the Borrower's intention to borrow pursuant to the Commitments by not later than 12:00 Noon (Dallas time), on the proposed Banking Day of borrowing. Such notice shall be on a written form of Application for Advance in the form of EXHIBIT B hereto (an "APPLICATION") signed by an Authorized Officer; provided that the Agent may, in its discretion, accept such notice made orally by an Authorized Officer, or upon a request transmitted to the Agent by telex, facsimile machine or other form of written electronic communication and signed by an Authorized Officer (all such requests for Advances not made by submission of an Application being referred to herein as "INFORMAL REQUESTS"). The Agent may rely on any Informal Request which shall have been received by it in good faith from anyone reasonably believed to be an Authorized Officer. Each Informal Request shall promptly be confirmed by a duly executed Application if the Agent so requires and shall in and of itself constitute a representation and warranty that no Default or Potential Default has occurred and is continuing or would result from the making of the requested Advance and that the requested Advance shall not cause the principal balance of the Loans to exceed the aggregate Commitments. The Agent shall notify the Banks of the Borrower's intent to borrow by 1:00 P.M. (Dallas time) on the proposed Banking Day of borrowing. Subject to the limitations of SECTION 2.2.1, the principal amount of each Loan made by each Bank shall be that portion of the aggregate loans made that the Commitment of such Bank bears to the aggregate of the Commitments of the Banks. By 2:00 P.M. (Dallas time) on each such borrowing date, each Bank severally agrees to make its portion of the Loans then being made to the Borrower by making available to the Agent, either by wire transfer to the Agent's main office in Dallas, Texas, or by deposit to any correspondent account which Agent may maintain with that Bank, the amount to be advanced by such Bank. The Borrower hereby authorizes the disbursement of each such Loan by deposit to the account of the Borrower with NationsBank, and NationsBank as Agent, shall, by 2:00 P.M. (Dallas time) on the date received, credit the amount so received from each Bank to the account of the Borrower with NationsBank. The aggregate principal amount of Loans made on any borrowing date shall be in minimum amounts of Five Hundred Thousand Dollars ($500,000) and in integral multiples of One Hundred Thousand Dollars ($100,000). All Advances by the Banks and payments by the Borrower shall be recorded by the 12 Banks on their books and records, and the principal amount outstanding from time to time, plus interest payable thereon, shall be determined from the books and records of the Banks. The books and records of the Banks shall be presumed prima facie correct as to such matters. (b) Standby Letters of Credit. Subject to the terms and conditions hereof, the Commitments, at the option of the Borrower upon delivery of a proper Standby Letter of Credit Application, may also be utilized in the form of Standby Letters of Credit issued by NationsBank for the account of the Borrower. Each Standby Letter of Credit shall have an expiry date not later than the earlier of (i) one (1) year from the date of issuance, or (ii) one (1) day before the expiration of the Commitment Period. The sum of the aggregate of the Standby Letters of Credit outstanding at any time and the aggregate amount of unreimbursed drawings shall not exceed Five Million Dollars ($5,000,000), and, when taken together with the aggregate principal amount of Loans then outstanding, shall at no time exceed the aggregate Commitments. Each Standby Letter of Credit issued pursuant to this SECTION 2.2.4(b) and each unreimbursed drawing thereunder shall count against and reduce the Commitments by the amount of such Standby Letter of Credit outstanding unless and until such Standby Letter of Credit expires by its terms or otherwise terminates or the amount of a drawing thereunder is reimbursed, in which event the Commitments shall be reinstated by the amount of such Standby Letter of Credit or the amount of such reimbursement, as the case may be. The amount of any Standby Letter of Credit outstanding at any time for all purposes hereof shall be the maximum amount which could be drawn thereunder under any circumstances from and after the date of determination. Each such Standby Letter of Credit shall conform to the general requirements of NationsBank for the issuance of such credits, as to form and substance, shall be subject to the Uniform Customs and Practices for Documentary Credits (1983 Revision), International Chamber of Commerce Publication No. 400 and shall be a letter of credit which NationsBank may lawfully issue. If and to the extent a drawing is at any time made under any Standby Letter of Credit, the Borrower agrees to pay to NationsBank immediately and unconditionally upon demand for reimbursement, in lawful money of the United States, an amount equal to each amount which shall be so drawn, together with interest from the date of such drawing to and including the date such payment is reimbursed to NationsBank or converted to Loans as provided herein. Until demand for reimbursement, such interest shall be calculated at a variable rate per annum equal to the Base Rate, and interest shall be calculated after such demand at a variable rate per annum equal to the Base Rate plus Two Percent (2%). NationsBank shall have the right to convert automatically the reimbursement Obligations of the Borrower arising out of any such drawing into Loans, and the Borrower and the other Banks hereby irrevocably authorize NationsBank to refinance, without notice to the Borrower and the other Banks, the reimbursement Obligations of the Borrower arising out of any such drawing into Loans, evidenced by the Notes and for all purposes 13 under, on and subject to the terms and conditions of this Agreement, but without regard to the conditions precedent to making an Advance under the Loans or to any requirement of this Agreement that each Loan be in a minimum amount or multiple. This Agreement and the other Loan Documents shall supersede any terms of any letter of credit applications or other documents which are irreconcilably inconsistent with the terms hereof or thereof. For administrative convenience, NationsBank shall issue the Standby Letters of Credit for the account of the Banks pursuant to the arrangements set forth below, and, accordingly, the outstanding portion of each Standby Letter of Credit shall be deemed to utilize the Commitment of each Bank according to its Pro Rata Share. Each Bank severally agrees to participate in each Standby Letter of Credit issued by NationsBank hereunder according to its Pro Rata Share of the Commitments. Each Bank's participation shall be funded by funding its Pro Rata Share of the Commitments upon any drawing under any Standby Letter of Credit not reimbursed the same day as a drawing thereunder by the Borrower; and thereupon, each such Bank shall be entitled to, and NationsBank shall remit to each such Bank, its respective Pro Rata Share of any amounts (including any interest thereon) received by NationsBank in reimbursement of such drawing. The Borrower agrees to pay to NationsBank for the pro rata benefit of the Banks at the time of issuance (or renewal, if applicable) of each Standby Letter of Credit, Standby Letter of Credit fees in the amount of the per annum Applicable Margin for the face amount of each Standby Letter of Credit subject to a minimum fee in each case of Five Hundred Dollars ($500). Such fees shall be calculated for the period of time the Standby Letter of Credit is to be outstanding on the basis that an entire year consists of three hundred sixty (360) days. Such fees will be allocated among the Banks in accordance with their respective Pro Rata Shares and will be remitted by NationsBank to the Banks promptly upon receipt. The Borrower also agrees to pay NationsBank for its own account at the time of issuance (or renewal, if applicable) of each Standby Letter of Credit, a fronting and issuance fee in the amount of .125% per annum of the face amount of each Standby Letter of Credit. The Borrower hereby authorizes NationsBank to collect such fees by deducting the amount thereof from any account of the Borrower at NationsBank, advising the Borrower to that effect. NationsBank agrees to make demand for reimbursement of the amount of any drawing under the Standby Letters of Credit if directed to do so by the Required Banks and in any event no later than the last day of the Commitment Period. 2.2.5 Method of Payments . All payments of principal and interest on the Notes shall be made by the Borrower to the Agent at its main office in Dallas, Texas, by 1:00 P.M. (Dallas time) on the date when due, and shall be applied pro rata among the Banks in accordance with the outstanding principal amounts of the Notes held by them. Each payment delivered to the Agent for the account of any Bank shall be delivered by the Agent for the account of such Bank no later than 2:00 P.M. (Dallas time) on the same day. Optional prepayments of principal shall be a minimum of Five Hundred Thousand 14 Dollars ($500,000) and in integral multiples of One Hundred Thousand Dollars ($100,000). 2.2.6 Use of Proceeds. The proceeds of Advances of Loans shall be used for general corporate purposes. 2.3 Provisions Applicable to All Facilities. The following provisions are applicable to all Facilities: 2.3.1 Calculation of Interest/Default Rate. To the extent permitted by law, interest on outstanding Advances shall be calculated on the basis that an entire year's interest is earned in three hundred sixty (360) days; provided that, interest on outstanding Advances which are subject to the Base Rate shall be calculated on the basis of a 365/366 day year, unless the Base Rate is based on the Federal Funds Effective Rate, in which case interest shall be calculated on the basis that an entire year's interest is earned in three hundred sixty (360) days. If any installment of principal or interest on any Loan becomes due and payable on a day other than a Banking Day, the maturity of the installment of principal or interest shall be extended to the next succeeding Banking Day, and interest shall be payable during such extension of maturity. All payments received by the Agent after 1:00 P.M. (Dallas time) on any Banking Day shall be deemed to be received on the next succeeding Banking Day for the purpose of calculation of interest. After the maturity of any Loan, whether by acceleration or otherwise, or while and so long as there shall exist any uncured Default, all Loans shall bear interest at a per annum rate equal to Two Percent (2%) above the otherwise applicable rate. While there exists any uncured Default but prior to maturity, interest accrued at the Default rate shall be payable as accrued from the date of Default on demand by the Agent as directed by the Required Banks. The Required Banks' determination of the date of Default and the amount of interest due and payable at the Default rate of interest shall be deemed prima facie correct, and the Borrower acknowledges the right of the Required Banks to impose the applicable Default rate of interest from the date the Default occurred even though such Default may not have been known by the Banks or the Borrower until a later date and even though the Borrower has paid interest at the regular rate of interest during such period. After maturity, whether by acceleration or otherwise, interest shall be payable as accrued and without demand. 2.3.2 Manner of Payment - Immediately Available Funds. All payments with respect to the Facilities shall be payable at the principal office of the Agent in Dallas, Texas, in funds available for the Banks' immediate use at that city, and no payment will be considered to have been made until received in such funds. Except as otherwise provided in SECTION 8.19 hereof, all payments received on account of any of the Loans will be applied first to the satisfaction of any interest which is then due and payable, and to principal only after all interest which is due and payable has been satisfied. All payments received by the Agent by 1:00 P.M. (Dallas time) on a Banking Day shall be remitted to each Bank in accordance with its Pro Rata Share of such payment by 2:00 15 P.M. (Dallas time) that same Banking Day and payments received by the Agent after 1:00 P.M. (Dallas time) on a Banking Day shall be remitted to each Bank in accordance with its Pro Rata Share of such payment by 12:00 Noon (Dallas time) on the next succeeding Banking Day. 2.3.3 Procedures for Electing Optional Rates. Optional Rates may be elected only in accordance with the following procedures and subject to the other conditions contained in this Agreement: (a) No Optional Rate may be elected at any time a Default or a Potential Default exists. (b) The Borrower shall notify the Agent of its election or renewal of an Optional Rate prior to 2:00 P.M. (Dallas time) not less than three (3) Banking Days prior to the commencement of a LIBOR Interest Period or CD Rate Interest Period specifying (i) the election or renewal date (which shall be the first day of the relevant Interest Period), (ii) the amount of the Loan (or Loans taken together) elected or renewed which amount shall be in a Permissible Increment, (iii) whether the Loan shall be subject to the Adjusted LIBOR or the CD Rate, and (iv) the duration of the LIBOR Interest Period or CD Rate Interest Period selected to apply thereto. The Agent shall immediately notify the Banks whenever an Optional Rate is selected by the Borrower. (c) An election of an Optional Rate may be communicated to the Agent only by an Authorized Officer of the Company. Such election may be communicated by telephone or by telex, facsimile machine or other form of written electronic communication, or by a writing delivered to the Agent. The Borrower shall confirm in writing any election communicated by telephone and such written confirmation shall be signed by an Authorized Officer. The Agent shall be entitled to rely on any verbal communication of the election of an Optional Rate which is received by a designated employee of the Agent from anyone reasonably believed in good faith by such employee to be an Authorized Officer of the Borrower. (d) Not more than four (4) Interest Periods may be selected at any one time to apply to outstanding Advances of the Loans. (c) Notwithstanding any other provision of this Agreement, in the event that any Bank determines (which determination shall be conclusive and binding upon the Borrower) that by reason of circumstances affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the LIBOR for any LIBOR Interest Period at a time when a rate calculated by reference to Adjusted LIBOR is requested or when the outstanding balance of Advances under the Loans is being maintained at a rate calculated by reference 16 to the Adjusted LIBOR, the Agent shall forthwith give notice of such determination, confirmed in writing, to the Borrower. If such notice is given, then no rate calculated by reference to the Adjusted LIBOR may be selected by the Borrower and any outstanding principal balance of Advances under the Loans then bearing interest at a rate calculated by reference to the Adjusted LIBOR shall be converted, on the last day of the then current LIBOR Interest Period, to the Base Rate. (f) If any law or any governmental regulation, guideline or order or interpretation or application thereof by any Governmental Authority charged with the interpretation or administration thereof or compliance with any request or directive of any central bank or other Governmental Authority whether or not having the force of law (i) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against assets held by, credit extended by, deposits with or for the account of, or other acquisition of funds by, any Bank (other than requirements expressly included herein in the determination of the Adjusted LIBOR or CD Rate hereunder), or (ii) imposes upon any Bank any other condition or expense with respect to this Agreement, or the making, maintenance or funding of any part of the proceeds of an Optional Rate Advance or any security therefor; and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense upon any Bank with respect to the outstanding balance of the Loans bearing interest at the Optional Rate or the making, maintenance or funding of any part thereof by an amount which any Bank deems to be material (any Bank being deemed for this purpose to have made, maintained or funded the proceeds of an Optional Rate Advance from certificates of deposit), such Bank shall from time to time notify the Borrower of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by such Bank (which determination shall be presumed to be correct) to be necessary to compensate such Bank for such increase in cost, reduction in income or additional expense. Such amount shall be due and payable by the Borrower to such Bank ten (10) Banking Days after such notice is given. If a Bank desires to make a claim for increased cost, reduction in income or additional expense, it shall send a certificate to the Borrower within sixty (60) days after such Bank could calculate the increased cost, reduction in income or additional expense, specifying the amount of such increase in cost, reduction in income or additional expense (which certificate shall be presumed prima facie to be correct as to such amount due and payable); provided, however, that if a Bank fails to send a certificate within such sixty (60) day period, such Bank shall, with respect to compensation payable pursuant to this SECTION 2.3.3(f), only be entitled to payment under this SECTION 2.3.3(f) for increased cost, reduction in income or additional expense from and after the date sixty (60) days prior to the date that such Bank sends such certificate. 17 (g) Any payment of the outstanding principal balance bearing interest at an Optional Rate on a day other than the last day of the corresponding Interest Period (whether or not such payment is mandatory or automatic and whether or not such payment is then due) shall be subject to contemporaneous payment of the Prepayment Premium if, at the time of prepayment, the Reinvestment Rate is less than the Optional Rate at which interest accrues on such principal balance. If at the time of any voluntary or mandatory prepayment of any portion of the principal of any Loan, interest accrues at both an Optional Rate or Rates and at the Base Rate on portions of a Loan or Loans, then any prepayment of principal will be applied first to the portion of a Loan or Loans on which interest accrues at the Base Rate and next to the portion or portions at which interest accrues at an Optional Rate or Rates. (h) In addition to the compensation required by SECTION 2.3.3(f) and (g) hereof, the Borrower shall indemnify each Bank (on a net basis) against any loss or expense (including loss of margin) which any Bank has sustained or incurred as a consequence of any (i) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or in part any notice stated herein to be irrevocable (the Agent having in its sole discretion the option (A) to give effect to such attempted revocation and obtain indemnity under this SECTION 2.3.3(h), or (B) to treat such attempted revocation as having no force or effect, as if never made), or (ii) default by the Borrower in the performance or observance of any covenant or condition contained in the Loan Documents including without limitation any failure of the Borrower to pay when due (by acceleration or otherwise) any principal, interest or any other amount due hereunder or under the Loan Documents. If any Bank sustains or incurs any such loss or expense it shall notify the Borrower of the amount determined in good faith by such Bank (which determination shall be conclusive and binding on the Borrower) to be necessary to indemnify such Bank for such loss or expense. Such amount shall be due and payable by the Borrower to such Bank ten (10) Banking Days after such notice is given. 2.3.4 Fees. (a) Agent Fee. In consideration of its services as Agent hereunder, the Borrower shall pay the Agent an Agent's fee pursuant to the terms of a letter agreement between the Agent and the Borrower dated this date. (b) Non-Use Fee. The Borrower shall pay to the Agent for the pro rata benefit of the Banks a Non-Use Fee on the average daily (beginning April 15, 1996) unborrowed portion of the Commitments, which fee shall be due and payable quarterly in arrears; equal to .15% per annum when the Applicable Margin for Adjusted LIBOR Loans is at Level I, .20% per annum when the Applicable Margin for Adjusted LIBOR Loans is at Level II, and .25% when the 18 Applicable Margin for Adjusted LIBOR Loans is at Level III. Such Non-Use Fee shall be calculated on the basis of the actual number of days elapsed and a 365/366 day year. 2.3.5 Non-Receipt of Funds by the Agent. (a) From the Banks. Unless the Agent shall have received notice from a Bank by 2:00 P.M. (Dallas time) on a proposed Banking Day on which such Bank is to provide funds to the Agent for a Loan to be made by such Bank that such Bank will not make available to the Agent such funds, the Agent may assume that such Bank has made such funds available to the Agent on the date of such Loan in accordance with this Agreement and the Agent in its sole discretion may, but shall not be obligated to, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent such Bank has not made such funds available to the Agent, such Bank agrees to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at a rate per annum equal to the Federal Funds Effective Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan for purposes of this Agreement. If such Bank does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Agent with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at the rate of interest applicable at the time to the relevant Loan. (b) From the Borrower. Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent in its sole discretion may, but shall not be obligated to, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Borrower has not made such payment in full to the Agent, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date the Agent recovers such amount at a rate per annum equal to the Federal Funds Effective Rate. 2.3.6 Interest Recapture. If the designated rate applicable to any Loan exceeds the Maximum Rate, the rate of interest on such Loan shall be limited to the Maximum Rate, but any subsequent reductions in such designated rate shall not reduce the rate of 19 interest thereon below the Maximum Rate until the total amount of interest accrued thereon equals the amount of interest which would have accrued thereon if such designated rate had at all times been in effect. In the event that at maturity (stated or by acceleration), or at final payment of the Notes, the total amount of interest paid or accrued is less than the amount of interest which would have accrued if such designated rates had at all times been in effect, then, at such time and to the extent permitted by law, the Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest which would have accrued if such designated rates had at all times been in effect and the amount of interest which would have accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest actually paid or accrued on the Notes. 2.3.7 Maximum Rate. Regardless of any provision contained in any Loan Document, no Bank shall ever be entitled to contract for, charge, take, reserve, receive, or apply, as interest on the Obligations, or any part thereof, any amount in excess of the Maximum Rate, and, if the Banks ever do so, then such excess shall be deemed a partial prepayment of principal and treated hereunder as such and any remaining excess shall be refunded to the Borrower. In determining if the interest paid or payable exceeds the Maximum Rate, the Borrower and the Banks shall, to the maximum extent permitted under applicable law, (a) treat all Loans as but a single extension of credit (and the Banks and the Borrower agree that such is the case and that provision herein for multiple Loans is for convenience only), (b) characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary prepayments and the effects thereof, and (d) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the Obligations; provided that, if the Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Amount, the Banks shall refund such excess, and, in such event, the Banks shall not, to the extent permitted by law, be subject to any penalties provided by any laws for contracting for, charging, taking, reserving, or receiving interest in excess of the Maximum Amount. If the laws of the State of Texas are applicable for purposes of determining the "Maximum Rate" or the "Maximum Amount," such term shall mean the "indicated rate ceiling" from time to time in effect under Article 1.04, Title 79, Revised Civil Statutes of Texas, as amended. Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended, the Borrower agrees that such Chapter 15 (which regulates certain revolving credit loan accounts and revolving triparty accounts) shall not govern or in any manner apply to the Obligations. 2.4 Additional Standby Letter of Credit Provisions. The obligation of the Borrower to reimburse any drawing under any Standby Letter of Credit shall be absolute, unconditional and irrevocable and shall be paid and performed strictly in accordance with the terms of this Agreement under all circumstances, whatsoever, including, without limitation, the following: 20 (a) any lack of validity or enforceability of any Standby Letter of Credit or any Loan Document; (b) any amendment or waiver of or consent to departure from the terms of any Standby Letter of Credit or any Loan Document; (c) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against the beneficiary of any Standby Letter of Credit, any transferee of any Standby Letter of Credit, the Banks or any other Person, whether in connection with the Loan Documents, such Standby Letter of Credit or any unrelated transaction; (d) any statement, draft or other document presented under any Standby Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (e) the surrender or impairment of any security for the performance or observance of the terms of the Loan Documents or such Standby Letter of Credit; or (f) any circumstance, happening or admission whatsoever, whether or not similar to any of the foregoing, including, without limitation, those matters described below. The parties benefitted by any Standby Letter of Credit shall be deemed to be the agents of the Borrower, and except as expressly set forth herein, the Borrower assumes all risks for their acts, omissions, or misrepresentations. Neither NationsBank nor any of its affiliates or correspondents shall be responsible for the validity, sufficiency, truthfulness or genuineness of any document required to draw under any Standby Letter of Credit even if such document should in fact prove to be in any and all respects invalid, insufficient, fraudulent or forged, provided only that the document appears on its face to be in accordance with the terms of the Standby Letter of Credit. NationsBank, its affiliates and correspondents shall not be responsible for any failure of any draft to bear reference or adequate reference to the applicable Standby Letter of Credit or for the failure of any Person to note the amount of any draft on any Standby Letter of Credit or to surrender or take up any Standby Letter of Credit, each of which provisions may be waived by NationsBank, or for errors, omissions, interruptions, or delays in transmission or delivery of any messages or documents. Without limiting the generality of the foregoing, the Borrower agrees that any action taken by NationsBank or any of its affiliates or correspondents under or in connection with any Standby Letter of Credit shall be binding upon the Borrower and shall not put NationsBank or any such affiliates or correspondents under any such resulting liability to the Borrower. NationsBank shall not be liable for consequential damages or for any action or failure to take action under or in connection with any Standby Letter of Credit except for any such action or failure to take action which constitutes gross negligence or willful 21 misconduct, it being expressly understood that NationsBank will be indemnified for its own negligence. NationsBank is expressly hereby authorized to honor any request for payment which is made under or in compliance with the terms of any Standby Letter of Credit without regard to and without any duty on its part to inquire into the existence of any disputes or controversies between the Borrower and any beneficiary of any Standby Letter of Credit or any other Person or into respective rights, duties or liabilities of any of them or whether any facts or occurrences represented in any of the documents presented under any Standby Letter of Credit are true and correct. No Person, other than the parties hereto, shall have any rights of any nature under this Agreement or by reason hereof. NationsBank shall not be liable to the Banks participating in any Standby Letter of Credit except for gross negligence or willful misconduct in connection with such Standby Letter of Credit. In no event shall NationsBank's reliance and payment against documents presented under a Standby Letter of Credit appearing on its face to substantially comply with the terms thereof be deemed to constitute gross negligence or willful misconduct. SECTION 3. WARRANTIES -------------------- In order to induce the Banks to enter into this Agreement and to make Advances pursuant to their Commitments and to induce NationsBank to issue Standby Letters of Credit, the Borrower represents and warrants to the Banks, which representations and warranties will survive the delivery of the Notes, the making of the Loans and the establishment of the Facilities, that: 3.1 Corporation Existence and Standing. The Borrower and each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is qualified, in good standing and authorized to do business in such other states wherein non-qualification would have a material adverse effect on the Borrower or its operations. 3.2 Loan Documents - Corporate Power. Authorization and Validity. The Borrower possesses the requisite power to enter into and execute the Loan Documents to be executed by it and to perform its obligations thereunder. The execution and delivery by the Borrower of the Loan Documents to be executed by it have been duly authorized by proper corporate proceedings and each and all of such documents constitute legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and equitable principles affecting the rights of creditors. 3.3 Loan Documents - Compliance with Laws and Contracts. Neither the execution and delivery by the Borrower of the Loan Documents, the consummation of the transactions contemplated herein and therein, nor compliance with the provisions hereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any Subsidiary or the Borrower's or any Subsidiary's articles of incorporation or by-laws or the provisions of any indenture, instrument or agreement to which the Borrower or any Subsidiary is a party or is subject, or by which the Borrower or any Subsidiary, or its properties, is bound, 22 or conflicts with or constitutes a default thereunder, or results in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement. 3.4 Financial Statements. The December 31, 1995 Consolidated financial statements of the Borrower heretofore delivered to the Banks were prepared in accordance with GAAP in effect on the date such statements were prepared and fairly present the financial condition of the Borrower and its Subsidiaries at such date and the results of their operations for the period then ended. No material adverse change in the condition of the Borrower and its Subsidiaries as shown on the above-described financial statements has occurred since the date thereof. Since such date, the Borrower and its Subsidiaries as a Consolidated group have not incurred any contingent liabilities that could materially adversely affect their financial condition. 3.5 Taxes. To the best of its knowledge after due investigation, the Borrower and each of its Subsidiaries has filed all United States federal income tax returns and all other tax returns which are required to be filed and has paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower and each of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Borrower and each of its Subsidiaries in respect of any taxes or other governmental charges are adequate. 3.6 Litigation. No litigation or proceeding in any court or before any other Governmental Authority is presently pending or threatened, and no claim has been asserted, against the Borrower or any Subsidiary which, if adversely determined, would materially affect the business, operations, properties or prospects of the Borrower or any Subsidiary. 3.7 ERISA. The Borrower and each ERISA Affiliate is in compliance in all material respects with all applicable provisions of ERISA, and neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than usual fees and assessments imposed by the PBGC. Neither a "reportable event", nor a "prohibited transaction", has occurred under, nor has there occurred any complete or partial withdrawal from, nor has there occurred any other event which would constitute grounds for termination of or the appointment of a trustee to administer any Plan (including any "multiemployer plan") maintained for "employees" of the Borrower or any ERISA Affiliate, all within the meanings ascribed by ERISA. 3.8 Defaults. No Default or Potential Default has occurred and is continuing. There does not presently exist any material default or any circumstance which with notice, lapse of time, or both, would constitute a material default under the terms and conditions of any trust, debenture, indenture, note, bond, instrument, mortgage, lease, agreement, order, decree, or judgment to which the Borrower or any Subsidiary is a party or by which it or its assets may be bound or affected. 23 3.9 Liabilities. Investments and Guarantees. The Borrower and its Subsidiaries have no material undisclosed liability, direct or indirect, absolute or contingent, except those included within the financial statements described in SECTION 3.4 above. 3.10 Compliance with Governmental Requirements. The Borrower and each of its Subsidiaries are in substantial compliance with all applicable requirements of law and of all Governmental Authorities that are material to the conduct of their respective businesses. 3.11 Rights to Conduct Business. The Borrower and each of its Subsidiaries possesses all franchises, licenses, permits, patents, copyrights, trademarks and consents of appropriate Governmental Authorities required to own their respective properties and as are necessary or useful to carry on their respective businesses. 3.12 No Casualty. As of the date hereof, neither the business nor the properties of the Borrower or any of its Subsidiaries is materially adversely affected by any fire, explosion, accident, strike, lock-out or other labor dispute, drought, storm, earthquake, embargo, act of God or of the public enemy or other casualty. 3.13 Regulation U. The Borrower is not engaged in the business of extending credit for the purposes of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the borrowings hereunder will be used to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock. 3.14 Governmental Consents. Each authorization by or consent, approval or exemption of any Governmental Authority required in connection with the execution and delivery by the Borrower of the Loan Documents, its performance hereunder and thereunder, and the borrowings by the Borrower hereunder has been obtained. 3.15 Subsidiaries. Except as disclosed on SCHEDULE 3.15 hereto, the Borrower has no Subsidiaries or other ownership interest in any other Person. 3.16 Environmental Compliance. Except as disclosed on SCHEDULE 3.16 hereto, or otherwise disclosed in writing to the Banks, (a) the Borrower and each of its Subsidiaries is, to the best of Borrower's knowledge after due investigation, in substantial compliance with all Environmental Laws, including, without limitation, all Environmental Laws in jurisdictions in which the Borrower or any of its Subsidiaries owns or operates, or has owned or operated, a facility or site, arranges or has arranged for disposal or treatment of hazardous substances, solid waste or other waste, accepts or has accepted for transport any hazardous substances, solid waste or other wastes or holds or has held any interest in real property or otherwise; (b) no litigation or proceeding arising under, relating to or in connection with any Environmental Law is pending or threatened against the Borrower or any of its Subsidiaries, any real property in which the Borrower or any of its Subsidiaries holds or has held an interest or on which it has conducted any past or present operation of the Borrower or any of its Subsidiaries; and (c) no release, 24 threatened release or disposal of hazardous waste, solid waste or other wastes is occurring, or has occurred, on, under or to any real property in which the Borrower or any Subsidiary holds any interest or performs any of its operations, in violation of any Environmental Law. As used in this Section, "litigation or proceeding" means any demand, claim, notice, suit, suit in equity, action, administrative action, investigation or inquiry whether brought by a Governmental Authority or other Person. 3.17 Marketable Title. The Borrower and each of its Subsidiaries has good and marketable title to all of its real properties and good title to all of its other properties and assets, including, without limitation, those shown on the financial statements delivered pursuant to SECTION 3.4, except such properties or assets as have been disposed of since the date of such financial statements in the ordinary course of business or as are no longer used or useful in the conduct of its business. Except for Permitted Encumbrances, none of the assets of the Borrower or any of its Subsidiaries are subject to any mortgage, pledge, security interest, title retention lien or other encumbrance. Except to evidence Permitted Encumbrances, no financing statement or similar instrument which names the Borrower or any of its Subsidiaries as debtor or relates to any of its property has been filed in any state or other jurisdiction and remains unreleased, and neither the Borrower nor any of its Subsidiaries has signed any financing statement or similar instrument or security agreement authorizing the secured party thereunder to file any such financing statement or similar instrument. 3.18 Contracts of Surety. Except for endorsements by the Borrower or any of its Subsidiaries of negotiable instruments for deposit or collection in the ordinary course of business and except as set forth on SCHEDULE 4.2.10 hereto, neither the Borrower nor any of its Subsidiaries is a party to any contract of guaranty or surety. 3.19 Insolvency. Neither the Borrower nor any Subsidiary is "insolvent" within the meaning of that term as defined in (S)101(29) of the Federal Bankruptcy Code and each is able to pay its debts as they mature. 3.20 Regulation. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company" or an "affiliate of a holding company" or a "Subsidiary of a holding company" within the meanings of the public Utility Holding Company Act of 1935, as amended. 3.21 Full Disclosure. No information, exhibit, memorandum, or report (excluding estimated future operating results) furnished by the Borrower to the Banks in connection with the negotiation of the Loans contains any material misstatement of fact, or omits to state any fact necessary to make the statements contained therein not materially misleading, and all estimated future operating results, if furnished, were prepared on the basis of assumptions, data, information, tests or other conditions believed to be valid or accurate or to exist at the time such estimates were prepared and furnished. There presently exists no fact or circumstance relative to the Borrower or any Subsidiary whether or not disclosed, which is presently anticipated to have a material adverse effect upon the business, operations, financial condition, properties or 25 prospects of the Borrower and its Subsidiaries or the ability of the Borrower or any Subsidiary to fully perform its obligations under the Loan Documents. 3.22 General. All statements contained in any certificate or financial statement prepared and delivered by or on behalf of the Borrower to any Bank under the Loan Documents shall constitute representations and warranties made by the Borrower hereunder. SECTION 4. COVENANTS -------------------- 4.1 Affirmative Covenants. So long as any Bank has a Commitment hereunder, any Standby Letter of Credit is outstanding, and until the Obligations are paid in full, unless the Required Banks shall otherwise consent in writing, the Borrower will: 4.1.1 Financial Reporting. Furnish the Banks: (a) As soon as practicable, but in any event within ninety (90) days after the end of each fiscal year, Consolidated financial statements of the Borrower certified after audit by certified public accountants acceptable to the Banks including a balance sheet, statement of income and retained earnings and a statement of cash flows, with accompanying notes to financial statements all prepared in accordance with GAAP on a Consolidated basis consistent with prior years unless specifically noted thereon, and accompanied by an unqualified opinion of said accountants, the auditor's management letter describing any deficiencies in the internal controls or other matters of significance discovered by such auditor during the course of the audit, and further accompanied by unaudited consolidating balance sheets and statements of income and a certificate of the chief financial officer or treasurer of the Borrower that there exists no Default or Potential Default under the Loan Documents, or if any Default or Potential Default exists, stating the nature and status thereof; (b) As soon as possible, but in any event within forty-five (45) days after the end of each of the Borrower's first three (3) fiscal quarters, similar unaudited Consolidated statements of the Borrower as of the end of such quarter and the results of their operations for the portion of the fiscal year then elapsed, and consolidating balance sheets and income statements, all prepared in accordance with GAAP on a Consolidated and consolidating basis consistent with prior periods, unless specifically otherwise noted thereon, and accompanied by the certificate of the chief financial officer or treasurer of the Borrower that there exists no Default or Potential Default under the Loan Documents or if any Default or Potential Default exists, stating the nature and status thereof; 26 (c) As soon as possible, but in any event within forty-five (45) days after the end of each fiscal quarter, a fully executed and completed Compliance Certificate, signed by the chief financial officer or treasurer of the Borrower; (d) As soon as possible, but in any event within five (5) days after the Borrower becomes aware thereof, a written statement signed by an Authorized Officer of the Borrower as to the occurrence of any Default or Potential Default stating the specific nature thereof, the Borrower's intended action to cure the same and the time period in which such cure is to occur; (e) As soon as possible, but in any event within ten (10) days after the commencement thereof, a written statement describing any litigation, arbitration, administrative or other proceeding instituted by or against the Borrower or any Subsidiary which, if adversely determined, may have a material effect upon the business, operations, financial condition, properties or prospects of the Borrower and its Subsidiaries as a Consolidated group; (f) As soon as possible, but in any event within ten (10) days after the Borrower becomes aware thereof, a written statement signed by an Authorized Officer of the Borrower describing any "reportable event" or "prohibited transaction" which has occurred with respect to any Plan (all within the meanings ascribed by ERISA) and the action which the Borrower proposes to take with respect thereto; (g) As soon as possible, but in any event within ten (10) days after the filing with the Securities and Exchange Commission, or any successor thereto, or any state securities regulatory authority, copies of all registration statements and all periodic and special reports required or permitted to be filed under federal or state securities laws and regulations; and (h) As soon as they are proposed and immediately upon their being made, any amendments to the Note Purchase Agreements and Canadian Revolver described in SECTION 4.2.6(g) and (h). (i) Such other information as the Banks may from time to time reasonably request. 4.1.2 Minimum Net Worth. Maintain at all times a Consolidated Net Worth of not less than the sum of (a) $80,000,000, (b) 75% of the net proceeds received by the Borrower from the issuance of equity securities, and (c) 50% of Consolidated net income from July 1, 1995 to the date as of which any calculation is being made hereunder, taken as one accounting period, but without deduction for any net loss during any fiscal quarter. 27 4.1.3 Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of not less than 1.15 to 1.0. 4.1.4 Leverage Ratio. Maintain a Leverage Ratio of not greater than .60 to 1.0 at the last day of each September 30, December 31, March 31 and June 30. 4.1.5 Notice of Material Adverse Change. Give prompt notice in writing to the Banks of the occurrence of any development, financial or otherwise, including pending or threatened litigation, arbitration, administrative or other proceeding which might materially adversely affect the business, properties, affairs or prospects of the Borrower and its Subsidiaries as a Consolidated group or the ability of the Borrower to perform the Obligations. 4.1.6 Conduct of Business. Carry on and, subject to the exceptions to the prohibitions in SECTIONS 4.2.3 and 4.2.12, cause each Subsidiary to carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as presently conducted, and do all things necessary to remain duly incorporated, validly existing and in good standing as a corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its respective business in each jurisdiction in which conducted. 4.1.7 Taxes. Pay and cause each Subsidiary to pay when due all taxes, assessments and governmental charges and levies upon it or its income, profit or property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been created. 4.1.8 Insurance. Maintain and cause each Subsidiary to maintain in full force and effect adequate insurance in amounts and against liabilities consistent with sound business practice and upon terms acceptable to the Banks. 4.1.9 Compliance with Laws. Comply and cause each Subsidiary to comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which the Borrower or any Subsidiary may be subject, including, without limitation, all Environmental Laws and ERISA. 4.1.10 Maintenance of Properties. Do and cause each Subsidiary to do all things reasonably necessary to maintain, preserve, protect and keep its material properties in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business may be properly conducted at all reasonable times. To the extent permitted by SECTION 4.2.1, nothing herein shall prevent the Company or any Subsidiary from selling or abandoning properties which are not material and are of no further use. 28 4.1.11 Inspection. Permit and cause each Subsidiary to permit the Banks at their own expense, by their representatives and agents, to inspect any of the properties, corporate books and financial records of the Borrower and its Subsidiaries, to examine and make copies of the books of accounts and other financial records of the Borrower and its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with, and to be advised as to the same by, its officers at such reasonable times as the Banks may designate. 4.1.12 Trade Accounts. Pay and cause each Subsidiary to pay all trade accounts in accordance with industry practices. 4.1.13 Use of Proceeds. Use the proceeds of the Loans solely for the purposes herein described. 4.1.14 Reports. File and cause each Subsidiary to file, as appropriate, on a timely basis, annual reports, operating records and any other reports or filings required to be made with any Governmental Authority. 4.1.15 Licenses. Maintain and cause each Subsidiary to maintain in full force and effect all material operating permits, licenses, franchises, and rights used by or useful to the Borrower or a Subsidiary in the ordinary course of business. 4.1.16 Notice of Environmental Matters. Notify the Banks immediately upon obtaining knowledge that to the extent it could reasonably be expected to result in a material adjustment to its financial statements as required by GAAP: (a) any premises which have at any time been owned or occupied by or have been under lease to the Borrower or any Subsidiary are the subject of an environmental investigation by any Governmental Authority having jurisdiction over the regulation of hazardous substances or Environmental Laws, the purpose of which investigation is to quantify the levels of hazardous substances located on such premises, or (b) the Borrower or any Subsidiary has been named or is threatened to be named as a party responsible for the possible contamination of any real property or ground water with hazardous substances, including, but not limited to the contamination of past and present waste disposal sites. If the Borrower or any Subsidiary is notified of any event described at items (a) or (b) above, the Borrower shall, upon request of the Required Banks, immediately engage or cause the Subsidiary to engage a firm or firms of engineers or environmental consultants appropriately qualified to determine as quickly as practical the extent of contamination and the potential financial liability of the Borrower or the Subsidiary with respect thereto, and the Banks shall be provided with a copy of any report prepared by such firm or by 29 any Governmental Authority as to such matters as soon as any such report becomes available to the Borrower or the Subsidiary, provided, however, that as any such report will likely be prepared in anticipation of litigation with respect to such alleged contamination, it shall be reviewed only by such officers of the Banks as have reason to know its contents, and the Banks, unless required by law, shall not disclose the contents or existence of such report to any other person whomsoever without the prior written consent of Borrower. 4.1.17 Subsidiary Guaranties. At the sole discretion of the Required Banks at any time after the assets of the Subsidiaries are at least twenty percent (20%) of the Borrower's Consolidated total assets, the Borrower, upon request of the Required Banks, will cause each Subsidiary to execute and deliver a Guaranty and deliver to Agent such resolutions, opinions and other Loan Documents in connection therewith as Agent may request, all in a form reasonably satisfactory to the Banks. 4.2 Negative Covenants. So long as any Bank has a Commitment hereunder, any Standby Letter of Credit is outstanding, and until the Obligations are paid in full, unless the Required Banks shall otherwise consent in writing, the Borrower will not, nor will it permit any Subsidiary to: 4.2.1 Dispose of Property. Except in the ordinary course of business, sell, transfer, lease or otherwise dispose of its assets or properties, or discount, with or without recourse, any of its accounts receivable, except (a) sales from inventory in the ordinary course of business, (b) occasional sales of obsolete assets for consideration not less than the fair market value thereof, (c) the sale, discount, or transfer of delinquent accounts receivable in the ordinary course of business for purposes of collection, and (d) sales, transfers, leases and other dispositions of other assets, including discounts of accounts receivable, not exceeding Five Million Dollars ($5,000,000) in the aggregate in any twelve (12) month period or 10% of Consolidated Net Worth in the aggregate. 4.2.2 Liens. Create, incur, or suffer to exist, any mortgage, pledge, lien or other encumbrance upon any of its properties or assets, real or personal, tangible or intangible, whether now owned or hereafter acquired, except Permitted Encumbrances. 4.2.3 Merger, Etc. Enter into any merger or consolidation with, or acquisition of, any Person or any substantial portion of its assets, except so long as there exists no Default or Potential Default and no Default or Potential Default would be occasioned thereby, and as long as the Borrower is the survivor, the Borrower may merge or consolidate with or acquire stock or assets or assume liabilities of a Person engaged in the same business as the Borrower, or one similar thereto. 4.2.4 Dividends. Other than to the Borrower, declare or pay any dividends or make any distribution on account of its stock, in cash or other property other than in common stock of the Borrower, or purchase, redeem, retire or otherwise acquire any 30 shares of stock of the Borrower, except so long as no Default or Potential Default then exists or would be occasioned by such payment, purchase, redemption, retirement or acquisition, the Borrower may pay legal dividends and make such legal purchases, redemptions and acquisitions which in the aggregate do not exceed the sum of $8,000,000, plus 50% of Consolidated net income earned after June 30, 1995, taken as one accounting period. 4.2.5 Sell and Leaseback. Enter into any arrangements, directly or indirectly, with a Person whereby the Borrower or any Subsidiary shall sell or transfer any property used or useful in its business and then or thereafter rent or lease such property for substantially the same purpose as the property sold or transferred. 4.2.6 Indebtedness. Create, incur or suffer to exist any Indebtedness or liability under commercial or standby letters of credit, except (a) the Obligations, (b) that listed in SCHEDULE 4.2.6, (c) trade accounts and normal business accruals payable in the ordinary course of business, (d) true operating leases so long as the total rental payments thereunder do not exceed one percent (1%) of net sales in the aggregate in any fiscal year, (e) commercial letters of credit in an amount not to exceed $5,000,000 in the aggregate at any time outstanding, (f) other Indebtedness not to exceed 10% of Consolidated Net Worth at any time, (g) $92 million in Indebtedness issued pursuant to the Note Purchase Agreements between the Company and the purchasers listed therein dated as of July 23, 1993, and the other to be dated subsequent to the date hereof, and (h) the Canadian Dollar equivalent of U.S. $10 million, pursuant to a revolving credit facility for the Borrower's Canadian operations on terms and subject to documentation satisfactory to the Required Banks. 4.2.7 Investments. Make or suffer to exist any investments, or commitments therefor, in any other Person, except (a) Qualified Investments, (b) those in existence on the date hereof and included within the financial statements described in SECTION 3.4, (c) as permitted by SECTIONS 4.2.3 and 4.2.8 hereof, (d) investments in and guarantees of Indebtedness of joint ventures and investments in the stock of customers received in lieu of defaulted accounts receivable which do not exceed in the aggregate ten percent (10%) of Consolidated Net Worth at any time, and (e) other investments which do not exceed $1,000,000 in common stock and other securities which are not Qualified Investments. 4.2.8 Loans and Advances. Make any loan, disbursement or advance to, or investment in, any Person, except (a) extensions of trade credit and advances to suppliers in the ordinary course of business, and (b) loans, disbursements or advances to employees not exceeding Five Hundred Thousand Dollars ($500,000) in the aggregate outstanding at any time. 4.2.9 Guarantees. Make or suffer to exist any guarantees of or otherwise be responsible in any manner with respect to the obligations of any other Person, except (a) endorsements of instruments for deposit or collection in the ordinary course of 31 business, (b) guarantees in favor of the Banks, (c) as permitted by SECTION 4.2.7(d), (d) guarantees of Indebtedness of wholly-owned Subsidiaries, and (e) upon delivery to the Agent of Guarantees required by SECTION 4.1.17 hereof, guarantees of the Subsidiaries of the Indebtedness described in SECTION 4.2.6(g) hereof. 4.2.10 Special Corporate Transactions. Engage in any material transaction with any Person (other than Subsidiaries) other than on an arm's length basis. 4.2.11 Accounting Policies. Change its fiscal year or any of its significant accounting policies, except to the extent necessary to comply with GAAP. 4.2.12 Change of Business. Make any material change in the nature of its business as carried on at the date of this Agreement. 4.2.13 Benefit Plans. Permit any condition to exist in connection with any Plan which could result in the Borrower or a Subsidiary incurring any material liability, fine or penalty. 4.2.14 Margin Stock. Use or cause or permit the proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time. 4.2.15 Other Agreements. Enter into any agreement containing any provision which would be violated or breached in any material respect by the performance of its obligations under this Agreement or under any other Loan Document. 4.2.16 Judgments. Permit uninsured judgments and/or monetary penalties rendered against it or any Subsidiary in excess of Seven Hundred Fifty Thousand ($750,000) in the aggregate in any judicial or administrative proceeding to remain unsatisfied for a period in excess of thirty (30) days unless such judgments and/or penalties are being contested in good faith by appropriate proceedings and execution upon any such judgments have been stayed and appropriate reserves have been established with respect thereto. 4.2.17 Principal Office. Change the location of its principal office unless it gives not less than thirty (30) days prior written notice of such change to the Agent. SECTION 5. CONDITIONS PRECEDENT TO LOANS ---------------------------------------- 5.1 Conditions to Initial Advance. The Banks shall not be obligated to make the initial Advances under their Commitments, and NationsBank shall not be obligated to issue any Standby Letter of Credit unless (a) no Default or Potential Default shall then exist, (b) all legal matters 32 incident to such borrowing shall be satisfactory to the Banks and their counsel, and (c) the following conditions precedent shall have been fulfilled to the satisfaction of the Banks and all of the documents required to be delivered to the Agent or the Banks shall be satisfactory to the Agent and the Banks in form and substance: 5.1.1 Opinion of Counsel. The Banks shall have received a favorable written opinion of counsel to the Borrower as to those matters reasonably required by the Banks. 5.1.2 Organizational Documents. The Agent shall have received certified copies of each of the Borrower's and each (if marked by an asterisk on SCHEDULE 3.15) Subsidiary's articles of incorporation and by-laws, both as amended, accompanied by recent certificates of good standing issued by the Secretary of State of its state of incorporation and those states in which the Borrower or such Subsidiary owns property, maintains offices or conducts business. 5.1.3 Corporate Resolutions. The Agent shall have received certified copies of resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of the Loan Documents, and designating by name and title the officer or officers of the Borrower authorized to execute the Loan Documents. 5.1.4 Incumbency Certificates. The Agent shall have received incumbency certificates, executed by the secretary or assistant secretary of the Borrower, which shall identify the name and title and bear the signature of the officers of the Borrower authorized to sign the Loan Documents, and the Banks shall be entitled to rely upon such certificates until informed of any change in writing by the Borrower. 5.1.5 Loan Documents. The Agent shall have received the Loan Documents duly executed by the authorized officers of the Borrower. 5.1.6 Insurance. The Agent shall have received evidence of insurance showing that the insurance required hereunder to be maintained by the Borrower and its Subsidiaries is in full force and effect. 5.1.7 Facility Fees. The fee due to the Agent before the first Advance or Standby Letter of Credit described in the letter agreement dated this date between the Agent and the Borrower shall have been paid to the Agent. 5.1.8 Repayment of Existing Bank Indebtedness. Repayment in full of all amounts outstanding pursuant to that Credit Agreement among the Borrower, NationsBank of Texas, N.A., Bank One, Indianapolis, National Association, Bank of America Illinois, and NationsBank of Texas, N.A., as Agent, dated as of July 23, 1993, as amended, and cancellation of all commitments thereunder. 33 5.1.9 Additional Documentation. Such other documents as the Banks may reasonably request shall have been delivered to the Agent. 5.2 Conditions to Subsequent Advances. NationsBank shall not be obligated to issue Standby Letters of Credit and the Banks shall not be obligated to make subsequent Advances under their Commitments unless (a) no Default or Potential Default shall then exist, (b) all legal matters incident to such borrowing shall be satisfactory to the Banks and their counsel, and (c) each representation and warranty contained in SECTION 3 hereof shall be and remain true and correct, except to the extent any such representation or warranty relates solely to an earlier date and except changes reflecting transactions permitted by this Agreement. Each borrowing notice or other request for financial accommodation under the Facilities shall constitute a representation or warranty by the Borrower that the applicable conditions contained in this SECTION 5 have been satisfied and shall also constitute the representation and warranty that no material adverse change affecting the Borrower's business, operations, financial condition, properties or prospects has occurred since the date of the last financial statements furnished to the Banks pursuant to SECTION 4.1.1 hereof. SECTION 6. DEFAULT ------------------ 6.1 Events of Default. The occurrence of any one or more of the following events shall constitute a Default: (a) nonpayment of any payment of principal or interest on any of the Notes, or any fee or other payment Obligation in connection with any Facility; or breach by the Borrower or any Subsidiary of any provision of SECTION 4.1 or SECTION 4.2; (b) the breach of any other provision of the Loan Documents which is not remedied within fifteen (15) days after written notice from Agent; (c) any representation or warranty made by the Borrower or any Guarantor to the Banks under or in connection with the Loan Documents is false or misleading in any material respect as of the date made; (d) the Borrower or a Subsidiary shall (i) have an order for relief entered with respect to it under the Federal Bankruptcy Act, (ii) admit in writing its inability to pay its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, consent to, or acquiesce in, the appointment of a receiver, trustee, liquidator or similar official for it or any substantial part of its property, (v) institute any proceeding seeking any order for relief under the Federal Bankruptcy Act or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debtors under any law relating 34 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, (vi) fail to have vacated or set aside within thirty (30) days of its entry any order of a court appointing without its consent a receiver, trustee, liquidator or similar official for it or any substantial part of its property; (e) without the application, approval or consent of the Borrower or a Subsidiary, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower, or a Subsidiary or any substantial part of its property, or any proceeding described in item (d) shall be instituted against the Borrower or a Subsidiary and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of thirty (30) consecutive days; (f) any order is entered in any proceedings against the Borrower or a Subsidiary decreeing the dissolution or split-up of the Borrower or a Subsidiary or the divestiture of a substantial portion of the assets of the Borrower or a Subsidiary, which order is not vacated or set aside within thirty (30) days of its entry, or any Governmental Authority shall condemn, seize or otherwise appropriate, or take custody or control of all or any substantial portion of the property of the Borrower or a Subsidiary; (g) there occurs any Reportable Event or Prohibited Transaction under, or any complete or partial withdrawal from, or any other event which would constitute grounds for termination of or the appointment of a trustee to administer, any Plan maintained by the Borrower or any ERISA Affiliate for the benefit of its Employees (as such terms are defined in ERISA) which could have a material adverse effect on the financial condition of the Borrower or any of its Subsidiaries; (h) the failure of the Borrower or a Subsidiary to pay when due or within any applicable grace or cure period its obligations for (A) other borrowed money, (B) the deferred purchase price of property or services (exclusive of the failure to pay trade payables), or (C) trade payables more than thirty (30) days past due, if such defaulted or past due obligations in (A) through (C) exceed One Million Dollars ($1,000,000) in the aggregate at any time, or the default by the Borrower or any Subsidiary in the performance of any other term, provision or condition contained in any agreement under which any such obligation was created or governed, the effect of which is to permit, with the giving of notice or lapse of time, or both, the holder of such obligation to cause such obligation to become due prior to its stated maturity, unless such default is waived in writing by the holder of such obligation; or any of such obligation shall be validly declared to be due and payable or required to be prepaid prior to the stated maturity thereof; 35 (i) any default by a Guarantor under a Guaranty or the termination or revocation or the attempted termination or revocation of a Guaranty by a Guarantor; or (j) If a Person controls (as that term is defined in the second sentence of the definition of Bank Affiliate) the Borrower. 6.2 Acceleration. If any Default described in SECTION 6.1, ITEM (D) or (E), occurs, the commitments of the Banks to make, renew or convert Advances of the Loans, or to issue Standby Letters of Credit hereunder shall automatically terminate and the Obligations (including, without limitation, an obligation to deposit with the Agent a sum equal to the aggregate face amount of the outstanding Standby Letters of Credit pursuant to SECTION 6.4 hereof) shall immediately become due and payable without any election or action on the part of any Bank. If any other Default occurs, then upon the declaration of the Required Banks, or the Agent, at the direction of the Required Banks, the obligations of the Banks to make, renew or convert Advances of the Loans, and the obligation of NationsBank to issue Standby Letters of Credit under this Agreement shall terminate and the Obligations (including, without limitation, an obligation to deposit with the Agent a sum equal to the aggregate face amount of the outstanding Standby Letters of Credit pursuant to SECTION 6.4 hereof) shall immediately become due and payable. In either event, 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. The remedies of the Banks specified in this Agreement and the other Loan Documents shall not be exclusive and the Banks may avail themselves of any of the remedies provided by law as well as any equitable remedies available to the Banks, and each and every remedy shall be cumulative and concurrent and shall be in addition to every other remedy now or hereafter existing at law or in equity. 6.3 Subrogation. NationsBank shall, to the extent of any payments made by NationsBank under any Standby Letter of Credit, be subrogated to all rights of the beneficiary of such Standby Letter of Credit as to all obligations of the Borrower with respect to which such payment shall have been made by NationsBank. 6.4 Deposit to Secure Reimbursement Obligations. When any Default or Potential Default has occurred and is continuing, the Required Banks or the Agent at the direction of the Required Banks may demand that the Borrower immediately pay to the Agent an amount equal to the aggregate outstanding amount of the Standby Letters of Credit and the Borrower shall immediately upon any such demand make such payment. The Borrower hereby irrevocably grants to the Agent for the benefit of NationsBank (for itself and any Bank participating in such Standby Letters of Credit) a security interest in all funds deposited to the credit of or in transit to any deposit account or fund established pursuant to this SECTION 6.4, including, without limitation, any investment of such fund. The Borrower hereby acknowledges and agrees that the Agent and NationsBank would not have an adequate remedy at law for failure by the Borrower to honor any demand made under this SECTION 6.4 and that the Agent and NationsBank shall have the right to require the Borrower specifically to perform its undertakings in this SECTION 6.4 36 whether or not any draws have been made under any Standby Letter of Credit. In the event the Agent or NationsBank makes a demand pursuant to this SECTION 6.4, and the Borrower makes the payment demanded, the Agent agrees to invest the amount of such payment for the account of the Borrower and at the Borrower's risk and direction in Qualified Investments. 6.5 Preservation of Rights. No delay or omission of the Agent or any Bank to exercise any power or right under the Loan Documents shall impair such power or right or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any power or right shall not preclude other or further exercise thereof or the exercise of any other power or right. No Advance hereunder shall constitute a waiver of any of the conditions of any Bank's obligation to make further Advances, nor, in the event Borrower is unable to satisfy any such condition, shall a waiver of such condition in any one instance have the effect of precluding any Bank from thereafter declaring such inability to be a Default hereunder. No course of dealings shall be binding upon the Agent or any Bank. SECTION 7. THE AGENT -------------------- 7.1 Appointment. Each of the Banks hereby designates and appoints NationsBank as the Agent of such Bank under this Agreement and the other Loan Documents, and each such Bank authorizes NationsBank, as Agent to act as the Agent for such Bank. The duties of the Agent shall be administrative in nature, and the Agent shall not have a fiduciary relationship in respect of any Bank by reason of this Agreement, and the Agent shall not be deemed to have assumed any obligation towards or relationship or agency or trust with or for the Borrower. The provisions of this SECTION 7 are solely for the benefit of the Agent and the Banks, and the Borrower shall not have any rights as a third party beneficiary of any of the provisions hereof. 7.2 Powers. The Agent shall have and may exercise such powers hereunder and under the other Loan Documents as are specifically delegated to the Agent by the terms hereof and thereby, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Banks, or any obligation to the Banks to take any action hereunder or thereunder except any action specifically provided by this Agreement or the other Loan Documents to be taken by the Agent. The Agent shall take such action or refrain from taking such action as is directed by the Required Banks, or, if this Agreement or the Loan Documents requires that such direction shall be given by all of the Banks, then by all the Banks. 7.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted to be taken by it under or in connection with this Agreement or the other Loan Documents except for its or for such person's own gross negligence or willful misconduct, or be responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent or any of the Banks under or in connection with this Agreement or for the value, validity, effectiveness, genuineness, 37 enforceability or sufficiency of this Agreement or any of the other Loan Documents or for any failure of the Borrower to perform the Obligations. The Agent shall not be under any obligation to any of the Banks to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or the conditions of, this Agreement. The Agent shall be fully justified in failing or refusing to take any action hereunder or under the other Loan Documents unless it shall first be indemnified to its satisfaction by the Banks pro rata against any and all liability and expense which may be incurred by it or by reason of taking or continuing to take any such action. 7.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person. The Agent shall in all cases be fully protected in acting, or refraining from acting, hereunder or under the other Loan Documents in accordance with written instructions signed by the Required Banks pursuant to SECTION 6.2, 6.4, 7.5, 7.9, or 8.1, or signed by all of the Banks as required by SECTION 8.1 hereof, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all the Banks and on all holders of the Notes. Further, the Agent shall be entitled to rely, with respect to legal matters, upon the opinion of counsel selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent. Any requests, 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. 7.5 Defaults/Notices. Except for a Default specified in SECTION 6.1(A) hereof, the Agent shall not be deemed to have knowledge of the occurrence of any Default or Potential Default unless the Agent has received written notice from a Bank or the Borrower specifying such Default or Potential Default and stating that such notice is a "NOTICE OF DEFAULT". In the event that the Agent receives such a notice, the Agent shall promptly give written notice thereof to the Banks. Any time a Bank has actual knowledge of the occurrence of any Default or Potential Default, such Bank shall promptly give written notice thereof to the Agent. The Agent shall take such action with respect to a Default or a Potential Default as shall be reasonably directed in writing by the Required Banks or all the Banks, as applicable, provided, however, that, unless and until the Agent shall have received such direction, the Agent may take such action, or refrain from taking such action with respect thereto, as it shall deem advisable in the best interests of the Banks. The Agent shall have no obligation to impose or collect the Default rate of interest as provided in SECTION 2.3.1 hereof unless and until instructed in writing by the Required Banks, which written instruction shall include the Required Banks' determination of the date of Default and the amount of interest due and payable by the Borrower. 7.6 Non-Reliance on Agent and Other Banks. Each Bank expressly acknowledges that neither the Agent nor any of its officers, directors, employees or agents has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or 38 warranty by the Agent to any of the Banks. Each Bank represents to the Agent that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, financial condition and creditworthiness of the Borrower and made its own decision to make its loans hereunder and enter into this Agreement. Each Bank also represents that it will independently and without reliance upon the Agent or the other Banks, and based upon such documents and information as it may deem appropriate at the time, continue to make its own credit analysis and decisions in taking or not taking action under this Agreement. The Agent makes no representation or warranty of any kind with respect to the validity, enforceability, legality or sufficiency of the Loan Documents or any of the other documents referred to or contemplated herein or therein. 7.7 Rights as Bank. The Agent shall have the same rights and powers hereunder as any Bank and may exercise the same as though it were not the Agent, and the term "BANK" or "BANKS" shall, 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 banking or trust business with the Borrower as if it were not the Agent. The Borrower hereby authorizes the Agent, as the Agent may elect in its sole discretion, to discuss with and furnish to the Banks or for a proper business purpose to any other Person having an interest in the Obligations (whether as a guarantor, pledgor, participant, purchaser or otherwise) all financial statements, audit reports and other information pertaining to the Borrower whether such information was provided by the Borrower or prepared or obtained by the Agent. Neither the Agent nor any of its employees, officers, directors or agents makes any representation or warranty regarding any audit reports or other analysis of the Borrower's condition which the Agent may elect to distribute, whether such information was provided by the Borrower or prepared or obtained by the Agent, nor shall the Agent or any of its employees, officers, directors or agents be liable to any Person receiving a copy of such reports or analysis for any inaccuracy or omission contained therein or relating thereto. 7.8 Agent's Indemnification and Reimbursement. The Banks agree to indemnify and to reimburse the Agent (to the extent not reimbursed by the Borrower) according to their Pro Rata Shares, from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed upon, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or the other Loan Documents or any action taken or omitted by the Agent under this Agreement or the other Loan Documents, provided that no Bank shall be liable for any portion of the foregoing resulting from the Agent's gross negligence or willful misconduct. Without limiting the foregoing, each Bank agrees to indemnify and reimburse the Agent (to the extent not reimbursed by the Borrower) promptly upon demand for its Pro Rata Share, (a) for any expenses not reimbursed by the Borrower and for which the Agent is entitled to reimbursement by the Borrower hereunder, and (b) for all out-of-pocket expenses (including, without limitation, fees and disbursements of counsel) incurred by the Agent on behalf of the Banks in connection with the preparation, administration (other than ordinary expenses of administration and Agent's 39 fees), or enforcement of, or legal advice in respect its rights or responsibilities under this Agreement. 7.9 Successor Agent. The Agent may resign at any time by giving written notice thereof to the Banks and the Borrower and may be removed at any time with or without cause by the Required Banks. The Agent may also be removed by all the Banks (except for a Bank that is also the Agent) for gross negligence or willful misconduct of its obligations under this Agreement or the other Loan Documents. Upon any such resignation or removal, the Required Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving notice of resignation, then the retiring Agent may appoint a successor Agent. Such successor Agent shall be a commercial bank having capital and retained earnings of at least One Hundred Million Dollars ($100,000,000). 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 retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this SECTION 7 shall continue in effect for its benefit with respect to any actions taken or omitted to be taken by it while it was acting as the Agent hereunder. SECTION 8. GENERAL PROVISIONS ----------------------------- 8.1 Waivers, Amendments and Remedies. No delay or omission of the Agent or any of the Banks to exercise any power or right under the Loan Documents shall impair such power or right or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such power or right shall not preclude other or further exercise thereof or the exercise of any other power or right. No waiver, amendment, modification, consent or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing and signed by the Required Banks, and, to the extent any rights or duties of the Agent may be affected thereby, the Agent; provided, however, that no waiver, amendment, modification, consent or other variation shall without the consent of the Agent and all of the Banks (a) authorize or permit the extension of time for paying the principal of, or interest on, the Obligations, or any fees payable thereunder, or any reduction in the principal amount thereof or the rate of interest or fees thereon, (b) amend (i) the respective percentages of the Banks' Commitments, (ii) the definition of Required Banks or the percentage of Banks required to take or approve any action hereunder, or (iii) provisions of this SECTION 8.1 or SECTIONS 6.1 or 6.2, (c) release any Guaranty, or (d) waive, amend, or modify any other provision of the Loan Documents or a Guaranty which creates an obligation on the part of the Borrower or any Guarantor to indemnify the Agent or any Bank or to pay money to the Agent or any Bank. Except for waivers and consents granted by the Required Banks for violations and requests by the Borrower with respect to the provisions of SECTION 4, no amendment or modification of the provisions of SECTIONS 4.1.2, 4.1.3, and 4.1.4, shall be valid without the written agreement of all the Banks. Any such waiver, amendment, modification or consent shall be effective only in the specific instance and for the specific purpose for which given. All 40 remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Banks until the Obligations have been paid in full. 8.2 Taxes. Any taxes (excluding income taxes payable by the Banks) payable or ruled payable by federal or state authority in respect of the Loan Documents shall be paid by the Borrower together with interest and penalties, if any. 8.3 Successors and Assigns. The Loan Documents shall be binding upon and inure to the benefit of the Borrower, the Banks and the Agent, and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights under the Agreement or any interest herein, without the prior written consent of the Banks. 8.4 Waiver of Setoff. The Borrower agrees that it will not exercise any right of setoff on any of the Notes or assert any claim for reduction or credit against any of the Notes except when actual payment has been made. 8.5 Severability. If any provision of any of the Loan Documents is contrary to the governing law, the same shall not invalidate any of the other provisions hereof or thereof. 8.6 ENTIRE AGREEMENT. A CREDIT AGREEMENT IN WHICH THE AMOUNT INVOLVED EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY'S AUTHORIZED REPRESENTATIVE. THE RIGHTS AND OBLIGATIONS OF THE BORROWER, THE GUARANTORS, THE BANKS, AND THE AGENT SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN SUCH PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE BORROWER, ANY GUARANTOR, ANY BANK, AND/OR THE AGENT REPRESENT THE FINAL AGREEMENT BETWEEN THE BORROWER, THE GUARANTORS, THE BANKS, AND THE AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN SUCH PARTIES. THIS PARAGRAPH IS INCLUDED HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED FROM TIME TO TIME. 8.7 Several Obligations. The respective obligations of the Banks hereunder are several and not joint and no Bank shall be or be deemed to 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 Bank to perform any of its obligations hereunder shall not relieve any other Bank from any of its obligations hereunder. 41 8.8 Costs and Expenses. The Borrower shall reimburse the Agent for any and all reasonable costs, charges and out-of-pocket expenses, including, without limitation, reasonable fees and out-of-pocket expenses of counsel for the Agent, paid or incurred by the Agent in connection with the preparation, review, execution, delivery, amendment, modification, and administration of the Loan Documents. The Borrower shall also reimburse the Agent and each Bank for any and all reasonable costs, charges and out-of-pocket expenses, including, without limitation, reasonable fees and out-of-pocket expenses of counsel, paid or incurred in connection with the collection and enforcement (whether through negotiations, legal proceedings or otherwise) of the Loan Documents. Any Bank may pay or deduct from the loan proceeds any of such expenses, and any proceeds so applied shall be deemed to be Advances under this Agreement evidenced by the Notes, shall bear interest at the rate of interest provided in the Notes, and, if such payment or deduction results in any over-borrowing hereunder, shall be payable on demand. 8.9 CHOICE OF LAW. UNLESS OTHERWISE SPECIFICALLY STATED IN A LOAN DOCUMENT, THE LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES THEREUNDER AND HEREUNDER SHALL BE GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, NOTWITHSTANDING THE FACT THAT TEXAS CONFLICT OF LAW RULES MIGHT OTHERWISE REQUIRE THE SUBSTANTIVE RULES OF LAW OF ANOTHER JURISDICTION TO APPLY. THE BORROWER CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY, TEXAS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS MADE UPON THE BORROWER. ALL SERVICE OF PROCESS MAY BE MADE BY MESSENGER, CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED IN SECTION 8.11 HEREOF. THE BORROWER WAIVES ANY OBJECTION WHICH THE BORROWER MAY HAVE TO ANY PROCEEDING COMMENCED IN A FEDERAL OR STATE COURT LOCATED WITHIN DALLAS COUNTY, TEXAS, BASED UPON IMPROPER VENUE OR FORUM NON CONVENIENS. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANKS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. 8.10 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. 8.11 Notices. Any notice required or permitted to be given under this Agreement or any of the Loan Documents may be, and shall be deemed, given when actually delivered, or, if mailed, shall be deemed to have been given five (5) days after the date when sent by registered or certified United States mail, or, if by telex, shall be deemed to have been given upon receipt of the appropriate answerback, addressed to Agent or any Bank at the address specified on SCHEDULE 1.1, or if to the Borrower, as follows: 42 800 East 101st Terrace Kansas City, Missouri 64131 Attention: Treasurer Notwithstanding the foregoing, any notices to the Agent shall not be effective until actually received. The Borrower and the Banks may each change the address for service of notice upon it by a notice in writing to the others pursuant to this Section. 8.12 Counterparts . This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement. 8.13 Participations and Assignments. ------------------------------ 8.13.1 Participations . No Bank may participate, sell, transfer or assign all or any portion of its rights and obligations under this Agreement or its Loans without the prior written consent of the Borrower and the Agent, except without any consent of the Borrower or the Agent, any Bank may sell participations of all or part of any interest in its Loans to any Bank Affiliate; and provided, however, the Borrower's consent shall not be required during the continuance of a Default. The Borrower agrees that any permitted participant shall, subject to the provisions of SECTION 8.18, at any time during a Default have the right to set off obligations owed to such participant and not paid when due against any accounts or other assets of the Borrower held by, on deposit with or in the possession of such participant. 8.13.2 Assignments. Subject to the provisions of this section (and if no Default is continuing, upon the prior written consent of the Borrower and the Agent), any Bank may, in the ordinary course of its commercial banking business and in accordance with applicable law, sell to one or more financial institutions (each a "PURCHASER") a proportionate part (not less than $5,000,000 and in integral multiples of $1,000,000) of all or any part of its rights and obligations under the Loan Documents, and such Purchaser shall assume such rights and obligations, pursuant to an assignment agreement reasonably acceptable to the Agent. Upon delivery of an executed copy of the assignment agreement to the Borrower and the Agent and payment to the Agent of an administrative fee of $2,500 by the selling Bank, from and after the assignment's effective date (which shall be after the date of such delivery), such Purchaser shall for all purposes be a Bank party to this agreement and shall have all the rights and obligations of a Bank under this agreement to the same extent as if it were an original party hereto with a Commitment as set forth in the assignment agreement, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent (which may be 100% if it has sold 100% of its interest in the Obligations and Loan Documents), and, except as provided in the following sentence, no further consent or action by the Borrower, the Banks, or the Agent shall be required. Upon the consummation of any transfer to a Purchaser pursuant to this clause, SCHEDULE 1.1 shall automatically be deemed to reflect the name, address, and Commitment of such Purchaser, the Agent shall deliver to the Borrower and the 43 Banks an amended SCHEDULE 1.1 reflecting such changes, the Borrower shall execute and deliver to each of the transferor Bank and such Purchaser a Note in the face amount of its Commitment following such transfer, and, upon receipt of such Note, such transferor Bank shall return to the Borrower the Note previously delivered to such Bank hereunder. A Purchaser shall be subject to all the provisions in this section and to SECTION 8.3 the same as if it were a Bank signatory hereto as of the date of this agreement. 8.14 Setoff. Upon the occurrence of a Default, each Bank is authorized at any time and from time to time thereafter, without notice to the Borrower, to set off, appropriate and apply any and all monies, securities and other property of the Borrower now or hereafter held or received by, or in transit to, any Bank from or for the Borrower, against any Obligation in such order and manner as the Banks may reasonably determine or as provided in this Agreement. 8.15 Indemnification. The Borrower agrees to indemnify each Bank, and its respective successors and assigns (including any purchaser of any participation in the Facilities), and its directors, officers and employees, against all losses, claims, costs, damages, liabilities and expenses, including, without limitation, all expenses of litigation or preparation therefor (a "LOSS"), which it may pay or incur in connection with or arising out of the direct or indirect application of the Proceeds of the Advances hereunder, and in connection with any mergers, consolidations or acquisitions permitted hereunder, unless such Loss is occasioned by the gross negligence or wilful misconduct of such Bank. Without limiting the generality of the foregoing, the Borrower agrees to indemnify and hold harmless each Bank, and its respective successors and assigns (including any purchaser of a participation in the Facilities) and its directors, agents, attorneys, officers and employees from and against any Loss which any of them may pay or incur in investigating, preparing for, defending against, or providing evidence, producing documents or taking any other action in respect of any commenced or threatened litigation, administrative proceeding or investigation under any federal securities law or any other statute, regulation, or rule of common law. The indemnity set forth herein shall be in addition to any other Obligations of the Borrower to the Banks hereunder or at common law or otherwise, and shall survive any termination of this Agreement, the expiration of this Agreement and the payment of all Obligations. Payments by the Borrower under this SECTION 8.15 shall not reduce any other Obligations. 8.16 Additional Amounts Payable. If any change in any existing law or the enactment, adoption or judicial or administrative interpretation of any law, regulation, treaty, guideline or directive (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System), whether or not having the force of law, or compliance with the same by any Bank, either (a) subjects any Bank to any additional tax, duty, charge, deduction or withholding with respect to any of the Facilities (other than a tax measured by the net or gross income of such Bank), or (b) imposes or increases any reserve, special deposit or similar requirement on account of any of the Facilities not otherwise provided for in this Agreement, or (c) imposes increased minimum capital requirements on any Bank on account of its issuing or maintaining any of the Facilities; and if any of the foregoing (w) results in an increase to such Bank in the cost of issuing or maintaining any of the Facilities, or making any payment on account of any 44 of the Facilities, (x) reduces the amount of any payment receivable by such Bank under this Agreement with respect to any of the Facilities, (y) requires such Bank to make any payment calculated by reference to the gross amount of any sum received or paid by such Bank pursuant to any of the Facilities, or (z) reduces the rate of return on such Bank's capital to a level below that which such Bank could otherwise have achieved (taking into consideration such Bank's policies with respect to Capital Adequacy) for which such costs, payment or reduction such Bank is not compensated pursuant to SECTION 2.3.3(F), then the Borrower shall pay to such Bank, as additional compensation for the Facilities, such amounts as will compensate such Bank for such increased cost, payment or reduction. Within twenty (20) days after (i) the initial demand therefor, which initial demand, if made, shall be given by such Bank within sixty (60) days after such Bank could calculate the increased cost, payment or reduction and (ii) presentation by such Bank of a certificate to the Borrower containing a statement of the cause of such increased cost, payment or reduction and a calculation of the amount thereof (which statement and calculation shall be presumed to be correct), the Borrower shall pay the additional amount payable measured from the date such change, enactment, adoption or interpretation first affects such Bank; provided, however, that if a Bank fails to make such initial demand within such sixty (60) day period, such Bank shall, with respect to compensation payable pursuant to this SECTION 8.16, only be entitled to payment under this SECTION 8.16 for such additional compensation from and after the date sixty (60) days prior to the date such Bank makes its initial demand for additional compensation. 8.17 Banks Not in Control. None of the covenants or other provisions contained in the Loan Documents shall or shall be deemed to, give the Banks the rights or power to exercise control over the affairs and/or management of the Borrower, any of its Subsidiaries or any Guarantor, the power of the Banks being limited to the right to exercise the remedies provided in the Loan Documents; provided, however, that if any Bank becomes the owner of any stock or other equity interest in, any Person whether through foreclosure or otherwise, such Bank shall be entitled (subject to requirements of law) to exercise such legal rights as it may have by being owner of such stock, or other equity interest in, such Person. 8.18 Adjustments. If any Bank (a "BENEFITED BANK") shall at any time receive any payment of all or any part of the Obligations hereunder, or interest thereon, or receive any collateral in respect thereof (whether by set-off or otherwise) in a greater proportion than its ratable portion, such Benefited Bank shall purchase for cash from the other Banks such portions of the other Banks' Notes, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause the Benefited Bank to share the excess payment or benefits of such collateral or proceeds ratably with the other Banks; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from the Benefited Bank, such purchase shall be rescinded, and the purchase price and benefits returned to the extent of such recovery, but without interest. The Borrower agrees that each Bank so purchasing a portion of another Bank's Notes may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Bank were the direct holder of such portion. 45 8.19 Application of Proceeds. Notwithstanding any contrary provision of any other Loan Document, after the occurrence of a Default and acceleration of the Obligations, including, without limitation, proceeds received, shall be applied by the Agent to payment of the Obligations in the following order: (a) First, to payment of all costs and expenses of the Agent and the Banks incurred in connection with the preservation, collection and enforcement of the Obligations; (b) Second, to the payment of that portion of the Obligations constituting accrued and unpaid interest and fees, pro rata among the Banks in accordance with their Pro Rata Shares; (c) Third, to the payment of the principal amount of the Obligations, pro rata among the Banks in accordance with their Pro Rata Shares; (d) Fourth, to the payment of any other Obligations not referred to above to the Agent or any of the Banks as may be properly payable; and (e) Fifth, the balance, if any, after all the Obligations have been satisfied, shall be returned to the Borrower. 8.20 Exceptions to Covenants. Neither the Borrower nor any Subsidiary shall take any action or fail to take any action which is permitted as an exception to any of the covenants contained in any Loan Document if such action or omission would result in the breach of any other covenant contained in any of the Loan Documents. 8.21 Survival. All covenants, agreements, undertakings, representations, and warranties made in any of the Loan Documents shall survive all closings under the Loan Documents and, except as otherwise indicated, shall not be affected by any investigation made by any party. All rights of reimbursement and indemnification shall survive termination of this Agreement and payment in full of the Obligations. 46 IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this Agreement as of the date first above written. THE RIVAL COMPANY, a Delaware corporation By: /s/ Stanley D. Biggs ------------------------------------ Its: Vice President, Treasurer ------------------------------------ NATIONSBANK OF TEXAS, N.A., as Agent and a Bank By: ------------------------------------ Its: ------------------------------------ BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a Bank By: ------------------------------------ Its: ------------------------------------ BANK OF AMERICA ILLINOIS, a Bank By: ------------------------------------ Its: ------------------------------------ IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this Agreement as of the date first above written. THE RIVAL COMPANY, a Delaware corporation By: ----------------------------------- Its: ----------------------------------- NATIONSBANK OF TEXAS, N.A., as Agent and a Bank By: /s/ Perry B. Stephenson ----------------------------------- Perry B. Stephenson Its: ----------------------------------- Senior Vice President BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a Bank By: ----------------------------------- Its: ----------------------------------- BANK OF AMERICA ILLINOIS, a Bank By: ----------------------------------- Its: ----------------------------------- IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this Agreement as of the date first above written. THE RIVAL COMPANY, a Delaware corporation By: ----------------------------------- Its: ----------------------------------- NATIONSBANK OF TEXAS, N.A., as Agent and a Bank By: ----------------------------------- Its: ----------------------------------- BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a Bank By: ----------------------------------- Its: ----------------------------------- BANK OF AMERICA ILLINOIS, a Bank By: /s/ R. Guy Stapleton ----------------------------------- R. Guy Stapleton Its: ----------------------------------- Managing Director IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have executed this Agreement as of the date first above written. THE RIVAL COMPANY, a Delaware corporation By: ----------------------------------- Its: ----------------------------------- NATIONSBANK OF TEXAS, N.A., as Agent and a Bank By: ----------------------------------- Its: ----------------------------------- BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a Bank By: /s/ Anthony Schlichte ----------------------------------- Its: Vice President & Manager ----------------------------------- BANK OF AMERICA ILLINOIS, a Bank By: ----------------------------------- Its: ----------------------------------- SCHEDULE 1.1 ------------ BANKS AND COMMITMENTS ---------------------
Bank and Address Commitment ===================================================== NationsBank of Texas, N.A. $33,000,000 901 Main Street, 67th Floor Dallas, Texas 75202 Telecopy No. (214) 508-0980 Attn: Perry B. Stephenson Senior Vice President ===================================================== Bank One, Indianapolis, National 21,000,000 Association Bank One Center-Tower 111 Monument Circle, Suite 1911 Indianapolis, Indiana 46277-0119 Telecopy No. (317) 321-8830 Attn: Holly Fischer Durbin Relationship Manager ===================================================== Bank of America Illinois 21,000,000 231 South La Salle Street Chicago, Illinois 60697 Telecopy No. (312) 987-1276 Attn: R. Guy Stapleton Managing Director ===================================================== TOTAL $75,000,000 =====================================================
SCHEDULE 3.15 ------------- THE RIVAL COMPANY ----------------- SUBSIDIARIES ------------ Each is 100 percent owned by The Rival Company: Rival Manufacturing of Canada, Ltd, a Canadian Corporation * Waverly Products Company Limited, a Jamaican Corporation Pollenex Corporation, a Missouri Corporation * Fasco Consumer Products, Inc., a Delaware Corporation * Patton Electric Company, Inc., an Indiana Corporation * Patton Electric Company, Hong Kong, Ltd., a Hong Kong Corporation A 100 percent owned subsidiary of Rival Canada: RC Acquisition, Inc., a Canadian Corporation A 100 percent owned subsidiary of RC Acquisition, Inc.: Bionaire Inc., a Canadian Corporation * Each is either directly or indirectly, a 100 percent owned subsidiary of Bionaire Inc.: Bionaire Corporation, a New Jersey Corporation * Bionaire International B.V., a Netherlands Corporation Bionaire Worldwide Management, Inc., a Florida Corporation Bionaire France, a French Corporation SCHEDULE 3.16 ------------- THE RIVAL COMPANY ----------------- ENVIRONMENTAL COMPLIANCE ------------------------ Kansas City, Missouri: In June, 1992, the Company terminated the lease of its former office/warehouse facility at 36th and Bennington, Kansas City, Missouri. Upon lease termination, the landlord engaged an engineer to perform an environmental study of the property. The landlord has performed some remediation at the site. The Company has not determined the extent of its responsibility, if any, for such expense. SCHEDULE 4.2.2 -------------- THE RIVAL COMPANY ----------------- LIENS ----- Liens on assets of Bionaire Inc. and its subsidiaries related to a Secured Revolving Credit and Term Loan Facility between Bionaire Inc. and Royal Bank of Canada with an unpaid balance of approximately U.S. $6 million. SCHEDULE 4.2.6 -------------- THE RIVAL COMPANY ----------------- EXISTING INDEBTEDNESS --------------------- 8.21.1 Indebtedness pursuant to the Credit Agreement among The Rival Company and NationsBank of Texas, N.A., Bank One, Indianapolis, N.A., and Bank of America Illinois, dated as of July 23, 1993, as amended, which will be paid in full with the proceeds of the first Advances pursuant to the Credit Agreement, as required by SECTION 5.1.11 thereof. Indebtedness pursuant to a $15 million Promissory Note dated March 25, 1996, between The Rival Company and NationsBank of Texas, N.A., which will be paid either at its stated maturity or, if issued before then, with the proceeds of the Indebtedness issued pursuant to the Note Purchase Agreement to be dated subsequent to the date hereof. Indebtedness of Bionaire Inc. pursuant to a Secured Revolving Credit and Term Loan Facility with an unpaid balance of approximately U.S. $6 million between Bionaire Inc. and Royal Bank of Canada. Schedule 4.2.6 -------------- EXHIBIT A --------- PROMISSORY NOTE --------------- $______________________ April 15, 1996 FOR VALUE RECEIVED, THE RIVAL COMPANY, a Delaware Corporation ("MAKER"), promises to pay to the order of _____________________________________ ("PAYEE") that portion of the principal amount of $________________________ that may be disbursed and outstanding under this note, together with interest. This note is one of the "Notes" under the Credit Agreement dated as of the same date as this note (as renewed, extended, amended, supplemented, replaced, or restated, the "CREDIT AGREEMENT"), among Maker, Payee and certain other "Banks," and NationsBank of Texas, N.A. (as agent for itself and other Banks, "AGENT"). All of the defined terms in the Credit Agreement have the same meanings when used in this note. This note incorporates by reference the principal and interest payment terms in the Credit Agreement for this note -- including, without limitation, the final maturity of the last day of the Commitment Period. This note incorporates by reference all other provisions in the Credit Agreement applicable to this note -- such as provisions for disbursements of principal, applicable interest rates before and after Default, voluntary and mandatory prepayments, acceleration of maturity, exercise of rights, payment of attorneys' fees, court costs, and other costs of collection, and certain waivers, choice of Texas and United States federal law, usury savings, and other matters applicable to "Loan Documents" under the Credit Agreement. THE RIVAL COMPANY, Maker By ____________________________________________ (Name) ____________________________________________ (Title)____________________________________________ Exhibit A --------- EXHIBIT B --------- APPLICATION FOR ADVANCE ----------------------- Date: _____________________ NationsBank of Texas, N.A. 901 Main Street Dallas, Texas 75202 Gentlemen: The Rival Company hereby requests an Advance in the amount of $_____________ under the Loans provided for in that certain Credit Agreement dated as of April 15, 1996, (the "Agreement"), among The Rival Company, certain "Banks" and NationsBank of Texas, N.A. ("NationsBank") individually and as agent for itself and the Banks ("Agent"). Please disburse this Advance by crediting the amount thereof to The Rival Company's Account No. ____________________ maintained with NationsBank. Capitalized terms not specifically defined herein shall have the meaning described in the Agreement. In connection with this request, the undersigned certifies as follows: The undersigned is an Authorized Officer of The Rival Company. Each of the representations and warranties contained in Section 3 of the Agreement (each as modified or otherwise affected by Section 5.2) are true and correct as of this date. No material adverse change affecting The Rival Company's business, operations, financial condition, properties or prospects has occurred since the date of the last financial statements furnished to the Banks pursuant to Section 4.1.1 of the Agreement. No Default or Potential Default currently exists. Very truly yours, THE RIVAL COMPANY By:_______________________________________ ------------------------------------------ (Printed Name) AUTHORIZED OFFICER OF THE RIVAL COMPANY EXHIBIT B EXHIBIT D --------- COMPLIANCE CERTIFICATE FOR _______________ ENDED _______________, 199__ (the "SUBJECT PERIOD") AGENT: NationsBank of Texas, N.A. DATE: ______________, 199__ BORROWER: The Rival Company - -------------------------------------------------------------------------------- This certificate is delivered under the Credit Agreement, as it may be from time to time renewed, extended, amended, replaced, or restated, (the "CREDIT AGREEMENT") dated as of April 15, 1996, among The Rival Company, NationsBank of Texas, N.A., as a Bank and the Agent, and certain financial institutions listed and referred to as Banks in the Credit Agreement. Unless stated otherwise, all capitalized terms in this Certificate shall have the same meanings ascribed to them in the Credit Agreement. I certify to the Agent and the Banks that, on the date of this certificate, (a) I am an Authorized Officer of the Borrower; (b) the financial statements of the Borrower attached to this certificate were prepared in accordance with GAAP, and present fairly the (consolidated and consolidating, if applicable) financial condition and results of operations of the Borrower as of, and for the (quarter or fiscal year) ended on, the last day of the Subject Period; (c) a review of the activities of the Borrower and its subsidiaries during the Subject Period has been made under my supervision with a view to determining whether, during the Subject Period, the Borrower and its subsidiaries performed and complied with all of their obligations under the Loan Documents, and during the Subject Period, to my knowledge (i) the Borrower and its subsidiaries performed and complied with all of their obligations under the Loan Documents (except for the deviations, if any, set forth on a schedule annexed to this certificate) in all material respects, and (ii) no Default (nor any Potential Default) has occurred which has not been cured or waived (except the Defaults or Potential Defaults, if any, described on the schedule annexed to this certificate); and (d) to my knowledge, the status of compliance by the Borrower with SECTIONS 4.1.2, 4.1.3 AND 4.1.4 of the Credit Agreement at the end of the Subject Period is as set forth on the schedule annexed to this certificate. By __________________________________________________ (Name) __________________________________________________ (Title) __________________________________________________ SCHEDULE TO COMPLIANCE CERTIFICATE 8.22 Describe deviations from performance or compliance with covenants, if any -- CLAUSE (C)(I) of attached certificate -- if none, so state: 8.23 Describe Defaults or Potential Defaults, if any -- CLAUSE (C)(II) of the attached certificate -- if none, so state: 8.24 Reflect compliance with covenants in SECTIONS 4.1.2, 4.1.3 AND 4.1.4 at end of Subject Period (on a consolidated basis, if applicable) -- CLAUSE (D) of the attached certificate: Section 4.1.2 Minimum Net Worth A. Net Worth $ =========== B. Required Minimum Net Worth (1) Fixed Sum $ 80,000,000 (2) 75% of proceeds of equity securities issuance since April 15, 1996 + $ ----------- (3) 50% of consolidated net income since July 1, 1995 (without deducting net loss for any fiscal quarter) + $ ----------- (4) Required Minimum Net Worth = $ =========== 1 Exhibit D --------- Section 4.1.3 Fixed Charge Coverage Ratio A. EBITDA (1) Net Income before interest expense, taxes and extraordinary items $ ----------- (2) Depreciation expense $ ----------- (3) Amortization expense $ ----------- (4) EBITDA = $ =========== B. Fixed Charges (1) Current maturities of long term debt $ ------------ (2) Capital expenditures $ ------------ (3) Cash tax expenditures $ ------------ (4) Dividends paid or currently payable $ ------------ (5) Interest Expense $ ------------ (6) Total = $ ============ C. Fixed Charges Coverage Ratio [Line A(7) / B(6)] = : 1.0 ============ D. Minimum Required Fixed Charge Coverage Ratio 1.15 : 1.0 ============ Section 4.1.4 Leverage Ratio (A) Indebtedness $ ------------ (B) Net Worth $ ------------ 2 Exhibit D --------- (C) Leverage Ratio (Line A / Line A + B) ------------ (D) Maximum allowed for the last day of the Subject Period .60 to 1.0 ------------ 3 Exhibit D --------- EX-11 4 EARNINGS PER SHARE THE RIVAL COMPANY AND SUBSIDIARIES EXHIBT 11 EARNINGS PER SHARE (in thousands except per share data)
Three months ended Nine months ended ------------------ ----------------- 03/31/96 03/31/95 03/31/96 03/31/95 -------- -------- -------- -------- Net earnings $ 1,572 $ 1,750 $ 14,121 $ 12,450 ======== ======== ======== ======== Primary Earnings Per Share - -------------------------- Weighted average common and common equivalent shares outstanding 9,959 9,330 9,940 9,441 ======== ======== ======== ======== Earnings per common and common equivalent share $ 0.16 $ 0.19 $ 1.42 $ 1.32 ======== ======== ======== ======== Share computation: Average common shares outstanding 9,726 9,150 9,722 9,239 Average number of options outstanding 549 410 539 414 Less treasury shares acquired with proceeds from exercise of options (316) (230) (321) (212) -------- -------- ------- -------- Weighted average common and common equivalent shares outstanding 9,959 9,330 9,940 9,441 ======== ======== ======= ========
* Fully diluted earnings per share is equal to primary earnings per share for all periods presented. EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Form 10Q for the 3/31/96 Quarter and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS 9-MOS JUN-30-1996 JUN-30-1995 JUL-01-1995 JUL-01-1994 MAR-31-1996 MAR-31-1995 320 214 0 0 58,183 36,171 2,374 1,585 88,229 52,144 146,697 88,857 60,814 42,226 24,572 20,493 236,406 151,382 88,132 24,148 38,000 42,000 97 93 0 0 0 0 106,477 82,904 236,406 151,382 233,263 179,109 233,263 179,109 167,879 128,304 167,879 128,304 37,144 27,410 342 353 4,816 2,942 23,221 20,295 9,100 7,845 14,121 12,450 0 0 0 0 0 0 14,121 12,450 1.42 1.32 1.42 1.32
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