-----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, UpGVNBMUtvz6kbKjMdXwZ5VJEhXBGclsm3qls/eFe6NJqW+Eloyr5faLvdjRXmY9 Bx58fm3DBCMwS07l3hi4AA== 0000912057-97-012159.txt : 19970409 0000912057-97-012159.hdr.sgml : 19970409 ACCESSION NUMBER: 0000912057-97-012159 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 19970407 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBW FOODS INC CENTRAL INDEX KEY: 0001033523 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-24715 FILM NUMBER: 97576111 BUSINESS ADDRESS: STREET 1: 445 HUTCHINSON AVE CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6144368600 MAIL ADDRESS: STREET 1: 445 HUTCHINSON AVE CITY: COLUMBUS STATE: OH ZIP: 43215 S-4 1 FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1997 REGISTRATION NO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ MBW FOODS INC. (Exact name of registrant as specified in its charter) DELAWARE 2099 13-3921934 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number)
-------------------------- Community Corporate Center 445 Hutchinson Avenue Columbus, Ohio 43235 (614) 436-8600 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) -------------------------- MR. THOMAS J. FERRARO PRESIDENT MBW FOODS INC. COMMUNITY CORPORATE CENTER 445 HUTCHINSON AVENUE COLUMBUS, OHIO 43235 (614) 436-8600 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------------- COPIES TO: Mr. James B. Ardrey Frank L. Schiff, Esq. Dartford Partnership White & Case L.L.C. 1155 Avenue of the Americas 456 Montgomery Street, New York, New York 10036-2787 Suite 2200 (212) 819-8752 San Francisco, California 94104 (415) 982-3019
-------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered in connection with the information of a holding company and there is compliance with General Instruction G, check the following box. / / -------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED TITLE OF EACH OFFERING AGGREGATE NOTE OF SECURITIES AMOUNT TO BE PRICE PER OFFERING AMOUNT OF TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) REGISTRATION FEE 9 7/8% Series B Senior Subordinated Notes due 2007..... $100,000,000 100% $100,000,000 $30,303.03
(1) In accordance with Rule 457(f)(2), the registration fee is calculated based on the book value, which has been computed as of April 7, 1997, of the outstanding 9 7/8% Senior Subordinated Notes due 2007 of MBW Foods Inc. to be cancelled in the exchange transaction hereunder. -------------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MBW FOODS INC. CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4 A. INFORMATION ABOUT THE TRANSACTION 1. Forepart of Registration Statement and Outside Front Cover Page; Cross Reference Outside Front Cover Page of Prospectus..... Sheet; Inside Front Cover Page 2. Inside Front and Outside Back Cover Pages Inside Front Cover Page; Outside Back Cover of Prospectus.............................. Page 3. Risk Factors, Ratio of Earnings to Fixed Prospectus Summary; Risk Factors; Pro Forma Charges and Other Information.............. Financial Information; Selected Historical Financial Data; Business 4. Terms of the Transaction................... Prospectus Summary; The Exchange Offer; Certain United States Federal Income Tax Considerations; Description of Notes 5. Pro Forma Financial Information............ Prospectus Summary; Pro Forma Financial Information 6. Material Contacts with the Company Being Not Applicable Acquired................................... 7. Additional Information Required for Not Applicable Reoffering by Persons and Parties Deemed to be Underwriters............................ 8. Interests of Named Experts and Counsel..... Not Applicable 9. Disclosure of Commission Position on Not Applicable Indemnification for Securities Act Liabilities................................ B. INFORMATION ABOUT THE REGISTRANT 10. Information with Respect to S-3 Not Applicable Registrants................................ 11. Incorporation of Certain Information by Not Applicable Reference.................................. 12. Information with Respect to S-2 or S-3 Not Applicable Registrants................................ 13. Incorporation of Certain Information by Not Applicable Reference.................................. 14. Information with Respect to Registrant Prospectus Summary; Capitalization; Other Than S-2 or S-3 Registrants.......... Selected Historical Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; The Acquisition; Business; Management; Certain Related Transactions; Description of Notes; Description of Senior Credit Facilities; Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED 15. Information with Respect to S-3 Not Applicable Companies.................................. 16. Information with Respect to S-2 or S-3 Not Applicable Companies.................................. 17. Information with Respect to Companies Other Not Applicable Than S-2 or S-3 Companies.................. D. VOTING AND MANAGEMENT INFORMATION 18. Information if Proxies, Consents or Not Applicable Authorizations are to be Solicited......... 19. Information if Proxies, Consents or Management; Certain Related Transactions; Authorizations are not to be Solicited or Security Ownership in an Exchange Offer.......................
SUBJECT TO COMPLETION, DATED APRIL 7, 1997 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS MBW FOODS INC. OFFER TO EXCHANGE 9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007 FOR ALL OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED ----------------------------------------------------------------- MBW Foods Inc., a Delaware corporation (the "Company"), a wholly-owned subsidiary of MBW Holdings Inc. ("Holdings"), which in turn is a wholly-owned subsidiary of MBW Investors LLC ("MBW LLC") hereby offers, upon the terms and subject to conditions set forth in this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal"; together with the Prospectus, the "Exchange Offer"), to exchange up to an aggregate principal amount of $100,000,000 of its 9 7/8% Series B Senior Subordinated Notes Due 2007 (the "New Notes") for up to an aggregate principal amount of $100,000,000 of its outstanding 9 7/8% Senior Subordinated Notes Due 2007 (the "Old Notes"). The proceeds from the issuance of the Old Notes were used to refinance certain Existing Indebtedness (as defined) and to pay related fees and expenses. The terms of the New Notes are identical in all material respects to those of the Old Notes, except for certain transfer restrictions, registration rights and liquidated damages relating to the Old Notes. The New Notes will be issued pursuant to, and entitled to the benefits of, the Indenture (as defined herein) governing the Old Notes. The New Notes and the Old Notes are sometimes referred to collectively as the "Notes." Interest on the New Notes is payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 1997. The New Notes will mature on February 15, 2007. Except as described below, the Company may not redeem the New Notes prior to February 15, 2002. On or after such date, the Company may redeem the New Notes, in whole or in part, at any time at the redemption prices set forth herein, together with accrued and unpaid interest, if any, to the date of redemption. In addition, at any time and from time to time on or prior to February 15, 2000, the Company may, subject to certain requirements, redeem up to $35.0 million of the aggregate principal amount of Notes with the cash proceeds received from one or more Equity Offerings (as defined) at a redemption price equal to 109.875% of the principal amount to be redeemed, together with accrued and unpaid interest, if any, to the date of redemption, provided that at least $65.0 million of the aggregate principal amount of Notes remain outstanding immediately after each such redemption. The New Notes will not be subject to any sinking fund requirement. Upon the occurrence of a Change of Control (as defined), (i) the Company will have the option, at any time on or prior to February 15, 2002, to redeem the New Notes in whole but not in part at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined) plus accrued and unpaid interest to the date of redemption, and (ii) if the Company does not so redeem the New Notes or if such Change of Control occurs after February 15, 2002, the Company will be required to make an offer to repurchase the New Notes at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of repurchase. See "Description of Notes -- Optional Redemption." The New Notes will be unsecured and will be subordinated to all existing and future Senior Indebtedness (as defined) of the Company and will be effectively subordinated to all obligations of any subsidiaries of the Company as may exist from time to time. On the date of issuance of the New Notes, the Company will not have any subsidiaries; however the Indenture (as defined) will not restrict the ability of the Company to create, acquire or capitalize subsidiaries in the future. The New Notes will rank PARI PASSU with any future Senior Subordinated Indebtedness (as defined) of the Company and will rank senior to all other subordinated indebtedness of the Company. As of March 31, 1997, the Company had no Senior Indebtedness outstanding (excluding unused revolving credit commitments of $60.0 million) and the Company had no Senior Subordinated Indebtedness outstanding other than the Notes. See "Description of Notes -- Ranking." (CONTINUED ON NEXT PAGE) - -------------------------------------------------------------------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER. - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------------------------------------------------------ THE DATE OF THIS PROSPECTUS IS , 1997. (CONTINUED FROM COVER) The Old Notes were originally issued and sold on February 10, 1997 in a transaction not registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the exemptions provided in Rule 144A and Regulation D under the Securities Act. Accordingly, the Old Notes may not be reoffered, resold or otherwise pledged, hypothecated or transferred in the United States unless so registered or unless an applicable exemption from the registration requirements of the Securities Act is available. The Company will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on , 1997, unless extended by the Company in its sole discretion (the "Expiration Date"). The Expiration Date will not in any event be extended to a date later than , 1997. Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. In the event the Company terminates the Exchange Offer and does not accept for exchange any Old Notes with respect to the Exchange Offer, the Company will promptly return the Old Notes to the holders thereof. The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered for exchange, but is otherwise subject to certain customary conditions. The Old Notes may be tendered only in integral multiples of $1,000. The New Notes are being offered hereunder in order to satisfy certain obligations of the Company contained in the Exchange and Registration Rights Agreement dated as of February 10, 1997 (the "Exchange and Registration Rights Agreement") by and between the Company and Chase Securities Inc., as the initial purchaser (the "Initial Purchaser"), with respect to the initial sale of the Old Notes. Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission") rendered to third parties in similar transactions, the New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by respective holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the New Notes are acquired in the ordinary course of such holder's business and such holder has no arrangement with any person to participate in the distribution of such New Notes and is not engaged in and does not intend to engage in a distribution of the New Notes. Each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of the New Notes received in exchange for Old Notes if such New Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." There has not previously been any public market for the New Notes. The Company does not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system. There can be no assurance that an active market for the New Notes will develop. To the extent that an active market for the New Notes does develop, the market value of the New Notes will depend on market conditions (such as yields on alternative investments), general economic conditions, the Company's financial condition, and other factors. Such conditions might cause the New Notes, to the extent that they are actively traded, to trade at a significant discount from face value. See "Risk Factors -- Absence of Public Market." The Company will not receive any proceeds from the Exchange Offer. The Company has agreed to pay the expenses incident to the Exchange Offer. ii NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. ------------------------ Until , 1997 (90 days after commencement of this offering), all dealers effecting transactions in the New Notes, whether or not participating in this offering, may be required to deliver a Prospectus. AVAILABLE INFORMATION The Company has filed with the Commission a registration statement on Form S-4 (the "Registration Statement") under the Securities Act, with respect to the New Notes. This Prospectus, which constitutes a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain items of which are contained in schedules and exhibits to the Registration Statement as permitted by the rules and regulations of the Commission. Items of information omitted from this Prospectus but contained in the Registration Statement may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following regional offices of the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. Electronic filings filed through the Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR") are publicly available through the Commission's home page on the Internet at http://www.sec.gov. As a result of this offering, the Company will become subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In the event that the Company ceases to be subject to the informational requirements of the Exchange Act, the Company has agreed to file with the Commission and provide to the Trustee and the holders of Notes annual reports and the information, documents and other reports otherwise required pursuant to Sections 13 and 15(d) of the Exchange Act. See "Description of Notes -- Certain Covenants -- SEC Reports." iii PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA, INCLUDING THE FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE STATED IN THIS PROSPECTUS, REFERENCES TO (I) THE "COMPANY" SHALL MEAN MBW FOODS INC., A DELAWARE CORPORATION; (II) "HOLDINGS" SHALL MEAN MBW HOLDINGS INC., A DELAWARE CORPORATION; (III) "MBW LLC" SHALL MEAN MBW INVESTORS LLC, A DELAWARE LIMITED LIABILITY COMPANY; AND (IV) THE "PREDECESSOR" SHALL MEAN THE MRS. BUTTERWORTH'S SYRUP AND PANCAKE MIX BUSINESS WHICH THE COMPANY ACQUIRED FROM CONOPCO, INC. (THE "SELLER"), A SUBSIDIARY OF UNILEVER UNITED STATES, INC. ("UNILEVER") IN THE ACQUISITION (AS DEFINED). EXCEPT AS OTHERWISE INDICATED, (I) ALL REFERENCES TO MARKET, CATEGORY AND SEGMENT SALES AND TO MARKET SHARE PERCENTAGES AND MARKET POSITIONS REFLECT THE 52-WEEK PERIOD ENDED DECEMBER 21, 1996 AS GATHERED BY A.C. NIELSEN FOR U.S. RETAIL GROCERY SALES; (II) ALL REFERENCES TO THE COMPANY'S SALES REFER TO NET SALES AS REPORTED IN THE HISTORICAL FINANCIAL STATEMENTS OF THE PREDECESSOR; (III) ALL REFERENCES TO "REGULAR SYRUP" REFER TO FULL-CALORIE TABLE SYRUP; AND (IV) ALL REFERENCES TO "SYRUP" REFER TO REGULAR SYRUP, LITE SYRUP AND PURE MAPLE/SPECIALTY SYRUPS. Mrs. Butterworth's-Registered Trademark- IS A REGISTERED TRADEMARK OF THE COMPANY. THIS PROSPECTUS ALSO INCLUDES TRADEMARKS OF COMPANIES OTHER THAN THE COMPANY. THE COMPANY OVERVIEW The Company markets and sells MRS. BUTTERWORTH'S, the number one brand of regular syrup in the United States and the number two syrup brand overall. Originally introduced in 1960, MRS. BUTTERWORTH'S syrup is well known for its unique buttery flavor and distinctive grandmother-shaped bottle and enjoys 100% aided brand awareness among syrup consumers. In addition to its strong national presence, MRS. BUTTERWORTH'S is the number one brand of syrup in the Central and Mid-Central United States, the two regions of the country with the highest per capita syrup consumption. The strength of the MRS. BUTTERWORTH'S brand is evidenced by the fact that it is the only one of the three leading national brands of syrup to increase its market share over the last three years. MRS. BUTTERWORTH'S strong market position in syrup is complemented by the Company's pancake mix products. MRS. BUTTERWORTH'S leading market positions and strong brand recognition have enabled it to realize a long history of high operating margins, stable sales and growth in operating profit. From 1993 to 1996, MRS. BUTTERWORTH'S EBITDA margin (as defined) increased from 13.9% to 19.5% and its EBITDA (as defined) increased 40%. For the year ended December 31, 1996, the Company's pro forma sales and EBITDA were $91.6 million and $19.9 million, respectively. The syrup and pancake mix categories in the United States are stable and are characterized by broad household penetration and steady growth. From 1993 to 1996, the syrup and pancake mix categories grew at compound annual rates of approximately 1.4% and 3.5%, respectively. The Company's products are sold nationally through an independent broker network to retail grocery stores, mass merchandisers, military exchanges and foodservice distributors. MRS. BUTTERWORTH'S syrups and pancake mixes are sold in approximately 99% and 63%, respectively, of all retail grocery stores in the United States. MRS. BUTTERWORTH'S syrup is contract manufactured and distributed under a one-year co-pack agreement between the Company and the Seller. For the year ended December 31, 1996, the Company's syrup and pancake mix sales represented approximately 88% and 12% of pro forma sales, respectively. The Company believes that MRS. BUTTERWORTH'S strong brand name, leading market positions, high operating margins and cash flow provide an attractive platform upon which to build a focused, branded dry grocery products company. The Company believes that the performance of certain dry grocery categories and brands has suffered in recent years as a result of declining levels of marketing support and little or no new product innovation by the major food companies. Consequently, the Company believes that many of these undermanaged brands are likely candidates for divestiture from their corporate parents. While these categories and brands tend to be mature, there are expanding segments 1 within the categories and growth opportunities that have not been realized. As a result, the Company believes that an attractive opportunity exists for building a branded dry grocery products company through strategic acquisitions of established, well-recognized national and regional brands that have been undermanaged in recent years. The Company's objective is to renew the growth of the brands it acquires by providing them the focus, strategic direction, marketing resources and dedicated sales and marketing organizations that they have lacked. MRS. BUTTERWORTH'S GROWTH STRATEGY The Company believes that MRS. BUTTERWORTH'S has significant growth potential which has not been realized due to a lack of corporate support and marketing resources from the Seller in recent years. The Company plans to improve MRS. BUTTERWORTH'S performance by increasing management attention to the brand and by devoting the marketing resources necessary to exploit opportunities in the syrup and pancake mix categories. The Company intends to implement its strategy through the following initiatives: - POSITION BRAND AS BEST VALUE. The Company plans to position MRS. BUTTERWORTH'S as the best value among the three leading national syrup brands by continuing to provide its distinctive, premium quality product at prices which are moderately below those of the other national brands. In May 1996, MRS. BUTTERWORTH'S lowered the everyday prices of its syrup products. To offset the cost of lowering everyday prices, MRS. BUTTERWORTH'S also reduced its costly and relatively ineffective buy-one-get-one-free promotions. For the twelve weeks ended November 23, 1996, a representative period following the implementation of this "value-pricing" strategy, dollar sales and market share of the MRS. BUTTERWORTH'S ORIGINAL label increased 8.0% and 0.6%, respectively. The Company believes that full implementation of MRS. BUTTERWORTH'S value pricing strategy will result in continued increases in sales and market share. - REFORMULATE LITE PRODUCT. MRS. BUTTERWORTH'S LITE has not been reformulated or improved since its introduction in 1985. Over the last five years, competitors have focused their research and development efforts on the lite syrup segment, taking advantage of newly developed ingredients and formulations. While MRS. BUTTERWORTH'S is the leading brand in the regular syrup segment, MRS. BUTTERWORTH'S share of the lite syrup segment is 15.2% and is significantly below AUNT JEMIMA'S leading 32.4% share of the segment. The Company plans to reformulate and improve the taste of MRS. BUTTERWORTH'S LITE. Management believes that this reformulation, coupled with MRS. BUTTERWORTH'S leading position in the regular syrup segment and increased marketing support, can expand the Company's share of the lite segment and further strengthen the Company's overall syrup market share. - ROLL OUT PRODUCT LINE EXTENSIONS. Management believes MRS. BUTTERWORTH'S strong brand equity and leading market shares in the syrup category present considerable opportunities for product line extensions. For example, an opportunity exists to develop a product which is directed at children and packaged in plastic, as compared to the current glass packaging. Opportunities also exist for MRS. BUTTERWORTH'S in the flavored syrup segment, as none of the major national brands currently offer these specialty products. In addition, management believes that opportunities exist for growth in the Company's pancake mix business with increased marketing and sales support for its recently redesigned and updated packaging. - ADOPT CONSUMER BASED MARKETING STRATEGY. Over the next two years, the Company plans to reduce its reliance on costly and relatively inefficient trade spending and price discounting and increase its advertising and consumer promotional events. The Company plans to reduce or eliminate buy-one- get-one-free promotions and its heavy reliance on coupons in free standing inserts. The Company will reallocate those marketing dollars to advertising and more focused consumer promotions such as cross-promotions with host foods including frozen waffles and pancake mix. In addition, the Company will direct its advertising expenditures to support the introduction of new or improved products and reinforce MRS. BUTTERWORTH'S unique brand equity and positioning as the best value among the national brands. 2 OWNERSHIP AND MANAGEMENT The Company was organized by Dartford Partnership L.L.C. ("Dartford"), majority owner McCown De Leeuw & Co. ("MDC"), Fenway Partners Capital Fund, L.P. ("Fenway") and certain other investors to acquire the MRS. BUTTERWORTH'S syrup and pancake mix business from the Seller. The Company is managed by Dartford and an operating team led by Thomas J. Ferraro (President) and C. Gary Willett (Executive Vice President). Dartford was formed by Managing Partner Ian R. Wilson, former Vice Chairman of The Coca-Cola Company and former Chairman and Chief Executive Officer of Castle & Cooke, Inc. (Dole Food Company, Inc.), to make investments in the consumer food and beverage categories. Dartford's five partners have extensive experience in building and managing leveraged investments in the food and beverage industries. Over the past ten years, Dartford has successfully built and managed a number of food companies including Wyndham Foods Inc. ("Wyndham"), which Dartford grew to become the fourth largest cookie company in the United States, Windmill Holding Corp. ("Windmill"), a branded baking products company, and most recently Van de Kamp's Inc. ("Van de Kamp's"), a leading frozen convenience food company. In September 1995, Dartford and Fenway organized Van de Kamp's to acquire the VAN DE KAMP'S frozen seafood product line from The Pillsbury Company and to serve as the foundation upon which to build a branded frozen convenience food company. In May 1996, Van de Kamp's acquired MRS. PAUL'S frozen seafood business from Campbell Soup Company and in July 1996 acquired the AUNT JEMIMA frozen breakfast (waffles, pancakes and french toast) and CELESTE frozen pizza businesses from The Quaker Oats Company. Van de Kamp's, under the direction of Dartford, has assembled a 100 person sales, marketing and administrative organization, moved and consolidated manufacturing facilities and reinvigorated its brands with new product introductions and increased marketing support. Under Dartford's management, Van de Kamp's has grown into a diversified branded frozen convenience food company, with annual revenues increasing from approximately $150 million at September 30, 1995 to approximately $400 million at December 31, 1996. MDC is a private equity investment firm organized in 1984 to "buy and build" middle market companies in partnership with management. MDC currently manages three generations of funds totaling approximately $500 million of contributed and committed capital. MDC has developed, and committed itself to, an investment process that identifies and then backs top managers in industries that are undergoing consolidation or rapid internal growth. Over the past 13 years, MDC has made 30 separate acquisitions, of which 21 have been acquisition-oriented "buy and builds" similar to the strategy contemplated by the Company, including DIMAC Corporation, Eastman, Inc. and Outsourcing Solutions Inc. Fenway is a second generation direct investment firm formed by Peter Lamm, Richard Dresdale and Andrea Geisser. Together, the firm's principals have 50 years of experience building and managing direct investment portfolios. The partners of Fenway have acquired and overseen investments in several food processing and food distribution businesses, most recently as the majority owner of Van de Kamp's in partnership with Dartford. Fenway focuses its investment activities on acquiring interests in middle market companies with revenues between $50 million and $500 million which offer leading market shares, strong franchises, multiple profit centers and underlying growth. Mr. Ferraro has over 23 years of grocery products experience, and Mr. Willett has over 19 years of grocery products experience. Prior to joining MRS. BUTTERWORTH'S, Messrs. Ferraro and Willett managed Heritage Brands, leading the leveraged buyout and build-up of Campfire, Inc. Prior to joining Heritage Brands, Mr. Ferraro spent 11 years with Borden, Inc., most recently as Vice President of Sales for the Niche Grocery division. His experience with niche grocery products extends back to his early career with RJR Nabisco Inc. and Drackett Products, where he held a variety of marketing and sales positions. Prior to joining Heritage Brands, Mr. Willett held a variety of senior management positions at Borden, Inc. and The Kellogg Company. 3 THE ACQUISITION, FINANCINGS AND RELATED TRANSACTIONS On December 31, 1996 (the "Acquisition Closing Date"), the Company acquired substantially all of the assets of the MRS. BUTTERWORTH'S syrup and pancake mix business from a subsidiary of Unilever for approximately $114.1 million (the "Acquisition"). The assets acquired by the Company include (i) the MRS. BUTTERWORTH'S trademarks for the United States, Canada and Puerto Rico, (ii) the equipment for the manufacture of syrup, (iii) inventories (raw materials, packaging and finished goods), (iv) proprietary formulations for MRS. BUTTERWORTH'S syrups and pancake mixes, (v) other product specifications and customer lists and (vi) rights under certain contracts, licenses, purchase orders and other arrangements and permits. Additionally, the Company entered into the Transition Services Agreement (as defined) with the Seller, under which the Seller will provide certain financial and operational reporting services for a period of up to six months from the Acquisition Closing Date, and the Co-Pack Agreement (as defined), under which the Seller will contract manufacture and distribute syrup for the Company for a period of up to one year from the Acquisition Closing Date. See "The Acquisition." Financing for the Acquisition and related fees and expenses consisted of (i) $33.8 million of equity capital provided by Dartford, certain affiliates of MDC, Fenway and certain other investors (collectively, the "Equity Investors"); (ii) $15.0 million of term loans (the "Term Facility") and $30.0 million of revolving loans (the "Revolving Facility") borrowed under a $60.0 million senior secured credit facility among the Company, Holdings, the lenders named therein, The Chase Manhattan Bank ("Chase Manhattan"), as administrative agent, and Chase Securities Inc. ("CSI"), as arranging agent (the "Senior Credit Facilities"); and (iii) $50.0 million of loans borrowed under a senior subordinated credit facility among the Company, the lenders named therein and CSI, as agent (the "Senior Subordinated Credit Facility"). The Acquisition, the financing thereof (not including the offering of the Old Notes) and the payment of related transaction fees and expenses are referred to herein as the "Transactions." See "Security Ownership" and "Description of Senior Credit Facilities." The sources and uses of funds for the Transactions were as follows:
SOURCES: (DOLLARS IN MILLIONS) Senior Credit Facilities: Revolving Facility (1)........................................................ $ 30.0 Term Facility................................................................. 15.0 Senior Subordinated Credit Facility............................................. 50.0 Equity proceeds................................................................. 33.8 ------- Total sources............................................................... $ 128.8 ------- ------- USES: Purchase price of the Acquisition............................................... $ 114.1 Excess cash at closing.......................................................... 9.1 Transaction fees and expenses................................................... 5.6 ------- Total uses.................................................................. $ 128.8 ------- -------
- ------------------------------ (1) On the Acquisition Closing Date, borrowings of up to $45.0 million under the Revolving Facility were available for working capital and general corporate purposes, including up to $5.0 million for letters of credit. See "Description of Senior Credit Facilities." THE FINANCING The Company used the proceeds of the offering of the Old Notes (the "Offering") to repay a total of approximately $95.0 million of indebtedness, consisting of the aggregate principal amounts outstanding under the Senior Subordinated Credit Facility, the Term Facility and the Revolving Facility (the "Existing Indebtedness"), to pay accrued and unpaid interest with respect to Existing Indebtedness being repaid and to pay certain fees and expenses incurred in connection with the Offering (together with the payment of Existing Indebtedness, the "Financing"). The Senior Subordinated Credit Facility and the Term Facility were terminated and the Revolving Facility was increased by $15.0 million to $60.0 million, which is available to the Company for general corporate purposes, including acquisitions. 4 THE EXCHANGE OFFER The New Notes....................... The forms and terms of the New Notes are identical in all material respects to the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except for certain transfer restrictions, registration rights and liquidated damages provisions relating to the Old Notes described below under "Description of Notes" and "Old Notes Exchange and Registration Rights Agreement." The Exchange Offer.................. The Company is offering to exchange up to $100,000,000 aggregate principal amount of the New Notes for up to $100,000,000 aggregate principal amount of the Old Notes. Old Notes may be exchanged only in integral multiples of $1,000. Expiration Date; Withdrawal of The Exchange Offer will expire at 5:00 p.m., New York Tender............................ City time, on , 1997, or such later date and time to which it is extended by the Company (the "Expiration Date"). The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. The Expiration Date will not in any event be extended to a date later than , 1997. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Certain Conditions to the Exchange Offer............................. The Exchange Offer is subject to customary conditions, which may be waived by the Company. See "The Exchange Offer -- Certain Conditions to the Exchange Offer." Procedures for Tendering Old Each holder of Old Notes wishing to accept the Notes............................. Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with such Old Notes and any other required documentation to the Exchange Agent (as defined) at the address set forth herein. By executing the Letter of Transmittal, each holder will represent to the Company that, among other things, (i) any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) it has no arrangement with any person to participate in the distribution of the New Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Each Holder whose Old Notes are held through DTC (as defined) and wishes to participate in the Exchange Offer may do so through DTC's Automated Tender Offer Program
5 ("ATOP") by which each tendering participant will agree to be bound by the Letter of Transmittal. Interest on the New Notes........... Interest on the New Notes will accrue from the date of issuance (the "New Note Issue Date") at the rate of 9 7/8% per annum, and will be payable semi-annually in arrears on each February 15 and August 15, commencing on August 15, 1997. Holders of the New Notes will also on August 15, 1997 receive an amount equal to the accrued interest on the Old Notes. Interest on the Old Notes accepted for exchange will cease to accrue upon issuance of the New Notes. Special Procedures for Beneficial Owners............................ Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Old Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering his Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. Guaranteed Delivery Procedure....... Holders of Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent, prior to the Expiration Date, must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Registration Requirements........... The Company has agreed to use its best efforts to consummate on or prior to 180 days after the date of original issuance of the Old Notes (the "Issue Date") the registered Exchange Offer pursuant to which holders of the Old Notes will be offered an opportunity to exchange their Old Notes for the New Notes which will be issued without legends restricting the transfer thereof. In the event that applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer or in certain other circumstances, the Company has agreed to file a Shelf Registration Statement covering resales of the Old Notes and to use its best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act and, subject to certain exceptions, keep such Shelf Registration Statement effective until three years after the
6 Issue Date. If the Company fails to consummate the Exchange Offer on or prior to 180 days after the Issue Date or, in the event that the Company is not in compliance with certain obligations under the Exchange and Registration Rights Agreement, the Company shall be obligated to pay liquidated damages to holders of the Old Notes. See "Old Notes Exchange and Registration Rights Agreement." Certain Federal Income Tax Considerations.................... For a discussion of certain federal income tax considerations relating to the exchange of the New Notes for the Old Notes, see "Certain United States Federal Income Tax Considerations." Use of Proceeds..................... There will be no proceeds to the Company from the exchange of Notes pursuant to the Exchange Offer. Exchange Agent...................... Wilmington Trust Company is the Exchange Agent. The address and telephone number of the Exchange Agent are set forth in "The Exchange Offer -- Exchange Agent."
TERMS OF THE NOTES The form and terms of the New Notes are the same as the form and terms of the Old Notes except that the New Notes are registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and will not contain the registration rights and liquidated damages provisions relating to the Old Notes. See "Description of Notes" and "Old Notes Exchange and Registration Rights Agreement." RISK FACTORS See "Risk Factors" for a discussion of certain factors that should be considered by participants in the Exchange Offer. 7 SUMMARY PRO FORMA FINANCIAL DATA The following table sets forth certain unaudited summary pro forma financial data of the Company as of December 31, 1996 and for the year then ended. The unaudited summary pro forma statement of operations data give effect to the Transactions and the Financing as if they had occurred on January 1, 1996. The unaudited summary pro forma balance sheet information gives effect to the Financing as if it had occurred on December 31, 1996. The unaudited summary pro forma financial data do not purport to represent what the Company's results of operations or financial condition would have actually been had the Transactions and Financing been consummated as of such dates or for the periods ended or project the Company's results of operations or financial condition for any future period. The unaudited summary pro forma financial data should be read in conjunction with the Pro Forma Financial Information and the notes thereto. See "Pro Forma Financial Information" and the separate historical financial statements of the Predecessor and the notes thereto included elsewhere in this Prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
YEAR ENDED DECEMBER 31, 1996 -------------- STATEMENT OF OPERATIONS DATA: Net sales......................................................................................... $ 91,581 Cost of products sold............................................................................. 29,913 -------------- Gross profit.................................................................................... 61,668 Brokerage, distribution and marketing expenses: Brokerage and distribution...................................................................... 8,140 Trade promotions................................................................................ 19,712 Consumer marketing.............................................................................. 10,835 -------------- Total brokerage, distribution and marketing expenses.............................................. 38,687 Selling, general and administrative expenses...................................................... 3,711 Amortization of goodwill and other intangibles.................................................... 3,066 -------------- Operating profit.................................................................................. 16,204 Amortization of deferred financing fees........................................................... 856 Interest expense, net............................................................................. 9,742 -------------- Income before taxes............................................................................. 5,606 Provision for income taxes........................................................................ 2,159 -------------- Net income...................................................................................... $ 3,447 -------------- -------------- OTHER FINANCIAL DATA: EBITDA(1)......................................................................................... 19,866 EBITDA margin(2).................................................................................. 21.7% Depreciation and amortization..................................................................... 3,662 Inventories....................................................................................... 1,182 Ratio of EBITDA to interest expense, net.......................................................... 2.0x Ratio of earnings to fixed charges(3)............................................................. 1.5x
- ------------------------------ (1) EBITDA is defined as net income before interest, taxes, depreciation and amortization and is presented because it is commonly used by certain investors and analysts to analyze and compare, on the basis of operating performance, and to determine a company's ability to service and incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities or other consolidated income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. (2) EBITDA margin is computed as EBITDA as a percentage of net sales. (3) For purposes of determining the ratio of earnings to fixed charges, earnings are defined as net income before provision for income taxes, plus fixed charges. Fixed charges consist of interest expense on all indebtedness, amortization of deferred financing fees and one-third of rental expense on operating leases, representing that portion of rental expense deemed by the Company to be attributable to interest. 8 SUMMARY HISTORICAL FINANCIAL DATA The following table sets forth summary historical financial data of the Predecessor for the periods indicated. The summary historical statement of operations data for the years ended December 31, 1994, 1995 and 1996 are derived from the audited financial statements of the Predecessor included elsewhere in this Prospectus which have been audited by Price Waterhouse LLP. The summary historical statement of operations data for the year ended December 31, 1993 are derived from the unaudited financial statements of the Predecessor which are not included elsewhere in this Prospectus and which, in the opinion of management, include all adjustments necessary for a fair presentation. This information should be read in conjunction with the Predecessor's historical financial statements and related notes thereto appearing elsewhere in this Prospectus and with "Management's Discussion and Analysis of Financial Condition and Results of Operations." See also "Selected Historical Financial Data."
YEAR ENDED DECEMBER 31, ------------------------------------------ 1993 1994 1995 1996 --------- --------- --------- --------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Net sales............................................................. $ 89,798 $ 96,729 $ 91,302 $ 89,541 Cost of products sold................................................. 27,549 29,930 27,743 28,955 --------- --------- --------- --------- Gross profit........................................................ 62,249 66,799 63,559 60,586 Brokerage, distribution and marketing expenses: Brokerage and distribution........................................ 7,547 8,662 7,583 8,140 Trade promotions.................................................. 19,517 21,911 19,380 17,672 Consumer marketing................................................ 15,917 15,297 13,291 10,835 --------- --------- --------- --------- Total brokerage, distribution and marketing expenses.................. 42,981 45,870 40,254 36,647 Selling, general and administrative expenses.......................... 7,011 6,829 6,120 6,753 --------- --------- --------- --------- Income before taxes................................................. 12,257 14,100 17,185 17,186 Provision for income taxes............................................ 4,719 5,429 6,616 6,616 --------- --------- --------- --------- Net income.......................................................... $ 7,538 $ 8,671 $ 10,569 $ 10,570 --------- --------- --------- --------- --------- --------- --------- ---------
9 RISK FACTORS Prospective investors should carefully consider the following factors in addition to the other information set forth in this Prospectus before participating in the Exchange Offer. SUBSTANTIAL LEVERAGE The Company is significantly leveraged. At March 31, 1997, the Company had outstanding $100.0 million in aggregate principal amount of indebtedness (excluding trade payables and other liabilities) and availability of $60.0 million under the Revolving Facility. The degree to which the Company is leveraged could have important consequences to holders of the Notes, including the following: (i) the Company will have significant cash interest expense and principal repayment obligations with respect to outstanding indebtedness, including the Senior Credit Facilities and the Notes; (ii) the Company could be vulnerable to changes in general economic conditions or increases in prevailing interest rates; (iii) the Company's ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired; (iv) the Company may be substantially more leveraged than certain of its competitors, which may place the Company at a competitive disadvantage; (v) all of the indebtedness outstanding under the Senior Credit Facilities will be secured by substantially all the assets of the Company and matures prior to the maturity of the Notes; and (vi) the Company's substantial degree of leverage may limit its flexibility to adjust to changing market conditions, reduce its ability to withstand competitive pressures and make it more vulnerable to a downturn in general economic conditions or its business. See "Description of Senior Credit Facilities" and "Description of Notes." The Company believes that its cash flow from operations will be sufficient to meet its payment obligations under the Senior Credit Facilities and other operational requirements. If the Company is unable to generate sufficient cash flow from operations, it may be required to delay or forego its acquisition strategy, reduce or delay planned product improvement initiatives or refinance all or a portion of amounts outstanding under the Senior Credit Facilities at or prior to their maturity, which is prior to the maturity of the Notes. Other potential measures to raise cash include the sale of assets or equity. However, the Company's ability to raise funds by selling assets is restricted by the Senior Credit Facilities, and its ability to effect equity financings is dependent on results of operations and market conditions. In the event that the Company is unable to refinance such indebtedness or raise funds through asset sales, sales of equity or otherwise, its ability to pay principal of, and interest on, the Notes would be adversely affected. RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS The Indenture restricts, among other things, the Company's ability to incur additional indebtedness, incur liens, pay dividends or make certain other restricted payments, enter into certain transactions with affiliates, impose restrictions on the ability of a subsidiary to pay dividends or make certain payments to the Company, merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the assets of the Company. In addition, the Senior Credit Facilities contain other and more restrictive covenants and prohibit the Company from prepaying its other indebtedness (including the Notes). See "Description of Notes -- Certain Covenants" and "Description of Senior Credit Facilities." The Senior Credit Facilities require the Company to maintain specified financial ratios and satisfy financial condition tests. The Company's ability to meet those financial ratios and tests can be affected by events beyond its control, and there can be no assurance that the Company will meet those tests. A breach of any of these covenants could result in a default under the Senior Credit Facilities and/or the Indenture. Upon the occurrence of an event of default under the Senior Credit Facilities, the lenders could elect to declare all amounts outstanding under the Senior Credit Facilities, together with accrued interest, to be immediately due and payable. If the Company were unable to repay those amounts, the lenders could proceed against the collateral granted to them to 10 secure that indebtedness. If the lenders under the Senior Credit Facilities accelerate the payment of the indebtedness, there can be no assurance that the assets of the Company would be sufficient to repay in full such indebtedness and the other indebtedness of the Company, including the Notes. See "Description of Senior Credit Facilities." SUBORDINATION; ASSET ENCUMBRANCES The Notes are subordinated in right of payment to all existing and future Senior Indebtedness, including the principal of (and premium, if any) and interest on and all other amounts due on or payable in connection with Senior Indebtedness. As of March 31, 1997, the Company had no Senior Indebtedness outstanding (excluding unused revolving credit commitments of $60.0 million under the Senior Credit Facilities). By reason of such subordination, in the event of the insolvency, liquidation, reorganization, dissolution or other winding-up of the Company or upon a default in payment with respect to, or the acceleration of, any Senior Indebtedness, the holders of such Senior Indebtedness and any other creditors who are holders of Senior Indebtedness and creditors of subsidiaries that are not guarantors of the Notes must be paid in full before the Holders of the Notes may be paid. The Company does not currently have any subsidiaries, however, the Indenture will not restrict the ability of the Company to create, acquire or capitalize subsidiaries in the future. The Indenture permits subsidiaries of the Company to incur debt provided certain conditions are met and such subsidiaries guarantee the Notes. If the Company incurs any additional PARI PASSU debt, the holders of such debt would be entitled to share ratably with the Holders of the Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of the Company. This may have the effect of reducing the amount of proceeds paid to Holders of the Notes. In addition, no payments may be made with respect to the principal of (and premium, if any) or interest on the Notes if a payment default exists with respect to Senior Indebtedness and, under certain circumstances, no payments may be made with respect to the principal of (and premium, if any) or interest on the Notes for a period of up to 179 days if a non-payment default exists with respect to Senior Indebtedness. See "Description of Notes." The Company has granted the lenders under the Senior Credit Facilities security interests in substantially all of the current and future assets of the Company, including a pledge of all of the issued and outstanding shares of capital stock of the Company's future domestic subsidiaries. In the event of a default on such indebtedness (whether as a result of the failure to comply with a payment or other covenant, a cross-default, or otherwise), the parties granted such security interests will have a prior secured claim on the capital stock of the Company and the assets of the Company and any guarantors under the Senior Credit Facilities. If such parties should attempt to foreclose on their collateral, the Company's financial condition and the value of the Notes would be materially adversely affected. See "Description of Senior Credit Facilities." LIMITATION ON CHANGE OF CONTROL The Indenture requires the Company, in the event of a Change of Control in respect of which it has not elected to redeem the Notes, to repurchase any Notes that holders thereof desire to have repurchased at 101% of the principal amount thereof, plus accrued interest to the Change of Control repurchase date. See "Description of Notes -- Change of Control." The Change of Control purchase feature of the Notes may in certain circumstances discourage or make more difficult a sale or takeover of the Company. There can be no assurance that the Company will have funds available to redeem or repurchase the Notes upon the occurrence of a Change of Control. In particular, a Change of Control may cause an acceleration of the Senior Credit Facilities and other indebtedness, if any, of the Company, in which case such indebtedness would be required to be repaid in full before redemption or repurchase of the Notes. See "Description of Notes -- Change of Control" and "Description of Senior Credit Facilities." The inability to repay such indebtedness, if accelerated, or 11 to redeem or repurchase all of the Notes upon the occurrence of a Change in Control would constitute an event of default under the Indenture. COMPETITION The Company competes in highly competitive markets with a significant number of companies of varying sizes, including divisions or subsidiaries of larger companies. A number of these competitors have multiple product lines, have substantially greater financial and other resources available to them and may be substantially less leveraged than the Company, and there can be no assurance that the Company can compete successfully with such other companies. Competitive pressures or other factors could cause the Company's products to lose market share or result in significant price erosion, which would have a material adverse effect on the Company's results of operations. See "Business -- Competition." RAW MATERIALS The Company purchases agricultural commodities, flavors, other raw materials and packaging from growers, commodity processors, importers, other food companies and packaging manufacturers. While all such materials are available from numerous independent suppliers, commodity raw materials are subject to fluctuations in price attributable to, among other things, changes in crop size and federal and state agricultural programs. Such fluctuations could have a material adverse effect on the performance of the Company. See "Business -- Raw Materials." RISKS RELATING TO THE ACQUISITION The Company was recently formed for the purpose of the Acquisition. The Company's business was previously operated as a product line of Unilever. There can be no assurance that the Company will not encounter unanticipated problems or expenses in establishing MRS. BUTTERWORTH'S as an independent company. In addition, there can be no assurance that the Company, under Dartford's management, will be able to achieve results comparable with those of Van de Kamp's. In connection with the Acquisition, the Company entered into the Co-Pack Agreement with a division of the Seller which has agreed to manufacture and distribute syrup and foodservice pancake mix for the Company at prices based on historical manufacturing costs for a period of up to one year from the Acquisition Closing Date. Thereafter, the Company intends to enter into a new co-pack agreement with a third party or manufacture the syrup in a new facility to be acquired or leased by the Company. There can be no assurance that the Company will be able to enter into a new co-pack agreement on substantially the same terms as the Co-Pack Agreement or will be able to acquire or lease such facility. In addition, the Seller historically provided computer, accounting and human resources support, warehouse space, a network of third-party distribution services and a network of regional food brokers. The Company has entered into the Transition Services Agreement pursuant to which the Seller will provide various financial and operational reporting services to the Company for a period of up to six months after the Acquisition Closing Date. There can be no assurance that the Company will be able to perform these services at a comparable cost. The majority of the existing broker agreements were transferred to the Company concurrently with the Acquisition. Although the Company believes that it will be able to continue such broker agreements on substantially the same terms as those previously negotiated with the Seller, there can be no assurance that the Company will be able to do so. RISKS ASSOCIATED WITH ACQUISITION STRATEGY The Company plans to continue to pursue additional acquisitions of well recognized national and regional dry grocery brands. There can be no assurance, however, that the Company will be able to identify additional acquisitions or that, if consummated, any anticipated benefits will be realized from such acquisitions. In addition, the availability of additional acquisition financing cannot be assured and, 12 depending on the terms of such additional acquisitions, could be restricted by the terms of the Senior Credit Facilities and/or the Indenture. The process of integrating acquired operations into the Company's existing operations may result in unforeseen operating difficulties, may require substantial attention from members of the Company's senior management and may require significant financial resources that would otherwise be available for the ongoing development or expansion of the Company's existing operations. Possible future acquisitions by the Company could result in the incurrence of additional debt, contingent liabilities and amortization expenses related to goodwill and other intangible assets, all of which could materially adversely affect the Company's financial condition and operating results. IMPACT OF GOVERNMENTAL REGULATION The Company is subject to numerous federal, state and local laws and regulations concerning, among other things, health and safety matters, food manufacture, product labeling, advertising and the environment. Compliance with existing federal, state and local laws and regulations is not expected to have a material adverse effect upon the earnings or competitive position of the Company. However, the Company cannot predict the effect, if any, of laws and regulations that may be enacted in the future, or of changes in the enforcement of existing laws and regulations that are subject to extensive regulatory discretion. See "Business -- Certain Legal and Regulatory Matters." DEPENDENCE ON KEY MANAGEMENT The Company's success will depend to a significant extent on its executive and other key management personnel. Although the Company has entered into employment agreements with certain of its executive officers and a management services agreement with Dartford, there can be no assurance the Company will be able to retain its executive officers and key personnel or attract additional qualified management in the future. CONTROL BY INVESTOR GROUP All of the outstanding shares of the Company's Common Stock are beneficially owned by MBW LLC. Accordingly, MBW LLC and the Equity Investors control the Company and have the power to elect all of its directors, appoint new management and approve any action requiring the approval of the holders of the Company's Common Stock, including adopting amendments to the Company's Certificate of Incorporation and approving mergers or sales of substantially all of the Company's assets. See "Management." The directors elected by MBW LLC will have the authority to make decisions affecting the capital structure of the Company, including the issuance of additional capital stock, the implementation of stock repurchase programs and the declaration of dividends. Pursuant to MBW LLC's Limited Liability Company Agreement, for so long as MDC owns more than 50% of the voting interests of MBW LLC, MDC will have the right to designate a majority of the Board of Directors of the Company. See "Security Ownership." ABSENCE OF PUBLIC MARKET There has not previously been any public market for the New Notes or the Old Notes. There can be no assurance as to the liquidity of any markets that may develop for the New Notes, the ability of holders to sell the New Notes, or the price at which holders would be able to sell the New Notes. Future trading prices of the New Notes will depend on many factors, including among other things, prevailing interest rates, the Company's operating results and the market for similar securities. Historically, the market for securities similar to the New Notes, including non-investment grade debt, has been subject to disruptions that have caused substantial volatility in the prices of such securities. There can be no assurance that any market for the New Notes, if such market develops, will not be subject to similar disruptions. 13 USE OF PROCEEDS OF THE NEW NOTES This Exchange Offer is intended to satisfy obligations of the Company under the Exchange and Registration Rights Agreement. The Company will not receive any proceeds from the issuance of the New Notes offered hereby. In consideration for issuing the New Notes as contemplated in this Prospectus, the Company will receive, in exchange, Old Notes in like principal amount. The form and terms of the New Notes are identical in all material respects to the form and terms of the Old Notes, except as otherwise described herein under "The Exchange Offer--Terms of the Exchange Offer." The Old Notes surrendered in exchange for the New Notes will be retired and cancelled and cannot be reissued. Accordingly, issuance of the New Notes will not result in any increase in the outstanding debt of the Company. CAPITALIZATION The following table sets forth the capitalization of the Company as of the Acquisition Closing Date, which reflects the Transactions and as adjusted to give effect to the Financing. This table should be read in conjunction with the "Pro Forma Financial Information" included elsewhere in this Prospectus.
DECEMBER 31, 1996 ---------------------- AS ADJUSTED ACTUAL (UNAUDITED) --------- ----------- (DOLLARS IN MILLIONS) Cash................................................................................. $ 8.6 $ 10.0 --------- ----------- --------- ----------- Long-term debt (including current maturities): Revolving Facility(1).............................................................. 30.0 -- Term Facility...................................................................... 15.0 -- Senior Subordinated Credit Facility................................................ 50.0 -- Senior Subordinated Notes offered hereby........................................... -- 100.0 --------- ----------- Total long-term debt............................................................. 95.0 100.0 Total stockholder's equity(2)........................................................ 33.2 33.2 --------- ----------- Total capitalization................................................................. $ 128.2 $ 133.2 --------- ----------- --------- -----------
- ------------------------------ (1) The Senior Credit Facilities include a Revolving Facility of $45.0 million was increased by $15.0 million to $60.0 million on repayment of the Term Facility in the Financing. See "Description of Senior Credit Facilities." (2) Reflects the $33.2 million equity contribution from Holdings. 14 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER Pursuant to the Exchange and Registration Rights Agreement by and between the Company and the Initial Purchaser, the Company has agreed (i) to file a registration statement with respect to an offer to exchange the Old Notes for senior debt securities of the Company with terms substantially identical to the Old Notes (except that the New Notes will not contain terms with respect to transfer restrictions, registration rights and liquidated damages) on or prior to 60 days after the Issue Date and (ii) to use best efforts to cause such registration statement to become effective under the Securities Act within 150 days after the Issue Date. In the event that applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer as contemplated thereby, or if certain holders of the Old Notes notify the Company that they are not eligible to participate in, or would not receive freely tradeable New Notes in exchange for tendered Old Notes pursuant to, the Exchange Offer, the Company will use its best efforts to cause to become effective a shelf registration statement (the "Shelf Registration Statement") with respect to the resale of the Old Notes and to keep the Shelf Registration Statement effective until three years after the Issue Date. In the event that the Company is not in compliance with certain obligations under the Exchange and Registration Rights Agreement, the Company shall be obligated to pay liquidated damages to holders of the Old Notes. See "Old Notes Exchange and Registration Rights Agreement." Each holder of the Old Notes that wishes to exchange such Old Notes for New Notes in the Exchange Offer will be required to make certain representations, including representations that (i) any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) it has no arrangement with any person to participate in the distribution of the New Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or Holdings or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. RESALE OF NEW NOTES Based on interpretations by the staff of the Commission set forth in no-action letters issued to third-parties, the Company believes that, except as described below, New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than a holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and such holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such New Notes. Any holder who tenders in the Exchange Offer with the intention or for the purpose of participating in a distribution of the New Notes cannot rely on such interpretation by the staff of the Commission and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Unless an exemption from registration is otherwise available, any such resale transaction should be covered by an effective registration statement containing the selling security holder's information required by Item 507 of Regulation S-K under the Securities Act. This Prospectus may be used for an offer to resell, resale or other retransfer of New Notes only as specifically set forth herein. Each broker-dealer that receives New Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." 15 TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept for exchange any and all Old Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Company will issue $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of outstanding Old Notes surrendered pursuant to the Exchange Offer. Old Notes may be tendered only in integral multiples of $1,000. The form and terms of the New Notes will be the same as the form and terms of the Old Notes except the New Notes will be registered under the Securities Act and hence will not bear legends restricting the transfer thereof. The New Notes will evidence the same debt as the Old Notes. The New Notes will be issued under and entitled to the benefits of the Indenture, which also authorized the issuance of the Old Notes, such that both series will be treated as a single class of debt securities under the Indenture. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. As of the date of this Prospectus, $100.0 million aggregate principal amount of the Old Notes are outstanding. This Prospectus, together with the Letter of Transmittal, is being sent to all registered holders of Old Notes. There will be no fixed record date for determining registered holders of Old Notes entitled to participate in the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the provisions of the Exchange and Registration Rights Agreement and the applicable requirements of the Exchange Act, and the rules and regulations of the Commission thereunder. Old Notes which are not tendered for exchange in the Exchange Offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the Indenture and the Exchange and Registration Rights Agreement. The Company shall be deemed to have accepted for exchange properly tendered Notes when, as and if the Company shall have given oral or written notice thereof to the Exchange Agent and complied with the provisions of Section 1 of the Exchange and Registration Rights Agreement. The Exchange Agent will act as agent for the tendering holders for the purposes of receiving the New Notes from the Company. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions specified below under "-- Certain Conditions to the Exchange Offer." Holders who tender Old Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes described below, in connection with the Exchange Offer. See "--Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time on , 1997, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Company will notify the Exchange Agent of any extension by oral or written notice and will mail to the registered holders of Old Notes an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the then Expiration Date. The Company reserves the right, in its sole discretion, (i) to delay accepting for exchange any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer if any of the conditions set forth 16 below under "--Certain Conditions to the Exchange Offer" shall not have been satisfied, by giving oral or written notice of such delay, extension or termination to the Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of Old Notes. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders, and the Company will extend the Exchange Offer, depending upon the significance of the amendment and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such period. INTEREST ON THE NEW NOTES The New Notes will bear interest at a rate of 9 7/8% per annum, payable semi-annually, on February 15 and August 15 of each year, commencing on August 15, 1997. Holders of New Notes will receive interest on August 15, 1997 from the date of initial issuance of the New Notes, plus an amount equal to the accrued interest on the Old Notes. Interest on the Old Notes accepted for exchange will cease to accrue upon issuance of the New Notes. CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other term of the Exchange Offer, the Company will not be required to accept for exchange, or exchange any New Notes for, any Old Notes, and may terminate the Exchange Offer as provided herein before the acceptance of any Old Notes for exchange, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the Company's reasonable judgment, might materially impair the ability of the Company to proceed with the Exchange Offer; or (b) any law, statute, rule or regulation is proposed, adopted or enacted, or any existing law, statute, rule or regulation is interpreted by the staff of the Commission, which, in the Company's reasonable judgment, might materially impair the ability of the Company to proceed with the Exchange Offer; or (c) any governmental approval has not been obtained, which approval the Company shall, in its reasonable discretion, deem necessary for the consummation of the Exchange Offer as contemplated hereby. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any Old Notes, by giving oral or written notice of such extension to the holders thereof. During any such extensions, all Old Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by the Company. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified above under "--Certain Conditions to the Exchange Offer." The Company will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Old Notes as promptly as practicable, such notice in the case of any extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the 17 Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Old Notes tendered, and no New Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939 (the "TIA"). PROCEDURES FOR TENDERING Only a holder of Old Notes may tender such Old Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or facsimile thereof, have the signature thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date or, in the alternative, comply with DTC's ATOP procedures described below. In addition, either (i) Old Notes must be received by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is available, into the Exchange Agent's account at the Depository Trust Company (the "Book-Entry Transfer Facility" or "DTC") pursuant to the procedure for book-entry transfer described below or properly transmitted Agent's Message (as defined below) must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the Letter of Transmittal and other required documents must be received by the Exchange Agent at the address set forth below under "The Exchange Offer--Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. The tender by a holder which is not withdrawn prior to the Expiration Date will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder of Old Notes to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder of Old Notes. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. Signatures on a Letter of Transmittal or a notice of withdrawal described below, as the case be, must be guaranteed by an Eligible Institution (as defined below) unless the Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the 18 case may be, are required to be guaranteed, such guarantor must be a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of the recognized signature guarantee programs identified in the Letter of Transmittal (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Old Notes listed therein, such Old Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered holder as such registered holder's name appears on such Old Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, provide evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. The Exchange Agent and DTC have confirmed that any financial institution that is a participant in DTC's system may utilize DTC's ATOP to tender. Accordingly, participants in DTC's ATOP may, in lieu of physically completing and signing the Letter of Transmittal and delivering it to the Exchange Agent, electronically transmit their acceptance of the Exchange Offer by causing the Depositary to transfer the Old Notes to the Exchange Agent in accordance with the Depositary's ATOP procedures for transfer. The Depositary will then send an Agent's Message to the Exchange Agent. The term "Agent's Message" means a message transmitted by DTC received by the Exchange Agent and forming part of the Book-Entry Confirmation, which states that the Depositary has received an express acknowledgement from a participant in DTC's ATOP that is tendering Old Notes which are the subject of such book entry confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal (or, in the case of an Agent's Message relating to guaranteed delivery, that such participant has received and agrees to be bound by the applicable Notice of Guaranteed Delivery), and that the agreement may be enforced against such participant. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holder, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In all cases, issuance of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of Old Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents. If any tendered Old Notes are not accepted for exchange for any reason set forth in the 19 terms and conditions of the Exchange Offer or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such non-exchanged Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof, with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at the address set forth below under "--Exchange Agent" on or prior to the Expiration Date or, if the guaranteed delivery procedures described below are to be complied with, within the time period provided under such procedures. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available or (ii) who cannot deliver their Old Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, may effect a tender if: (a) The tender is made through an Eligible Institution; (b) Prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder, the registered number(s) of such Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three (3) New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the Old Notes or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (c) Such properly completed and executed Letter of Transmittal (or facsimile thereof), or properly transmitted Agent's Message as well as all tendered Notes in proper form for transfer or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three (3) New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. 20 For a withdrawal to be effective, (i) a written notice of withdrawal must be received by the Exchange Agent at one of the addresses set forth below under "--Exchange Agent" or (ii) holders must comply with the appropriate procedures of DTC's ATOP system. Any such notice of withdrawal must specify the name of the person having tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn (including the principal amount of such Old Notes), and (where certificates for Old Notes have been transmitted) specify the name in which such Old Notes were registered, if different from that of the withdrawing holder. If certificates for Old Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Old Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described above, such Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described under "--Procedures for Tendering" above at any time on or prior to the Expiration Date. EXCHANGE AGENT Wilmington Trust Company has been appointed as Exchange Agent of the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: BY REGISTERED OR CERTIFIED MAIL OR BY BY HAND: OVERNIGHT COURIER: Wilmington Trust Company Wilmington Trust Company Corporate Trust Administration c/o Harris Trust Company of New York, 1100 North Market Street as Agent Rodney Square North 75 Water Street Wilmington, Delaware 19890-0001 New York, New York 10004 BY FACSIMILE: Wilmington Trust Company Corporate Trust Administration Facsimile: (302) 651-1079 Confirm by Telephone: (302) 651-8864
21 FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Company. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to broker-dealers or others soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company and are estimated in the aggregate to be approximately $250,000. Such expenses include registration fees, fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, and related fees and expenses. The Company will pay all transfer taxes, if any, applicable to the exchange of Notes pursuant to the Exchange Offer. If, however, certificates representing Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of Notes tendered, or if tendered Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. TRANSFER TAXES Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register New Notes in the name of, or request that Old Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes, as set forth (i) in the legend thereon as a consequence of the issuance of the Old Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws and (ii) otherwise set forth in the Offering Memorandum dated February 10, 1997 distributed in connection with the Offering. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register the Old Notes under the Securities Act. Based on interpretations by the staff of the Commission, New Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with respect to the distribution of the New Notes to be acquired pursuant to the Exchange Offer. Any holder who tenders in the Exchange Offer for the purpose of participating in a distribution of the New Notes (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection 22 with a secondary resale transaction. In addition, to comply with the securities laws of certain jurisdictions, if applicable, the New Notes may not be offered or sold unless they have been registered or such securities laws have been complied with. The Company has agreed, pursuant to the Exchange and Registration Rights Agreement and subject to certain specified limitations therein, to register or qualify the New Notes for offer or sale under the securities or blue sky laws of such jurisdictions as any holder of the New Notes may request in writing. 23 SELECTED HISTORICAL FINANCIAL DATA The following table sets forth selected historical financial data of the Predecessor for the periods indicated. The selected historical statement of operations data for the years ended December 31, 1994, 1995 and 1996 are derived from the audited financial statements of the Predecessor included elsewhere in this Prospectus which have been audited by Price Waterhouse LLP. The selected historical statement of operations data for the year ended December 31, 1993 are derived from the unaudited financial statements of the Predecessor which are not included elsewhere in this Prospectus and which, in the opinion of management, include all adjustments necessary for a fair presentation. This table should be read in conjunction with the Predecessor's historical financial statements and related notes thereto included elsewhere in this Prospectus and with "Management's Discussion and Analysis of Financial Condition and Results of Operations."
YEAR ENDED DECEMBER 31, ---------------------------------------------- 1993 1994 1995 1996 ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Net sales....................................................................... $ 89,798 $ 96,729 $ 91,302 $ 89,541 Cost of products sold........................................................... 27,549 29,930 27,743 28,955 ---------- ---------- ---------- ---------- Gross profit.................................................................. 62,249 66,799 63,559 60,586 Brokerage, distribution and marketing expenses: Brokerage and distribution.................................................. 7,547 8,662 7,583 8,140 Trade promotions............................................................ 19,517 21,911 19,380 17,672 Consumer marketing.......................................................... 15,917 15,297 13,291 10,835 ---------- ---------- ---------- ---------- Total brokerage, distribution and marketing expenses............................ 42,981 45,870 40,254 36,647 Selling, general and administrative expenses.................................... 7,011 6,829 6,120 6,753 ---------- ---------- ---------- ---------- Income before taxes........................................................... 12,257 14,100 17,185 17,186 Provision for income taxes...................................................... 4,719 5,429 6,616 6,616 ---------- ---------- ---------- ---------- Net income.................................................................... $ 7,538 $ 8,671 $ 10,569 $ 10,570 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- OTHER FINANCIAL DATA: Ratio of earnings to fixed charges(1)........................................... NA NA NA NA
- ------------------------------ (1) For the historical periods presented above, the Seller did not allocate any fixed charges to the Predecessor. 24 PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial statements (the "Pro Forma Financial Statements") are based on the audited balance sheet of the Company and the audited statement of operations of the Predecessor which are included elsewhere in this Prospectus. The Pro Forma Financial Statements give effect to the Financing as if it had occurred as of December 31, 1996 for balance sheet data and give effect to the Transactions and the Financing as if both had occurred as of January 1, 1996 for statement of operations data. In addition, the Pro Forma Financial Statements give effect to certain reductions in general and administrative expenses. General and administrative expenses of the Predecessor have historically consisted of direct and indirect allocations from the Seller. Based on existing formal and informal arrangements to operate the Company on a stand-alone basis, as well as thorough analysis of additional anticipated costs, the Company has developed an operating budget which reflects substantial selling, general and administrative savings as compared to the historical financial statements of the Predecessor which included various corporate expense allocations. Management of the Company believes it is appropriate to reflect these amounts in the Pro Forma Financial Statements as the Company, pursuant to the Asset Purchase Agreement between the Company and the Seller, acquired no infrastructure or employees from the Seller and, therefore, the Company will not be operated in the future on a basis comparable to the Seller. See Note (c) to the Pro Forma Statements of Operations below. The pro forma financial information set forth below reflects pro forma adjustments that are based upon available information and factually supportable assumptions that the Company believes are reasonable. The pro forma financial information does not purport to represent what the Company's results of operations or financial condition actually would have been had the Transactions and Financing been consummated as of such dates or for the period ended or project the Company's results of operations or financial condition for any future period. The Pro Forma Financial Statements and accompanying notes should be read in conjunction with the historical financial statements of the Company and the Predecessor and other financial information pertaining to the Company including "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein. 25 MBW FOODS INC. UNAUDITED PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 1996 (DOLLARS IN THOUSANDS)
COMPANY PRO FORMA COMPANY HISTORICAL ADJUSTMENTS PRO FORMA ----------- ------------- ----------- ASSETS: Cash................................................................ $ 8,666 $ 2,000(a) $ 10,666 Accounts receivable................................................. 480 -- 480 Inventories......................................................... 1,182 -- 1,182 Prepaid expenses 9 -- 9 ----------- ------------- ----------- Total current assets.............................................. 10,337 2,000 12,337 Machinery and equipment............................................. 5,206 -- 5,206 Goodwill and other intangible assets................................ 111,358 -- 111,358 Deferred financing costs............................................ 3,995 4,745(a) 8,740 ----------- ------------- ----------- Total assets...................................................... $ 130,896 $ 6,745 $ 137,641 ----------- ------------- ----------- ----------- ------------- ----------- LIABILITIES AND STOCKHOLDER'S EQUITY: Accrued expenses.................................................... $ 2,736 $ 1,745(a) $ 4,481 Long-term debt...................................................... 95,000 5,000(a) 100,000 ----------- ------------- ----------- Total liabilities................................................... 97,736 6,745 104,481 Total stockholder's equity.......................................... 33,160 -- 33,160 ----------- ------------- ----------- Total liabilities and stockholder's equity........................ $ 130,896 $ 6,745 $ 137,641 ----------- ------------- ----------- ----------- ------------- -----------
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (a) Reflects the issuance of $100,000 of long-term debt and repayment of $30,000 of senior secured revolving debt, $15,000 of senior secured term debt and $50,000 of senior subordinated debt, as well as the payment of related debt issuance costs, and excess cash after applying the proceeds of the Offering. 26 MBW FOODS INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 (DOLLARS IN THOUSANDS)
PREDECESSOR PRO FORMA COMPANY HISTORICAL ADJUSTMENTS PRO FORMA ------------- ------------ ----------- Net sales............................................................ $ 89,541 $ 2,040(a) $ 91,581 Cost of products sold................................................ 28,955 958(b) 29,913(g) ------------- ------------ ----------- Gross profit....................................................... 60,586 1,082 61,668 ------------- ------------ ----------- Brokerage, distribution and marketing expenses: Brokerage and distribution......................................... 8,140 -- 8,140 Trade promotions................................................... 17,672 2,040(a) 19,712 Consumer marketing................................................. 10,835 -- 10,835 ------------- ------------ ----------- Total brokerage, distribution and marketing expenses................. 36,647 2,040 38,687 Selling, general and administrative expenses......................... 6,753 (3,042)(c) 3,711(g) Amortization of goodwill and other intangibles....................... -- 3,066(d) 3,066 ------------- ------------ ----------- Operating profit................................................... 17,186 (982) 16,204 Amortization of deferred financing fees.............................. -- 856(e) 856 Interest expense, net................................................ -- 9,742(e) 9,742 ------------- ------------ ----------- Income before taxes................................................ 17,186 (11,580) 5,606 Provision for income taxes........................................... 6,616 (4,457)(f) 2,159 ------------- ------------ ----------- Net income......................................................... $ 10,570 $ (7,123) $ 3,447 ------------- ------------ ----------- ------------- ------------ ----------- EBITDA............................................................... $ 19,866(h) ----------- -----------
See Accompanying Notes to Unaudited Pro Forma Statements of Operations 27 NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (a) Represents the reclassification of amounts accounted for as cash discounts by the Seller to trade promotions by the Company. (b) Adjustment reflects net additional expenses related to cost of products sold as follows:
YEAR ENDED DECEMBER 31, 1996 ------------------- (DOLLARS IN THOUSANDS) COST OF PRODUCTS SOLD: Predecessor historical expenses.................................................. $ 28,955 Less Company expenses: Co-pack agreements(1).......................................................... 29,393 Depreciation(2)................................................................ 520 -------- Total Company expenses....................................................... 29,913 -------- Difference....................................................................... $ 958 -------- --------
- ------------------------------ (1) These expenses include the Predecessor's historical volumes for syrup and pancake mix products, as adjusted to give effect to the contractual rates included in the Co-Pack Agreement. (2) Represents depreciation of the Company's equipment, reflecting an increase in depreciation expense over the Predecessor's historical expense as a result of a higher depreciable basis for the acquired equipment. The equipment will be depreciated over an average life of 10 years. (c) Represents the difference between corporate expense allocated by Unilever relating to sales, marketing, general and administrative and research and development functions and such costs for the stand-alone business. The Company has formal and informal agreements in place to operate the business on a stand-alone basis, and has completed a thorough analysis of anticipated costs going forward. Based on these agreements and analysis, the Company has developed a detailed annual operating budget which reflects approximately $3.7 million in factually supportable selling, general and administrative costs, which is approximately $2.4 million lower than Unilever's corporate allocated costs. A substantial portion of these savings are attributable to a lower headcount relative to the headcounts included in the historical allocations from Unilever. These direct and indirect allocations included multiple layers of Unilever management which the Company will not need to replicate. On a stand-alone basis, the Company will have 22 employees, consisting of seven in executive and finance functions, four in marketing functions, 10 in sales functions and one in research and development. The table below reflects cost savings resulting from the new personnel infrastructure of the Company as compared to the Predecessor's historical selling, general and administrative expenses. Management of the Company believes it is appropriate to reflect these amounts in the Pro Forma Financial Statements as the Company, pursuant to the Asset Purchase Agreement between the Company and the Seller, acquired no infrastructure or employees from the Seller and, therefore, the Company will not be operated in the future on a basis comparable to the Seller. 28
YEAR ENDED DECEMBER 31, 1996 ------------------- (DOLLARS IN THOUSANDS) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Predecessor historical expenses.................................................. $ 6,753 Less Company expenses: Executive and finance(1)....................................................... 1,568 Division management and marketing.............................................. 302 Sales.......................................................................... 1,096 Research and development....................................................... 192 Other(2)....................................................................... 553 ------- Total Company expenses........................................................... 3,711 ------- Difference....................................................................... $ 3,042 ------- -------
- --------------------- (1) Includes aggregate annual expenses related to management and advisory services provided by Dartford and MDC of $850. (2) Includes professional fees, facilities expenses and other related expenses. (d) Reflects intangible amortization expense as a result of the Acquisition. Goodwill will be amortized on a straight line basis over a 40-year period and other intangibles will be amortized over periods ranging from five to 20 years. (e) Pro forma interest expense has been calculated based upon pro forma debt levels and the applicable interest rates. The Predecessor was not allocated any interest expense from the Seller. The pro forma commitment fee on the unused portion of the Revolving Facility is based on an unused balance of $60.0 million. The interest income is calculated based on an average outstanding cash balance of approximately $10.0 million. The table below presents pro forma net interest expense, noted with the respective interest rates or fee, and pro forma amortization of deferred financing costs:
YEAR ENDED DECEMBER 31, 1996 ------------------- (DOLLARS IN THOUSANDS) PRO FORMA INTEREST EXPENSE: Senior Subordinated Notes offered hereby (9.875%)................................ $ 9,875 Commitment fee on Revolving Facility (.50%)...................................... 300 Interest income (5.0%)........................................................... (433) -------- Total pro forma net interest expense......................................... $ 9,742 -------- -------- Pro forma amortization of deferred financing costs............................... $ 856 -------- --------
(f) Reflects a reduction in the provision for income taxes, as a result of the pro forma decrease in income before income taxes and the effect of the Company's amortization of goodwill being deductible for income tax purposes. (g) Pro forma depreciation expense included in cost of products sold and selling, general and administrative expenses is $596,000 for the year ended December 31, 1996. Pro forma operating lease expense included in selling, general and administrative expenses is $135,000 for the years ended December 31, 1996. (h) EBITDA is defined as net income before interest, taxes, depreciation and amortization and is presented because it is commonly used by certain investors and analysts to analyze and compare, on the basis of operating performance, and to determine a company's ability to service and incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities or other consolidated income or cash flows statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. 29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company markets and sells the MRS. BUTTERWORTH'S brand of syrup and pancake mix products. As product lines of Unilever, MRS. BUTTERWORTH'S was not accounted for as a separate legal entity or division. The discussion which follows is based on MRS. BUTTERWORTH'S historical financial information. The Predecessor's selling, general and administrative expenses have consisted solely of corporate allocations from the Seller. As a result, the level of these expenses does not reflect the actual expenses required to operate the Company on a stand-alone basis. Management has developed, and is in the process of implementing, a new corporate infrastructure to operate the Company on a stand-alone basis. See "Pro Forma Financial Information." Under the Seller's ownership, MRS. BUTTERWORTH'S aggregate marketing expenditures were reduced consistently over the last several years and emphasized a trade-oriented marketing strategy. Management intends to maintain aggregate marketing expenditures at a level consistent with recent experience, but to reallocate those expenditures by placing a greater emphasis on advertising and consumer marketing. See "Business--MRS. BUTTERWORTH'S Growth Strategy." In May 1996, MRS. BUTTERWORTH'S adopted a "value pricing" strategy to position its brand as the best value among the three national syrup brands. MRS. BUTTERWORTH'S began the implementation of this strategy by reducing the wholesale list prices of certain of its products, resulting in lower everyday shelf prices to the consumer. This strategy was adopted to decrease MRS. BUTTERWORTH'S reliance on price discounting and to reduce costly buy-one-get-one-free promotions and was intended to increase sales volume and decrease overall marketing expenditures. The initial results of this strategy are reflected in MRS. BUTTERWORTH'S performance for the year ended December 31, 1996 and the related discussion below. RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 1993 1994 1995 -------------------- -------------------- -------------------- AMOUNT % AMOUNT % AMOUNT % --------- --------- --------- --------- --------- --------- (DOLLARS IN THOUSANDS) Net sales.................................................. $ 89,798 100.0% $ 96,729 100.0% $ 91,302 100.0% Cost of products sold...................................... 27,549 30.7 29,930 30.9 27,743 30.4 --------- --------- --------- --------- --------- --------- Gross profit............................................. 62,249 69.3 66,799 69.1 63,559 69.6 Brokerage, distribution and marketing expenses: Brokerage and distribution............................. 7,547 8.4 8,662 8.9 7,583 8.3 Trade promotions....................................... 19,517 21.7 21,911 22.7 19,380 21.2 Consumer marketing..................................... 15,917 17.7 15,297 15.8 13,291 14.6 --------- --------- --------- --------- --------- --------- Total brokerage, distribution and marketing expenses....... 42,981 47.8 45,870 47.4 40,254 44.1 Selling, general and administrative expenses............... 7,011 7.8 6,829 7.1 6,120 6.7 --------- --------- --------- --------- --------- --------- Income before taxes...................................... 12,257 13.7 14,100 14.6 17,185 18.8 Provision for income taxes................................. 4,719 5.3 5,429 5.6 6,616 7.2 --------- --------- --------- --------- --------- --------- Net income............................................... $ 7,538 8.4% $ 8,671 9.0% $ 10,569 11.6% --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1996 -------------------- AMOUNT % --------- --------- Net sales.................................................. $ 89,541 100.0% Cost of products sold...................................... 28,955 32.3 --------- --------- Gross profit............................................. 60,586 67.7 Brokerage, distribution and marketing expenses: Brokerage and distribution............................. 8,140 9.1 Trade promotions....................................... 17,672 19.7 Consumer marketing..................................... 10,835 12.1 --------- --------- Total brokerage, distribution and marketing expenses....... 36,647 40.9 Selling, general and administrative expenses............... 6,753 7.6 --------- --------- Income before taxes...................................... 17,186 19.2 Provision for income taxes................................. 6,616 7.4 --------- --------- Net income............................................... $ 10,570 11.8% --------- --------- --------- ---------
30 YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995 NET SALES declined 1.9% to $89.5 million for the year ended December 31, 1996 as compared to $91.3 million for the year ended December 31, 1995. Sales volume increased 2.7% to 94.7 million pounds in 1996 from 92.2 million pounds in 1995. Syrup sales decreased $1.8 million to $79.1 million in 1996 from $80.9 million in 1995. Syrup volume increased 3.4% to 78.6 million pounds in 1996 from 76.0 million pounds in 1995. In May 1996, MRS. BUTTERWORTH'S adopted a value pricing strategy to position its brand as the best value among the three national syrup brands. This pricing strategy has benefitted the brand through higher volumes and savings on consumer marketing expenses, but resulted in a net decrease in syrup sales during 1996. Pancake mix sales remained constant at $10.4 million in 1996, the same as in 1995. Pancake mix was flat at 16.1 million pounds in 1996 which was the same volume achieved in 1995. GROSS PROFIT as a percentage of net sales was 67.7% for the year ended December 31, 1996 as compared to 69.6% for the year ended December 31, 1995. The decrease in gross profit margin was primarily due to lower wholesale prices related to the Company's value pricing strategy while raw material costs remained essentially unchanged. INCOME BEFORE TAXES as a percentage of net sales improved to 19.2% for the year ended December 31, 1996 as compared to 18.8% for the year ended December 31, 1995. The operating margin improvement was primarily the result of a reduction in consumer marketing expense as a percentage of net sales to 12.1% in 1996 from 14.6% in 1995. This was a result of the value pricing strategy that reduced costly buy-one-get-one-free promotions. PROVISION FOR INCOME TAXES. The provision for income taxes of $6.6 million in 1996 represented an effective tax rate of 38.5%, the same as in 1995. NET INCOME of $10.6 million in 1996 was the same as net income of $10.6 million in 1995. YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994 NET SALES decreased 5.6% to $91.3 million in the year ended December 31, 1995 from $96.7 million in the year ended December 31, 1994. Sales volume decreased 10.1% to 92.2 million pounds in 1995 from 102.6 million pounds in 1994. Syrup sales decreased $3.0 million to $80.9 million in 1995 from $83.9 million in 1994, and syrup volume declined 8.4% to 76.1 million pounds from 83.1 million pounds in 1994. Syrup sales and volume declines were primarily due to the phasing out of the MAPLE VALLEY syrup brand, one of the Predecessor's lower priced brands, and an overall decrease in promotional support for MRS. BUTTERWORTH'S. The declines were partially offset by the impact during 1995 of an industry-wide price increase in August 1994. Pancake mix sales declined $2.4 million to $10.4 million in 1995 from $12.8 million in 1994. Pancake mix volume decreased 17.0% to 16.1 million pounds from 19.4 million pounds in 1994. Increased competition in MRS. BUTTERWORTH'S key Central and Mid-Central regions was the primary cause of the decrease in sales and volume. GROSS PROFIT as a percentage of net sales was 69.6% in 1995 as compared to 69.1% in 1994. The increase in gross profit margin was primarily a result of the impact during 1995 of the August 1994 price increase, which resulted in the average price of retail syrup increasing from 1994 to 1995 while raw materials costs as a percentage of net sales remained essentially unchanged. Also contributing to the gross margin increase during 1995 was the phasing out of the MAPLE VALLEY brand, one of the Predecessor's lower margin brands. INCOME BEFORE TAXES as a percentage of net sales increased to 18.8% in 1995 as compared to 14.6% in 1994. This increase was primarily the result of the August 1994 price increase and reductions in trade promotions, consumer marketing and brokerage and distribution expense as a percentage of net sales. PROVISION FOR INCOME TAXES. The provision for income taxes of $6.6 million in 1995 represented an effective tax rate of 38.5%, the same as in 1994. 31 NET INCOME increased to $10.6 million in 1995 compared to $8.7 million in 1994. YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993 NET SALES increased 7.7% to $96.7 million in the year ended December 31, 1994 from $89.8 in the year ended December 31, 1993. Sales volume rose 8.7% to 102.6 million pounds in 1994 from 94.4 million pounds in 1993. Syrup sales increased $6.3 million to $83.9 million in 1994 from $77.6 million in 1993. Syrup volume rose 9.6% to 83.1 million pounds in 1994 from 75.8 million pounds in 1993. Syrup sales and volume increases were due to the August 1994 price increase, the addition of new foodservice customers and the introduction of MRS. BUTTERWORTH'S COUNTRY BEST RECIPE. These increases were partially offset by sales and volume declines of the MAPLE VALLEY syrup products. Pancake mix sales grew $0.6 million to $12.8 million in 1994 from $12.2 million in 1993. Pancake mix volume increased 4.3% to 19.4 million pounds in 1994 from 18.6 million pounds in 1993. The increase in pancake mix sales and volume was primarily attributable to incremental foodservice volume. GROSS PROFIT as a percentage of net sales was 69.1% in 1994 as compared to 69.3% in 1993. The decrease in gross profit margin was primarily attributable to the addition of new foodservice customers. INCOME BEFORE TAXES as a percentage of net sales improved to 14.6% in 1994 as compared to 13.7% in 1993. The margin improvement was primarily the result of a decline in consumer marketing as a percentage of net sales, following extensive use of buy-one-get-one-free promotions and in-ad coupons in 1993. The decline in consumer marketing was partially offset by increases in brokerage and distribution expenses and trade promotions as a percentage of net sales. PROVISION FOR INCOME TAXES. The provision for income taxes in 1994 of $5.4 million represented an effective tax rate of 38.5%, the same as in 1993. NET INCOME increased to $8.7 million in 1994 compared to $7.5 million in 1993. The increase was the result of a higher operating profit. LIQUIDITY AND CAPITAL RESOURCES The Company incurred substantial indebtedness in connection with the Acquisition. Interest payments on the Notes represent significant cash requirements for the Company. As of December 31, 1996, on a pro forma basis, after giving effect to the Financing, the Company would have had $100.0 million in aggregate principal amount of indebtedness outstanding under the Notes and availability of $60.0 million under the Revolving Facility. The Company will be required to make periodic payments of interest on the Notes and the Senior Credit Facilities. See "Description of Notes" and "Description of Senior Credit Facilities." In addition to its debt service obligations, the Company's liquidity needs will be for working capital, capital expenditures and acquisitions. Assets capitalized relating to machinery and equipment acquired in this transaction, and referred to elsewhere herein as capital expenditures, were $46,000, $21,000, $64,000 and $470,000 for the years ended December 31, 1993, 1994, 1995 and 1996, respectively. Capital expenditure requirements have historically been financed with internally generated funds and have been primarily related to refurbishments and improvements of manufacturing equipment. The Company's primary sources of liquidity are cash flows from operations and borrowings under the Revolving Facility. $60.0 million is available to the Company for borrowing under the Revolving Facility. See "Description of the Senior Credit Facilities." In addition, as a result of the Transactions and the Financing, the Company generated approximately $10.0 million in cash, which will be available for general corporate purposes. The Company anticipates that its working capital requirements and capital expenditures for 1997 will be satisfied through a combination of available cash and cash flow generated from operations. INFLATION The Company does not believe that inflation has had a material impact on its financial position or results of operations during the periods covered by the Financial Statements included herein. 32 THE ACQUISITION ASSET PURCHASE AGREEMENT On the Acquisition Closing Date, pursuant to the Asset Purchase Agreement between the Seller and the Company, dated as of December 18, 1996 (the "Asset Purchase Agreement"), the Company acquired substantially all of the assets of the MRS. BUTTERWORTH'S syrup and pancake mix business for a cash purchase price of $114.6 million. The purchase price paid on the Acquisition Closing Date was subsequently reduced by $483,000 pursuant to the purchase price adjustment mechanism set forth in the Asset Purchase Agreement. The assets acquired by the Company include (i) the MRS. BUTTERWORTH'S trademarks for the United States, Canada and Puerto Rico and patents, copyrights and other intellectual property rights relating to MRS. BUTTERWORTH'S products, (ii) the machinery, equipment and spare parts used in the manufacture of MRS. BUTTERWORTH'S syrups, (iii) inventories held by the Seller on the Acquisition Closing Date, including raw materials, packaging and finished goods, (iv) proprietary formulations for MRS. BUTTERWORTH'S syrups and pancake mixes, (v) other product specifications and customer lists and (vi) rights under certain contracts, licenses, purchase orders and other arrangements and permits. Except for warranty and related claims not to exceed $150,000, the Company did not assume any pre-closing liabilities or obligations of the Seller. The Asset Purchase Agreement contains customary representations, covenants and indemnification provisions. CO-PACK AGREEMENT Pursuant to a co-pack agreement between Van den Bergh Foods Company ("VDB"), a division of the Seller, and the Company dated as of December 31, 1996 (the "Co-Pack Agreement"), VDB will contract manufacture and package all of the Company's requirements for specified syrup and pancake mix products, subject to certain minimum and maximum supply limits. Prices for the products are fixed based on the Seller's actual 1996 costs, with certain scheduled increases, and are subject to adjustment based upon purchase price variances for raw materials and packaging supplies and fluctuations in monthly production volumes below certain monthly minimum or above certain monthly maximum levels. The Co-Pack Agreement terminates on December 31, 1997, subject to earlier termination with respect to one or more products by mutual agreement of the parties. TRANSITION SERVICES AGREEMENT Pursuant to a transition services agreement between the Company and the Seller dated as of December 31, 1996 (the "Transition Services Agreement"), the Seller will provide the Company with certain operational and financial services which it performed prior to the Acquisition for a period not to exceed six months from the Acquisition Closing Date. The Company will pay the Seller a weekly fee of up to $17,000 for the Seller's sales services, which fee shall be reduced proportionately as the Company assumes responsibility for sales on a by-market basis. The Company will pay the Seller a fee of $82,800 per month for all other services provided by the Seller under the Transition Services Agreement. The Company may terminate any or all of the services provided by the Seller on ten days' prior written notice to the Seller and, in the case of brokers, 45 days' prior notice. OTHER AGREEMENTS Pursuant to a Shared Technology License Agreement dated as of December 31, 1996 between the Seller and the Company, the Seller granted the Company a nonexclusive, perpetual and royalty-free right and license to use any proprietary and/or confidential trade secrets, know-how, processes and other technology used in connection with the MRS. BUTTERWORTH'S business. Pursuant to a Flavor Supply Agreement dated as of December 31, 1996 between Quest International Flavors & Food Ingredients Company ("Quest"), an affiliate of Unilever, and the Company, Quest has agreed to provide the Company with certain flavor mixtures used in the production of MRS. BUTTERWORTH'S syrups, subject to certain minimum and maximum order limits. 33 BUSINESS COMPANY OVERVIEW The Company markets and sells MRS. BUTTERWORTH'S, the number one brand of regular syrup in the United States and the number two syrup brand overall. Originally introduced in 1960, MRS. BUTTERWORTH'S syrup is well known for its unique buttery flavor and distinctive grandmother-shaped bottle and enjoys 100% aided brand awareness among syrup consumers. In addition to its strong national presence, MRS. BUTTERWORTH'S is the number one brand of syrup in the Central and Mid-Central United States, the two regions of the country with the highest per capita syrup consumption. The strength of the MRS. BUTTERWORTH'S brand is evidenced by the fact that it is the only one of the three leading national brands of syrup to increase its market share over the last three years. MRS. BUTTERWORTH'S strong market position in syrup is complemented by the Company's pancake mix products. The Company's products include a full range of branded syrups and pancake mixes including its ORIGINAL, COUNTRY BEST RECIPE and LITE syrup labels and its OLD FASHIONED, BUTTERMILK COMPLETE and ORIGINAL COMPLETE pancake mix labels. MRS. BUTTERWORTH'S leading market positions and strong brand recognition have enabled it to realize a long history of high operating margins, stable sales and growth in operating profit. From 1993 to 1996, MRS. BUTTERWORTH'S EBITDA margin increased from 13.9% to 19.5% and its EBITDA increased 40%. For the year ended December 31, 1996, the Company's pro forma sales and EBITDA were $91.6 million and $19.9 million, respectively. The syrup and pancake mix categories in the United States are stable and are characterized by broad household penetration and steady growth. From 1993 to 1996, the syrup and pancake mix categories grew at compound annual rates of approximately 1.4% and 3.5%, respectively. The Company's products are sold nationally through an independent broker network to retail grocery stores, mass merchandisers, military exchanges and foodservice distributors. MRS. BUTTERWORTH'S syrups and pancake mixes are sold in approximately 99% and 63%, respectively, of all retail grocery stores in the United States. MRS. BUTTERWORTH'S syrup is contract manufactured and distributed under a one-year co-pack agreement between the Company and the Seller. For the year ended December 31, 1996, the Company's syrup and pancake mix sales represented approximately 88% and 12% of pro forma sales, respectively. The Company believes that MRS. BUTTERWORTH'S strong brand name, leading market positions, high operating margins and cash flow provide an attractive platform upon which to build a focused, branded dry grocery products company. The Company believes that the performance of certain dry grocery categories and brands has suffered in recent years as a result of declining levels of marketing support and little or no new product innovation by the major food companies. Consequently, the Company believes that many of these undermanaged brands are likely candidates for divestiture from their corporate parents. While these categories and brands tend to be mature, there are expanding segments within the categories and growth opportunities that have not been realized. As a result, the Company believes that an attractive opportunity exists for building a branded dry grocery products company through strategic acquisitions of established, well-recognized national and regional brands that have been undermanaged in recent years. The Company's objective is to renew the growth of the brands it acquires by providing them the focus, strategic direction, marketing resources and dedicated sales and marketing organizations that they have lacked. The Company's principal executive office is located at Community Corporate Center, 445 Hutchinson Avenue, Columbus, Ohio 43235. The Company's telephone number is (614) 436-8600. MRS. BUTTERWORTH'S GROWTH STRATEGY The Company believes that MRS. BUTTERWORTH'S has significant growth potential which has not been realized due to a lack of corporate support and marketing resources from the Seller in recent years. The Company plans to improve MRS. BUTTERWORTH'S performance by increasing management attention to the 34 brand and by devoting the marketing resources necessary to exploit opportunities in the syrup and pancake mix categories. The Company intends to implement its strategy through the following initiatives: - POSITION BRAND AS BEST VALUE. The Company plans to position MRS. BUTTERWORTH'S as the best value among the three leading national syrup brands by continuing to provide its distinctive, premium quality product at prices which are moderately below those of the other national brands. In May 1996, MRS. BUTTERWORTH'S lowered the everyday prices of its syrup products. To offset the cost of lowering everyday prices, MRS. BUTTERWORTH'S also reduced its costly and relatively ineffective buy-one-get-one-free promotions. For the twelve weeks ended November 23, 1996, a representative period following the implementation of this "value-pricing" strategy, dollar sales and market share of the MRS. BUTTERWORTH'S ORIGINAL label increased 8.0% and 0.6%, respectively. The Company believes that full implementation of MRS. BUTTERWORTH'S value pricing strategy will result in continued increases in sales and market share. - REFORMULATE LITE PRODUCT. MRS. BUTTERWORTH'S LITE has not been reformulated or improved since its introduction in 1985. Over the last five years, competitors have focused their research and development efforts on the lite syrup segment, taking advantage of newly developed ingredients and formulations. While Mrs. Butterworth's is the leading brand in the regular syrup segment, MRS. BUTTERWORTH'S share of the lite syrup segment is 15.2% and is significantly below AUNT JEMIMA'S leading 32.4% share of the segment. The Company plans to reformulate and improve the taste of MRS. BUTTERWORTH'S LITE. Management believes that this reformulation, coupled with MRS. BUTTERWORTH'S leading position in the regular syrup segment and increased marketing support, can expand the Company's share of the lite segment and further strengthen the Company's overall syrup market share. - ROLL OUT PRODUCT LINE EXTENSIONS. Management believes MRS. BUTTERWORTH'S strong brand equity and leading market shares in the syrup category present considerable opportunities for product line extensions. For example, an opportunity exists to develop a product which is directed at children and packaged in plastic, as compared to the current glass packaging. Opportunities also exist for MRS. BUTTERWORTH'S in the flavored syrup segment, as none of the major national brands currently offer these specialty products. In addition, management believes that opportunities exist for growth in the Company's pancake mix business with increased marketing and sales support for its recently redesigned and updated packaging. - ADOPT CONSUMER BASED MARKETING STRATEGY. Over the next two years, the Company plans to reduce its reliance on costly and relatively inefficient trade spending and price discounting and increase its advertising and consumer promotional events. The Company plans to reduce or eliminate buy-one- get-one-free promotions and its heavy reliance on coupons in free standing inserts. The Company will reallocate those marketing dollars to advertising and more focused consumer promotions such as cross-promotions with host foods including frozen waffles and pancake mix. In addition, the Company will direct its advertising expenditures to support the introduction of new or improved products and reinforce MRS. BUTTERWORTH'S unique brand equity and positioning as the best value among the national brands. INDUSTRY The U.S. syrup category had sales of $421 million in 1996 and has grown at a compound annual rate of approximately 1.4% since 1993. Sales of syrup are driven by the consumption of host foods, product innovation and consumers' desire for traditional "home style" meals. Sales in the syrup category increased in 1991 and 1992 due to the increased consumption of host foods, which was driven primarily by new product introductions of host foods. Growth in the syrup category has also been driven by product innovation, such as the development of lite and specialty flavored syrups. Syrup is widely consumed across the United States and has a 60% household penetration rate. Approximately 95% of syrup is consumed with pancakes, waffles and french toast, and syrup is consumed with 7% of all U.S. breakfasts, equal in frequency of consumption to hot cereals and baked goods. On average, syrup users 35 consume the product once every two weeks and purchase syrup approximately once every three months. The most common purchase size is 24 ounces. Consumption increases slightly during the winter months. The syrup category has three major segments: regular, lite and pure maple/specialty flavored, which represent approximately 58%, 30% and 12% of syrup sales, respectively. Regular syrup is a full-calorie, corn syrup based product. Lite syrup is also a corn syrup based product, but has only half the calories of regular syrup. Pure maple, diet and other specialty syrups, all of which are non-corn syrup based products, occupy market niches and are not currently offered by any of the major national syrup manufacturers. The three leading brands of syrup (AUNT JEMIMA, MRS. BUTTERWORTH'S and LOG CABIN) account for approximately 48% of total syrup sales in the United States. The remaining 52% is fragmented, with private label accounting for approximately 20% of sales and numerous other national and regional brands accounting for the remainder. Management believes that private label's share of the syrup market will remain relatively flat due to the lack of opportunity for growth in distribution of private label syrup and the relatively high level of private label syrup which is currently sold on promotion. Private label syrup currently has approximately 96% distribution to retail grocery stores, leaving little room for growth in distribution. In addition, approximately 35% of private label syrup is sold on promotion, a relatively high percentage of promoted sales for a private label product. Finally, since 1988 private label syrup prices have increased at nearly double the rate of the three leading syrup brands, reducing the premium for branded syrups from approximately 80% to 55%. The U.S. retail grocery pancake mix category had sales of $145 million in 1996 and grew at a compound annual rate of 3.5% from 1993 to 1996, largely due to a trend among consumers to return to traditional meals and the perceived value offered by pancake mix compared with substitute products. Pancake mix has a household penetration rate of 30%. The purchase cycle is once every three months, similar to syrup. The pancake mix category is less fragmented than the syrup category with the four leading brands (AUNT JEMIMA, HUNGRY JACK, KRUSTEAZ and MRS. BUTTERWORTH'S) accounting for approximately 70% of sales. Private label and smaller national and regional competitors account for the remainder. See "--Competition." PRODUCTS AND MARKETS The Company markets and sells the MRS. BUTTERWORTH'S brand of syrup and pancake mix. The retail grocery channel is the primary market for the Company's products and accounted for approximately 85% of sales for the year ended December 31, 1996. In this channel, the Company's syrup products are primarily sold in 12, 24 and 36 ounce bottles and pancake mix products are primarily sold in two pound paperboard boxes. The remaining 15% of the Company's sales are in other channels, including membership warehouses, convenience stores, mass merchandisers, foodservice and the U.S. military. In these channels, the Company's syrup products are also sold in gallon and portion pack units and pancake mix products are also sold in five pound polybags. SYRUPS (88% of sales). MRS. BUTTERWORTH'S syrup products include regular syrup, which is a full-calorie corn syrup based product, and lite syrup, which is a half-calorie corn syrup based product. The Company's syrups are primarily sold in highly recognizable grandmother-shaped glass bottles. REGULAR SYRUP. MRS. BUTTERWORTH'S is the leading brand of regular syrup in the United States with a 19.0% share of the regular syrup segment. MRS. BUTTERWORTH'S produces and sells regular syrup under its ORIGINAL label, which was introduced in 1960, and its COUNTRY BEST RECIPE label, a cinnamon-vanilla flavor introduced in 1994. MRS. BUTTERWORTH'S ORIGINAL 24 ounce stock keeping unit ("SKU") is the number two ranked SKU in the syrup category and sales of all MRS. BUTTERWORTH'S ORIGINAL sizes accounted for approximately 44% of the Company's sales for the year ended December 31, 1996. 36 LITE SYRUP. MRS. BUTTERWORTH'S LITE, introduced in 1985, is the third leading brand in the lite syrup segment, with a 15.2% share of that segment. PANCAKE MIXES (12% of sales). MRS. BUTTERWORTH'S pancake mixes include add-in mixes, to which the user adds eggs and vegetable oil, and complete mixes, to which the user adds only water. The Company's add-in mix is sold under the MRS. BUTTERWORTH'S OLD-FASHIONED label. The Company's complete mixes are sold under its MRS. BUTTERWORTH'S BUTTERMILK COMPLETE and MRS. BUTTERWORTH'S ORIGINAL COMPLETE labels. MARKETING, SALES AND DISTRIBUTION The MRS. BUTTERWORTH'S trademark has been developed over 36 years and has been supported through a mix of trade promotions, consumer marketing and advertising. In addition, MRS. BUTTERWORTH'S unique grandmother-shaped bottle provides strong brand identification at the point of sale. MRS. BUTTERWORTH'S products are sold by a network of independent brokers and are distributed on a national basis from the Seller's Olathe, Kansas facility. Originally introduced in 1960, MRS. BUTTERWORTH'S is a well-recognized trademark in the United States. MRS. BUTTERWORTH'S warm, homespun and "grandmotherly" image appeals to young and old consumers alike. According to a 1995 Nielsen Brandbuilder study, MRS. BUTTERWORTH'S has 100% aided brand awareness among syrup consumers. MRS. BUTTERWORTH'S also has significantly higher Nielsen scores than its competitors in key consumer areas including "rich tasting", "attractive packaging" and "attractive advertising". Consumer awareness and attraction to the MRS. BUTTERWORTH'S brand is reinforced through MRS. BUTTERWORTH'S unique grandmother-shaped glass bottle, which provides customers with strong point-of-purchase brand identification. MRS. BUTTERWORTH'S trade promotions have consisted of price discounting, in-store advertising and couponing in retailer flyers. In the second quarter of 1996, MRS. BUTTERWORTH'S adopted a strategy to position its syrup products as the best value among the three leading national brands. MRS. BUTTERWORTH'S reduced its wholesale prices, resulting in lower everyday shelf prices to the consumer for the Company's regular syrup products. This strategy was adopted to decrease reliance on price discounting. MRS. BUTTERWORTH'S consumer marketing has relied heavily on coupons in free standing inserts, which historically have had low average redemption rates, and costly buy-one-get-one-free promotions. The pricing strategy implemented in the second quarter of 1996 was adopted to decrease reliance on buy-one-get-one-free promotions and has resulted in a reduction in MRS. BUTTERWORTH'S consumer marketing expenditures. The Company intends to shift the focus of its consumer marketing to targeted couponing, such as cross-promotions with host food products. MRS. BUTTERWORTH'S advertising has been limited in recent years. Historically, MRS. BUTTERWORTH'S advertising consisted primarily of television advertising which was aimed at promoting MRS. BUTTERWORTH'S unique brand image. The Company's advertising emphasized the old-fashioned "grandmotherly" image associated with the brand and its homemade quality and wholesome taste. Additionally, MRS. BUTTERWORTH'S advertising campaign, which used a "talking syrup bottle," appeals to both children and adults. MRS. BUTTERWORTH'S advertising has a strong recall score and has been highly effective in motivating the purchase of MRS. BUTTERWORTH'S products and the Company intends to continue this advertising. The majority of MRS. BUTTERWORTH'S syrup and pancake mix products are sold through a network of approximately 60 independent brokers to retail grocery stores, membership warehouses, convenience stores and mass merchandisers. Retail grocery sales account for approximately 85% of the Company's sales of syrups and pancake mixes. The Company also uses a separate broker network which sells syrups and pancake mixes to the foodservice distributors and operators. MRS. BUTTERWORTH'S syrups and pancake mixes are distributed on a national basis from the Seller's Olathe, Kansas facility. None of the Company's customers account for more than 10% of the Company's sales. 37 COMPETITION The three major national brands of syrup are AUNT JEMIMA, MRS. BUTTERWORTH'S and LOG CABIN. Sales of these three brands account for approximately 48% of total syrup sales in the United States. Smaller national and regional brands, including HUNGRY JACK, GOLDEN GRIDDLE and VERMONT MAID, and private label syrups also compete in the syrup category. Competition is based primarily on price and consumer positioning. MRS. BUTTERWORTH'S is the number one brand of regular syrup in the United States, with a 19.0% share of the regular syrup segment, followed by LOG CABIN and AUNT JEMIMA with regular segment shares of 17.2% and 12.4%, respectively. MRS. BUTTERWORTH'S is the number two national brand of syrup overall, with a 15.5% market share compared with market shares for AUNT JEMIMA and LOG CABIN of 17.3% and 14.9%, respectively. As illustrated in the following table, MRS. BUTTERWORTH'S is the only national brand that has gained market share over the past three years.
SYRUP MARKET SHARE ------------------------------- BRAND 1994 1995 1996 - ----------------------------------------------------------------- --------- --------- --------- MRS. BUTTERWORTH'S............................................... 15.0% 15.5% 15.5% AUNT JEMIMA...................................................... 19.7% 18.6% 17.3% LOG CABIN........................................................ 17.8% 15.8% 14.9%
MRS. BUTTERWORTH'S is also the leading brand of syrup in the Central (Chicago, Denver, Kansas City) and Mid-Central (Detroit, Indianapolis, Pittsburgh) regions of the United States, the two regions of the country with the highest per capita syrup consumption. The U.S. pancake mix category is more concentrated than the syrup category, with four major brands representing 69.9% of the total market. AUNT JEMIMA is the leader in the pancake mix category, with a 32.1% market share, followed by HUNGRY JACK, KRUSTEAZ and MRS. BUTTERWORTH'S, with market shares of 16.6%, 15.0% and 6.0%, respectively. RAW MATERIALS The Company utilizes a variety of basic raw materials in the manufacture of its syrup and pancake mix products, including corn syrup, flour, sugar and flavorings. The Company also utilizes significant quantities of glass and cardboard for its packaging requirements. Supplies of MRS. BUTTERWORTH'S ingredients and packaging requirements are readily available from a number of sources and are purchased based on price. See "The Acquisition." PRODUCTION AND EQUIPMENT MRS. BUTTERWORTH'S syrup is manufactured and packaged at the Seller's Olathe, Kansas facility under the Co-Pack Agreement between the Company and the Seller pursuant to which the Seller has agreed to contract manufacture syrup for the Company for a period of up to one year from the Acquisition Closing Date at prices which are based on historical manufacturing costs. Prior to the end of the Co-Pack Agreement, the Company will either enter into a co-packing agreement with a third party or move the syrup manufacturing assets to a new location to be acquired or leased by the Company. See "The Acquisition." Raw materials, packaging supplies and finished goods related to the syrup business are also warehoused at the Seller's Olathe, Kansas facility. The Company owns all of the equipment used in each stage of the production of syrup, including batching, filling and case-packing the products. The equipment was purchased by the Company in the Acquisition and has the capacity to produce approximately two times the number of cases of syrup as has been produced historically. All of the equipment is located in the Seller's Olathe, Kansas facility. MRS. BUTTERWORTH'S retail pancake mixes are manufactured and packaged by two third parties under co-packing agreements. The Company assumed these agreements at their historical prices at the 38 Acquisition Closing Date. MRS. BUTTERWORTH'S foodservice pancake mixes, which account for approximately 1% of the Company's sales, are manufactured at a separate facility owned by the Seller. TRADEMARKS In the Aquisition, the Company acquired a number of registered trademarks in the United States, Canada and Puerto Rico. The Company's principal trademark is MRS. BUTTERWORTH'S-Registered Trademark-. Management is not aware of any fact that would negatively impact the continued use of any of its trademarks and trade names. EMPLOYEES The Company's labor requirements related to the manufacturing of syrup and foodservice pancake mix will be covered under the Co-Pack Agreement for a period of up to one year from the Acquisition Closing Date. In addition, the majority of the labor related to the Company's financial and administrative functions are covered under the Transition Services Agreement for a period of up to six months from the Acquisition Closing Date. The Company has formed a 22-person sales, marketing and administrative organization. CERTAIN LEGAL AND REGULATORY MATTERS LITIGATION The Company did not assume any litigation relating to the Predecessor that was pending as of the Acquisition Closing Date. The Seller has agreed to indemnify, subject to certain limitations, the Company with respect to any litigation that may arise in the future to the extent such litigation relates to the conduct of the Predecessor prior to the Acquisition Closing Date. See "The Acquisition." Historically, the Seller has been the defendant in various legal actions related to the business, none of which had, or were expected to have, a material adverse effect on the operations or financial condition of the Predecessor. PUBLIC HEALTH The Company is subject to the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the Food and Drug Administration (the "FDA"). This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, labeling, packaging and safety of food. For example, the FDA regulates manufacturing practices for foods through its current "good manufacturing practices" regulations, and specifies the "recipes," called standards of identity, for certain foods. In addition, the Nutrition Labeling and Education Act of 1990, as amended, prescribes the format and content of certain information required to appear on the labels of food products. The Company is subject to regulation by certain other governmental agencies, including the U.S. Department of Agriculture. The operations and the products of the Company are also subject to state and local regulation through such measures as licensing of plants, enforcement by state health agencies of various state standards and inspection of the facilities. Enforcement actions for violations of federal, state and local regulations may include seizure and condemnation of violative products, cease and desist orders, injunctions and/or monetary penalties. Management believes that the Company's facilities and practices are sufficient to maintain compliance with applicable government regulations, although there can be no assurances in this regard. ENVIRONMENTAL The Company did not assume any liabilities for environmental matters relating to the operation of the MRS. BUTTERWORTH'S business prior to the Acquisition Closing Date. The Company is subject to extensive and changing federal, state and local environmental laws and regulations pertaining to the environment, including the discharge of materials into the environment and the handling and disposal of wastes (including solid and hazardous wastes). 39 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS
NAME AGE POSITION - ---------------------------------------------------- --------- ---------------------------------------------------- Ian R. Wilson....................................... 67 Chairman of the Board of Directors Thomas J. Ferraro................................... 48 President and Director James B. Ardrey..................................... 38 Executive Vice President and Director Ray Chung........................................... 48 Executive Vice President and Director C. Gary Willett..................................... 42 Executive Vice President M. Laurie Cummings.................................. 33 Vice President and Secretary David E. De Leeuw................................... 52 Director Charles Ayres....................................... 37 Director Tyler T. Zachem..................................... 31 Director Peter Lamm.......................................... 45 Director Richard C. Dresdale................................. 40 Director
IAN R. WILSON (67), Chairman of the Board of Directors of the Company. Mr. Wilson is the Managing Partner of Dartford. Mr. Wilson currently serves as Chairman of the Board of Directors of Van de Kamp's, Inc. and Windy Hill Pet Food Company. Prior to forming Dartford, Mr. Wilson served as Chairman and Chief Executive Officer of Windmill. Prior to that, Mr. Wilson was Chairman and Chief Executive Officer of Wyndham. From 1983 to 1984 Mr. Wilson was the Chairman and Chief Executive Officer of Castle & Cooke, Inc. (now known as Dole Food Company, Inc.), an international food and real estate concern. Prior to Castle & Cooke, Inc., Mr. Wilson spent 25 years with The Coca-Cola Company in a series of management positions, most recently as Vice Chairman of The Coca-Cola Company and President of the Pacific Group. Mr. Wilson's past and present service as a director includes membership on the boards of Novell, Inc., Revlon, Inc., Crown Zellerbach Corporation, Castle & Cooke, Inc., Wilson Bottling Corporation, Golden State Foods and New Age Beverages, Ltd. THOMAS J. FERRARO (48), President and Director of the Company. Prior to joining the Company, Mr. Ferraro served as President of Campfire, Inc., which recently merged into International Home Foods, Inc. Prior to joining Campfire, Inc. he was Vice President of Sales for the Niche Grocery division of Borden, Inc. Mr. Ferraro's experience with niche grocery products extends back to his early career with RJR Nabisco Inc. and Drackett Products, a division of Bristol-Meyers Squibb Company, where he held a variety of marketing and sales positions. JAMES B. ARDREY (38), Executive Vice President and Director of the Company. Mr. Ardrey is a Partner in Dartford. From January 1993 to February 1995, Mr. Ardrey was a consultant to Windmill, conducting its divestiture program. From 1984 to 1992, Mr. Ardrey was an investment banker with Paine Webber Incorporated, serving as Managing Director from 1990 to 1992. Prior to joining Paine Webber Incorporated, Mr. Ardrey was a consultant with Booz, Allen & Hamilton. Mr. Ardrey currently serves as a Director of Van de Kamp's. RAY CHUNG (48), Executive Vice President and Director of the Company. Mr. Chung is a Partner in Dartford. Mr. Chung has previously served as a Director, Executive Vice President and Chief Financial Officer of Windmill from 1989 to 1995 and as a Director, Executive Vice President and Chief Financial Officer of Wyndham Foods, Inc. from 1985 to 1990. From May 1984 to September 1985, Mr. Chung served as Vice President--Finance for the Kendall Company, a subsidiary of the Colgate-Palmolive Company. Between 1981 and 1984, Mr. Chung served as Vice President--Finance for Riviana Foods, Inc. Mr. Chung currently serves as a Director of Windy Hill Pet Food Company and VDK Holdings, Inc. C. GARY WILLETT (42), Executive Vice President of the Company. Prior to joining the Company, Mr. Willett served as Executive Vice President/General Manager of Campfire, Inc., which recently merged 40 into International Home Foods, Inc. Prior to Campfire, Inc., Mr. Willett spent 12 years with Borden, Inc. in a series of marketing and general management positions, most recently as a Vice President/G.M. of Elmer's. Before joining Borden, Inc., Mr. Willett spent six years with The Kellogg Company in various marketing and sales positions. M. LAURIE CUMMINGS (33), Vice President and Secretary of the Company. Ms. Cummings is a partner in Dartford. Ms. Cummings was Vice President, Controller and Treasurer of Windmill from 1989 to 1995. Between 1987 and 1990, Ms. Cummings was the Controller and Assistant Treasurer of Wyndham. Ms. Cummings currently serves as Vice President of Windy Hill Pet Food Company and Van de Kamp's. DAVID E. DE LEEUW (52), Director of the Company. Mr. De Leeuw is a managing general partner of MDC Management Company III, L.P., which is the general partner of McCown De Leeuw & Co. III, L.P. and McCown De Leeuw & Co. III (Europe), L.P., a managing general partner of MDC Management Company IIIA, L.P., which is the general partner of McCown De Leeuw & Co. III (Asia), L.P. and a member of Gamma Fund, LLC. Prior to founding McCown De Leeuw & Co. with George E. McCown in 1984, Mr. De Leeuw was Manager of the Leveraged Acquisition Unit and Vice President in the Capital Markets Group at Citibank, N.A. Mr. De Leeuw also worked with W.R. Grace & Co. where he was Assistant Treasurer and Manager of Corporate Finance. Mr. De Leeuw began his career as an investment banker with Paine Webber Incorporated. He currently serves as a director of Vans, Inc., DEC International Inc., Nimbus CD International, Inc., Pelican Companies, Inc., Tiara Motorcoach Corporation, Papa Gino's Inc. and Outsourcing Solutions Inc. CHARLES AYRES (37), Director of the Company. Mr. Ayres is a general partner of MDC Management Company III, L.P., which is the general partner of McCown De Leeuw & Co. III, L.P. and McCown De Leeuw & Co. III (Europe), L.P., a general partner of MDC Management Company IIIA, L.P., which is the general partner of McCown De Leeuw & Co. III (Asia), L.P. and a member of Gamma Fund, LLC. Mr. Ayres has been associated with McCown De Leeuw & Co. since 1991. Prior to joining McCown De Leeuw & Co., Mr. Ayres was a founding partner of HMA Investments, Inc., a private investment firm focused on middle market management buyouts. Mr. Ayres began his career as an investment banker with Lazard Freres & Co. He currently serves as a director of Nimbus CD International, Inc., ASC Network Corp., Tiara Motorcoach Corporation and Papa Gino's, Inc. TYLER T. ZACHEM (31), Director of the Company. Mr. Zachem is a principal of MDC Management Company III, L.P., which is the general partner of McCown De Leeuw & Co. III, L.P., and McCown De Leeuw & Co. III (Europe), L.P., and a principal of MDC Management Company IIIA, L.P., which is the general partner of McCown De Leeuw & Co. III (Asia), L.P. Mr. Zachem has been associated with McCown De Leeuw & Co. since July 1993. Mr. Zachem previously worked as a consultant with McKinsey & Co. and as an investment banker with McDonald & Company. He currently serves as a director of Outsourcing Solutions Inc. PETER LAMM (45), Director of the Company. Mr. Lamm is President of Fenway Partners, Inc., the management company for Fenway, a New York based direct investment firm for institutional investors with a primary objective of acquiring controlling positions in leading middle-market companies. From February 1982 to April 1994, Mr. Lamm was employed by Butler Capital Corporation, most recently as Senior Direct Investment Officer and a Managing Director. Until April 1994, Mr. Lamm was also a general partner of the five limited partnerships managed by Butler Capital Corporation. Mr. Lamm currently serves as a director of Van de Kamp's, MW Manufacturers Inc., National School Supply Company, Inc., Brown Moulding Company, Inc., Valley Recreation Products Inc., Teters Floral Products, Inc. and Bear Archery, Inc. RICHARD C. DRESDALE (40), Director of the Company. Mr. Dresdale is a Managing Director of Fenway Partners, Inc. Prior to founding Fenway with Mr. Lamm and Andrea Geisser, Mr. Dresdale was a principal at Clayton, Dubilier and Rice, Inc. ("CD&R"). Mr. Dresdale also served as a limited partner of the general 41 partner of three of the investment partnerships managed by CD&R. Mr. Dresdale previously worked as an Investment Officer with Manufacturers Hanover Venture Capital Corporation. Mr. Dresdale currently serves as a director of MW Manufacturers Inc., Brown Moulding Company, Inc., Teters Floral Products, Inc., Bear Archery, Inc., Nu-kote Holdings, Inc. and Remington Arms Company. EXECUTIVE COMPENSATION On December 31, 1996, the Company entered into employment agreements with Thomas J. Ferraro and C. Gary Willett. The Company employed no other executive officers on December 31, 1996. Pursuant to the Employment Agreement between the Company and Thomas J. Ferraro dated as of December 31, 1996 (the "Ferraro Employment Agreement"), Mr. Ferraro shall serve as President of the Company and a director of the Company. Mr. Ferraro shall receive a base salary of $175,000 per year and will be eligible to receive a bonus of up to 70% of his base salary based upon certain earnings criteria. The Ferraro Employment Agreement provides for a two-year term, commencing on the Acquisition Closing Date; however, on each anniversary of the Acquisition Closing Date the term will automatically be extended for one additional year so that the term ends two years after the latest anniversary of the Acquisition Closing Date. If the Company terminates Mr. Ferraro's employment without cause, the Company is required to pay him an amount equal to the base salary he would have been entitled to receive through the end of the current term of the Ferraro Employment Agreement. The Ferraro Employment Agreement also provides that until the later of the first anniversary of his termination and the end of the current term of the employment agreement, Mr. Ferraro may not compete with or solicit employees from the Company. Pursuant to the Employment Agreement between the Company and C. Gary Willett dated as of December 31, 1996 (the "Willett Employment Agreement"), Mr. Willett shall serve as Executive Vice President of the Company. Mr. Willett shall receive a base salary of $140,000 per year and will be eligible to receive a bonus of up to 60% of his base salary based upon certain earnings criteria. The Willett Employment Agreement provides for a two-year term, commencing on the Acquisition Closing Date; however, on each anniversary of the Acquisition Closing Date the term will be automatically extended for one additional year so that the term ends two years after the latest anniversary of the Acquisition Closing Date. If the Company terminates Mr. Willett's employment without cause, the Company is required to pay him an amount equal to the base salary he would have been entitled to receive through the end of the current term of the Willett Employment Agreement. The Willett Employment Agreement also provides that until the later of the first anniversary of his termination and the end of the current term of the employment agreement, Mr. Willett will not compete with or solicit employees from the Company. DIRECTOR COMPENSATION Directors who are officers, employees or otherwise affiliates of the Company do not receive compensation for their services as directors. Directors of the Company are entitled to reimbursement of their reasonable out-of-pocket expenses in connection with their travel to and attendance at meetings of the board of directors or committees thereof. No determination has yet been made with respect to annual fees or board attendance fees, if any, to be paid to directors of the Company who are not also officers, employees or otherwise affiliates of the Company. 42 SECURITY OWNERSHIP All of the outstanding capital stock of the Company is held by Holdings and all of the outstanding capital stock of Holdings is held by MBW LLC. The Class A and Class B common limited liability company interests ("MBW Common LLC Securities") are the only classes of MBW LLC's limited liability company interests that currently possess voting rights. As of December 31, 1996 there were 34,800 membership units of MBW Common LLC Securities. The following table sets forth certain information regarding the beneficial ownership of MBW Common LLC Securities by each person who beneficially owns more than 5% of such securities, by directors and certain executive officers of the Company, individually, and by the directors and executive officers of the Company as a group.
NUMBER OF PERCENTAGE OF MBW COMMON LLC MBW COMMON LLC NAME AND ADDRESS OF BENEFICIAL OWNER SECURITIES(1) SECURITIES(1) - -------------------------------------------------------------------------------- --------------- --------------- 5% STOCKHOLDERS: McCown De Leeuw & Co. III, L.P.(2).............................................. 23,250 66.8% c/o McCown De Leeuw & Co. 3000 Sand Hill Road, Building 3, Suite 290 Menlo Park, California 94025 McCown De Leeuw & Co. III (Europe), L.P.(2)..................................... 23,250 66.8% c/o McCown De Leeuw & Co. 3000 Sand Hill Road, Building 3, Suite 290 Menlo Park, California 94025 McCown De Leeuw & Co. III (Asia), L.P.(2)....................................... 23,250 66.8% c/o McCown De Leeuw & Co. 3000 Sand Hill Road, Building 3, Suite 290 Menlo Park, California 94025 Gamma Fund, LLC(2).............................................................. 23,250 66.8% c/o McCown De Leeuw & Co. 3000 Sand Hill Road, Building 3, Suite 290 Menlo Park, California 94025 Fenway Partners Capital Fund, L.P.(3)........................................... 8,750 25.1% 152 West 57th Street New York, New York 10019 Dartford Partnership L.L.C.(4).................................................. 2,000 5.7% 801 Montgomery Street, Suite 400 San Francisco, California 94133 OFFICERS AND DIRECTORS: Ian R. Wilson(4)................................................................ 2,000 5.7% James B. Ardrey(4).............................................................. 2,000 5.7% Ray Chung(4).................................................................... 2,000 5.7% M. Laurie Cummings(4)........................................................... 2,000 5.7% David E. De Leeuw(2)............................................................ 23,250 66.8% Charles Ayres(2)................................................................ 23,250 66.8% Tyler T. Zachem(2).............................................................. 23,250 66.8% Peter Lamm(3)................................................................... 8,750 25.1% Richard C. Dresdale(3).......................................................... 8,750 25.1% Thomas J. Ferraro............................................................... 200 0.6% C. Gary Willett................................................................. 100 0.3% All directors and executive officers of the Company as a group.................. 34,300 98.6%
43 - ------------------------ (1) As used in this table, beneficial ownership means the sole or shared power to vote, or to direct the voting of a security, or the sole or shared power to dispose, or direct the disposition, of a security. (2) Includes 20,959.9 membership units owned by McCown De Leeuw & Co. III, L.P., an investment partnership whose general partner is MDC Management Company III, L.P. ("MDC III"), 1,488.0 membership units held by McCown De Leeuw & Co. III (Europe), L.P., an investment partnership whose general partner is MDC Management Company IIIA, L.P. ("MDC IIIA"), 348.7 membership units held by McCown De Leeuw & Co. III (Asia), L.P., an investment partnership whose general partner is MDC IIIA, and 453.4 membership units owned by Gamma Fund, LLC, a California limited liability company. The voting members of Gamma Fund, LLC are George E. McCown, David E. De Leeuw, David E. King, Robert B. Hellman, Jr., Charles Ayres and Steven A. Zuckerman, who are also the only general partners of MDC III and MDC IIIA. Voting and dispositive decisions regarding the MBW Common LLC Securities are made by Mr. McCown and Mr. De Leeuw, as Managing General partners of each of MDC III and MDC IIIA, who together have more than the required two-thirds-in-interest vote of the Managing General Partners necessary to effect such decision on behalf of any such entity. Voting and dispositive decisions regarding the MBW Common LLC Securities owned by Gamma Fund, LLC are made by a vote or consent of a majority in number of the voting members of Gamma Fund, LLC. Messrs. McCown, De Leeuw, King, Hellman, Ayres and Zuckerman have no direct ownership of any shares of MBW Common LLC Securities and disclaim beneficial ownership of any shares of MBW Common LLC Securities except to the extent of their proportionate partnership interests or membership interests (in the case of Gamma Fund, LLC). (3) The general partner of Fenway is Fenway Partners, L.P., a Delaware limited partnership, whose general partner is Fenway Partners Management Inc., a Delaware corporation. Peter Lamm and Richard Dresdale are directors and officers of Fenway Partners Management Inc., and as such may be deemed to have the power to vote or dispose of MBW Common LLC Securities held by Fenway. Each of Messrs. Lamm and Dresdale have no direct ownership of any shares of MBW Common LLC Securities and disclaim beneficial ownership of any shares of MBW Common LLC Securities except to the extent of their indirect partnership intererests in Fenway. (4) Mr. Ian Wilson is the managing partner and Ms. M. Laurie Cummings and Messrs. James B. Ardrey and Ray Chung are partners of Dartford, and as such they may be deemed to have the power to vote or dispose of MBW Common LLC Securities held by Dartford. Each of Ms. Cummings, Messrs. Wilson, Ardrey and Chung disclaims the existence of a group and disclaims beneficial ownership of MBW Common LLC Securities not respectively owned by him or her. 44 CERTAIN RELATED TRANSACTIONS DARTFORD MANAGEMENT SERVICES AGREEMENT Concurrently with the consummation of the Acquisition, the Company entered into a Management Services Agreement (the "Dartford Management Services Agreement") with Dartford pursuant to which Dartford will provide management oversight to the Company. Management services provided by Dartford include, but are not limited to, corporate and financial planning, oversight of operations, production of business plans, identification of possible acquisitions and advice with the financing thereof and definition and development of business opportunities. The annual management fee for these services will be an amount based upon a percentage of consolidated annual net sales of MBW LLC and its subsidiaries, provided that the fee shall be not less than $600,000 per year. The annual management fee will be equal to 0.5% of net sales up to $250 million, an additional amount equal to 0.375% of net sales above $250 million but less than $500 million and an additional 0.25% of net sales above $500 million. The annual management fee is subject to reduction under certain circumstances, including the Company, Holdings or MBW LLC hiring or appointing a Chief Executive Officer or other senior executive with responsibility and authority for providing to the Company the management services provided by Dartford under the Dartford Management Services Agreement. Dartford will also receive a transaction fee for subsequent Acquisitions (as defined therein) by the Company equal to 1.25% of the Acquisition Price (as defined therein). The Dartford Management Services Agreement expires on the earlier of the date six months following a sale of substantially all of the equity securities or assets of the Company, Holdings or MBW LLC and the fifth anniversary of the Acquisition Closing Date and is renewable annually thereafter unless terminated by either party. The Dartford Management Services Agreement can also be terminated by either party prior to the expiration of the term upon the occurrence of certain events. The Company believes that the terms of and fees paid for the management services rendered are at least as favorable to the Company as those which could be negotiated with a third party. In addition, Dartford received a fee of $250,000 upon the closing of the Transactions, was reimbursed for out-of-pocket expenses incurred in connection with the Acquisition and was issued 1,000 membership units of MBW Common LLC Securities. MDC ADVISORY SERVICES AGREEMENT Concurrently with the consummation of the Acquisition, the Company entered into an Advisory Services Agreement (the "MDC Advisory Services Agreement") with MDC Management Company III, L.P. ("MDC Management"), an affiliate. Under the MDC Advisory Services Agreement, MDC Management will provide certain advisory functions. MDC Management will receive an annual monitoring fee for providing these services based upon a percentage of consolidated annual net sales of MBW LLC and its subsidiaries, provided that the fee shall be not less than $250,000 per year. The annual monitoring fee will be equal to $250,000 for net sales up to $120 million, an additional amount equal to 0.12821% of net sales above $120 million but less than $250 million, an additional amount equal to 0.125% of net sales above $250 million but less than $500 million and an additional 0.083% of net sales above $500 million. MDC Management will also receive a transaction fee for subsequent Acquisitions (as defined therein) by the Company equal to 0.65625% of the Acquisition Price (as defined therein). The MDC Advisory Services Agreement expires on the earlier of the date six months following a sale of substantially all of the equity securities or assets of the Company, Holdings or MBW LLC and the fifth anniversary of the Acquisition Closing Date and is renewable annually thereafter unless terminated by the Company. The Company believes that the terms of and fees paid for the professional services rendered are at least as favorable to the Company as those which could be negotiated with a third party. In addition, upon the closing of the Transactions, MDC Management received a one-time fee of $1,250,000 for financial advisory services provided to the Company in connection therewith. FENWAY AGREEMENT Concurrently with the consummation of the Acquisition, the Company entered into an agreement (the "Fenway Agreement") with Fenway Partners, Inc., an affiliate. Under the Fenway Agreement, Fenway will receive a transaction fee for subsequent Acquisitions (as defined therein) by the Company equal to 0.21875% of the Acquisition Price (as defined therein). 45 DESCRIPTION OF SENIOR CREDIT FACILITIES The description set forth below does not purport to be complete and is qualified in its entirety by reference to certain agreements setting forth the principal terms and conditions of the Company's Senior Credit Facilities, copies of which are filed as exhibits to the Registration Statement of which this Prospectus is a part. In connection with the Acquisition, the Company entered into a Credit Agreement with Chase Manhattan and various lenders providing for senior secured credit facilities. In connection with such financing, Chase Manhattan acts as Administrative Agent and CSI acted as Arranging Agent. The Senior Credit Facilities consist of a senior secured Revolving Facility providing for revolving loans to the Company and the issuance of letters of credit for the account of the Company, in an aggregate principal and stated amount at any time not to exceed $60.0 million (of which not more than $5.0 million may be represented by letters of credit). The Revolving Facility will have scheduled quarterly reductions of $3.75 million beginning on March 15, 1999 and continuing until September 15, 2001 with a final reduction of $18.75 million on December 15, 2001. Loans and letters of credit under the Revolving Facility will be available at any time through the final maturity date on December 15, 2001. The Company is required to make mandatory prepayments on the Senior Credit Facilities under certain circumstances, including upon certain asset sales, issuance of debt securities or issuance of equity securities to persons other than the Equity Investors. The Company will also be required to make prepayments on the Senior Credit Facilities and permanently reduce commitments under the Revolving Facility in an amount equal to 50% of the Company's annual trailing Consolidated Excess Cash Flow (as defined therein) in 2000 and thereafter and upon receipt of cash proceeds from property and casualty insurance or condemnation awards. At the Company's option, loans may be prepaid, and revolving credit commitments or letters of credit may be permanently reduced, in whole or in part at any time without premium or penalty. The obligations of the Company under the Senior Credit Facilities are unconditionally and irrevocably guaranteed by Holdings and any future domestic subsidiaries of the Company (collectively, the "Guarantors"). In addition, the Senior Credit Facilities are secured by first priority or equivalent security interests in all capital stock of the Company (including all the capital stock of, or other equity interest in, future domestic subsidiaries of the Company) and the tangible and intangible assets of the Company and the Guarantors. At the Company's option the interest rate per annum applicable to the Revolving Facility will be either the rate (grossed-up for maximum statutory reserve requirements for eurocurrency liabilities) at which eurodollar deposits for one, two, three or six months (as selected by the Company) are offered to Chase Manhattan in the interbank eurodollar market in the approximate amount of Chase Manhattan's share of the relevant Loan (the "Adjusted Eurodollar Rate") plus a margin of 2.50% (the "Applicable Eurodollar Rate Margin") or the Base Rate plus a margin of 1.25%. The Base Rate is the higher of (i) the rate of interest publicly announced by Chase Manhattan as its prime rate in effect at its principal office in New York City and (ii) the federal funds effective rate plus 0.5%. The Company pays a per annum fee equal to 0.50% on the undrawn portion of the commitments in respect of the Revolving Facility and a per annum fee on the face amount of all outstanding letters of credit equal to the Applicable Eurodollar Rate Margin then in effect with respect to loans under the Revolving Facility bearing interest based upon the Eurodollar Rate. The Senior Credit Facilities contain a number of significant covenants that, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, repay other indebtedness or amend other debt instruments, pay dividends, create liens on assets, enter into leases, 46 guarantees, investments or acquisitions, engage in mergers or consolidations, make capital expenditures, or engage in certain transactions with subsidiaries and affiliates and otherwise restrict corporate activities. In addition, under the Senior Credit Facilities, the Company is required to comply with specified ratios and tests, including minimum interest coverage, minimum fixed charge coverage and maximum leverage ratios and a limitation on capital expenditures. The Senior Credit Facilities also contain provisions that prohibit any modification of the Indenture in any manner adverse to the banks, financial institutions and other entities under the Senior Credit Facilities (the "Lenders") and that limit the Company's ability to refinance the Notes without the consent of such Lenders. 47 DESCRIPTION OF NOTES GENERAL The New Notes will be issued, and the Old Notes were issued, under an Indenture dated as of February 10, 1997 (the "Indenture") among the Company and Wilmington Trust Company, as trustee (the "Trustee"). For purposes of the following summary, the Old Notes and the New Notes shall be collectively referred to as the "Notes." The terms and conditions of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indenture. The following statements are summaries of the provisions of the Notes and the Indenture and do not purport to be complete. Such summaries make use of certain terms defined in the Indenture and are qualified in their entirety by express reference to the Indenture. The definitions of certain capitalized terms used in the following summary are set forth below under "-- Certain Definitions." A copy of the Indenture is filed as an exhibit to the Registration Statement of which this Prospectus is a part. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of the Company in the Borough of Manhattan, The City of New York, except that, at the option of the Company, payment of interest may be made by check mailed to the address of the holders as such address appears in the Note Register. Any Old Notes that remain outstanding after the completion of the Exchange Offer, together with the New Notes issued in connection with the Exchange Offer, will be treated as a single class of securities under the Indenture. See "The Exchange Offer" and "Old Notes Exchange and Registration Rights Agreement." The New Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. TERMS OF NOTES The Notes are unsecured senior subordinated obligations of the Company, limited to $100.0 million aggregate principal amount, and will mature on February 15, 2007. Each Note will bear interest at the rate per annum shown on the front cover of this Prospectus from the date of issuance, or from the most recent date to which interest has been paid or provided for, payable semi-annually on February 15 and August 15 of each year commencing August 15, 1997 to holders of record at the close of business on the February 1 or August 1 immediately preceding the interest payment date. OPTIONAL REDEMPTION Except as set forth below, the Notes are not redeemable at the option of the Company prior to February 15, 2002. On and after such date, the Notes will be redeemable, at the Company's option, in whole or in part, at any time upon not less than 30 nor more than 60 days prior notice mailed by first-class mail to the registered address of each holder of Notes to be redeemed, at the following redemption prices (expressed in percentages of principal amount), plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date): If redeemed during the 12 month period commencing on February 15 of the years set forth below:
PERIOD REDEMPTION PRICE - ---------------------------------- ------------------ 2002.............................. 104.9375% 2003.............................. 103.2917% 2004.............................. 101.6458% 2005 and thereafter............... 100.0000%
48 In addition, at any time and from time to time prior to February 15, 2000, the Company may redeem up to $35.0 million of the aggregate principal amount of Notes with the cash proceeds of one or more Equity Offerings received by, or invested in, the Company at a redemption price (expressed as a percentage of principal amount) of 109.875%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least $65.0 million of the aggregate principal amount of the Notes remain outstanding after each such redemption. At any time on or prior to February 15, 2002, the Notes may also be redeemed as a whole at the option of the Company upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each holder's registered address, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the date of redemption (the "Redemption Date") (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). "Applicable Premium" means, with respect to a Note at any Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at February 15, 2002 (such redemption price being described under "--Optional Redemption") plus (2) all required interest payments due on such Note through February 15, 2002, computed using a discount rate equal to the Treasury Rate plus 50 basis points over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two business days prior to the Redemption Date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the Redemption Date to February 15, 2002; provided, however, that if the period from the Redemption Date to February 15, 2002 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Note. RANKING The payment of Indebtedness evidenced by, and all other obligations in respect of, the Notes is subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash or Cash Equivalents when due of all Senior Indebtedness of the Company. However, payment from the money or the proceeds of U.S. Government Obligations held in any defeasance trust described under "Defeasance" below is not subordinate to any Senior Indebtedness or subject to the restrictions described herein. At March 31, 1997, the Company had no Senior Indebtedness outstanding (excluding unused revolving credit commitments of $60.0 million). Although the Indenture contains limitations on the amount of additional Indebtedness that the Company may Incur, under certain circumstances the amount of such Indebtedness could be substantial and, in any case, such Indebtedness may be Senior Indebtedness. See "--Certain Covenants--Limitation on Indebtedness." "Senior Indebtedness" means the principal of, premium (if any), and interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company 49 regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, the Bank Indebtedness and all other Indebtedness of the Company, whether outstanding on the Issue Date or thereafter issued, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that the obligations in respect of such Indebtedness are not superior in right of payment to the Notes; provided, however, that Senior Indebtedness will not include (i) any obligation of the Company to any Subsidiary, (ii) any liability for Federal, state, foreign, local or other taxes owed or owing by the Company, (iii) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (iv) any Indebtedness, Guarantee or obligation of the Company that is expressly subordinate or junior in right of payment to any other Indebtedness, Guarantee or obligation of the Company, including any Senior Subordinated Indebtedness and any Subordinated Obligations or (v) any Capital Stock. Only Indebtedness of the Company that is Senior Indebtedness will rank senior to the Notes in accordance with the provisions of the Indenture. The Notes will in all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of the Company. The Company has agreed in the Indenture that it will not Incur, directly or indirectly, any Indebtedness that is subordinate or junior in ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness merely because it is unsecured. The Company may not pay principal of, premium (if any), or interest on, or liquidated damages with respect to, or make any payment on account of any other obligations with respect to, the Notes or make any deposit pursuant to the provisions described under "Defeasance" below and may not otherwise purchase or retire any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when due in cash or Cash Equivalents or (ii) any other default on Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms unless, in either case, the default has been cured or waived and any such acceleration has been rescinded or such Senior Indebtedness has been paid in full in cash or Cash Equivalents. However, the Company may pay any such amounts without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to which either of the events set forth in clause (i) or (ii) of the immediately preceding sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (i) or (ii) of the second preceding sentence) with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay any amounts in respect of the Notes for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of such default from the Representative of the holders of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (ii) because the default giving rise to such Blockage Notice is no longer continuing or (iii) because such Designated Senior Indebtedness has been repaid in full in cash or Cash Equivalents). Notwithstanding the provisions described in the immediately preceding sentence, unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Notes after the end of such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360 day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. 50 Upon any payment or distribution of the assets of the Company upon a total or partial liquidation or dissolution or reorganization or bankruptcy of or similar proceeding relating to the Company or its property, the holders of Senior Indebtedness will be entitled to receive payment in full in cash or Cash Equivalents of the Senior Indebtedness before the holders of the Notes are entitled to receive any payment, and until the Senior Indebtedness is paid in full in cash or Cash Equivalents, any payment or distribution to which holders would be entitled but for the subordination provisions of the Indenture will be made to holders of the Senior Indebtedness as their interests may appear. If a distribution is made to holders of the Notes that, due to the subordination provisions, should not have been made to them, such holders are required to hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear. If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness or the Representative of such holders of the acceleration. The Company may not pay the Notes until five Business Days after such holders or the Representative of the Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if the subordination provisions of the Indenture otherwise permit payment at that time. By reason of such subordination provisions contained in the Indenture, in the event of insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the Noteholders, and creditors of the Company who are not holders of Senior Indebtedness or of Senior Subordinated Indebtedness (including the Notes) may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of Senior Subordinated Indebtedness. CHANGE OF CONTROL Upon the occurrence of any of the following events (each a "Change of Control"), each holder of the Notes will have the right to require the Company to repurchase all or any part of such holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date): (i) prior to the first public offering of Voting Stock of the Company, Holdings or MBW LLC, as the case may be, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of majority voting power of the Voting Stock of the Company, whether as a result of issuance of securities of the Company, Holdings or MBW LLC, as the case may be, any merger, consolidation, liquidation or dissolution of the Company, Holdings or MBW LLC, as the case may be, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders will be deemed to beneficially own any Voting Stock of a Person (the "specified corporation") held by any other Person (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, a majority of the voting power of the Voting Stock of the parent corporation); (ii) following the first public offering of Voting Stock of the Company, Holdings or MBW LLC, as the case may be, any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in clause (i) above, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company, Holdings or MBW LLC, as the case may be; provided that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company, Holdings or MBW LLC, as the case may be, than such other person and do not have the right or 51 ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company, Holdings or MBW LLC, as the case may be, (for purposes of this clause (ii), such other person shall be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other person "beneficially owns" (as defined in this clause (ii)), directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders "beneficially own" (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent corporation and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent corporation); or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office. Within 30 days following any Change of Control, unless the Company has mailed a redemption notice with respect to all the outstanding Notes in connection with such Change of Control, the Company shall mail a notice to each holder of record of the Notes with a copy to the Trustee stating: (i) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on a record date to receive interest on the relevant interest payment date); (ii) the circumstances and relevant facts and financial information concerning such Change of Control; (iii) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and (iv) the procedures determined by the Company, consistent with the Indenture, that a holder must follow in order to have its Notes purchased. The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof. The occurrence of certain of the events that would constitute a Change of Control would constitute a default under the Senior Credit Agreement. Future Senior Indebtedness of the Company and its Subsidiaries may contain prohibitions of certain events that would constitute a Change of Control or require such Senior Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the holders of their right to require the Company to repurchase the Notes could cause a default under such Senior Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company's ability to pay cash to the holders upon a repurchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required repurchases. Even if sufficient funds were otherwise available, the terms of the Senior Credit Agreement generally prohibit the Company's prepayment of the Notes prior to their scheduled maturity. Consequently, if the Company is not able to prepay the Bank Indebtedness and any other Senior Indebtedness containing similar restrictions or obtain requisite consents or waivers, as described above, the Company will be unable to fulfill its repurchase obligations if holders of Notes exercise their repurchase rights following a Change of Control, thereby resulting in a default under the Indenture. 52 CERTAIN COVENANTS The Indenture contains certain covenants including, among others, the following: LIMITATION ON INDEBTEDNESS. (a) The Company shall not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness; provided, however, that the Company and any of its Subsidiaries may Incur Indebtedness if on the date thereof the Consolidated Coverage Ratio would be greater than 2.00:1.00. (b) Notwithstanding the foregoing paragraph (a), the Company and its Subsidiaries may Incur the following Indebtedness: (i) Bank Indebtedness provided that the aggregate principal amount of Indebtedness Incurred pursuant to this clause (i) does not exceed an amount outstanding at any time equal to $60.0 million less the aggregate amount of permanent reductions of commitments to extend credit thereunder and repayments of principal thereof (without duplication of repayments required as a result of such reductions of commitments); (ii) Indebtedness (A) of the Company to any Wholly-Owned Subsidiary and (B) of any Subsidiary to the Company or any Wholly-Owned Subsidiary; (iii) Indebtedness represented by the Notes, any Indebtedness (other than the Indebtedness described in clauses (i)-(ii) above) outstanding on the date of the Indenture and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) or this paragraph (b); (iv) Indebtedness represented by the Note Guarantees and Guarantees of Indebtedness Incurred pursuant to clause (i) above; (v) Indebtedness under Currency Agreements and Interest Rate Agreements which are entered into for bona fide hedging purposes of the Company or its Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company) and correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Company or its Subsidiaries Incurred without violation of the Indenture or to business transactions of the Company or its Subsidiaries on customary terms entered into in the ordinary course of business; (vi) Indebtedness of the Company attributable to Capitalized Lease Obligations, or Incurred to finance the acquisition, construction or improvement of fixed or capital assets, or constituting Attributable Indebtedness in respect of Sale/Leaseback Transactions, in an aggregate principal amount at any one time outstanding not in excess of $5.0 million; and (vii) Indebtedness of the Company or any of its Subsidiaries (which may comprise Bank Indebtedness) in an aggregate principal amount at any time outstanding not in excess of $10.0 million. (c) Notwithstanding any other provision of this covenant, the Company shall not Incur any Indebtedness (i) pursuant to paragraph (b) above if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Notes to at least the same extent as such Subordinated Obligations or (ii) pursuant to paragraph (a) or (b) if such Indebtedness is subordinate or junior in ranking in any respect to any Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. (d) The Company shall not Incur any Secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company) except (A) dividends or distributions payable in its Capital Stock (other than Disqualified Stock) and (B) dividends or distributions payable to the Company or another Subsidiary (and, if such Subsidiary is not a Wholly-Owned Subsidiary, to its other stockholders on a PRO RATA basis), (ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any Subsidiary held by Persons other than the Company or another Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, 53 principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment"), if at the time the Company or such Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); or (2) the Company could not Incur at least an additional $1.00 of Indebtedness pursuant to paragraph (a) under "Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments declared (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution of the Board of Directors) or made subsequent to the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the Issue Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment as to which financial results are available (but in no event more than 135 days prior to the date of such Restricted Payment) (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or other cash contributions to its capital subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); (C) aggregate Net Cash Proceeds from the issue or sale of its Capital Stock to an employee stock ownership plan or similar trust, provided, however, that if such plan or trust Incurs any Indebtedness to or Guaranteed by the Company to finance the acquisition of such Capital Stock, such aggregate amount shall be limited to any increase in the Consolidated Net Worth of the Company resulting from principal repayments made by such plan or trust with respect to Indebtedness Incurred by it to finance the purchase of such Capital Stock; and (D) the amount by which Indebtedness of the Company or its Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary) subsequent to the Issue Date of any Indebtedness of the Company or its Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or other property, distributed by the Company or any Subsidiary upon such conversion or exchange). (b) The provisions of paragraph (a) shall not prohibit: (i) any purchase or redemption of Capital Stock or Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); provided, however, that (A) such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale shall be excluded from clause (3)(B) of paragraph (a); (ii) any purchase or redemption of Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iii) any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted under "Limitation on Sales of Assets and Subsidiary Stock" below; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iv) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; (v) payment of dividends or other distributions by the Company for the purposes set forth in clauses (A) through (C) below; provided, however, that any such dividend or distribution described in clauses (A) and (B) will be excluded in the calculation of the amount of Restricted Payments and any such dividend or distribution described in clause (C) will be included in the calculation of the amount of Restricted Payments: (A) in amounts equal to the amounts required for Holdings and MBW LLC to pay franchise taxes and other fees required to maintain its legal existence and provide for audit, accounting, legal and other operating costs of up to 54 $500,000 per fiscal year; (B) in amounts equal to amounts required for Holdings and MBW LLC to pay Federal, state and local income taxes to the extent such income taxes are attributable to the income of the Company and its Subsidiaries; and (C) in amounts equal to amounts expended by the Company, Holdings or MBW LLC to repurchase Capital Stock of the Company, Holdings or MBW LLC owned by employees (including former employees) of the Company or its Subsidiaries or their assigns, estates and heirs; provided that the aggregate amount paid, loaned or advanced pursuant to this clause (C) shall not, in the aggregate, exceed the sum of $3.0 million plus any amounts contributed by MBW LLC or Holdings to the Company as a result of resales of such repurchased shares of Capital Stock; or (vi) any repurchase of equity interest deemed to occur upon exercise of stock options if such equity interests represent a portion of the exercise price of such options. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES. The Company shall not, and shall not permit any of its Subsidiaries to, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any such Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligation owed to the Company, (ii) make any loans or advances to the Company or (iii) transfer any of its property or assets to the Company; except: (A) any encumbrance or restriction pursuant to an agreement in effect on the Issue Date, including those arising under the Senior Credit Documents; (B) any encumbrance or restriction with respect to a Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by a Subsidiary prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary was acquired by the Company); (C) any encumbrance or restriction with respect to a Subsidiary pursuant to an agreement effecting a refinancing of Indebtedness Incurred pursuant to an agreement referred to in clauses (A) or (B) or this clause (C) or contained in any amendment, supplement or modification (including an amendment and restatement) to an agreement referred to in clauses (A) or (B) or this clause (C); provided, however, that the encumbrances and restrictions contained in any such refinancing agreement or amendment taken as a whole are no less favorable to the holders of the Notes in any material respect than encumbrances and restrictions contained in such agreements; (D) in the case of clause (iii), any encumbrance or restriction (1) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license, or similar contract, (2) by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Subsidiary not otherwise prohibited by the Indenture, or (3) contained in security agreements securing Indebtedness of a Subsidiary to the extent such encumbrance or restrictions restrict the transfer of the property subject to such security agreements; (E) any such restriction imposed by applicable law; (F) any restriction with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition; and (G) purchase obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired. LIMITATION ON SALES OF ASSETS. (a) The Company shall not, and shall not permit any Subsidiary to, make any Asset Disposition unless (i) the Company or such Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the shares and assets subject to such Asset Disposition, (ii) at least 85% of the consideration thereof received by the Company or such Subsidiary is in the form of cash and (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Subsidiary, as the case may be) (A) first, to the extent the Company elects (or is required by the terms of any Senior Indebtedness or Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary), to prepay, repay or purchase Senior Indebtedness or such Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the 55 Company) within one year after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B) second, to the extent of the balance of Net Available Cash after application in accordance with clause (A), to the extent the Company or such Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Subsidiary with Net Available Cash received by the Company or another Subsidiary) within one year after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to purchase Notes pursuant and subject to the conditions of the Indenture to the Noteholders at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to the purchase date; and (D) fourth, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A), (B) and (C), to (x) acquire Additional Assets (other than Indebtedness and Capital Stock) or (y) prepay, repay or purchase Indebtedness of the Company (other than Indebtedness owed to an Affiliate of the Company and other than Disqualified Stock of the Company) or Indebtedness of any Subsidiary (other than Indebtedness owed to the Company or an Affiliate of the Company), in each case described in this clause (D) within one year from the receipt of such Net Available Cash or, if the Company has made an Offer pursuant to clause (C), six months from the date such Offer is consummated; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C) or (D) above, the Company or such Subsidiary shall retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the Company and its Subsidiaries shall not be required to apply any Net Available Cash in accordance herewith except to the extent that the aggregate Net Available Cash from all Asset Dispositions which are not applied in accordance with this covenant at any time exceed $1.0 million. The Company shall not be required to make an offer for Notes pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (A) and (B)) is less than $10.0 million for any particular Asset Disposition (which lesser amounts shall be carried forward for purposes of determining whether an offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). For the purposes of this covenant, the following will be deemed to be cash: (x) the assumption of Indebtedness (other than Disqualified Stock) of the Company or any Subsidiary and the release of the Company or such Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition and (y) securities received by the Company or any Subsidiary of the Company from the transferee that are promptly converted by the Company or such Subsidiary into cash. (b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (a)(iii)(C), the Company will be required to purchase Notes tendered pursuant to an offer by the Company for the Notes at a purchase price of 100% of their principal amount plus accrued interest to the purchase date in accordance with the procedures (including prorating in the event of oversubscription) set forth in the Indenture. If the aggregate purchase price of the Notes tendered pursuant to the offer is less than the Net Available Cash allotted to the purchase of the Notes, the Company will apply the remaining Net Available Cash in accordance with clause (a)(iii)(D) above. (c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue thereof. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company will not, and will not permit any Subsidiary to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate 56 Transaction") unless: (i) the terms of such Affiliate Transaction are no less favorable to the Company or such Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate amount in excess of $1.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company and by a majority of the disinterested members of such Board, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in (i) above); and (iii) in the event such Affiliate Transaction involves an aggregate amount in excess of $5.0 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized standing that such Affiliate Transaction is fair to the Company or such Subsidiary, as the case may be, from a financial point of view. (b) The provisions of the foregoing paragraph (a) will not prohibit (i) any Restricted Payment permitted to be paid pursuant to the covenant described under "--Limitation on Restricted Payments" (and in the case of Permitted Investments, only those described in clauses (v), (vi) and (ix) of the definition of Permitted Investments), (ii) the performance of the Company's or Subsidiary's obligations under any employment contract, collective bargaining agreement, employee benefit plan, related trust agreement or any other similar arrangement heretofore or hereafter entered into in the ordinary course of business, (iii) payment of compensation to, and indemnity provided on behalf of, employees, officers, directors or consultants (excluding the Management Services Agreement) in the ordinary course of business, (iv) maintenance in the ordinary course of business of benefit programs or arrangements for employees, officers or directors, including vacation plans, health and life insurance plans, deferred compensation plans, and retirement or savings plans and similar plans, (v) any transaction between the Company and a Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries or (vi) the payment of certain fees under the Management Services Agreement as in effect on the Issue Date. LIMITATION ON SALE OF SUBSIDIARY CAPITAL STOCK. The Company (i) will not, and will not permit any Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Capital Stock of any Subsidiary to any Person (other than to the Company or a Wholly-Owned Subsidiary) and (ii) will not permit any Subsidiary to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company or a Wholly-Owned Subsidiary; provided, however, that the foregoing shall not prohibit such conveyance, sale, lease or other disposition of all the Capital Stock of a Subsidiary if the net cash proceeds from such transfer, conveyance, sale, lease, other disposition or issuance are applied in accordance with the covenant described above under "--Limitation on Sales of Assets." SEC REPORTS. Notwithstanding that the Company may not be required to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the Commission, and within 15 days after such reports are filed, provide the Trustee and the holders (at their addresses as set forth in the register of Notes) with the annual reports and the information, documents and other reports which are otherwise required pursuant to Section 13 and 15(d) of the Exchange Act. Such requirements may also be satisfied, prior to April 11, 1997, with the filing with the Commission of a registration statement under the Securities Act that contains the foregoing information (including financial statements) and by providing copies thereof to the Trustee and the holders. In addition, following the registration of the common stock of the Company pursuant to Section 12(b) or 12(g) of the Exchange Act, the Company shall furnish to the Trustee and the holders, promptly upon their becoming available, copies of the Company's annual report to stockholders and any other information provided by the Company to its public stockholders generally. FUTURE NOTE GUARANTORS. The Company will cause each Subsidiary which Incurs Indebtedness or which is a guarantor of Indebtedness Incurred pursuant to clause (b)(i) of the covenant described under "--Limitation on Indebtedness" to execute and deliver to the Trustee a Note Guarantee pursuant to which such Subsidiary will Guarantee, jointly and severally, to the holders and the Trustee, subject to 57 subordination provisions substantially the same as those described above, the full and prompt payment of the Notes in the Indenture. Each Note Guarantee will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by that Subsidiary without rendering the Note Guarantee, as it relates to such Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. LIMITATION ON LINES OF BUSINESS. The Company will not, and will not permit any Subsidiary to, engage in any business, other than the food business and such other business activities which are incidental or related thereto. MERGER AND CONSOLIDATION. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) expressly assumes, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture; (ii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to paragraph (a) of "--Limitation on Indebtedness"; (iv) immediately after giving effect to such transaction, the Successor Company will have Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; and (v) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, but the predecessor, the Company, in the case of a lease of all or substantially all its assets will not be released from the obligation to pay the principal of and interest on the Notes. Notwithstanding the foregoing clauses (ii), (iii) and (iv), (1) any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another Wholly-Owned Subsidiary of the Company and (2) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. EVENTS OF DEFAULT An Event of Default is defined in the Indenture as (i) a default in any payment of interest on any Note when due, continued for 30 days, (ii) a default in the payment of principal of any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise, (iii) the failure by the Company to comply with its obligations under "--Merger and Consolidation" above, (iv) the failure by the Company to comply for 30 days after notice with any of its obligations under the covenants described under "Change of Control" above or under covenants described under "Certain Covenants" above (in each case, other than a failure to purchase Notes which shall constitute an Event of Default under clause (ii) above), other than "--Merger and Consolidation", (v) the failure by the Company to comply for 60 days after notice with its other agreements contained in the Indenture, (vi) Indebtedness of the Company or any Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million and such default shall not have been cured or such acceleration rescinded within a 10-day period (the "cross acceleration provision"), (vii) certain 58 events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the "bankruptcy provisions"), (viii) any judgment or decree for the payment of money in excess of $5.0 million (to the extent not covered by insurance) is rendered against the Company or a Significant Subsidiary and such judgment or decree shall remain undischarged or unstayed for a period of 60 days after such judgment becomes final and non- appealable (the "judgment default provision") or (ix) the failure of any Note Guarantee to be in full force and effect (except as contemplated by the terms thereof) or the denial or disaffirmation by any Note Guarantor of its obligations under the Indenture or any Note Guarantee if such default continues for 10 days. However, a default under clauses (iv) and (v) will not constitute an Event of Default until the Trustee or the holders of at least 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified in clauses (iv) and (v) hereof after receipt of such notice. If an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Company may declare the principal of and accrued and unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and accrued and unpaid interest shall be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs and is continuing, the principal of and accrued and unpaid interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders. Under certain circumstances, the holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such holder has previously given the Trustee notice that an Event of Default is continuing, (ii) holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy, (iii) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60 day period. Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust officers in good faith determines that withholding notice is in the interests of the Noteholders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof. 59 AMENDMENTS AND WAIVERS Subject to certain exceptions, the Indenture may be amended with the consent of the holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding. However, without the consent of each holder of an outstanding Note affected, no amendment may, among other things, (i) reduce the amount of Notes whose holders must consent to an amendment, (ii) reduce the rate of or extend the time for payment of interest on any Note, (iii) reduce the principal of or extend the Stated Maturity of any Note, (iv) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed as described under "Optional Redemption" above, (v) make any Note payable in money other than that stated in the Note, (vi) make any change to the subordination provisions of the Indenture that adversely affects the rights of any holder of the Notes, (vii) impair the right of any holder to receive payment of principal of and interest on such holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder's Notes or (viii) make any change in the amendment provisions which require each holder's consent or in the waiver provisions. Without the consent of any holder, the Company and the Trustee may amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a successor corporation of the obligations of the Company under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f) (2) (B) of the Code), to add Guarantees with respect to the Notes, to secure the Notes, to add to the covenants of the Company for the benefit of the Noteholders or to surrender any right or power conferred upon the Company, to make any change that does not adversely affect the rights of any holder or to comply with any requirement of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act. However, no amendment may be made to the subordination provisions of the Indenture that adversely affects the rights of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent to such change. The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the Indenture becomes effective, the Company is required to mail to the holders a notice briefly describing such amendment. However, the failure to give such notice to all the holders, or any defect therein, will not impair or affect the validity of the amendment. DEFEASANCE The Company at any time may terminate all its obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Company at any time may terminate its obligations under covenants described under "Certain Covenants" (other than "Merger and Consolidation"), the operation of the cross acceleration provision, the bankruptcy provisions with respect to Subsidiaries and the judgment default provision described under "Events of Default" above and the limitations contained in clauses (iii) and (iv) under "Certain Covenants--Merger and Consolidation" above ("covenant defeasance"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an 60 Event of Default specified in clause (iv), (vi), (vii) (with respect only to Subsidiaries), or (viii) or (ix) under "Events of Default" above or because of the failure of the Company to comply with clause (iii) or (iv) under "Certain Covenants--Merger and Consolidation" above. In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the "defeasance trust") with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law). CONCERNING THE TRUSTEE Wilmington Trust Company is to be the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. GOVERNING LAW The Indenture provides that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. CERTAIN DEFINITIONS "Acquisition Closing Date" means December 31, 1996. "Additional Assets" means (i) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Subsidiary in a Related Business; (ii) the Capital Stock of a Person that becomes a Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Subsidiary; or (iii) Capital Stock constituting a minority interest in any Person that at such time is a Subsidiary; provided, however, that, in the case of clauses (ii) and (iii), such Subsidiary is primarily engaged in a Related Business. "Affiliate" of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any Person who is a director or officer (a) of such Person, (b) of any Subsidiary of such Person or (c) of any Person described in clause (i) above. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the covenants described under "Certain Covenants--Limitation on Sales of Assets and Subsidiary Stock", "-- Limitation on Restricted Payments" and "--Limitation on Affiliate Transactions" only, "Affiliate" shall also mean any beneficial owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Asset Disposition" means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions that are part of a common plan) of shares of Capital Stock of a Subsidiary (other than directors' qualifying shares), property or other assets (each 61 referred to for the purposes of this definition as a "disposition") by the Company or any of its Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction) other than (i) a disposition by a Subsidiary to the Company or a Wholly-Owned Subsidiary or by the Company or a Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory or Temporary Cash Investments in the ordinary course of business, (iii) a disposition of obsolete equipment or equipment that is no longer useful in the conduct of the business of the Company and its Subsidiaries and that is disposed of in each case in the ordinary course of business, (iv) the sale of other assets so long as the fair market value of the assets disposed of pursuant to this clause (iv) does not exceed $1.0 million in the aggregate in any fiscal year and $5.0 million in the aggregate prior to February 15, 2007, (v) for the purposes of the covenant described under "Certain Covenants--Limitation on Sales of Assets" only, a disposition subject to the covenant described under "--Limitation on Restricted Payments" and (vi) the disposition of all or substantially all of the assets of the Company in the manner permitted pursuant to the provisions described under the caption "--Merger and Consolidation" or any disposition that constitutes a Change of Control pursuant to the Indenture. "Attributable Indebtedness" in respect of a Sale/ Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Senior Credit Documents and any Indebtedness that is incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) Indebtedness under such Senior Credit Documents including Indebtedness that refinances such Indebtedness, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for postfiling interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof (including, without limitation, cash collateralization of letters of credit). "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. "Cash Equivalents" means (i) securities issued or directly and fully guaranteed or insured by the United States Government, or any agency or instrumentality thereof, having maturities of not more than 62 one year from the date of acquisition; (ii) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of "A" or better from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (iii) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances having maturities of not more than one year from the date of acquisition thereof issued by any domestic commercial bank the long-term debt of which is rated at the time of acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's Ratings Group, or "A" or the equivalent thereof by Moody's Investors Service, Inc., and having capital and surplus in excess of $500.0 million; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i), (ii) and (iii) entered into with any bank meeting the qualifications specified in clause (iii) above; (v) commercial paper rated at the time of acquisition thereof at least "A-2" or the equivalent thereof by Standard & Poor's Ratings Group or "P-2" or the equivalent thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in either case maturing within 270 days after the date of acquisition thereof; and (vi) interests in any investment company which invests solely in instruments of the type specified in clauses (i) through (v) above. "Code" means the Internal Revenue Code of 1986, as amended. "Consolidated Cash Flow" for any period means the Consolidated Net Income for such period, plus, to the extent deducted in calculating such Consolidated Net Income, (i) income tax expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization expense, in each case for such period, (v) other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period), and (vi) for the period ending on the first anniversary of the Issue Date only, non-recurring relocation and start-up expenses not in excess of $3 million, in each case for such period, and minus, to the extent not already deducted in calculating Consolidated Net Income, (i) the aggregate amount of "earnout" payments paid in cash during such period in connection with acquisitions previously made by the Company and (ii) non-cash items increasing Consolidated Net Income for such period. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (1) if the Company or any of its Subsidiaries has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (2) if since the beginning of such period the Company or any of its Subsidiaries shall have made any Asset Disposition, Consolidated Cash Flow for such period shall be reduced by an amount equal to the Consolidated Cash Flow (if positive) attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated Cash Flow (if negative) attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense attributable to any Indebtedness of the Company or any of its Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Subsidiary of the 63 Company is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Subsidiary to the extent the Company and its continuing Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if since the beginning of such period the Company or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary of the Company (or any Person which becomes a Subsidiary of the Company) or an acquisition of assets, including any Investment in a Subsidiary of the Company or any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness and including the pro forma expenses and cost reductions calculated on a basis consistent with Regulation S-X of the Securities Act) as if such Investment or acquisition occurred on the first day of such period and (4) if since the beginning of such period any Person (that subsequently became a Subsidiary of the Company or was merged with or into the Company or any Subsidiary of the Company since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (2) or (3) above if made by the Company or a Subsidiary of the Company during such period, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Subsidiaries, plus, to the extent not included in such interest expense, (i) interest expense attributable to Capitalized Lease Obligations and imputed interest with respect to Attributable Indebtedness, (ii) amortization of debt discount and debt issuance cost (other than those debt discounts and debt issuance costs incurred on the Acquisition Closing Date and the Issue Date), (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) interest actually paid by the Company or any such Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person, (vii) net costs associated with Currency Agreements and Interest Rate Agreements (including amortization of fees), (viii) the product of (A) all Preferred Stock dividends in respect of all Preferred Stock of Subsidiaries of the Company and Disqualified Stock of the Company held by Persons other than the Company or a Wholly-Owned Subsidiary multiplied by (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined Federal, state and local statutory tax rate of the Company, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP and (ix) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust. "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income (loss) of any Person if such Person is not a Subsidiary, except that (A) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Subsidiary, to 64 the limitations contained in clause (iii) below) and (B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income;(ii) any net income (loss) of any person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) any net income (loss) of any Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Subsidiary, directly or indirectly, to the Company, except that (A) subject to the limitations contained in (iv) below, the Company's equity in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Subsidiary during such period to the Company or another Subsidiary as a dividend (subject, in the case of a dividend that could have been made to another Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income; (iv) any gain (but not loss) realized upon the sale or other disposition of any assets of the Company or its consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which are not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person; (v) any extraordinary gain or loss; and (vi) the cumulative effect of a change in accounting principles. "Consolidated Net Worth" means the total of the amounts shown on the balance sheet of the Company and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of the Company ending prior to the taking of any action for the purpose of which the determination is being made as (i) the par or stated value of all outstanding Capital Stock of the Company plus (ii) paid in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii) any other Senior Indebtedness which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $5.0 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture. "Disqualified Stock" means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to 123 days after the Stated Maturity of the Notes. "Equity Investors" means the equity owners of MBW LLC on the Issue Date. "Equity Offering" means any public or private sales of equity securities (excluding Disqualified Stock) of the Company, Holdings or MBW LLC. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other 65 entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in the Indenture shall be computed in conformity with GAAP as in effect on the Issue Date. "Governmental Authority" means any nation or government, any state or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of any other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Holdings" means MBW Holdings Inc., a Delaware corporation. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. "Indebtedness" means, with respect to any Person on any date of determination (without duplication), (i) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money, (ii) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto) (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i), (ii) and (v)) entered into in the ordinary course of business of such Person to the extent that such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (other than contingent or "earn-out" payment obligations and Trade Payables and accrued expenses incurred in the ordinary course of business), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, (v) all Capitalized Lease Obligations and all Attributable Indebtedness of such Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, provided, however, that the amount of Indebtedness of such Person shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons, (vii) all Indebtedness of other Persons to the extent Guaranteed by such Person, (viii) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any accrued dividends) and (ix) to the extent not otherwise included in this definition, obligations of such Person under Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above as such amount would be reflected on a balance sheet in accordance with GAAP and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. 66 "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extension of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. "Issue Date" means the date on which the Old Notes were originally issued. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Management Services Agreement" means (i) the Management Services Agreement dated as of December 31, 1996 between the Company and Dartford Partnership L.L.C. (and its permitted successors and assigns thereunder), (ii) the Advisory Services Agreement dated as of December 31, 1996 between the Company and MDC Management Company III, L.P. (and its permitted successors and assigns thereunder) and (iii) the Agreement dated as of December 31, 1996 between the Company and Fenway Partners Inc. (and its permitted successors and assigns thereunder), in each case without giving effect to any amendment or other modification thereto. "MBW LLC" means MBW Investors LLC, a Delaware limited liability company. "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to any Person owning a beneficial interest in assets subject to sale or minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Subsidiary of the Company after such Asset Disposition and (v) any portion of the purchase price from an Asset Disposition placed in escrow (whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise in connection with such Asset Disposition) provided, however, that upon the termination of such escrow, Net Available Cash shall be increased by any portion of funds therein released to the Company or any Subsidiary. "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale. 67 "Note Guarantee" means any guarantee which may from time to time be executed and delivered by a Subsidiary of the Company pursuant to the provisions of the covenant described under "Certain Covenants --Future Note Guarantors." Each such Note Guarantee will have subordination provisions equivalent to those contained in the Indenture. "Note Guarantor" means any Subsidiary that has issued a Note Guarantee. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Permitted Holders" means the Equity Investors and their respective Affiliates. "Permitted Investment" means (i) any Investment in a Subsidiary of the Company or a Person which will, upon making such Investment, become a Subsidiary; provided, however, that the primary business of such Subsidiary is a Related Business; (ii) any Investment in another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Subsidiary of the Company; provided, however, that such Person's primary business is a Related Business; (iii) any Investment in Temporary Cash Investments; (iv) receivables owing to the Company or any of its Subsidiaries, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (v) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vi) loans or advances to employees made in the ordinary course of business of the Company or such Subsidiary; (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any of its Subsidiaries or in satisfaction of judgments or claims; (viii) Investments the payment for which consists exclusively of equity securities (exclusive of Disqualified Stock) of the Company; (ix) loans or advances to employees and directors to purchase equity securities of the Company, Holdings or MBW LLC; provided that the aggregate amount of such loans and advances shall not exceed $2.0 million at any time outstanding; (x) any Investment in another Person to the extent such Investment is received by the Company or any Subsidiary as consideration for Asset Disposition effected in compliance with the covenant under "Limitations on Sales of Assets"; (xi) prepayment and other credits to suppliers made in the ordinary course of business consistent with the past practices of the Company and its Subsidiaries; (xii) Investments in connection with pledges, deposits, payments or performance bonds made or given in the ordinary course of business in connection with or to secure statutory, regulatory or similar obligations, including obligations under health, safety or environmental obligations; and (xiii) any Investment in another Person not to exceed in the aggregate $2.0 million at any one time outstanding (measured as of the date made and without giving effect to subsequent changes in value). "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision hereof or any other entity. "Preferred Stock," as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the note which is due or overdue or is to become due at the relevant time. 68 "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, "refinances," and "refinanced" shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Subsidiary and Indebtedness of any Subsidiary that refinances Indebtedness of another Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus the amount of any premium required to be paid in connection therewith and plus reasonable fees and expenses in connection therewith); provided further that Refinancing Indebtedness shall not include Indebtedness of a Subsidiary which refinances Indebtedness of the Company. "Related Business" means the food business and such other business activities which are incidental or related thereto. "Representative" means any trustee, agent or representative (if any) of an issue of Senior Indebtedness. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Subsidiary transfers such property to a Person and the Company or a Subsidiary leases it from such Person. "SEC" or "Commission" means the Securities and Exchange Commission. "Secured Indebtedness" means any Indebtedness of the Company secured by a Lien. "Securities Act" means the Securities Act of 1933, as amended. "Senior Credit Agreement" means the Credit Agreement dated as of December 31, 1996, among the Company, Holdings, the lenders parties thereto, and The Chase Manhattan Bank, as administrative agent and CSI, as arranging agent. "Senior Credit Documents" means the collective reference to the Senior Credit Agreement, the notes issued pursuant thereto and the Holdings Guaranty, the Subsidiary Guaranty, the Security Agreement, the Pledge Agreement, the Collateral Account Agreement and the Patent and Trademark Security Agreement (each as defined in the Senior Credit Agreement) and each of the mortgages and other security agreements, guarantees and other instruments and documents executed and delivered pursuant to any of the foregoing or the Senior Credit Agreement, in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amounts of available borrowing thereunder provided that such increase in borrowing is permitted by the covenant described under the caption "--Limitation on Indebtedness" or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement whether by the same or any other agent, lender or group of lenders. "Senior Subordinated Indebtedness" means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank PARI PASSU with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. 69 "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes pursuant to a written agreement. "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary shall refer to a Subsidiary of the Company. "Temporary Cash Investments" means any of the following: (i) any Investment in direct obligations of the United States of America or any agency thereof or obligations Guaranteed by the United States of America or any agency thereof, (ii) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $250.0 million (or the foreign currency equivalent thereof) and whose long-term debt, or whose parent holding company's long-term debt, is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) Investments in commercial paper, maturing not more than 180 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Voting Stock" of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors or managers. "Wholly-Owned Subsidiary" means a Subsidiary of the Company, all of the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary. 70 BOOK-ENTRY; DELIVERY AND FORM Except as set forth below, the New Notes will be represented by one permanent global certificate in definitive, fully registered form (the "Global Note"). The Global Note will be deposited with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee of DTC, or will remain in the custody of the Trustee pursuant to the FAST Balance Certificate Agreement between DTC and the Trustee. DTC has advised the Company that it is (i) a limited purpose trust company organized under the laws of the State of New York, (ii) a member of the Federal Reserve System, (iii) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers (including the Initial Purchaser), banks and trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Holders who are not Participants may beneficially own securities held by or on behalf of the Depository only through Participants or Indirect Participants. The Company expects that pursuant to procedures established by DTC (i) upon deposit of the Global Note, DTC will credit the accounts of Participants designated by the Exchange Agent with an interest in the Global Note and (ii) ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interest of Participants), the Participants and the Indirect Participants. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own and that a security interest in negotiable instruments can only be perfected by delivery of certificates representing the instruments. Consequently, the ability to transfer Notes or to pledge the Notes as collateral will be limited to such extent. So long as DTC or its nominee is the registered owner of the Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in the Global Note will not be entitled to have Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Securities, and will not be considered the owners or Holders thereof under the Indenture for any purpose, including with respect to giving of any directions, instruction or approval to the Trustee thereunder. As a result, the ability of a person having a beneficial interest in Notes represented by the Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system or to otherwise take action with respect to such interest, may be affected by the lack of a physical certificate evidencing such interest. Accordingly, each holder owning a beneficial interest in the Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of Notes under the Indenture or the Global Note. The Company understands that under existing industry practice, in the event the Company requests any action of holders of Notes or a holder that is an owner of a beneficial interest in the Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participant would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes. 71 Payments with respect to the principal of, premium, if any, and interest on, any Notes represented by the Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such Notes under the Indenture. Under the terms of the Indenture, the Company and the Trustee may treat the persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payment and for any and all other purposes whatsoever. Consequently, neither the Company nor the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of interest in the Global Note (including principal, premium, if any, and interest), or to immediately credit the accounts of the relevant Participants with such payment, in amounts proportionate to their respective holdings in principal amount of beneficial interest in the Global Note as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of interests in the Global Note will be governed by standing instructions and customary practice and will be the responsibility of the Participants or the Indirect Participants and DTC. CERTIFICATED SECURITIES If (i) the Company notifies the Trustee in writing that DTC is no longer willing or able to act as a depository or DTC ceases to be registered as a clearing agency under the Exchange Act and the Company is unable to locate a qualified successor within 90 days, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under the Indenture or (iii) upon the occurrence of certain other events, then, upon surrender by DTC of its Global Note, Certificated Securities will be issued to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Note. Upon any such issuance, the Trustee is required to register such Certificated Securities in the name of such person or persons (or the nominee of any thereof), and cause the same to be delivered thereto. Neither the Company nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued). 72 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the material U.S. federal income tax consequences relating to the purchase, ownership and disposition of the Notes. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder and judicial and administrative interpretations thereof, all as in effect as of the date hereof and all of which are subject to change (possibly on a retroactive basis) or different interpretation. The following summary is based on an opinion of White & Case, special counsel to the Company, which is not binding on the Internal Revenue Service (the "Service") and there can be no assurance that the Service will not challenge one or more of the tax consequences described herein, and the Company has not obtained, nor does it intend to obtain, a ruling from the Service with respect to the U.S. federal income tax consequences of the Offering. This discussion does not purport to address all aspects of U.S. federal income taxation that may be relevant to particular holders in light of their personal circumstances, the U.S. federal income tax consequences to certain types of holders subject to special treatment under the Code (for example, life insurance companies, tax exempt organizations, financial institutions, dealers in securities or currencies, persons holding Notes as a part of a hedging or conversion transaction or a straddle and foreign taxpayers), or the effect of any applicable state, local or foreign tax laws. Finally, this discussion assumes that all Notes will be held as "capital assets" within the meaning of Section 1221 of the Code. INVESTORS CONSIDERING THE PURCHASE OF NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISOR TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES UNDER FEDERAL AND APPLICABLE STATE, LOCAL AND OTHER TAX LAWS. PAYMENT OF INTEREST The stated interest on the Notes will be includable in a U.S. Holder's gross income as ordinary income for U.S. federal income tax purposes at the time it is paid or accrued in accordance with the U.S. Holder's method of tax accounting. The Notes will not have original issue discount. As used herein, a "U.S. Holder" of a Note means a holder that is a citizen or resident of the United States or any political subdivision thereof, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate the income of which is subject to U.S. federal income taxation regardless of its source or a trust if (A) a United States court can exercise primary supervision over the administration of such trust and (B) one or more United States fiduciaries has the authority to control all of the substantial decisions of such trust. EXCHANGE OFFER The exchange of Old Notes for New Notes pursuant to the Exchange Offer should not constitute a material modification of the terms of the Notes and, therefore, such exchange should not constitute an exchange for U.S. federal income tax purposes. Accordingly, such exchange should have no U.S. federal income tax consequences to U.S. Holders of Notes and the holding period of the New Notes will include the holding period of the Notes and the basis of the New Notes will be the same as the basis of the Notes immediately before the exchange. PURCHASES OF NOTES AT OTHER THAN ORIGINAL ISSUE PRICE The foregoing does not discuss special rules which may affect the treatment of a U.S. Holder that acquires Notes other than at par, including those provisions of the Code relating to the treatment of "market discount," and "amortizable bond premium." Any such purchaser should consult its tax advisor as to the consequences to him of the acquisition, ownership, and disposition of Notes. 73 SALE OR REDEMPTION A U.S. Holder of a Note who disposes of such Note in a taxable sale, exchange, redemption or other disposition generally will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of any property received for such Note (other than cash or property received in payment of accrued and unpaid interest) and (ii) the U.S. Holder's adjusted tax basis in such Note. Such gain or loss will be capital gain or loss and will be long-term if the Note has been held for a period of one year at the time of sale, exchange, redemption or other disposition. Any portion of the amount realized on the sale or other disposition of a Note that represents accrued but unpaid interest will be treated as a payment of such interest. Under current law, net capital gains of individuals are, under certain circumstances, taxed at lower rates than items of ordinary income. The deductibility of capital losses is subject to limitations. BACKUP WITHHOLDING Under the Code, a U.S. Holder of Notes may be subject, under certain circumstances, to "backup withholding" at a 31% rate with respect to interest payments or gross proceeds from the disposition of Notes. This withholding generally applies only if the U.S. Holder (i) fails to furnish to the payor the U.S. Holder's social security or other taxpayer identification number ("TIN") within a reasonable time after the request thereof, (ii) furnishes an incorrect TIN, (iii) is notified by the Service that it has failed to report properly interest or dividends, or (iv) fails, under certain circumstances, to provide a certified statement, signed under penalty of perjury, that the TIN provided is its correct number and that it is not subject to backup withholding. Any amount withheld from a payment to a U.S. Holder under the backup withholding rules is allowable as a credit against such U.S. Holder's federal income tax liability, provided that the required information is furnished to the Service, and if backup withholding results in an overpayment of taxes, a refund may be obtained from the Service. Corporations and certain other entities described in the Code and Treasury Regulations are exempt from such withholding if their exempt status is properly established. U.S. Holders of Notes should consult their tax advisors as to their qualifications for exemption from withholding and the procedure for obtaining such exemption. These backup withholding tax and information reporting rules currently are under review by the U.S. Treasury Department and proposed U.S. Treasury Regulations issued on April 15, 1996 would modify certain of such rules generally with respect to payments made after December 31, 1997. Accordingly, the application of such rules to the Notes could be changed. THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH PURCHASER OF NOTES SHOULD CONSULT WITH ITS OWN TAX ADVISORS TO THE SPECIFIC TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS. 74 OLD NOTES EXCHANGE AND REGISTRATION RIGHTS AGREEMENT The Company and the Initial Purchaser entered into an exchange and registration rights agreement (the "Exchange and Registration Rights Agreement") on February 10, 1997. Pursuant to the Exchange and Registration Rights Agreement, the Company agreed to (i) file with the Commission on or prior to 60 days after the Issue Date a registration statement on an appropriate form under the Securities Act (the "Exchange Offer Registration Statement") relating to a registered exchange offer (the "Exchange Offer") for the New Notes under the Securities Act and (ii) use its best efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 150 days after the Issue Date. As soon as practicable after the effectiveness of the Exchange Offer Registration Statement, the Company will offer to the holders of the Old Notes who are not prohibited by any law or policy of the Commission from participating in the Exchange Offer the opportunity to exchange their Notes for an issue of a second series of notes (the "New Notes"), identical in all material respects to the Old Notes (except that the New Notes will not contain terms with respect to transfer restrictions, registration rights and liquidated damages) that would be registered under the Securities Act. The Company will keep the Exchange Offer open for not less than 30 days (or longer, if required by law) after the date notice of the Exchange Offer is mailed to the holders of the Old Notes. If (i) applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer as contemplated thereby or (ii) for any other reason the Exchange Offer is not consummated within 180 days after the Issue Date or (iii) any holder either (A) is not eligible to participate in the Exchange Offer or (B) participates in the Exchange Offer and does not receive freely transferrable New Notes in exchange for tendered Old Notes, the Company will file with the Commission a shelf registration statement (the "Shelf Registration Statement") to cover resales of Transfer Restricted Securities by such holders who satisfy certain conditions relating to, among other things, the provision of information in connection with the Shelf Registration Statement. For purposes of the foregoing, "Transfer Restricted Securities" means each Old Note until (i) the date on which such Note has been exchanged for a freely transferable New Note in the Exchange Offer, (ii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) the date on which such Note is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. The Company will use its best efforts to have the Exchange Offer Registration Statement and, if applicable, a Shelf Registration Statement (each a "Registration Statement") declared effective by the Commission as promptly as practicable after the filing thereof. Unless the Exchange Offer would not be permitted by a policy of the Commission, the Company will commence the Exchange Offer and will use its best efforts to consummate the Exchange Offer as promptly as practicable, but in any event prior to 180 days after the Issue Date. If applicable, the Company will use its best efforts to keep the Shelf Registration Statement effective for a period of three years after the Issue Date, subject to certain exceptions, including suspending the effectiveness thereof for certain valid business reasons. If (i) the applicable Registration Statement is not filed with the Commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's staff, if later, within 45 days after publication of the change in law or interpretation), (iii) the Exchange Offer is not consummated on or prior to 180 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's staff, if later, within 45 days after publication of the change in law or interpretation), but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being succeeded within 60 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company will generally be obligated to pay liquidated damages to each holder of 75 Transfer Restricted Securities, during the period of such Registration Default, in an amount equal to $0.192 per week per $1,000 principal amount of the Notes constituting Transfer Restricted Securities held by such holder until the applicable Registration Statement is filed or declared effective, the Exchange Offer is consummated or the Shelf Registration Statement again becomes effective, as the case may be; provided, however, no liquidated damages shall be payable for a Registration Default under clause (iii) above if a Shelf Registration Statement covering resales of the Transfer Restricted Securities for which the Exchange Offer was intended shall have been declared effective. All accrued liquidated damages shall be paid to holders in the same manner as interest payments on the Notes on semi-annual payment dates which correspond to interest payment dates for the Notes. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. The Exchange and Registration Rights Agreement also provides that the Company (i) shall make available for a period of 90 days after the consummation of the Exchange Offer a prospectus meeting the requirements of the Securities Act to any broker-dealer for use in connection with any resale of any such Exchange Notes and (ii) shall pay all expenses incident to the Exchange Offer (including the expenses of one counsel to the holders of the Notes) and will indemnify certain holders of the Notes (including any broker-dealer) against certain liabilities, including liabilities under the Securities Act. A broker-dealer that delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act, and will be bound by the provisions of the Exchange and Registration Rights Agreement (including certain indemnification rights and obligations). Each holder of Old Notes that wishes to exchange such Notes for New Notes in the Exchange Offer will be required to make certain representations, including representations that (i) any New Notes to be received by it will be acquired in the ordinary course of its business, (ii) it has no arrangement with any person to participate in the distribution of the New Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or Holdings or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If a holder is not a broker-dealer, it will be required to represent that it is not engaged in, and does not intend to engage in, the distribution of the New Notes. If a holder is a broker-dealer that will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. Holders of the Old Notes will be required to make certain representations to the Company (as described above) in order to participate in the Exchange Offer, and will be required to deliver information to be used in connection with the Shelf Registration Statement in order to have their Notes included in the Shelf Registration Statement and benefit from the provisions regarding liquidated damages set forth in the preceding paragraphs. A holder who sells Old Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Exchange and Registration Rights Agreement which are applicable to such a holder (including certain indemnification obligations). For so long as the Notes are outstanding, the Company will continue to provide to holders of the Old Notes and to prospective purchasers of the Old Notes the information required by paragraph (d)(4) of Rule 144A under the Securities Act ("Rule 144A"). The Company will provide a copy of the Exchange and Registration Rights Agreement to prospective purchasers of Old Notes identified to the Company by the Initial Purchaser upon request. The foregoing description of the Exchange and Registration Rights Agreement is a summary only, does not purport to be complete and is qualified in its entirety by reference to all provisions of the Exchange and Registration Rights Agreement. 76 PLAN OF DISTRIBUTION Based on interpretations by the Commission set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder which is (i) an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act, (ii) a broker-dealer who acquired Notes directly from the Company or (iii) broker-dealers who acquired Notes as a result of market-making or other trading activities) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such New Notes are acquired in the ordinary course of such holders' business, and such holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such New Notes; provided that broker-dealers ("Participating Broker-Dealers") receiving New Notes in the Exchange Offer will be subject to a prospectus delivery requirement with respect to resales of such New Notes. To date, the Commission has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as the exchange pursuant to the Exchange Offer (other than a resale of an unsold allotment from the sale of the Old Notes to the Initial Purchasers) with the Prospectus, contained in the Exchange Offer Registration Statement. Pursuant to the Exchange and Registration Rights Agreement, the Company has agreed to permit Participating Broker-Dealers and other persons, if any, subject to similar prospectus delivery requirements to use this Prospectus in connection with the resale of such New Notes. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus, and any amendment or supplement to this Prospectus, available to any broker-dealer that requests such documents in the Letter of Transmittal. Each holder of the Old Notes who wishes to exchange its Old Notes for New Notes in the Exchange Offer will be required to make certain representations to the Company as set forth in "The Exchange Offer--Purpose and Effect of the Exchange Offer." In addition, each holder who is a broker-dealer and who receives New Notes for its own account in exchange for Old Notes that were acquired by it as a result of market-making activities or other trading activities, will be required to acknowledge that it will deliver a prospectus in connection with any resale by it of such New Notes. The Company will not receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company has agreed to pay all expenses incidental to the Exchange Offer other than commissions and concessions of any brokers or dealers and will indemnify holders of the Old Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act, as set forth in the Exchange and Registration Rights Agreement. 77 LEGAL MATTERS The validity of the Notes offered hereby will be passed upon for the Company by White & Case, New York, New York. EXPERTS The balance sheet of MBW Foods Inc. as of December 31, 1996 included in this Prospectus has been so included in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The statement of assets to be acquired of Mrs. Butterworth's Business as of December 31, 1996 and the statements of operations of Mrs. Butterworth's Business for each of the three years in the period ended December 31, 1996 included in this Prospectus have been so included in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 78 INDEX TO FINANCIAL STATEMENTS
PAGE ----- MBW FOODS INC. Report of Independent Accountants........................................................................ F-2 Balance Sheet as of December 31, 1996.................................................................... F-3 Notes to Balance Sheet................................................................................... F-4 MRS. BUTTERWORTH'S, A COMPONENT OF CONOPCO, INC. Report of Independent Accountants........................................................................ F-8 Statement of Assets to be Acquired as of December 31, 1996............................................... F-9 Statement of Operations for the years ended December 31, 1996, 1995 and 1994............................. F-10 Notes to Financial Statements............................................................................ F-11
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MBW Foods, Inc. In our opinion, the accompanying balance sheet of MBW Foods, Inc. (a wholly-owned subsidiary of MBW Investors LLC) presents fairly, in all material respects, the financial position of the Company at December 31, 1996, in conformity with generally accepted accounting principles. This financial statement is the responsibility of the Company's management; our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this statement in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. Price Waterhouse LLP San Francisco, California March 28, 1997 F-2 MBW FOODS INC. (A WHOLLY-OWNED SUBSIDIARY OF MBW INVESTORS LLC) BALANCE SHEET DECEMBER 31, 1996 (IN THOUSANDS) ASSETS: Cash............................................................................. $ 8,666 Accounts receivable.............................................................. 480 Inventories (Note 3)............................................................. 1,182 Prepaid expenses................................................................. 9 --------- Total current assets........................................................... 10,337 Machinery and equipment.......................................................... 5,206 Goodwill and other intangible assets (Note 4).................................... 111,358 Other assets..................................................................... 3,995 --------- Total assets................................................................... $ 130,896 --------- --------- LIABILITIES: Current liabilities Accrued expenses............................................................... $ 2,736 Long-term debt (Note 5).......................................................... 95,000 --------- Total liabilities.............................................................. 97,736 STOCKHOLDER'S EQUITY: Common stock, no par value, 3,000 shares authorized, 1,000 shares issued and outstanding.......................................... 33,160 --------- Total liabilities and stockholder's equity....................................... $ 130,896 --------- ---------
See Notes to the balance sheet. F-3 MBW FOODS INC. NOTES TO THE BALANCE SHEET (IN THOUSANDS) NOTE 1--THE COMPANY ORGANIZATION MBW Foods Inc. (the "Company"), a newly formed Delaware corporation, is a privately held food company. The Company commenced operations on December 31, 1996, when it acquired the Mrs. Butterworth's syrup and pancake business from a subsidiary of Unilever United States, Inc. ("the Seller"). The Company is a wholly-owned subsidiary of MBW Holdings Inc. ("Holdings"), also a Delaware corporation. Holdings is wholly-owned by MBW Investors LLC ("MBW LLC"), a Delaware limited liability company. The Company was initially capitalized with a capital infusion from Holdings, which was contributed by MBW LLC, and senior secured debt and senior subordinated debt (Note 5). After the close of business on December 31, 1996, the Company acquired substantially all the assets of Mrs Butterworth's syrup and pancake business (the "Business") from the Seller. The Company acquired the inventories, manufacturing equipment and intangible assets of the Business for a purchase price of $114.1 million. In due course, the Company will relocate the manufacturing equipment from the Seller's facility. The acquisition was accounted for by the purchase method of accounting. The purchase agreement contains customary representations, warranties and covenants by the Sellers and the Company. The acquisition was financed by (i) an equity capital contribution from Holdings of approximately $33.2 million, (ii) $45 million of loans borrowed under a senior secured credit facility (Note 5), and (iii) $50 million of loans borrowed under a senior subordinated credit facility (Note 5). The cost to acquire the Business has been allocated to tangible and intangible aspects acquired as follows: Cash paid to acquire Business.................................... $ 114,100 Other acquisition costs.......................................... 3,646 --------- 117,746 Costs assigned to tangible assets................................ (6,388) --------- Costs attributable to intangible assets.......................... $ 111,358 --------- ---------
OPERATIONS The Company produces and markets syrup and pancake mix products that are sold across the United States. The products are manufactured under co-packing agreements with the Seller and a third party. The principal trademark under which products are sold is Mrs. Butterworth's-Registered Trademark-. NOTE 2--SIGNIFICANT ACCOUNTING POLICIES The policies utilized by the company in the preparation of the financial statement conform to generally accepted accounting principles and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Actual amounts could differ from these estimates and assumptions. The Company uses the accrual basis of accounting in the preparation of its financial statements. F-4 MBW FOODS INC. NOTES TO THE BALANCE SHEET (IN THOUSANDS) FISCAL YEAR The Company's fiscal year ends on the last Saturday in December. The balance sheet at December 31, 1996 reflects the acquisition of the Business as of 11:59 p.m. on that date. CASH The Company considers all highly liquid financial instruments with a maturity of three months or less to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost or market value. Cost is determined using the first-in, first-out (FIFO) method. Inventories include the cost of raw materials, packaging and supplies, labor and manufacturing overhead. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is stated at cost and consists of machinery and equipment. Depreciation will be computed using the straight-line method over the estimated useful lives of the individual assets of ten years. As of December 31, 1996, there was no accumulated depreciation. INTANGIBLE ASSETS Intangible assets include goodwill, trademarks and various identifiable intangible assets purchased by the Company. Goodwill will be amortized over forty years using the straight-line method. Other intangible assets will be amortized using the straight-line method over periods ranging from five to forty years. As of December 31, 1996, there was no accumulated amortization. OTHER ASSETS Other assets consist of deferred loan acquisition costs. Deferred loan costs will be amortized using the straight-line method over the terms of the related debt. As of December 31, 1996, there was no accumulated amortization. NOTE 3 -- INVENTORIES Inventories consist of the following: Raw materials, packaging and supplies.............................. $ 523 Finished goods..................................................... 659 --------- $ 1,182 --------- ---------
F-5 MBW FOODS INC. NOTES TO THE BALANCE SHEET (IN THOUSANDS) NOTE 4 -- GOODWILL AND OTHER INTANGIBLES Goodwill and other intangible assets consist of the following: Goodwill......................................................... $ 64,518 Trademarks....................................................... 44,500 Other intangibles................................................ 2,340 --------- $ 111,358 --------- ---------
NOTE 5--LONG-TERM DEBT Long-term debt consists of the following; Senior Secured Debt Senior secured revolving debt; interest rate of 9.50% at December 31, 1996; principal due in quarterly installments through December 15, 2001; floating interest rate at the prime rate plus 1.25% or alternatively, the one, three or six month Eurodollar rate plus 2.50% payable quarterly or at the termination of the Eurodollar contract interest period............................. $ 30,000 Senior secured term debt; interest rate of 10.00% at December 31, 1996; principal due in quarterly installments through December 15, 2002; floating interest rate at the prime rate plus 1.75% or alternatively, the one, three or six month Eurodollar rate plus 3.00% payable quarterly or at the termination of the Eurodollar contract interest period........................................ 15,000 Senior Subordinated Note Senior subordinated note; interest rate of 12.75% at December 31, 1996; floating interest rate at the prime rate plus (i) 4.50% through June 29, 1997, (ii) 5.50% for the period June 30, 1997 through September 29, 1997, and (iii) 6.00% for the period September 30, 1997 through maturity............................. 50,000 --------- Total long-term debt........................................ $ 95,000 --------- ---------
SENIOR SECURED DEBT On December 31, 1996, the Company and Holdings entered into a Credit Agreement (the "Agreement") with several banks for $15 million of senior secured term debt and a $45 million revolving credit facility. At December 31, 1996, the Company had an outstanding balance of $30 million under the revolver. The proceeds from the senior secured term debt, a $30 million draw down of the revolving credit facility along with a senior subordinated note and contributed equity capital were used to acquire the Business from the Seller, pay fees and expenses and fund working capital. The debt is guaranteed by Holdings. F-6 MBW FOODS INC. NOTES TO THE BALANCE SHEET (IN THOUSANDS) The unused borrowing availability was $15 million at December 31, 1996. The Agreement requires a commitment fee of 0.50% per annum payable quarterly on the unused portion of the revolving credit facility. The borrowing availability increased to $60 million upon payment of the $15 million senior secured term debt. The Agreement includes restrictive covenants which limit additional borrowing, cash dividends, and capital expenditures, while also requiring the Company to maintain certain financial ratios. The Agreement contains optional prepayment provisions with no premium. Substantially all the assets of the Company are pledged as collateral for the debt. SENIOR SUBORDINATED NOTE On December 31, 1996, the Company issued a $50 million senior subordinated note (the "Note") to a bank. The Company can prepay portions of the outstanding balance of the Note without incurring a premium. The Note includes restrictive covenants which limit cash dividends, loans and investments and capital expenditures while also requiring the Company to maintain certain financial ratios. See subsequent event discussion at Note 7. NOTE 6--RELATED PARTY TRANSACTIONS The Company paid certain members of MBW LLC fees totaling $1.5 million as of December 31, 1996. The fees were paid for services provided in identifying, negotiating and consummating the Company's acquisition. The fees are included in the costs of the acquisition. On December 31, 1996, Mr. Thomas J. Ferraro, the President of the Company and Mr. C. Gary Willett, the Executive Vice President of the Company, executed promissory notes in favor of the Company in exchange for monies borrowed to assist in the capitalization of their limited liability company interests held with Investors. The promissory notes mature December 31, 1999 with required annual payments. Interest is due and payable quarterly at the rate of 8.00% per annum. The aggregate balance outstanding on the promissory notes as December 31, 1996 was $110,000. This amount has been recorded as a reduction to common stock. NOTE 7--SUBSEQUENT EVENT On February 10, 1997, the Company completed a private offering of 9 7/8% Senior Subordinated Notes due in 2007, with proceeds to the Company totaling approximately $97 million. These proceeds were primarily used to retire the $45 million of senior secured debt and the $50 million senior subordinated note. The repayment of the debt did not result in any gain or loss as the Company's revolving credit facility remains available. F-7 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors CONOPCO, Inc. We have audited the accompanying statement of assets to be acquired as of December 31, 1996 and the statement of operations for the years ended December 31, 1996, 1995 and 1994 of Mrs. Butterworth's Business, a component of CONOPCO, Inc. (the "Business"). These financial statements are the responsibility of CONOPCO, Inc.'s management. Our responsibility is to express an opinion on these statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying financial statements were prepared to present the assets to be acquired and the results of operations of the Business pursuant to the purchase agreement between CONOPCO, Inc. and MBW Acquisition Corp. (the "Buyer") as described in Note 1 and are not intended to be a complete presentation of the Business's financial position and cash flows. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets to be acquired of the Business as of December 31, 1996 and the results of its operations for the years ended December 31, 1996, 1995 and 1994, pursuant to the purchase agreement referred to in Note 1, in conformity with generally accepted accounting principles. Price Waterhouse LLP San Francisco, California March 14, 1997 F-8 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) STATEMENT OF ASSETS TO BE ACQUIRED DECEMBER 31, 1996 (IN THOUSANDS) Inventories........................................................................ $ 829 Machinery and equipment, net of accumulated depreciation of $1,791................. 2,774 --------- Total assets................................................................... $ 3,603 --------- ---------
The accompanying notes are an integral part of the financial statements. F-9 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) STATEMENT OF OPERATIONS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------------ 1996 1995 1994 -------------- --------- --------- Net sales................................................................. $ 89,541 $ 91,302 $ 96,729 Costs and expenses: Cost of products sold................................................... 28,955 27,743 29,930 Brokerage and distribution.............................................. 8,140 7,583 8,662 Trade promotions........................................................ 17,672 19,380 21,911 Consumer marketing...................................................... 10,835 13,291 15,297 Selling, general and administrative..................................... 6,753 6,120 6,829 -------------- --------- --------- Total costs and expenses............................................ 72,355 74,117 82,629 -------------- --------- --------- Income before taxes....................................................... 17,186 17,185 14,100 Provision for income taxes................................................ 6,616 6,616 5,429 -------------- --------- --------- Net income................................................................ $ 10,570 $ 10,569 $ 8,671 -------------- --------- --------- -------------- --------- ---------
The accompanying notes are an integral part of the financial statements. F-10 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 (IN THOUSANDS) 1. DESCRIPTION OF BUSINESS In December, 1996, CONOPCO, Inc. ("CONOPCO" or the "Company"), a subsidiary of Unilever United States, Inc., entered into an Asset Purchase Agreement (the "Agreement") with MBW Acquisition Corp., the predecessor of MBW Foods Inc. (the "Buyer"). The Agreement provides for the sale of certain assets of CONOPCO pertaining to its Mrs. Butterworth's Business (the "Business") and the assumption of certain liabilities relating to future commitments, as defined (see Note 8). The Business is operated as part of Van den Bergh Foods Company ("Van den Bergh"), a division of the Company. The Business's products, which are distributed on a national basis, consist of syrup and pancake mix. A significant portion of the Business's net sales are with major retailers. The sale was consummated on December 31, 1996, after the close of business but before the end of the business day. Under the terms of the Agreement, CONOPCO, Inc. sold to the Buyer certain assets exclusively used in the Business, as defined in the Agreement, and retains the manufacturing plants, employees and the retained liabilities, as defined in the Agreement, of the Business. Throughout the periods covered by the financial statements, the Business's operations were conducted and accounted for as part of the Company. These financial statements have been carved out from the Company's historical accounting records. Under the Company's centralized cash management system, cash requirements of the Business were generally provided directly by the Company and cash generated by the Business was generally remitted directly to the Company. Transaction systems (e.g., payroll, employee benefits, accounts payable) used to record and account for cash disbursements were provided by centralized company organizations outside the defined scope of the Business. Most of these corporate systems are not designed to track assets/liabilities and receipts/payments on a business specific basis. Given these constraints and the fact that only certain assets of the Business were sold, statements of financial position and cash flows could not be prepared. The manufacturing and distribution operations of the Business are conducted at sites where other Company manufacturing and distribution operations not included in the Business are present. In addition, certain non-manufacturing operations of the Business share facilities and space with other Company operations. At these shared sites, only the assets of the Business (inventories and machinery and equipment) are included in the statement of assets to be acquired. The Statement of Assets to be Acquired is as of the close of business on December 31, 1996, immediately prior to the sale. Net sales in the accompanying statement of operations represent net sales directly attributable to the Business. Costs and expenses in the accompanying statement of operations represent direct and allocated costs and expenses related to the Business. Costs for certain functions and services performed by centralized Company organizations outside the defined scope of the Business have been allocated to the Business based on usage or sales of the Business, as appropriate, compared to total Van Den Bergh usage or sales. The results of operations include expense allocations for 1) costs for administrative functions and services performed on behalf of the Business by centralized staff groups within the Company, 2) research and development expense and 3) CONOPCO's general corporate expenses including pension and certain other postretirement benefits costs (see Notes 2, 3 and 5 for a F-11 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1996 (IN THOUSANDS) description of the allocation methodologies employed). CONOPCO maintains all debt and notes payable on a consolidated basis to fund and manage all of its operations. Debt and related interest expense were not allocated to the Business. All of the allocations and estimates in the statements of operations are based on assumptions that Company management believes are reasonable under the circumstances. However, these allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if the Business had been operated as a separate entity or future results of the Business. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INCOME RECOGNITION. Sales and related cost of products sold are included in income and expense, respectively, when products are shipped to the customer. INVENTORIES. Inventories are priced at the lower of cost or market with cost determined by the last-in, first-out (LIFO) method. MACHINERY AND EQUIPMENT (M&E). M&E is stated at historical cost. Alterations and major overhauls which extend the lives or increase the capacity of M&E are capitalized. The amounts for property disposals are removed from M&E and accumulated depreciation accounts and any resultant gain or loss is included in earnings. Ordinary repairs and maintenance are charged to operating costs. DEPRECIATION. Van den Bergh calculates depreciation using the straight-line method over the useful lives of its property and M&E. Depreciation provided in costs and expenses is allocated to the Business based on sales of the Business compared to total Van den Bergh sales. COST OF PRODUCTS SOLD. Cost of products sold includes direct costs of materials, labor, and overhead and allocated costs for facilities, functions and services used by the Business at shared sites. Overhead allocations are based on estimated time spent by employees, relative use of facilities, estimated consumption of common supplies, and sales of the Business compared to total Van den Bergh sales. BROKERAGE AND DISTRIBUTION. Brokerage and distribution includes costs of the outside brokerage network and outbound freight. TRADE PROMOTIONS. Trade promotions represents promotional incentives offered to retailers. CONSUMER MARKETING. Consumer marketing is comprised of all costs associated with advertising coupons. Advertising expense is accrued as incurred. Production costs are expensed on the initial use of the advertisement. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative consists solely of allocated selling, administrative and research and development expenses. The Business is allocated these expenses based on sales of the Business compared to total Van den Bergh sales. INCOME TAXES. The taxable income of the Business was included in the tax returns of CONOPCO. As such, separate income tax returns were not prepared or filed for the Business. The provision for income taxes included in the accompanying statement of operations has been determined based upon statutory rates applied to pre-tax income. F-12 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1996 (IN THOUSANDS) PENSIONS. The Company has noncontributory defined benefit plans covering substantially all U.S. employees, including the employees of the Business. The benefits for these plans are based primarily on employees' years of service and employees' compensation during the last years of employment. It is the Company's policy to fund at least the minimum amounts required by the Employee Retirement Income Security Act of 1974. The Company maintains profit-sharing and savings plans for full-time employees who meet certain eligibility requirements. The costs allocated to the Business relative to the aforementioned plans are based on sales of the Business. OTHER POST RETIREMENT BENEFITS. The Company provides certain health care and life insurance benefits (post retirement benefits) to substantially all eligible retired U.S. employees and their dependents. These benefits are accounted for as they are earned by active employees. The post retirement costs allocated to the Business are based on sales of the Business. ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Also, as discussed in Note 1, these financial statements include allocations and estimates that are not necessarily indicative of the costs and expenses that would have resulted if the Business had been operated as a separate entity or future results of the Business. 3. RELATED PARTY TRANSACTIONS The statement of operations include significant allocations from other Company organizations involving functions and services (such as finance and accounting, management informations systems, research and development, legal, human resources and purchasing) that were provided to the Business by centralized CONOPCO organizations outside the defined scope of the Business. The costs of these functions and services have been allocated to the Business using methods that CONOPCO's management believes are reasonable. Such allocations are not necessarily indicative of the costs that would have been incurred if the Business had been a separate entity. Total cost of products sold includes $2,656, $3,026 and $2,990 in allocated costs for the years ended December 31, 1996, 1995 and 1994, respectively. Selling, general and administrative expenses include $6,753, $6,120 and $6,829 of allocated costs for the years ended December 31, 1996, 1995 and 1994, respectively. 4. PROVISION FOR INCOME TAXES Taxes computed at the U.S. statutory rates are summarized below:
1996 1995 1994 -------------------- -------------------- -------------------- AMOUNT % AMOUNT % AMOUNT % --------- --------- --------- --------- --------- --------- Federal.......................................... $ 5,843 34.0 $ 5,843 34.0 $ 4,794 34.0 State (net of federal tax benefit)............... 773 4.5 773 4.5 635 4.5 --------- --- --------- --- --------- --- Provision for income taxes....................... $ 6,616 38.5 $ 6,616 38.5 $ 5,429 38.5 --------- --- --------- --- --------- --- --------- --- --------- --- --------- ---
F-13 MRS. BUTTERWORTH'S BUSINESS (A COMPONENT OF CONOPCO, INC.) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1996 (IN THOUSANDS) 5. INVENTORIES
1996 --------- Raw materials, packaging and supplies....................................... $ 301 Finished products........................................................... 631 --------- 932 Adjustment to LIFO basis.................................................... (103) --------- $ 829 --------- ---------
The Company's application of LIFO is not attributable to individual business units. Accordingly, the results of applying LIFO have been allocated to the Business based on relative inventory values. Management believes such allocations are reasonable, but may not necessarily reflect the cost that would have been incurred if LIFO had been applied on a business specific basis. 6. DEPRECIATION EXPENSE Depreciation provided in costs and expenses was $277 in 1996, $311 in 1995 and $215 in 1994. 7. COMMITMENTS AND CONTINGENCIES The Business is currently subject to certain lawsuits and claims with respect to matters such as product liability and other actions arising in the normal course of business. Such lawsuits and claims, as defined in the Agreement, are the responsibility of CONOPCO. In the normal course of its operations, the Business has informal agreements with two suppliers to provide the Business with its glass bottle requirements. These informal agreements contain no specified duration and are subject to price adjustments. If these agreements were to terminate, the Company expects that the Business would acquire any on-hand inventory of the suppliers. F-14 NO PERSON HAS BEEN AUTHORIZED HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------------------------------- TABLE OF CONTENTS
Available Information................. iii Prospectus Summary.................... 1 Risk Factors.......................... 10 Use of Proceeds of the New Notes...... 14 Capitalization........................ 14 The Exchange Offer.................... 15 Selected Historical Financial Data.... 24 Pro Forma Financial Information....... 25 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 30 The Acquisition....................... 33 Business.............................. 34 Management............................ 40 Security Ownership.................... 43 Certain Related Transactions.......... 45 Description of Senior Credit Facilities.......................... 46 Description of Notes.................. 48 Certain United States Federal Income Tax Considerations.................. 73 Old Notes Exchange and Registration Rights Agreement.................... 75 Plan of Distribution.................. 77 Legal Matters......................... 78 Experts............................... 78 Index to Financial Statements......... F-1
MBW FOODS INC. OFFER TO EXCHANGE 9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007 FOR ALL OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007 --------------------- PROSPECTUS --------------------- , 1997 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Certificate of Incorporation of the Company provides that no director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director except for those breaches and acts or omissions with respect to which the General Corporation Law of the State of Delaware expressly provides that the Certificate of Incorporation shall not eliminate or limit such personal liability of directors. Section 145 of the Delaware General Corporation Law (the "DGCL") provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation, a "derivative action") if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's bylaws, disinterested director vote, stockholder vote, agreement or otherwise. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits
EXHIBIT NO. DESCRIPTION - --------- -------------------------------------------------------------------------------------------------- 1.1 Purchase Agreement dated February 5, 1997 by and between the Company and Chase Securities Inc. 2.1 Asset Purchase Agreement dated as of December 18, 1996, by and between MBW Foods Inc. (as successor-in-interest to MBW Acquisition Corp.) and Conopco, Inc., as amended. 3.1 Certificate of Incorporation of the Company, as amended to date, filed with the Secretary of State of the State of Delaware on November 21, 1996. 3.2 Amended and Restated By-laws of the Company. 4.1 Indenture dated as of February 10, 1997, by and between the Company and Wilmington Trust Company (the "Indenture"). 4.2 Specimen Certificate of 9 7/8% Senior Subordinated Note due 2007 (included in Exhibit 4.1 hereto). 4.3 Specimen Certificate of 9 7/8% Series B Senior Subordinated Note due 2007 (included in Exhibit 4.1 hereto). 4.4 Form of Note Guarantee to be issued by future subsidiaries of the Company pursuant to the Indenture (included in Exhibit 4.1 hereto). 4.5 Exchange and Registration Rights Agreement dated as of February 10, 1997, by and between the Company and Chase Securities Inc.
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EXHIBIT NO. DESCRIPTION - --------- -------------------------------------------------------------------------------------------------- 5.1 Opinion of White & Case regarding the legality of the New Notes. 8.1 Opinion of White & case regarding certain tax matters. 10.1 Management Services Agreement, dated as of December 31, 1996, by and between the Company and Dartford Partnership L.L.C. 10.2 Advisory Services Agreement, dated as of December 31, 1996, by and between the Company and MDC Management Company III, L.P. 10.3 Agreement dated as of December 31, 1996, by and between MBW Foods Inc. and Fenway Partners, Inc. 10.4 Credit Agreement, dated as of December 31, 1996, by and among the Company, MBW Holdings Inc., as Guarantor, the Lenders listed therein, The Chase Manhattan Bank, as Administrative Agent, Chase Securities Inc., as Arranging Agent and Exhibits thereto. 10.5 Employment Agreement, dated as of December 31, 1996, by and between the Company and Thomas J. Ferraro. 10.6 Employment Agreement, dated as of December 31, 1996, by and between the Company and C. Gary Willett. 10.7 Co-Pack Agreement, dated as of December 31, 1996, by and between the Company and Van den Bergh Foods Company. 10.8 Flavor Supply Agreement, dated as of December 31, 1996, by and between the Company and Quest International Flavors & Food Ingredients Company. 10.9 Transition Services Agreement, dated as of December 31, 1996, by and between the Company and Conopco, Inc. 10.10 Shared Technology Licensing Agreement, dated as of December 31, 1996, by and between the Company and Conopco, Inc. 10.11 Amended & Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996. 12.1 Statement re computation of ratios. 21.1 Subsidiaries of Registrant. 23.1 Consent of Price Waterhouse LLP. 23.2 Consent of White & Case (contained in the opinion filed as Exhibit 5.1 hereto). 23.3 Consent of White & Case (contained in Exhibit 8.1 hereto). 24.1 Power of Attorney (see page II-4). 25.1 Statement of eligibility of trustee. 99.1 Form of Letter of Transmittal for New Notes. 99.2 Form of Notice of Guaranteed Delivery for New Notes. 99.3 Letter to Brokers. 99.4 Letter to Clients. 99.5 Instructions to Registered Holder and/or Book Entry Transfer Participant from Beneficial Owner. 99.6 Guidelines for Certificate of Taxpayer Identification Number on substitute Form W-9.
II-2 ITEM 22. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes that insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim of indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by its is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into this prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on April 7, 1997. MBW FOODS INC. By: /s/ JAMES B. ARDREY ------------------------------------------ James B. Ardrey EXECUTIVE VICE PRESIDENT AND DIRECTOR
POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints and hereby authorizes James B. Ardrey and Tyler T. Zachem, and each of them, as attorney-in-fact, to sign on such person's behalf, individually and in each capacity stated below, and to file any amendments, including post-effective amendments to the registration statement. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 7, 1997.
SIGNATURE TITLE - -------------------------------------------------------- -------------------------------------------------------- /S/ THOMAS J. FERRARO -------------------------------------------- Director and President Thomas J. Ferraro (Principal Executive Officer) /S/ RAY CHUNG -------------------------------------------- Director and Executive Vice President Ray Chung (Principal Financial and Accounting Officer) /S/ IAN R. WILSON -------------------------------------------- Chairman of the Board of Directors Ian R. Wilson /S/ JAMES B. ARDREY -------------------------------------------- Director and Executive Vice President James B. Ardrey /S/ DAVID E. DE LEEUW -------------------------------------------- Director David E. De Leeuw /S/ CHARLES AYRES -------------------------------------------- Director Charles Ayres
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SIGNATURE TITLE - -------------------------------------------------------- -------------------------------------------------------- /S/ TYLER T. ZACHEM -------------------------------------------- Director Tyler T. Zachem /S/ PETER LAMM -------------------------------------------- Director Peter Lamm /S/ RICHARD C. DRESDALE -------------------------------------------- Director Richard C. Dresdale /S/ C. GARY WILLETT -------------------------------------------- Executive Vice President C. Gary Willett /S/ M. LAURIE CUMMINGS -------------------------------------------- Vice President and Secretary M. Laurie Cummings
II-5 EX-1.1 2 PURCH. AGMT. DATED 2/5/97 Exhibit 1.1 CONFORMED COPY ================================================================================ MRS. BUTTERWORTH'S MBW FOODS INC. 9 7/8% Senior Subordinated Notes due 2007 PURCHASE AGREEMENT dated February 5, 1997 between MBW FOODS INC. and CHASE SECURITIES INC. ================================================================================ MRS. BUTTERWORTH'S MBW FOODS INC. $100,000,000 9 7/8% Senior Subordinated Notes due 2007 PURCHASE AGREEMENT February 5, 1997 CHASE SECURITIES INC. 270 Park Avenue, 4th Floor New York, New York 10017 Dear Ladies and Gentlemen: MBW FOODS INC., a Delaware corporation (as more fully defined below, the "Company"), proposes to issue and sell to CHASE SECURITIES INC. (the "Initial Purchaser") $100,000,000 aggregate principal amount of its 9 7/8% Senior Subordinated Notes due 2007 (the "Notes"). The Notes will be issued pursuant to an Indenture to be dated as of February 10, 1997 (the "Indenture"), among the Company and Wilmington Trust Company, as trustee (the "Trustee"). This is to confirm the agreement concerning the purchase of the Notes from the Company by the Initial Purchaser. For all purposes of this Agreement, the term "Company" shall mean MBW Foods Inc. The Notes will be offered and sold to the Initial Purchaser without being registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on an exemption therefrom. The Company has prepared a preliminary offering memorandum, dated January 21, 1997 (the "preliminary offering memorandum"), and will prepare an offering memorandum dated the date hereof (such offering memorandum, in the form furnished to the Initial Purchaser for use in connection with the offering of the Notes, the "Offering Memorandum"), setting forth information concerning the Company and the Notes. Copies of the preliminary offering memorandum have been, and copies of the Offering Memorandum will be delivered by the Company to the Initial Purchaser pursuant to the terms of this Agreement. Any references herein to the preliminary offering memorandum and the Offering Memorandum shall be deemed to include all amendments and supplements thereto and all documents incorporated therein by reference. The Company hereby confirms that it has authorized the use of the preliminary offering memorandum and the Offering Memorandum in connection with the offering and resale of the Notes by the Initial Purchaser in accordance with Section 3 hereof. 2 The Initial Purchaser and its direct and indirect transferees will be entitled to the benefits of the Exchange and Registration Rights Agreement, substantially in the form attached hereto as Exhibit A (the "Registration Rights Agreement"), pursuant to which the Company will agree to use its best efforts to commence an offer to exchange the Notes for securities which have been registered under the Securities Act, and which are identical in all material respects to the Notes (except with respect to transfer restrictions), or to cause a shelf registration statement to become effective under the Securities Act and to remain effective for the period designated in such Registration Rights Agreement. The Company intends to use the proceeds of the Offering to repay approximately $95.0 million of Existing Indebtedness (as defined in the Offering Memorandum), to pay accrued and unpaid interest with respect to such indebtedness and to pay certain fees and expenses incurred in connection with the Offering. 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company represents and warrants to and agrees with the Initial Purchaser that: (a) Each of the preliminary offering memorandum and the Offering Memorandum, as of its respective date, contains all the information that, if requested by a prospective purchaser, would be required to be provided pursuant to Rule 144A(d)(4) under the Securities Act. Each of the preliminary offering memorandum and the Offering Memorandum, as of its date did not, and the Offering Memorandum as of the Closing Date (as defined below), will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading; provided, however, that the Company makes no representation or warranty as to information contained in or omitted from the preliminary offering memorandum or the Offering Memorandum, as amended or supplemented, in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Initial Purchaser specifically for use therein (the "Initial Purchaser's Information"). The parties acknowledge and agree that the Initial Purchaser's Information consists solely of the statements relating to the Initial Purchaser in the second sentence of the third paragraph, the third sentence of the fourth paragraph and the sixth paragraph in its entirety under the heading "Plan of Distribution" in the Offering Memorandum. (b) It is not required by applicable law or regulation in connection with the issuance and sale of the Notes to the Initial Purchaser and the offer, resale and delivery of the Notes in the manner contemplated by this Agreement and the Offering Memorandum, to register the Notes under the Securities Act or to qualify the Indenture in respect of the Notes under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (c) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which its 3 ownership or lease of property or the conduct of its business requires such qualification, except where the failure to so qualify would not have, singularly or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, business or prospects of the Company (a "Material Adverse Effect"), and has the corporate power and authority necessary to own or hold its respective properties and to conduct the businesses in which it is engaged as described in the Offering Memorandum. The Company has no subsidiaries. (d) On the Closing Date the Company will have an authorized capitalization of 3,000 shares of common stock, of which 1,000 are issued and outstanding, and all of the issued shares of capital stock of the Company will have been duly and validly authorized and issued, will be fully paid and non-assessable. (e) The Company has the corporate right, power and authority to execute and deliver this Agreement, the Indenture, the Registration Rights Agreement and the Notes (collectively, the "Transaction Documents") and to perform its obligations hereunder and thereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby have been duly and validly taken. (f) This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company. (g) The Registration Rights Agreement has been duly authorized by the Company, and when duly executed and delivered by the Company on the Closing Date, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing. (h) The Indenture has been duly authorized by the Company, and when duly executed and delivered by the Company and the Trustee on the Closing Date, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing. At the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. 4 (i) The Notes have been duly authorized by the Company, and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding, and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing. (j) The Transaction Documents and each of the Asset Purchase Agreement, Co-Pack Agreement and Transition Services Agreement (as defined in the Offering Memorandum) conform in all material respects to the description thereof contained in the Offering Memorandum. (k) The execution, delivery and performance of the Transaction Documents by the Company, the issuance, authentication, sale and delivery of the Notes, and compliance with the terms thereof will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor will such actions result in any violation of the provisions of the certificate of incorporation or by-laws of the Company or, assuming the accuracy of the representations and warranties of the Initial Purchaser contained herein, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties or assets; and except for such consents, approvals, authorizations, registrations or qualifications as may be required under the applicable state securities laws in connection with the purchase and resale of the Notes by the Initial Purchaser, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of the Transaction Documents by the Company, the issuance, authentication, sale and delivery of the Notes, and compliance with the terms thereof, and the consummation by the Company of the transactions contemplated thereby. (l) Price Waterhouse LLP are independent public accountants with respect to the Company as required by the Securities Act and the rules and regulations thereunder for financial statements included in a definitive prospectus forming part of a registration statement on Form S-1 under the Securities Act. The historical financial statements (including the related notes and supporting schedules, if any) included in the Offering Memorandum comply in all material respects with the requirements applicable to a Registration Statement on Form S-1 and have been prepared, and fairly present the financial position of the entity purported to be shown thereby at the respective dates indicated and, as 5 applicable, the results of its operations and its cash flows for the respective periods indicated, in accordance with generally accepted accounting principles consistently applied throughout such periods; and the financial information and financial data set forth in the Offering Memorandum under the captions "Summary Pro Forma Financial Data", "Summary Historical Financial Data", "Capitalization", "Selected Historical Financial" and "Pro Forma Financial Information" are derived from the accounting records of the Company and fairly present the data purported to be shown. The pro forma financial statements contained in the Offering Memorandum have been prepared on a basis consistent with such historical financial statements, except for the pro forma adjustments specified therein, and include all material adjustments to the historical financial data required to reflect the transactions described in the Offering Memorandum, and give effect to assumptions made on a reasonable basis and present fairly the historical and proposed transactions contemplated by the Offering Memorandum and this Agreement. (m) There are no pending actions or suits or judicial, arbitral, rule-making or other administrative or other proceedings to which the Company is a party or of which any property or assets of the Company is the subject which, singularly or in the aggregate could reasonably be expected to have a Material Adverse Effect; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (n) No action has been taken and no statute, rule or regulation or order has been enacted, adopted or issued by any governmental agency or body which prevents the issuance of the Notes or suspends the sale of the Notes in any jurisdiction; no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction has been issued with respect to the Company which would prevent or suspend the issuance or sale of the Notes, or the use of the preliminary offering memorandum or the Offering Memorandum in any jurisdiction; no action, suit or proceeding is pending against or, to the best of the Company's knowledge, threatened against or affecting the Company, before any court or arbitrator or any governmental body, agency or official, domestic or foreign, which could reasonably be expected to interfere with or adversely affect the issuance of the Notes or in any manner draw into question the validity thereof or in any manner draw into question the validity of the Transaction Documents or any action taken or to be taken pursuant thereto. (o) The Company (i) is not in violation of its certificate of incorporation or by-laws, (ii) is not in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject and (iii) is not in violation in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject. 6 (p) The Company possesses all material licenses, certificates, authorizations or permits issued by, and has made all declarations and filings with, the appropriate state, federal or foreign regulatory agencies or bodies which are necessary for the ownership of its properties or the conduct of its business as described in the Offering Memorandum, except where the failure to possess or make the same would not have, singularly or in the aggregate, a Material Adverse Effect, and the Company has not received notification of any revocation or modification of any such license, certificate, authorization or permit nor has any reason to believe that any such license, certificate, authorization or permit will not be renewed. (q) The Company is not (i) an "investment company" or a company "controlled by" an investment company within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), and the rules and regulations of the Commission thereunder or (ii) a "holding company" or a "subsidiary company" of a holding company, or an "affiliate" thereof within the meaning of the Public Utility Holding Company Act of 1935, as amended. (r) The Company owns or possesses adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of its business and has no reason to believe that the conduct of its business will conflict with, and has not received any notice of any claim of conflict with, any such rights of others. (s) The Company has good and indefeasible title in fee simple to, or has valid rights to lease or otherwise use, all items of real and personal property which are material to the business of the Company, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Memorandum or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company or such as would not reasonably be expected to have a Material Adverse Effect. (t) No labor disturbance by the employees of the Company exists or, to the best knowledge of the Company, is imminent which might be expected to have a Material Adverse Effect. (u) No "prohibited transaction" (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")) or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with respect to which the 30-day notice requirement 7 under Section 4043 of ERISA has been waived) has occurred with respect to any employee benefit plan of the Company which could have a Material Adverse Effect; each such employee benefit plan is in compliance in all material respects with applicable law, including ERISA and the Code; the Company has not incurred and does not expect to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any "pension plan"; and each "pension plan" (as defined in ERISA) for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which could cause the loss of such qualification. (v) There has been no storage, generation, transportation, handling, treatment, disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances by, due to, or caused by the Company (or, to the best knowledge of the Company, any other entity, including their predecessors, for whose acts or omissions the Company is or may be liable) upon any of the property now or previously owned or leased by the Company, or upon any other property, in violation of any statute or any ordinance, rule, regulation, order, judgment, decree or permit or which would, under any statute or any ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability, except for any violation or liability which would not have, singularly or in the aggregate with all such violations and liabilities, a Material Adverse Effect; there has been no disposal, discharge, emission or other release of any kind onto such property or into the environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which the Company has knowledge, except for any such disposal, discharge, emission, or other release of any kind which would not have, singularly or in the aggregate with all such discharges and other releases, a Material Adverse Effect. (w) Since December 31, 1996 there has not been any change in the capital stock or long-term debt of the Company (other than scheduled redemptions or payments) or any material adverse change, or any development involving a prospective material adverse change, in or affecting the management, financial position, stockholders' equity or results of operations of the Company, otherwise than as set forth or contemplated in the Offering Memorandum. (x) The Company has filed all federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof and has paid all material taxes due thereon, and no tax deficiency has been determined adversely to the Company which has had (nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company, might reasonably be expected to have) a Material Adverse Effect. (y) Except as set forth in or contemplated by the Offering Memorandum, since December 31, 1996, the Company has not (i) issued or granted any securities (other 8 than under plans, agreements and arrangements disclosed in, and in effect on the date of, the Offering Memorandum), (ii) incurred any liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business, (iii) entered into any transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock. (bb) There are no securities of the Company registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or listed on a national securities exchange or quoted in a U.S. automated inter-dealer quotation system. (cc) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation D")) of the Company has directly, or through any agent (provided that no representation is made as to the Initial Purchasers or any person acting on their behalf), (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the offering and sale of the Notes in a manner that would require the registration of the Notes under the Securities Act or (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offering of the Notes. (dd) Neither the Company nor its affiliates has taken, and the Company will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Notes. (ee) None of the proceeds of the sale of the Notes will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Notes to be considered a "purpose credit" within the meanings of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. (ff) On the Closing Date, the Company (after giving effect to the issuance of the Notes) will be Solvent. As used in this paragraph (ff), the term "Solvent" means, with respect to a particular date, that on such date (i) the aggregate fair value (or present fair salable value) of the assets of the Company is not less than its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured in the normal course of business and (ii) the Company does not have an unreasonably small amount of capital with which to conduct its business. In computing the amount of such contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 9 (gg) Neither the Company nor to the best of the Company's knowledge, any director, officer, agent, employee or other person associated with or acting on behalf of the Company, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (hh) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (ii) The Company has and will maintain insurance covering its properties, operations, personnel and businesses, which insurance is in amounts and insures against such losses and risks, in each case as is adequate in its reasonable business judgment to protect the Company and its businesses. The Company has not received notice from any insurer or agent of such insurer that capital improvements or other expenditures will have to be made in order to continue such insurance. (jj) Except as described in "Certain Related Transactions" in the Offering Memorandum, the Company is not a party to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or the Initial Purchaser for a brokerage commission, finder's fee or like payment. (kk) The Notes satisfy the eligibility requirements of Rule 144A(d)(3) under the Securities Act. 2. PURCHASE OF THE NOTES BY THE INITIAL PURCHASER. (a) On the basis of the representations, warranties and agreements herein contained, and subject to the terms and conditions set forth herein, the Company agrees to issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company, $100,000,000 aggregate principal amount of the Notes, at a purchase price equal to 97% of the principal amount thereof by wire transfer of immediately available funds. (b) The Company shall not be obligated to deliver any of the Notes, except upon payment for all of the Notes to be purchased as provided herein. 10 3. SALE AND RESALE OF THE NOTES BY THE INITIAL PURCHASER. (a) The Initial Purchaser has advised the Company that it proposes to offer the Notes for resale upon the terms and conditions set forth in this Agreement and in the Offering Memorandum. The Initial Purchaser hereby represents and warrants to, and agrees with, the Company that it (i) is purchasing the Notes pursuant to a private sale exempt from registration under the Securities Act, (ii) will not solicit offers for, or offer or sell, the Notes by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act, and (iii) will solicit offers for the Notes only from, and will offer, sell or deliver the Notes, as part of its initial offering, only to (A) persons in the United States whom the Initial Purchaser reasonably believes to be qualified institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the Securities Act, as such rule may be amended from time to time ("Rule 144A") or, if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to it that each such account is a Qualified Institutional Buyer to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A and in each case, in transactions under Rule 144A and (B) to a limited number of other accredited investors ("Accredited Investors") as defined in Rule 501(a)(1)(2), (3) or (7) under Regulation D that are institutional investors in private sales exempt from registration under the Securities Act. (b) The Company acknowledges and agrees that the Initial Purchaser may sell Securities to any affiliate of the Initial Purchaser and that any such affiliate may sell Securities purchased by it to the Initial Purchaser. 4. DELIVERY OF AND PAYMENT FOR THE NOTES. (a) Delivery of and payment for the Notes shall be made at the offices of Simpson Thacher & Bartlett, New York, New York, or at such other place as shall be agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., New York City time, on ________ __, 1997 or at such other time or date, not later than seven full business days thereafter, as shall be agreed upon by the Initial Purchaser and the Company (such date and time of payment and delivery being herein called the "Closing Date"). (b) On the Closing Date, payment of the purchase price for the Notes shall be made to the Company by wire transfer of same-day funds to such account or accounts as the Company shall specify prior to the Closing Date or by such other means as the parties hereto shall agree prior to the Closing Date against delivery to the Initial Purchaser of the certificates evidencing the Notes. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of the Initial Purchaser hereunder. Upon delivery, the Notes shall be in global form, registered in such names and in such denominations as the Initial Purchaser shall request in writing not less than two full business days prior to the Closing Date. For the purpose of expediting the checking and packaging of certificates evidencing the Notes, the Company agrees to make 11 such certificates available for inspection by the Initial Purchaser at least 24 hours prior to the Closing Date. 5. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the Initial Purchaser: (a) To furnish to the Initial Purchaser, without charge, as many copies of the Offering Memorandum and any supplements and amendments thereto as it may reasonably request. (b) To advise the Initial Purchaser promptly and, if requested, confirm such advice in writing, of the happening of any event which makes any statement of a material fact made in the Offering Memorandum untrue or which requires the making of any additions to or changes in the Offering Memorandum (as amended or supplemented from time to time) in order to make the statements therein, in light of the circumstances under which they were made, not misleading and not to effect such amendment or supplementation without the consent of the Initial Purchaser; to advise the Initial Purchaser promptly of any order preventing or suspending the use of the preliminary offering memorandum or the Offering Memorandum, or the suspension of the qualification of the Securities for offering or sale in any jurisdiction and of the initiation or threatening of any proceeding for any such purpose; and to use reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of the preliminary offering memorandum or the Offering Memorandum or suspending any such qualification and, if any such suspension is issued, to obtain the lifting thereof at the earliest possible time. (c) Prior to making any amendment or supplement to the Offering Memorandum, the Company shall furnish a copy thereof to the Initial Purchaser and counsel to the Initial Purchaser and will not effect any such amendment or supplement to which the Initial Purchaser shall reasonably object by notice to the Company after a reasonable period to review, which shall not in any case be longer than five business days after receipt of such copy. (d) If, at any time prior to completion of the distribution of the Notes by the Initial Purchaser to other purchasers, any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Initial Purchaser or counsel for the Company, to amend or supplement the Offering Memorandum in order that the Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances existing at the time it is delivered to a purchaser, or if it is necessary to amend or supplement the Offering Memorandum to comply with applicable law, to promptly prepare such amendment or supplement as may be necessary to correct such untrue statement or omission or so that the Offering Memorandum, as so amended or supplemented, will comply 12 with applicable law and to furnish to the Initial Purchaser such number of copies thereof as it may reasonably request. (e) So long as the Notes are outstanding and are "Restricted Securities" within the meaning of Rule 144(a)(3) under the Securities Act, to furnish to holders of the Notes and prospective purchasers of Notes designated by such holders, upon request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to and in compliance with Section 13 or 15(d) of the Exchange Act. (f) For a period of five years following the Closing Date, to furnish to the Initial Purchaser copies of any annual reports, quarterly reports and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission, and such other documents, reports and information as shall be furnished by the Company to the Trustee or to the holders of the Notes pursuant to the Indenture or the Exchange Act or any rule or regulation of the Commission thereunder. (g) To use its reasonable best efforts to qualify the Notes for sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchaser may reasonably designate and to continue such qualifications in effect so long as required for the distribution of the Notes. The Company will also arrange for the determination of the eligibility for investment of the Notes under the laws of such jurisdictions as the Initial Purchaser may reasonably request. Notwithstanding the foregoing, the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which they are not so qualified or to file a general consent to service of process in any jurisdiction. (h) To use its reasonable best efforts to permit the Notes to be designated Private Offerings, Resales and Trading through Automated Linkages Market ("PORTAL") securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market and to permit the Notes to be eligible for clearance and settlement through the Depository Trust Company (the "DTC"). (i) Not to, and will cause its affiliates (as such term is defined in Rule 501(B) under the Securities Act) not to, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect (except as contemplated in the Offering Memorandum or hereby) of any security (as defined in the Securities Act) which could be integrated with the sale of the Notes in a manner which would require the registration of the Notes under the Securities Act. (j) Except following the effectiveness of the Exchange Offer or the Shelf Registration Statement, as the case may be, not to, and will cause its affiliates (as such term is defined in Rule 501(B) under the Securities Act) not to, and will not authorize or 13 knowingly permit any person acting on their behalf to, solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. (k) To apply the net proceeds from the sale of the Notes as set forth in the Offering Memorandum. (l) For a period of 90 days from the date of the Offering Memorandum, not to offer for sale, sell, contract to sell or otherwise dispose of, directly or indirectly, or file a registration statement for, or announce any offer, sale, contract for sale of or other disposition of any debt securities issued or guaranteed by the Company or any of its subsidiaries (other than the Notes) without the prior written consent of the Initial Purchaser. (m) In connection with the offering, until the Initial Purchaser shall have notified the Company of the completion of the resale of the Notes, neither the Company nor any of its affiliated purchasers (as defined in Rule 10b-6 under the Exchange Act), either alone or with one or more other persons, will bid for or purchase, for any account in which it or any of its affiliated purchasers has a beneficial interest, any Notes, or attempt to induce any person to purchase any Notes; and neither it nor any of its affiliated purchasers will make bids or purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Notes. 6. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of the Initial Purchaser hereunder are subject to the accuracy, on the date hereof and on the Closing Date, of the representations and warranties of the Company contained herein, to the accuracy of the statements of the Company made in any certificates delivered pursuant to provisions hereof, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions: (a) The Initial Purchaser shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Offering Memorandum or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of Simpson Thacher & Bartlett, counsel for the Initial Purchaser, is material or omits to state a fact which, in the opinion of such counsel is material and is required to be stated therein or is necessary to make the statements therein not misleading; and no stop order suspending the sale of the Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (b) All corporate proceedings and other legal matters incident to the authorization, form and validity of each of the Transaction Documents, the Notes and the Offering Memorandum, and all other legal matters relating to the Transaction Documents and the transactions contemplated thereby shall be reasonably satisfactory in all material respects 14 to counsel for the Initial Purchaser, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (c) White & Case shall have furnished to the Initial Purchaser their written opinion, as counsel to the Company, addressed to the Initial Purchaser and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser, substantially to the effect set forth in Exhibit B hereto. (d) The Initial Purchaser shall have received from Simpson Thacher & Bartlett, counsel for the Initial Purchaser, such opinion or opinions, dated the Closing Date, with respect to such matters as the Initial Purchaser may reasonably require, and the Company shall have furnished to such counsel such documents and information as they reasonably request for the purpose of enabling them to pass upon such matters. (e) With respect to the letters of Price Waterhouse LLP delivered to the Initial Purchaser concurrently with the execution of this Agreement (the "Initial Letters"), the Company shall have furnished to the Initial Purchaser letters (the "Bring-Down Letters") addressed to the Initial Purchaser and dated the Closing Date (i) confirming that they are independent public accountants within the meaning of Rule 101 of the American Institute of Certified Public Accountants' Code of Professional Conduct and its rulings and interpretations; (ii) stating, as of the date of the Bring-Down Letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a date not more than five days prior to the date of such Bring-Down Letters), that the conclusions and findings of the firm with respect to the financial information and other matters covered by the initial letter are accurate and (iii) confirming in all material respects the conclusions and findings set forth in their initial letters. (f) The Company shall have furnished to the Initial Purchaser a certificate, dated the Closing Date, of its President or any Vice President and its chief financial officer stating that (A) such officers have carefully examined the Offering Memorandum, (B) in their opinion, as of the date hereof the Offering Memorandum did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and since the date hereof, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum and (C) to the best of their knowledge after reasonable investigation, as of the Closing Date, the representations and warranties of the Company in this Agreement are true and correct, the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and subsequent to the date of the most recent financial statements in the Offering Memorandum, there has been no material adverse change in the financial position or results of operations of the Company, or any change, or any development including a prospective 15 change, in or affecting the condition (financial or otherwise), results of operations, business or prospects of the Company, except as set forth in the Offering Memorandum. (g) The Initial Purchaser shall have received on the date hereof the Registration Rights Agreement executed and delivered by duly authorized officers of the Company. (h) The Notes shall have been approved by the NASD for trading in the PORTAL Market. (i) The Indenture shall have been duly executed and delivered by the Company and the Trustee and the Notes shall have been duly executed and delivered by the Company and duly authenticated by the Trustee. (j) If any event shall have occurred that requires the Company under Section 5(c) hereof to prepare an amendment or supplement to the Offering Memorandum, such amendment or supplement shall have been prepared, the Initial Purchaser shall have been given a reasonable opportunity to comment thereon, and copies thereof shall have been delivered to the Initial Purchaser reasonably in advance of the Closing Date. (k) There shall not have occurred any invalidation of Rule 144A under the Securities Act by any court or any withdrawal or proposed withdrawal of any rule or regulation under the Securities Act or the Exchange Act by the Commission or any amendment or proposed amendment thereof by the Commission which in the reasonable judgment of the Initial Purchaser would materially impair the ability of the Initial Purchaser to purchase, hold or effect resales of the Notes as contemplated hereby. (l) At the Closing Date, there shall exist no default or event of default under the Indenture or the Senior Credit Facilities (as defined in the Offering Memorandum). (m) Since December 31, 1996, except for the transactions contemplated by the Offering Memorandum, there shall not have been any change in the capital stock or long-term debt of the Company or any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), results of operations, business or prospects of the Company, the effect of which, in any such case described above, is, in the reasonable judgment of the Initial Purchaser, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Notes on the terms and in the manner contemplated in the Offering Memorandum (exclusive of any supplement). (n) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Notes by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) of the rules and regulations of the Commission under the 16 Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review (other than an announcement with positive implications of a positive upgrading) its rating of the Notes. (o) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the over-the-counter market shall have been suspended or limited, or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, or trading in any securities of the Company on any exchange or in the over-the-counter market shall have been suspended or, (ii) a general moratorium on commercial banking activities shall have been declared by Federal or New York State authorities, or (iii) an outbreak or escalation of hostilities or a declaration by the United States of a national emergency or war, or (iv) a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) the effect of which, in the case of this clause (iv), is, in the reasonable judgment of the Initial Purchaser, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Notes on the terms and in the manner contemplated by this Agreement and the Offering Memorandum (exclusive of any supplement). (p) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency which would, as of the Closing Date, prevent the issuance or sale of the Notes; and no injunction, restraining order or order of any other nature by a federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of the Notes. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchaser. 7. TERMINATION. The obligations of the Initial Purchaser hereunder may be terminated by the Initial Purchaser, in its absolute discretion, by notice given to and received by the Company prior to delivery of and payment for the Notes if, prior to that time, any of the events described in Sections 6(k), (m), (n), (o) or (p) shall have occurred and be continuing. 8. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) this Agreement shall have been terminated pursuant to Section 7, (b) the Company shall fail to tender the Notes for delivery to the Initial Purchaser for any reason permitted under this Agreement or (c) the Initial Purchaser shall decline to purchase the Notes for any reason permitted under this Agreement, the Company shall reimburse the Initial Purchaser for the 17 reasonable fees and expenses of its counsel and for such other reasonable out-of-pocket expenses as shall have been reasonably incurred by the Initial Purchaser in connection with this Agreement and the proposed purchase of the Notes. 9. INDEMNIFICATION. (a) The Company shall indemnify and hold harmless the Initial Purchaser, its affiliates, and its officers, directors, employees, representatives and agents, and each person, if any, who controls the Initial Purchaser within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9 and Section 10 as the Initial Purchaser) from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Notes), to which that Initial Purchaser may become subject, under the Securities Act, the Exchange Act or any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any preliminary offering memorandum or the Offering Memorandum or in any amendment or supplement thereto or any information provided by the Company pursuant to Section 5(e) hereof or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse the Initial Purchaser promptly upon demand for any legal or other expenses reasonably incurred by the Initial Purchaser in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Initial Purchaser's Information; and provided further that with respect to any such untrue statement or omission made in the preliminary offering memorandum, the indemnity agreement contained in this Section 9(a) shall not inure to the benefit of the Initial Purchaser, to the extent that the sale to the person asserting any such loss, claim, damage, liability or action was an initial resale by the Initial Purchaser and any such loss, claim, damage, liability or action is a result of the fact that both (i) to the extent required by applicable law, a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the sale of such Notes to such person, and (ii) the untrue statement or omission in the preliminary offering memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of non-compliance by the Company with Section 5(c). (b) The Initial Purchaser shall indemnify and hold harmless the Company, its affiliates, and its officers, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9 and Section 10 as the Company), 18 from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, under the Securities Act, the Exchange Act or any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any preliminary offering memorandum or the Offering Memorandum or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with the Initial Purchaser's Information, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 9 except to the extent that such indemnifying party has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, it shall notify the indemnifying party thereof, and the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that each indemnified party shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice 19 of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. The obligations of the Company and the Initial Purchaser in this Section 9 and in Section 10 are in addition to any other liability which the Company or the Initial Purchaser, as the case may be, may otherwise have. 10. CONTRIBUTION. If the indemnification provided for in Section 9 is unavailable or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchaser on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Initial Purchaser on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchaser on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under this Agreement (before deducting expenses) received by the Company, on the one hand, and the total discounts and commissions received by the Initial Purchaser with respect to the Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the Notes under this Agreement, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Initial Purchaser's Information on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue 20 statement or omission. The Company and the Initial Purchaser agree that it would not be just and equitable if contributions pursuant to this Section 10 were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 10 shall be deemed to include, for purposes of this Section 10, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 10, Initial Purchaser shall not be required to contribute any amount in excess of the amount by which the total price at which the Notes sold and distributed by it was offered to purchasers exceeds the amount of any damages which the Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Initial Purchaser, the Company and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as provided in Sections 9 and 10 with respect to affiliates, officers, directors, employees, representatives, agents and controlling persons of the Company and the Initial Purchaser and in Section 5(f) with respect to holders and prospective purchasers of the Notes. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 11, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 12. EXPENSES. The Company agrees with the Initial Purchaser to pay (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Notes and any taxes payable in that connection, (b) the costs incident to the preparation and printing of the preliminary offering memorandum and the Offering Memorandum and any amendments or supplements thereto, (c) the costs of distributing the preliminary offering memorandum and the Offering Memorandum and any amendments or supplements thereto, (d) the costs of printing, reproducing and distributing the Transaction Documents, (e) the costs incident to the preparation, printing and delivery of the certificates representing the Notes, including stamp duties and stock transfer taxes, if any, payable upon issuance of any of the Notes, (f) the fees and disbursements of the Company's counsel and accountants, (g) the fees and disbursements of accountants for the Company and the Predecessor (as defined in the Offering Memorandum), (h) any fees charged by rating agencies for rating the Notes, (i) the fees and expenses of qualifying the Notes under securities laws of the several jurisdictions as provided in Section 5(g) and of preparing, printing and distributing a Blue Sky memorandum (including related reasonable fees and expenses of Simpson Thacher & Bartlett, counsel to the Initial Purchaser), (j) the fees and expenses of the Trustee and any paying agent, 21 (including related fees and expenses of any counsel for such parties), (k) all expenses and listing fees incurred in connection with the application for quotation of the Notes on the PORTAL Market and the approval of the Notes for book-entry transfer by The Depository Trust Company, and (l) all other reasonable costs and expenses incident to the performance of the Company's obligations hereunder which are not otherwise specifically provided for in this Section; provided, however, that except as provided in this Section 12 and Section 8, the Initial Purchaser shall pay its own costs and expenses, including the costs and expenses of its counsel. 13. SURVIVAL. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Initial Purchaser contained in this Agreement or made by or on behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any of them or any person controlling any of them. 14. NOTICES. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Initial Purchaser, shall be delivered or sent by mail or facsimile transmission to Chase Securities Inc., 270 Park Avenue, New York, New York 10017, Attention: James C. Neary (Fax: 212-270-0994); or (b) if to the Company, shall be delivered or sent by mail or facsimile transmission to the address of the Company: 445 Hutchison Avenue, Columbus, Ohio 43235, Attn: Thomas Ferraro, with a copy to Frank Schiff, Esq., White & Case, 1155 Avenue of the Americas, New York, New York 10036. provided, however, that any notice to the Initial Purchaser pursuant to Section 9(c) shall be delivered or sent by mail to the Initial Purchaser at 270 Park Avenue, 39th Floor, New York, New York 10017, Attention: Legal Department. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. 15. DEFINITION OF TERMS. For purposes of this Agreement, "business day" means any day on which the New York Stock Exchange, Inc. is open for trading. 16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. 22 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 18. AMENDMENTS. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 19. HEADINGS. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument will become a binding agreement among the Company and the Initial Purchaser in accordance with its terms. Very truly yours, MBW FOODS INC. By: /s/ James B. Ardrey ------------------------------------- Title: Executive Vice President Accepted: CHASE SECURITIES INC. By: /s/ Joseph C. Purcell -------------------------- Authorized Signatory EXHIBIT A FORM OF REGISTRATION RIGHTS AGREEMENT ________ __, 1997 CHASE SECURITIES INC. 270 Park Avenue New York, New York 10017 Dear Sirs: MBW Foods Inc., a Delaware corporation (the "Company"), proposes to issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a purchase agreement dated ________ __, 1997 (the "Purchase Agreement"), $100,000,000 principal amount of its 9 7/8% Senior Subordinated Securities due 2007 (the "Securities") which Securities shall be unsecured and will be subordinated to all existing and future Senior Indebtedness of the Company and will be effectively subordinated to all obligations of each subsidiary of the Company as may exist from time to time. Capitalized terms used but not specifically defined herein have the respective meanings ascribed thereto in the Purchase Agreement. As an inducement to the Initial Purchaser to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Company agrees with you, for the benefit of the holders of the Securities (including the Initial Purchaser) (the "Holders"), as follows: 1. Registered Exchange Offer. The Company shall prepare and, not later than 60 days following the Issue Date (as hereinafter defined), shall file with the Commission a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer (the "Registered Exchange Offer") to the Holders to issue and deliver to such Holders, in exchange for the Securities, a like aggregate principal amount of debt securities of the Company (the "Exchange Securities") identical in all material respects to the Securities, except for the transfer restrictions relating to the Securities, shall use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 150 days after the Issue Date and to be consummated no later than 180 days after the Issue Date, and shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). The Exchange Securities will be issued under the Indenture or an indenture (the "Exchange Securities Indenture") between the Company and the Trustee or such other bank or trust company reasonably satisfactory to you, as trustee (the "Exchange Securities 2 Trustee"), such indenture to be identical in all material respects to the Indenture except for the transfer restrictions relating to the Securities (as described above). Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not (i) an affiliate of the Company within the meaning of the Securities Act or (ii) an Exchanging Dealer (as defined below) not complying with the requirements of the next sentence, (b) acquires the Exchange Securities in the ordinary course of such Holder's business and (c) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company, the Initial Purchaser and each Exchanging Dealer (as defined below) acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, (i) each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if the Initial Purchaser elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment it is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such a sale. In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange offer open for not less than 30 days after the date notice of the Exchange Offer is mailed to the Holders (or longer if required by applicable law); (c) utilize the services of a Depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; 3 (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all respects with all laws applicable to the Registered Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer, the Company shall: (a) accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (b) deliver to the Trustee for cancellation all Securities so accepted for exchange; and (c) cause the Trustee or the Exchange Securities Trustee, as the case may be, promptly to authenticate and deliver to each Holder of Securities, Exchange Securities equal in principal amount to the Securities of such Holder so accepted for exchange. The Company shall make available for a period of 90 days after the consummation of the Registered Exchange Offer, a copy of the prospectus forming part of the Exchange Offer Registration Statement to any broker-dealer for use in connection with any resale of any Exchange Securities. Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the date of original issue of the Securities. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act and (iii) such Holder is not an affiliate of the Company within the meaning of the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus 4 forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include, as of the consummation of the Registered Exchange Offer, an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Shelf Registration. If (i) applicable interpretations of the staff of the Commission do not permit the Company to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) for any other reason the Registered Exchange Offer is not consummated within 165 days after the Issue Date or (iii) any Holder either (A) is not eligible to participate in the Registered Exchange Offer or (B) participates in the Registered Exchange Offer and does not receive freely transferrable Exchange Securities in exchange for tendered Securities the following provisions shall apply: (a) The Company shall use all reasonable efforts to as promptly as practicable file with the Commission and thereafter shall use its reasonable best efforts to cause to be declared effective a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a "Shelf Registration Statement" and, together with any Exchange Offer Registration Statement, a "Registration Statement"); provided, however, that no Holder of Securities or Exchange Securities (other than the Initial Purchaser) shall be entitled to have Securities or Exchange Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be usable by Holders for a period of three years from the Issue Date or such shorter period that will terminate when all the Securities and Exchange Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities or Exchange Securities covered thereby not being able to offer and sell such Securities or Exchange Securities during that period, unless such action is required by applicable law; provided, however, that the foregoing shall not apply to actions taken by the Company in good faith and for valid business reasons (not including avoidance of its obligations hereunder), including, without limitation, the acquisition or divestiture of 5 assets, so long as the Company within 120 days thereafter complies with the requirements of Section 4(i) hereof. Any such period during which the Company fails to keep the registration statement effective and usable for offers and sales of Securities and Exchange Securities is referred to as a "Suspension Period." A Suspension Period shall commence on and include the date that the Company gives notice that the Shelf Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Securities and Exchange Securities and shall end on the date when each Holder of Securities and Exchange Securities covered by such registration statement either receives the copies of the supplemented or amended prospectus contemplated by Section 4(i) hereof or is advised in writing by the Company that use of the prospectus may be resumed. If one or more Suspension Periods occur, the three-year time period referenced above shall be extended by the number of days included in each such Suspension Period. (c) Notwithstanding any other provisions hereof, the Company will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein (the "Holders' Information")) does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Liquidated Damages. (a) The parties hereto agree that the Holders of Securities will suffer damages if the Company fails to fulfill its obligations under Section 1 or Section 2, as applicable, and that it would not be feasible to ascertain the extent of such damages. Accordingly, if (i) the applicable Registration Statement is not filed with the commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's Staff, if later, within 45 days after publication of the change in law or interpretation), (iii) the Registered Exchange Offer is not consummated on or prior to 180 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's Staff, if later, within 45 days after publication of the change in law or interpretation) but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness 6 thereof) without being succeeded within 60 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company will generally be obligated to pay liquidated damages to each holder of Transfer Restricted Securities (as defined below), during the period of such Registration Default, in an amount equal to $0.192 per week per $1,000 principal amount of the Securities constituting Transfer Restricted Securities held by such holder until the applicable Registration Statement is filed or declared effective, the Registered Exchange Offer is consummated or the Shelf Registration Statement again becomes effective, as the case may be; provided, however, no liquidated damages shall be payable for a Registration Default under clause (iii) above if a Shelf Registration Statement covering the securities for which the Exchange Offer was intended shall have been declared effective. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. "Transfer Restricted Securities" means each Security or Exchange Security until (i) the date on which such Security or Exchange Security has been exchanged for a freely transferrable Exchange Security in the Registered Exchange Offer, (ii) the date on which such Security or Exchange Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) the date on which such Security or Exchange Security is distributed to the public pursuant to Rule 144 under the Securities Act or is salable pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary in this Section 3(a), the Company shall not be required to pay liquidated damages to the holder of Transfer Restricted Securities if such holder: (a) failed to comply with its obligations to make the representations in the second to last paragraph of Section 1; or (b) failed to provide the information required to be provided by it, if any, pursuant to Section 4(m). (b) The Company shall notify the Trustee and the Paying Agent under the Indenture immediately upon the happening of each and every Registration Default. The Company shall pay the liquidated damages due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the liquidated damages then due. The liquidated damages due shall be payable on each interest payment date specified by the Indenture to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay liquidated damages shall be deemed to accrue from and including the applicable Registration Default. (c) The parties hereto agree that the liquidated damages provided for in this Section 3 constitute a reasonable estimate of and are intended to constitute the sole damages that will be suffered by holders of Transfer Restricted Securities by reason of the failure of the Shelf Registration Statement or the Exchange Offer Registration Statement, as the case may be, to be filed, to be declared effective or to remain effective, or the Exchange Offer to be consummated, as the case may be, to the extent required by this Agreement. 7 4. Registration Procedures. In connection with any Registration Statement, the following provisions shall apply: (a) The Company shall (i) furnish to you, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that the Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration, shall use reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as you reasonably may propose; (ii) if applicable, include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by the Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement. (b) The Company shall advise you and, if requested by the Holders, but only as to events set forth in clauses (i) and (ii) below, the Holders and, if requested by you, confirm such advice in writing (which advice pursuant to clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities or the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iv) of the happening of any event that requires the making of any changes in any Registration Statement or the prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 8 (c) The Company will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those incorporated by reference). (d) The Company will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offering and sale of the Transfer Restricted Securities covered by the prospectus or any amendment or supplement thereto. (e) The Company will furnish to each Exchanging Dealer or the Initial Purchaser, as applicable, which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing, all exhibits (including those incorporated by reference). (f) The Company will, during the Exchange Offer Registration Period, promptly deliver to each Exchanging Dealer or the Initial Purchaser, as applicable, without charge, as many copies of the prospectus included within the coverage of Exchange Offer Registration Statement and any amendment or supplement thereto as such Exchanging Dealer or the Initial Purchaser, as applicable, may reasonably request for delivery by (i) such Exchanging Dealer in connection with a sale of Exchange Securities received by it pursuant to the Registered Exchange Offer or (ii) the Initial Purchaser in connection with a sale of Exchange Securities received by it in exchange for Securities constituting any portion of an unsold allotment; and the Company consents to the use of the prospectus or any amendment or supplement thereto by any such Exchanging Dealer or the Initial Purchaser, as applicable, as aforesaid. (g) Prior to any public offering of Securities or Exchange Securities pursuant to any Registration Statement, the Company will use its reasonable best efforts to register or qualify or cooperate with the Holders of Securities included therein and its counsel in connection with the registration or qualification of such securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by such Registration Statement; provided, however, that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take 9 any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (h) The Company will cooperate with the Holders of Securities or Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities or Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request in writing prior to sales of Securities or Exchange Securities pursuant to such Registration Statement. (i) If (i) any event contemplated by paragraphs (b)(ii) through (iv) above occurs during the period in which the Company is required to maintain an effective Registration Statement or (ii) any Suspension Period remains in effect more than 120 days after the occurrence thereof, the Company will promptly prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities or purchasers of Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities or Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities or Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (k) The Company will use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and will make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act; provided that in no event shall such earnings statement be delivered later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the applicable Registration Statement, which statements shall cover such 12-month period. (l) The Company will cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act as required by applicable law in a timely manner. (m) The Company may require each Holder of Transfer Restricted Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Transfer Restricted 10 Securities as the Company may from time to time reasonably require for inclusion in such Registration Statement, and the Company may exclude from such registration the Transfer Restricted Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (n) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 4(i) hereof, or until advised in writing (the "Advice") by the Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 4(b)(ii) through (iv) during the period that the Company is required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(i) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required). 5. Registration Expenses. The Company will bear all expenses incurred in connection with the performance of its obligations under Sections 1, 2, 3 and 4 hereof and the Company will reimburse the Initial Purchaser and the Holders for the reasonable fees and disbursements of one firm of attorneys chosen by the Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities to be sold pursuant to each Registration Statement (the "Special Counsel") acting for the Initial Purchaser or Holders in connection therewith. 6. Indemnification. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser, as applicable, the Company shall indemnify and hold harmless each Holder, its directors, officers, agents and employees and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the directors, officers, agents and employees of such controlling persons against any and all loss, liability, claim and damage, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplements thereto or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and shall reimburse each Holder promptly upon demand for any and all expense (including, subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by the indemnified party), reasonably incurred as 11 such expenses are incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental or regulatory agency or body, commenced or threatened, or any claim based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided, however, that (i) this indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with Holders' Information and (ii) this indemnity with respect to any untrue statement or alleged untrue statement or omission or alleged omission in any related preliminary prospectus shall not enure to the benefit of any indemnified party from whom the person asserting any such loss, claim, damage or liability received Securities or Exchange Securities if such persons did not receive a copy of the final prospectus at or prior to the confirmation of the sale of such Securities or Exchange Securities to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of material fact contained in the related preliminary prospectus was corrected in the final prospectus unless such failure to deliver the final prospectus was a result of noncompliance by the Company with Sections 4(c), 4(d), 4(e) or 4(f). (b) In the event of a Shelf Registration Statement, each Holder agrees to indemnify and hold harmless the Company, its directors, officers, agents and employees and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the directors, officers, agents and employees of such controlling persons against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 6(a) hereof, as incurred, arising out of or based upon any untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment or supplement thereto) in reliance on and in conformity with Holders' Information furnished to the Company by such Holder; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities or Exchange Securities pursuant to the Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any claim or action commenced against it in respect of which indemnity may be sought hereunder; provided, however, that failure to so notify an indemnifying party shall not relieve such indemnifying party from any obligation that it may have pursuant to this Section except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; provided further, however, that the failure to notify an indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than on account of this indemnity agreement. If any such claim or action shall be brought against an indemnified party, the indemnified party shall notify the indemnifying party thereof, and the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the 12 indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that an indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on the written advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on the written advice of counsel to the indemnified party) between the indemnified party and indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel for the indemnified party will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent, but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If a claim by an indemnified party for indemnification under this Section 6 is unenforceable even though the express provisions hereof provide for indemnification in such case, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions, statements or omissions that resulted in such losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including 13 any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any losses shall be deemed to include, subject to the limitations set forth in Section 6(c) herein, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section, an indemnifying party that is a holder of Transfer Restricted Securities or Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Transfer Restricted Securities or Exchange Securities sold by such indemnifying party and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to any contribution from any person who was not guilty of such fraudulent misrepresentation. 7. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities, taken as a single class. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holders of Securities or Exchange Securities whose Securities or Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities or Exchange Securities being sold by such Holders pursuant to such Registration Statement. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 7(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Chase Securities Inc.; 14 (2) if to you, initially at your address set forth in the Purchase Agreement; and (3) if to the Company, initially at the address of the Company set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if telecopied. (c) Successors And Assigns. This Agreement shall be binding upon the Company and its successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopies) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. (g) No Inconsistent Agreements. The Company has not and shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the holders of Transfer Restricted Securities in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person. Without limiting the generality of the foregoing, without the written consent of the holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities, the Company shall not grant to any person the right to request the Company to register any debt securities of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of the Agreement. 15 (h) No Piggyback on Registrations. Neither the Company, nor any of its security holders (other than the holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities. (i) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (j) Remedies. In the event of a breach by the Company, or by any holder of Transfer Restricted Securities, of any of their obligations under this Agreement, each holder of Transfer Restricted Securities or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages (other than the recovery of damages for a breach by the Company of its obligations under Sections 1 or 2 hereof for which liquidated damages have been paid pursuant to Section 3 hereof), will be entitled to specific performance of its rights under this Agreement. The Company and each holder of Transfer Restricted Securities agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. Please confirm that the foregoing correctly sets forth the agreement among the Company and you. Very truly yours, MBW FOODS INC. By: _______________________________ Name: Title: 16 Accepted in New York, New York CHASE SECURITIES INC. By: ___________________________ Name: Title: 17 ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until _______________, 199_, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.* The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. - ---------- * In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus. ANNEX D |_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: _______________________________________ Address: ____________________________________ ____________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EXHIBIT B FORM OF OPINION OF WHITE & CASE White & Case shall furnish to the Initial Purchaser their written opinion, as counsel to the Company, addressed to the Initial Purchaser and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser, to the effect that: 1. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, and has all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged as described in the Offering Memorandum. The Company has no subsidiaries. 2. The Company's authorized capitalization is 3,000 shares of common stock, of which 1,000 are issued and outstanding, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. 3. The statements in the Offering Memorandum under the caption "Certain United States Federal Income Tax Considerations", insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects. 4. The Company has the corporate right, power and authority to execute and deliver the Transaction Documents and to perform its obligations thereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby have been duly and validly taken. 5. Each of the Purchase Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Company, and each constitutes a valid and legally binding agreement, enforceable in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 6. The Indenture has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery 2 thereof by the Trustee, constitutes a valid and legally binding agreement of the Company enforceable in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 7. The Notes have been duly authorized, executed and issued by the Company and, assuming due authentication thereof by the Trustee and upon payment and delivery in accordance with the Purchase Agreement, will constitute valid and legally binding obligations of the Company enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). The statements made in the Offering Memorandum under the caption "Description of Notes" and "Exchange and Registration Rights Agreement," insofar as they purport to constitute summaries of certain terms of the Indenture, the Notes and the Registration Rights Agreement, constitute accurate summaries of the terms of such documents in all material respects. 8. The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument known to us to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties or assets except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances as would not have a Material Adverse Effect; and to our knowledge no consent, approval, authorization or order of, or filing or registration with, any such court or arbitrator or governmental agency or body under any such statute, judgment, order, decree, rule or regulation is required for the execution, delivery and performance by the Company of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for 3 such consents, approvals, authorizations, filings, registrations or qualifications (i) which have been obtained or made prior to the Closing Date and (ii) as may be required to be obtained or made under the Securities Act and applicable state securities laws as provided in the Registration Rights Agreement. 9. Neither the consummation of the transactions contemplated by this Agreement nor the sale, issuance, execution or delivery of the Notes will violate Regulation G, T, U or X of the Federal Reserve Board. 10. To the knowledge of such counsel, there are no pending actions or suits or judicial, arbitral, rule-making, administrative or other proceedings to which the Company is a party or of which any property or assets of the Company is the subject which questions the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and to the knowledge of such counsel, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. 11. The Company is not an "investment company" or a company "controlled" by an investment company within the meaning of the Investment Company Act. 12. Assuming (i) the accuracy of the representations, warranties and agreements of the Company and of the Initial Purchaser contained in the Purchase Agreement, (ii) that the persons who buy the Notes in the initial resale thereof are Qualified Institutional Buyers or institutional Accredited Investors, and (iii) the accuracy of the representations and warranties made by each institutional Accredited Investor as set forth in the letters of representation executed by such institutional Accredited Investors in the form of Annex A to the Offering Memorandum, the issuance and sale of the Notes and the offer, resale and delivery of the Notes in the manner contemplated in the Offering Memorandum and the Purchase Agreement, are exempt from the registration requirements of the Securities Act and it is not necessary to qualify the Indenture under the Trust Indenture Act. Such counsel shall state that they have participated in conferences with representatives of the Company and with representatives of its independent accountants, at which conferences the contents of the Offering Memorandum, any amendment thereof and supplement thereto and related matters were discussed, and, although such counsel assume no responsibility for the factual accuracy or completeness of the Offering Memorandum, any amendment thereof or supplement thereto (except as expressly provided above), such counsel believes that the Offering Memorandum or any amendment thereof or supplement thereto (other than the financial statements and other financial and statistical information contained therein, as to which such counsel need express no belief) contains any untrue statement of a 4 material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and public officials which are furnished to the Initial Purchaser. EX-2.1 3 ASSET PURCH. AGMT. 12/18/96 Exhibit 2.1 ASSET PURCHASE AGREEMENT dated as of December 18, 1996 between CONOPCO, INC., as Seller and MBW AQCUISITION CORP., as Buyer Table of Contents Page ---- Index to Defined Terms........................................... v Parties; Recitals................................................ 1 ARTICLE I Transfer of Assets, Assumption of Liabilities and Purchase Price 1 1.1 Transfer of Property and Assets......... 1 1.2 Excluded Assets......................... 4 1.3 Consents to Certain Assignments......... 6 1.4 Assumption of Liabilities............... 6 1.5 Purchase Price and Payment.............. 8 1.6 Transfer Taxes.......................... 8 ARTICLE II Closing and Post-Closing Purchase Price Adjustment.................................... 8 2.1 Closing................................. 8 2.2 Deliveries by Seller.................... 9 2.3 Deliveries by Buyer..................... 10 2.4 Relocation.............................. 11 2.5 Post-Closing Purchase Price Adjustment............................ 11 2.6 Allocation of Purchase Price................................. 13 ARTICLE III Representations and Warranties of Seller........................................ 14 3.1 Organization............................ 14 3.2 Authorization........................... 14 3.3 No Conflicts or Violations; No Consents or Approvals Required............................. 14 3.4 Financial Statements.................... 15 3.5 Title to Transferred Assets............. 16 3.6 Contracts............................... 16 3.7 Conduct of Business Since Statement Date........................ 17 3.8 Compliance with Law and Permits............................... 18 3.9 Litigation.............................. 18 3.10 Intellectual Property................... 18 3.11 Taxes .................................. 19 -1- Page ---- 3.12 Entire Business ........................ 19 3.13 Brokers and Finders .................... 20 3.14 Equipment............................... 20 3.15 Inventory............................... 20 ARTICLE IV Representations and Warranties of Buyer.......... 20 4.1 Organization............................ 20 4.2 Authorization........................... 20 4.3 No Violations; No Consents or Approvals Required.................... 21 4.4 Brokers and Finders..................... 21 4.5 Financing............................... 21 ARTICLE V Covenants Pending the Closing.................... 22 5.1 Conduct of the Business................. 22 5.2 Access.................................. 22 5.3 Best Efforts............................ 23 5.4 Other Agreements........................ 23 5.5 No Shop................................. 23 5.6 Tax Certification....................... 24 5.7 Audited Financials...................... 5.8 Additional Financial 24 Statements.............................. 5.9 Price Waterhouse Re-Audit and 24 Audit and Other Financial Information............................. 24 ARTICLE VI Conditions to Closing............................ 25 6.1 Conditions to Buyer's Obligation to Close................... 25 6.2 Conditions to Seller's Obligation to Close................... 27 ARTICLE VII Termination...................................... 28 7.1 Termination............................. 28 7.2 Effect of Termination................... 29 -2- Page ---- ARTICLE VIII Indemnification.................................. 29 8.1 Obligation of Parties to Indemnify............................. 29 8.2 Indemnification Procedure for Third Party Claims.................... 30 8.3 Limitations on Indemnification....................... 31 8.4 Tax Considerations...................... 32 ARTICLE IX Additional Agreements............................ 32 9.1 Covenant Not to Compete................. 32 9.2 Certain Services and Benefits Provided by Affiliates................ 32 9.3 Seller's Access to Information.......... 33 9.4 Public Announcements.................... 33 9.5 Termination of Insurance................ 33 9.6 Confidentiality......................... 34 9.7 Further Assurances...................... 34 ARTICLE X Miscellaneous.................................... 34 10.1 Expenses................................ 34 10.2 Notices................................. 34 10.3 Entire Agreement; No Third Party Beneficiaries; Amendment; Waiver................................ 35 10.4 Severability............................ 36 10.5 Assignment.............................. 36 10.6 Affiliates.............................. 36 10.7 Governing Law........................... 37 10.8 Jurisdiction............................ 37 10.9 Services of Process..................... 37 10.10 Captions................................ 37 10.11 Defined Terms........................... 37 10.12 Counterparts............................ 38 10.13 Bulk Sales Law.......................... 38 Signatures....................................................... 38 -3- EXHIBITS A Shared Technology License Agreement B Patent License Agreement C Transition Services Agreement D Co-Pack Agreement E Flavor Supply Agreement F Flavor Escrow Agreement G Legal opinion of Cravath, Swaine & Moore H License Agreement I Legal opinion of Richards & O'Neil, LLP SCHEDULES 1.1(i)(A) Olathe, Kansas Equipment 1.1(i)(B) Bonner Springs, Kansas Equipment 1.2(iii) Excluded Business 1.2(viii) Certain Excluded Assets 1.3 Material Contracts and Material Permits 1.4 Advertising Commitments, Coupons and Promotions 2.5.1 Closing Date Inventory Statement 3.3 Required Consents 3.4(A) Financial Statements 3.4(B) Accounting Principles 3.5 Liens 3.6(A) Contracts 3.6(B) Contracts Requiring Third Party Consents 3.6(C) Contracts Containing Covenants Not to Compete 3.7 Conduct of Business 3.8 Compliance with Law and Permits 3.9 Litigation 3.10(A) Patents 3.10(B) Trademarks 3.10(C) Copyrights 3.10 Intellectual Property Exceptions -4- Index to Defined Terms Section ------- "Accounts Receivable"...................................... 1.2(vii) "Additional Financials".................................... 5.9 "Adjusted Purchase Price".................................. 2.5.3 "Affiliate"................................................ 10.6 "Assignment and Assumption Agreement"...................... 2.2(ii) "Assumed Liabilities"...................................... 1.4 "Audited Financials"....................................... 5.7 "Business"................................................. Recitals "Buyer".................................................... Preamble "C&L" ........................................... 5.7 "Closing".................................................. 2.1 "Closing Date"............................................. 2.1 "Closing Date Inventory"................................... 2.5.1 "Closing Date Inventory Statement"......................... 2.5.1 "Closing Date Payment"..................................... 1.5 "Contracts"................................................ 1.1(iii) "Co-Pack Agreement"........................................ 2.2(viii) "Copyrights"............................................... 1.1(viii) "Equipment"................................................ 1.1(i) "Excess Mix Sales"......................................... 1.4 "Excess Syrup Sales"....................................... 1.4 "Excluded Assets".......................................... 1.2 "Excluded Business"........................................ 1.2(iii) "FFDC Act"................................................. 3.8 "Financial Statements"..................................... 3.4 "Financing"................................................ 4.5 "Fixed Assets and Inventory Statement"..................... 3.4 "Flavor Escrow Agreement".................................. 2.2(x) "Flavor Supply Agreement".................................. 2.2(ix) "HSR Act".................................................. 3.16 "Income Taxes"............................................. 1.2(xi) "Indemnified Party"........................................ 8.2 "Indemnifying Party"....................................... 8.2 "Independent Auditor"...................................... 2.5.2 "Intellectual Property".................................... 1.1(ix) "Inventory"................................................ 1.1(ii) "Laws"..................................................... 3.8 "License Agreement"........................................ 2.3(ii) "Liens".................................................... 3.3 "Losses"................................................... 8.1.1 "Material Adverse Change".................................. 3.7 "Material Contracts"....................................... 1.3 "Material Permits"......................................... 1.3 "Notice of Objection"...................................... 2.5.2 "Patent License Agreement"................................. 2.2(vi) "Patents".................................................. 1.1(vi) -5- Section ------- "Permits".................................................. 1.1(v) "Permitted Liens".......................................... 3.5 "Prepaid Expenses.......................................... 1.2(viii) "Product Claims............................................ 1.4 "Public Filings" .................................. 5.9 "Purchase Price"........................................... 1.5 "Pure FD Laws"............................................. 3.8 "PW"....................................................... 5.9 "PW Audit"................................................. 5.9 "PW Re-Audit".............................................. 5.9 "Quest".................................................... 2.2(ix) "Retained Liabilities"..................................... 1.4 "Seller"................................................... Preamble "Shared Technology License Agreement"...................... 2.2(v) "Statement Date"........................................... 3.4 "Statements of Operations"................................. 5.7(a) "Termination Date"......................................... 7.1 "Third Party Claim"........................................ 8.2 "Trademarks"............................................... 1.1(vii) "Transferred Assets"....................................... 1.1 "Transferred Technology"................................... 1.1(ix) "Transition Services Agreement............................. 2.2(vii) "VdBF"..................................................... 3.1 -6- ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT made this 18th day of December, 1996, between CONOPCO, INC., a corporation organized under the laws of New York ("Seller"), and MBW ACQUISITION CORP., a corporation organized under the laws of Delaware ("Buyer"). WHEREAS Seller wishes to sell and Buyer wishes to purchase certain assets of Seller relating exclusively to the manufacture and sale of pancake syrup and pancake and waffle mix marketed under the Mrs. Butterworth's and Country Crock brand names (excluding the Excluded Business (as defined in Section 1.2(iii) below), the "Business"); and WHEREAS Buyer will assume certain liabilities of Seller as more fully described herein, all on the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, Seller and Buyer hereby agree as follows: ARTICLE I Transfer of Assets, Assumption of Liabilities and Purchase Price 1.1 Transfer of Property and Assets. At the Closing (as defined in Section 2.1), Seller shall sell, transfer, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, the following assets of Seller relating to the Business, that exist on the Closing Date (as defined in Section 2.1), but excluding the Excluded Assets (as defined in Section 1.2) (collectively, the "Transferred Assets"): (i) all machinery and equipment and spare parts set forth on Schedule 1.1(i)(A) and such other machinery and equipment and spare parts physically located at Seller's plant at Olathe, Kansas used or held for use by Seller exclusively in connection with the Business, the machinery and equipment set forth on Schedule 1.1(i)(B) and such other machinery and equipment and spare parts of Seller physically located at the plant of Cereal Food Processors, Inc. at Bonner Springs, Kansas used or held for use by or on behalf of Seller exclusively in connection with the Business (including such machinery, equipment and spare parts temporarily removed from Seller's plant at Olathe, Kansas or the plant of Cereal Food Processors, Inc. at Bonner Springs, Kansas for purpose of repair) (collectively, the "Equipment"); (ii) all inventories, including finished products, samples, work-in-process, raw materials and packaging materials, wherever located, of the Business reflected on the Closing Date Inventory Statement as defined in Section 2.5.1 (the "Inventory"); (iii) subject to Section 1.3, all rights of Seller under contracts, commitments, understandings, binding arrangements, licenses, purchase orders and all other legally binding arrangements, written or oral, to which Seller is a party or by which Seller or any of the Transferred Assets is bound, and relating exclusively to the Business, except to the extent any of the foregoing relate to the Excluded Assets or the Retained Liabilities (as defined in Section 1.4) and except for employment contracts (collectively, the "Contracts"); (iv) all of the following books and records, wherever located, relating exclusively to the Transferred Assets or the Business in Seller's possession: sales records, sales and sales promotional data, books of account, files, invoices, inventory records, accounting records, product specifications, drawings, engineering, maintenance, operating and production records, advertising materials, customer lists, cost and pricing information, supplier lists, business plans, catalogs, quality control records and manuals, blueprints, research and development files, laboratory books, patent and trademark files and litigation files, other than records kept for financial reporting or tax purposes and excluding any of the foregoing to the extent relating to the Retained Liabilities; -2- (v) to the extent transfer is permitted under applicable law or regulation and subject to Section 1.3, all permits, approvals, franchises, licenses or other rights granted to Seller by governmental authorities and necessary for the lawful ownership of the Transferred Assets or the lawful conduct of the Business as presently conducted by Seller (the "Permits"); (vi) all patents and patent applications of Seller that relate exclusively to the Business (the "Patents"); (vii) all trademarks, trademark applications and registrations, trade names, trade dress and service marks of Seller that relate exclusively to the Business, together with the goodwill associated therewith (the "Trademarks"); (viii) all copyrights, registrations and all applications therefor, including those for printed matter, databases, software and source codes of Seller used exclusively in connection with the Business, together with unregistered copyrights Seller used exclusively in connection with the Business (the "Copyrights"); (ix) all unpatented formulas, recipes, know-how, manufacturing methods and processes, inventions, discoveries, trade secrets, improvements and other technology of Seller used or held for use exclusively in connection with the Business and all other proprietary and/or confidential information or materials of any kind or character relating to any of the foregoing of Seller used or held for use exclusively in connection with the Business (the "Transferred Technology", and together with the Patents, the Trademarks and the Copyrights, the "Intellectual Property"); (x) all claims of Seller against third parties relating exclusively to the Transferred Assets or the Assumed Liabilities (as defined in Section 1.4) , including, without limitation, claims in respect of rights under manufacturers' and vendors' warranties, guarantees or similar obligations, claims for past infringement or violation of rights associated with the Intellectual Property and claims of Seller against any third party who damaged or injured, or caused -3- damage or injury to, any portion of the Transferred Assets or Business, but excluding any of the foregoing to the extent relating to (x) the Retained Liabilities (as defined in Section 1.4), (y) the Excluded Assets (as defined in Section 1.2) or (z) Losses (as defined in Section 8.1.1) for which Seller must indemnify Buyer pursuant to Section 8.1.1(iii) provided that with respect to any such Losses in respect of infringements of the Intellectual Property, Seller shall consider in good faith Buyer's reasonable request that Seller cooperate with Buyer (at no cost to Seller and without disruption to Seller's business) in pursuing claims against third parties relating to such Losses; and (xi) all goodwill of the Business, including the exclusive right to represent oneself as the successor to the Business, as well as any rights owned by Seller to use the name "Mrs. Butterworth's" in all countries where such name is currently used by Seller as set forth in Schedule 3.10(D). 1.2 Excluded Assets. Notwithstanding anything to the contrary contained in this Agreement, the parties understand and agree that Seller shall retain all its right, title and interest in and to, and there shall be excluded from the sale, transfer, assignment and delivery to Buyer hereunder, any and all assets or properties not specifically referred to in Section 1.1 (collectively, the "Excluded Assets"), including, without limitation, those assets of Seller set forth below: (i) cash, cash equivalents, investments and bank accounts; (ii) any shares of any Affiliate (as defined in Section 10.6); (iii) any assets, other than the Mrs. Butterworth's brand name, used or held for use by Seller in its business of manufacturing or selling the frozen bakery products, and dough and mixes for bakery products, marketed under the "Mrs. Butterworth's" brand name as set forth on Schedule 1.2(iii) (the "Excluded Business"); -4- (iv) any rights to the name "Country Crock", "Pennant" or "Bakers Source" (or any derivatives thereof); (v) any assets used or held for use by Seller in its business of manufacturing or selling goods, other than pancake and waffle mix formulations, marketed under the "Country Crock" brand name; (vi) any assets used or held for use by Seller in its business of manufacturing or selling goods which are not marketed under the "Mrs. Butterworth's" or "Country Crock" brand names; (vii) all machinery and equipment and spare parts physically located at Seller's plant at Rochester, New York; (viii) any assets set forth on Schedule 1.2 (viii); (ix) all accounts and notes receivable, deferred charges, chattel paper and other rights to receive payments (the "Accounts Receivable") arising from the operation of the Business prior to the Closing Date and the Accounts Receivable or other current assets, contracts, books and records, licenses and permits, intellectual property or goodwill to the extent related to or arising from the Excluded Assets, the Excluded Business or the Retained Liabilities; (x) all prepayments, deposits, claims for refunds and prepaid expenses relating to the Business (the "Prepaid Expenses"); (xi) any intercompany receivables owed to Seller by any Affiliate of Seller or any other current intercompany assets of Seller; (xii) any assets related to any employee benefit plan in which any employees of Seller or any of its Affiliates participate; (xiii) any refunds, claims to refunds or rights to receive refunds from Federal, state, local and foreign taxing authorities with respect to income, net worth, capital, value added, franchise or other taxes measured by or based upon income or profits ("Income Taxes") paid or to be paid by Seller or any of its Affiliates; -5- (xiv) any records related to Income Taxes paid or payable by Seller or any of its Affiliates; (xv) Seller's corporate charter documents, minute books, stockholder records, stock transfer records, corporate seal and similar corporate records; (xvi) such records as relate to the negotiation and consummation of the transactions provided for in this Agreement, including without limitation confidential communications with legal counsel representing Seller and the right to assert the attorney-client privilege with respect to any such communications; and (xvii) Seller's rights under this Agreement and any other agreements contemplated hereby. 1.3 Consents to Certain Assignments. To the extent the sale, conveyance, transfer or assignment of any Contract or Permit requires the consent of any third party, this Agreement shall not constitute an agreement to complete such sale, conveyance, transfer or assignment if such action would constitute a breach or violation of the terms of such Contract or Permit. Except for any consents to assignment related to those Contracts and Permits listed on Schedule 1.3 (the "Material Contracts and Material Permits"), if Seller is unable to obtain the consent to the assignment of any Contract or Permit prior to the Closing Date, the Closing shall nonetheless take place and, thereafter, Seller will take all commercially reasonable steps (not including the payment of consideration) requested by Buyer to secure such consent after the Closing Date or otherwise to transfer or provide to Buyer the benefits of such Contracts or Permits. 1.4 Assumption of Liabilities. On the Closing Date, Buyer shall assume and thereafter pay, honor and discharge when due and payable all liabilities and obligations of Seller (i) arising under or in respect of the Contracts and Permits after the Closing Date other than by reason of a default occurring on or prior to the Closing Date, (ii) listed as "pre-closing contract liabilities" on Schedule 3.6(A), (iii) arising out of the conduct of the Business after the Closing Date, (iv) arising under or in respect of the advertising commitments set forth in Schedule 1.4, (v) for trade promotions and consumer promotions planned or committed on or prior to the Closing Date as set forth in -6- Schedule 1.4 in respect of any and all products of the Business (including, without limitation, the Inventory) sold by Buyer at any time after the Closing Date or (vi) for refunds, adjustments, allowances, exchanges, returns and warranty, merchantability and other claims in respect of the Inventory (collectively, together with the liabilities described in the next two sentences, the "Assumed Liabilities"). Buyer shall assume and thereafter pay, honor and discharge when due and payable all liabilities and obligations of Seller for (i) refunds, adjustments, allowances, exchanges and (ii) returns and (iii) warranty, merchantability and other claims (excluding product liability and personal injury tort claims) in respect of any and all products of the Business sold by or for Seller at any time on or prior to the Closing Date (collectively, "Product Claims"); provided, that with respect to Product Claims that are received by Buyer during the 60-day period following the Closing Date, Seller shall be responsible for liabilities in excess of $150,000, in the aggregate, payable in respect thereof to the extent such liability is attributable to manufacturing defects or mislabeled products, net of amounts recovered by Buyer through a reworking of such defective or mislabeled product (it being agreed that Buyer will in good faith attempt such a reworking if commercially reasonable). Buyer shall assume and thereafter pay, honor and discharge when due and payable all liabilities and obligations for redemption of coupons planned or committed on or prior to the Closing Date as set forth in Schedule 1.4 and issued at any time after the Closing Date in respect of any and all products of the Business; provided, that if manufacturer sales to the retail grocery channel of pancake syrup products for the month of December 1996 exceed 250,000 of Seller's standard cases (the number of cases sold in excess of such amount being the "Excess Syrup Sales"), Seller shall reimburse Buyer for an amount equal to (x) $0.50 times (y) the number of bottles in Seller's standard case of pancake syrup times (z) the Excess Syrup Sales; and provided, further, that if manufacturer sales to the retail grocery channel of pancake mix products for the month of December 1996 exceed 60,000 of Seller's standard cases (the number of cases sold in excess of such amount being the "Excess Mix Sales"), Seller shall reimburse Buyer for an amount equal to (x) $0.50 times (y) the number of boxes in Seller's standard case of pancake mix times (z) the Excess Mix Sales. Buyer shall not assume, nor be obligated to pay, honor or discharge, any liabilities or obligations of Seller other than those referred to in the previous three sentences. All liabilities and obligations of Seller, -7- whether accrued, absolute, contingent or otherwise, of any nature whatsoever, whether or not known, due or payable, not constituting Assumed Liabilities, including, without limitation, for trade promotions and consumer promotions described in clause (v) above in respect of any and all products of the Business sold by Seller at any time on or prior to the Closing Date, are referred to herein collectively as the "Retained Liabilities". 1.5 Purchase Price and Payment. The purchase price for the Transferred Assets is $116,000,000 (the "Purchase Price"), subject to adjustment in accordance with Section 2.5. Buyer will pay to Seller on the Closing Date by wire transfer of immediately available funds to an account designated in writing by Seller to Buyer at least two business days prior to the Closing Date, the Purchase Price plus or minus an estimate prepared by Seller and delivered to Purchaser at least three business days prior to the Closing Date of any adjustment to the Purchase Price under Section 2.5 (the Purchase Price plus or minus such estimate is referred to herein as the "Closing Date Payment"). 1.6 Transfer Taxes. Buyer and Seller shall each pay 50% of all sales, documentary, use, registration, excise and transfer taxes and related fees (including any penalties, interest or additions to such taxes) arising from the transfer of the Transferred Assets or otherwise in connection with this Agreement. ARTICLE II Closing and Post-Closing Purchase Price Adjustment 2.1 Closing. The closing of the transactions contemplated hereby (the "Closing") shall be held at the offices of Seller at 390 Park Avenue, New York, New York 10022, at 10:00 a.m. on the earliest to occur of: (i) December 31, 1996 if the conditions set forth in Article VI shall have been satisfied (or waived by the applicable party) by such date, or (ii) the third business day after the condition set forth in Section 6.1.8 shall have been satisfied (or waived by the applicable party), if all other conditions set forth in Article VI shall have -8- been satisfied (or waived by the applicable party) by December 31, 1996; provided, that if the condition set forth in Section 6.1.8 shall not have been satisfied (or waived by the applicable party) by January 14, 1996, then the Closing shall not occur before January 31, 1996, or (iii) at such other place or on such other date and time upon which the parties may agree. The date on which the Closing takes place is referred to herein as the "Closing Date". The Closing shall be deemed to be effective as of the close of business on the Closing Date. 2.2 Deliveries by Seller. At the Closing, Seller shall deliver, or cause its Affiliates to deliver, to Buyer the following duly executed documents: (i) assignments in recordable form of the U.S., Canadian and Puerto Rican Patents, Trademarks and Copyrights; (ii) an assignment and assumption agreement providing for the assignment to Buyer of the Contracts and the Permits and the assumption by Buyer of the Assumed Liabilities (the "Assignment and Assumption Agreement"); (iii) a bill of sale covering all other Transferred Assets, but specifically excluding the Excluded Assets; (iv) any additional assignments or other instruments reasonably necessary to transfer title to the Transferred Assets to Buyer as contemplated by this Agreement, free and clear of all Liens except Permitted Liens; (v) a license agreement in the form of Exhibit A hereto (the "Shared Technology License Agreement"); (vi) a license agreement in the form of Exhibit B hereto (the "Patent License Agreement"); (vii) an agreement by Seller to provide certain transition services to Buyer after the Closing Date in the form of Exhibit C hereto (the "Transition Services Agreement"); (viii) an agreement by Seller to manufacture certain products for Buyer after the Closing Date in -9- the form of Exhibit D hereto (the "Co-Pack Agreement"); (ix) an agreement by Quest International Flavors & Food Ingredients Company ("Quest") to provide a certain flavor mixture to Buyer after the Closing Date in the form of Exhibit E hereto (the "Flavor Supply Agreement"); (x) an agreement by Quest to escrow certain flavor formulations for the benefit of Buyer in the form of Exhibit F hereto (the "Flavor Escrow Agreement"); and (xi) a legal opinion of Cravath, Swaine & Moore, counsel to Seller, in the form of Exhibit G hereto. 2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller the following: (i) immediately available funds in an amount equal to the Closing Date Payment in the manner set forth in Section 1.5; (ii) a duly executed license agreement in the form of Exhibit H hereto (the "License Agreement"); (iii) a duly executed Assignment and Assumption Agreement; (iv) a duly executed Shared Technology License Agreement; (v) the Patent License Agreement; (vi) a duly executed Transition Services Agreement; and (vii) a duly executed Co-Pack Agreement; (viii) a duly executed Flavor Supply Agreement; (ix) a duly executed Flavor Escrow Agreement; and (x) a legal opinion of Richards & O'Neil, LLP, counsel to Buyer, in the form of Exhibit I hereto. -10- 2.4 Relocation. Title to the Equipment and Inventory shall pass to Buyer on the Closing Date at the respective locations thereof on the Closing Date. Seller shall, at Seller's cost and expense, disassemble the Equipment and have it packaged and ready to ship after a reasonable period of time following termination of the Co-Pack Agreement. Buyer shall promptly remove the same at its own cost, risk and expense and without interference to Seller's normal operations. Seller shall provide Buyer reasonable access to Seller's facilities for such purpose at reasonable times and upon reasonable notice and will otherwise cooperate with Buyer to permit such prompt removal. 2.5 Post-Closing Purchase Price Adjustment. 2.5.1 Closing Date Inventory Statement. Within forty-five (45) days after the Closing Date, Seller shall deliver to Buyer a statement (the "Closing Date Inventory Statement") of the book value of Inventory of the Business as of the close of business on the Closing Date (the "Closing Date Inventory"), determined on a standard cost basis as described in Schedule 2.5.1 and in accordance with the accounting principles, practices, methodologies and policies used in preparation of the Fixed Assets and Inventory Statement (as defined in Section 3.4) but adjusted up or down for actual variances from such standard cost. The book value of Inventory included on the Closing Date Inventory Statement shall reflect a physical count of the Inventory conducted on the Closing Date and shall exclude any Inventory which is not in compliance with the last sentence hereof. The physical count of the Inventory shall be conducted by Seller and its representatives. Buyer and its representatives shall have the right to observe the physical count of the Inventory. After the Closing Date, Buyer at Seller's request shall cause Buyer's employees to assist Seller and its representatives in the preparation of the Closing Date Inventory Statement and shall provide to Seller and its representatives access at all reasonable times to the personnel, properties, books and records of the Business for such purpose. Inventory included on the Closing Date Inventory Statement shall exclude inventories of butter flavors and maple flavors and shall be of a quality, quantity and mix (including shelf life) which is usable and salable at customary gross margins and with customary markdowns consistent in all material respects with past practice in the ordinary course of business, and will not be adulterated, misbranded, -11- mispackaged or mislabeled within the meaning of, or in violation of, the FFDC Act or the Pure FD Laws (each as defined in Section 3.8). 2.5.2 Objections; Resolution of Disputes. Unless Buyer notifies Seller in writing within forty-five (45) days after Buyer's receipt of the Closing Date Inventory Statement of any objection to the valuation of the Closing Date Inventory set forth therein (the "Notice of Objection"), such valuation shall be final and binding. During such forty-five (45)-day period, Buyer and its representatives shall be permitted to review the working papers of Seller and Seller's accountants relating to the Closing Date Inventory Statement. Any Notice of Objection shall specify in reasonable detail the basis for the objections set forth therein and shall include only objections based on (i) mathematical errors in the computation of the Closing Date Inventory or (ii) the Closing Date Inventory not having been calculated in accordance with Section 2.5.1, it being the intent of the parties that the Closing Date Inventory Statement shall reflect the change in book value of the Inventory resulting only from the operation of the Business from the Statement Date (as defined in Section 3.4) to the Closing Date. Seller and Buyer acknowledge that (a) the sole purpose of the determination of the Closing Date Inventory is to adjust the Purchase Price so as to reflect the change in book value of the Inventory resulting only from the operation of the Business from the Statement Date to the Closing Date and (b) such change can be measured only if the calculation is done using the same principles, practices, methodologies, and policies at both dates. If Buyer provides such Notice of Objection to Seller within such forty-five (45)-day period, Buyer and Seller shall, during the forty-five (45)-day period following Buyer's delivery of such Notice of Objection to Seller, attempt in good faith to resolve Buyer's objections. During such forty-five (45)-day period, Seller and its representatives shall be permitted to review the working papers of Buyer and Buyer's accountants relating to the Notice of Objection and the basis therefor. If Buyer and Seller are unable to resolve all such objections within such period, the matters remaining in dispute shall be submitted to the Chicago office of Arthur Andersen LLP (or, if such firm declines to act, to another nationally recognized public accounting firm mutually agreed upon by Buyer and Seller and, if Buyer and Seller are unable to so agree within ten (10) days after the end of such forty-five (45)-day period, then -12- Buyer and Seller shall each select such a firm and such firms shall jointly select a third firm to resolve the disputed matters) (such determining firm being the "Independent Auditor"). The resolution of disputed items by the Independent Auditor shall be final and binding. The fees and expenses of the Independent Auditor shall be borne equally by Buyer and Seller. After final determination of the Closing Date Inventory Statement, Buyer shall have no further right to make any claims against Seller in respect of any element of the Closing Date Inventory that Buyer raised, or could have raised, in the Notice of Objection. 2.5.3 Adjustment Payment. Upon final determination of the Closing Date Inventory in accordance with Section 2.5.2, the Purchase Price shall be increased by the amount by which the book value of such final Closing Date Inventory exceeds $2,800,000, or the Purchase Price shall be decreased by the amount by which the book value of such final Closing Date Inventory is less than $2,800,000, as the case may be (the Purchase Price as so increased or decreased is referred to herein as the "Adjusted Purchase Price"). Within ten (10) days after such final determination, (i) if the Closing Date Payment is less than the Adjusted Purchase Price, Buyer shall pay to Seller an amount equal to such shortfall, plus simple interest thereon at the rate of 6% per annum from the Closing Date to the date of payment and (ii) if the Closing Date Payment is more than the Adjusted Purchase Price, Seller shall pay to Buyer an amount equal to such excess, plus simple interest thereon at the rate of 6% per annum from the Closing Date to the date of payment. Any such payment hereunder shall be made by wire transfer of immediately available funds. 2.6 Allocation of Purchase Price. The purchase price shall be allocated by Seller and Buyer among the Transferred Assets and Assumed Liabilities as agreed to by Buyer and Seller prior to the Closing Date. Seller and Buyer agree to report the allocation of the purchase price among the Transferred Assets and Assumed Liabilities in a manner entirely consistent with such allocation and agree to act in accordance with such allocation in the preparation of published financial statements prepared in accordance with generally accepted accounting principles and filing of all tax returns (including, without limitation, filing Form 8594 with its Federal income tax return for the taxable year that includes the date of the -13- Closing) and in the course of any tax audit, tax review or tax litigation thereto. ARTICLE III Representations and Warranties of Seller Seller hereby represents and warrants to Buyer as follows: 3.1 Organization. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York under the name Conopco, Inc. and is authorized to do business as Van den Bergh Foods Company ("VdBF"). 3.2 Authorization. Seller has full corporate power and authority to carry on the Business as now conducted and to own or lease the Transferred Assets owned or leased by it. Seller has full corporate power and authority to execute and deliver this Agreement and all other agreements, certificates and documents contemplated hereby to be executed and delivered by Seller and to consummate the transactions contemplated hereby and thereby. Seller has taken all corporate action required by its Certificate of Incorporation and By-laws to authorize the execution and delivery of this Agreement and all other agreements, certificates and documents contemplated hereby to be executed and delivered by Seller and to authorize the consummation of the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by Seller and is a legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms. All other agreements, certificates and documents contemplated hereby to be executed and delivered by Seller will on the Closing Date be duly and validly executed by Seller and be legal, valid and binding obligations of Seller, enforceable against it in accordance with their respective terms. 3.3 No Conflicts or Violations; No Consents or Approvals Required. Neither the execution and delivery of this Agreement or the other agreements contemplated hereby nor the consummation of the transactions contemplated -14- hereby or thereby will (i) conflict with or violate any provision of the Certificate of Incorporation or By-laws of Seller, (ii) conflict with or violate any statute, law, rule, regulation, ordinance, order, writ, injunction, judgment or decree applicable to Seller in respect of the Business or to which any of the Transferred Assets is subject, or (iii) conflict with or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would constitute a default) under any agreement or other instrument to which Seller is a party affecting the Transferred Assets or to which any of the Transferred Assets is subject or (iv) result in the creation of any mortgage, pledge, lien, claim, charge or other encumbrance of any kind (collectively, "Liens"), other than Permitted Liens (as defined in Section 3.5) or Liens caused by Buyer or the terms of the Financing (as defined in Section 4.5), on any of the Transferred Assets. Except for (i) approvals required under the HSR Act and (ii) required consents of other parties to the Contracts and Permits listed in Schedule 3.3, no notice, declaration, report or other filing or registration with, and no waiver, consent, approval or authorization of, any governmental or regulatory authority or any other person or entity is required to be made or obtained by Seller in connection with the execution and delivery of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby. 3.4 Financial Statements. Attached as Schedule 3.4(A) are the unaudited statement of fixed assets and inventory of the Business at September 30, 1996, and the unaudited statements of sales and incremental operating profits of the Business for the years ended December 31, 1993, 1994 and 1995 and the nine-month period ended September 30, 1996. (The foregoing financial statements are referred to herein collectively as the "Financial Statements"; the unaudited statement of fixed assets and inventory at September 30, 1996, is referred to herein as the "Fixed Assets and Inventory Statement" and September 30, 1996 is referred to herein as the "Statement Date"). The Financial Statements were prepared from the books and records of VdBF relating to the Business, in accordance with the historical accounting principles, practices, methodologies and policies of Seller, consistently applied throughout the periods covered thereby, and fairly present in all material respects, in accordance with such accounting principles, practices, methodologies and policies, the fixed assets and inventory -15- of the Business at September 30, 1996 and the sales and incremental operating profits of the Business for the respective years ended December 31, 1993, 1994 and 1995 and nine-months ended September 30, 1996. The accounting principles of the Seller used in the preparation of the Financial Statements materially differ from United States generally accepted accounting principles as set forth in Schedule 3.4(B). 3.5 Title to Transferred Assets. Seller has, and on the Closing Date shall have, good title to the Transferred Assets, free and clear of any Liens other than Permitted Liens. As used herein, the term "Permitted Liens" means and includes (i) Liens for taxes, assessments or governmental charges or levies not yet due and delinquent or being diligently contested in good faith, (ii) statutory Liens of carriers, warehousemen, mechanics, materialmen and the like arising in the ordinary course of business that do not impair in any material respect the conduct of the Business or the use of the Transferred Assets in the manner currently used by Seller and (iii) Liens set forth on Schedule 3.5. 3.6 Contracts. Schedule 3.6(A) sets forth a list of all Contracts in effect on the date of this Agreement, except for the following which were entered into in the ordinary course of business and which would not individually or in the aggregate have a material adverse effect on the Business or the Transferred Assets taken as a whole: (i) orders for the purchase of raw materials or supplies used in the manufacture of products, in each case with a remaining balance of $100,000 or less and a remaining term of one year or less; (ii) orders from customers for the purchase of products, in each case with a remaining balance of $100,000 or less and a remaining term of one year or less; and (iii) Contracts listed and described in Schedule 3.10. Seller has delivered or made available to Buyer copies of all written Contracts, and descriptions of the material terms of all oral Contracts, listed on Schedule 3.6(A). Seller and, to Seller's knowledge each other party to each Contract listed on Schedule 3.6(A), is in compliance in all material respects with the terms thereof. To Seller's knowledge each such Contract is in full force and effect on the date of this Agreement. Except as set forth in Schedule 3.6(B), no consent by any third party is required under any of the Contracts set forth on Schedule 3.6(A) as a result of or in -16- connection with the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. Except for any Contract listed on Schedule 3.6(C), no Contract contains a covenant not to compete which would limit or restrict Buyer. 3.7 Conduct of Business Since Statement Date. Except as set forth in Schedule 3.7, since the Statement Date Seller has conducted the Business only in the ordinary course in a manner consistent with past practice and there has been no material adverse change in the business, assets, liabilities, condition (financial or otherwise) and sales and incremental operating profit of the Business taken as a whole (a "Material Adverse Change"). Since the Statement Date, Seller has not: (i) permitted or allowed any of the Transferred Assets to be subjected to any Lien other than Permitted Liens; (ii) materially written down or materially written up the value of any Inventory other than in the ordinary course of business; (iii) sold, transferred or leased any of the Transferred Assets other than sale of Inventory in the ordinary course of business; (iv) made any changes in the customary methods used in operating the Business (including in marketing, selling and pricing practices and policies) other than in the ordinary course of business consistent with past practice, which changes, individually or in the aggregate are or would reasonably be expected to be material to the Business taken as a whole; (v) changed any methods of accounting for the Transferred Assets or the Business (other than as contemplated by this Agreement); (vi) waived any right of material value under any Material Contract; (vii) failed to perform in any material respect any of its obligations, or suffered or permitted to exist and be continuing any material default by it, under any Material Contract; or -17- (viii) agreed, whether in writing or otherwise, to take any of the actions set forth in this Section 3.7, other than as contemplated by this Agreement. 3.8 Compliance with Law and Permits. Except as set forth in Schedule 3.8, to its knowledge, Seller is in compliance in all material respects with all applicable local, state or federal statutes, laws, rules, regulations, orders, ordinances, judgments and decrees of all governmental and regulatory authorities, including, without limitation, the provisions of the Federal Food, Drug and Cosmetic Act, as amended (the "FFDC Act") and the pure food and drug laws of each of the states of the United States into which products of the Business are or have been shipped (the "Pure FD Laws") (collectively, "Laws") relating to the Business or the Transferred Assets and the terms of all Permits and as of the date of this Agreement Seller has not received written regulatory notices or complaints regarding non-compliance by the Business with applicable Laws. All Permits are in full force and effect and no proceedings are pending or, to the knowledge of Seller, threatened that may result in the revocation, cancellation or suspension thereof. 3.9 Litigation. Except as set forth in Schedule 3.9, no claim, action, suit, proceeding or investigation is pending or, to the knowledge of Seller, threatened before any court, arbitrator, or governmental agency which is reasonably likely to result in a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) and sales and incremental operating profit of the Business taken as a whole or in which any person or entity seeks to prohibit the consummation of the transactions contemplated by this Agreement. 3.10 Intellectual Property. A true and complete list of all the Patents, the Trademarks and the Copyrights is set forth in Schedule 3.10 (A), (B) and (C), respectively. Except as set forth in Schedule 3.10, Seller owns all rights to such Patents, Trademarks and Copyrights, free and clear of any Liens other than Permitted Liens, and Seller has not granted to any third party any license or other right with respect to any of the Intellectual Property (except to the extent such grant would be permitted under the License Agreement (it being understood that following the Closing any such grant shall be subject to the terms of -18- the License Agreement)). Except as set forth in Schedule 3.10, the Intellectual Property (together with the rights licensed under the Shared Technology License Agreement and the Patent License Agreement) includes all patents, trademarks, copyrights, know-how and other intellectual property necessary for the operation of the Business as currently conducted; provided, however, that the Intellectual Property does not include any rights to the brand name "Country Crock", "Pennant" or "Bakers Source". Except as set forth in Schedule 3.10, no claim is pending or, to the knowledge of Seller, threatened that Seller's use of the Intellectual Property infringes the patent, trademark or copyright rights of any person or entity and such use of the Intellectual Property does not infringe any such rights. To the knowledge of Seller, no other person or entity is infringing Seller's rights in the Intellectual Property. Each of the applicable Trademark registrations is valid and subsisting in the territory in which such Trademark is registered for use on the Product(s) for which such Trademark is currently being used. All recipes used to prepare the Products are exclusively used in the Business. 3.11 Taxes. All Federal, state, local and foreign tax returns, reports and declarations of any kind required to be filed by or on behalf of Seller with respect to the Business on or prior to the Closing Date have been or will be timely filed. Except for transfer and similar taxes for which Buyer and Seller are equally liable under Section 1.6, Seller has timely paid or will timely pay all taxes validly imposed on it with respect to the Business which relate to or accrue in any period ending on or prior to the Closing Date and the portion ending on the Closing Date of any period which includes but ends after the Closing Date. 3.12 Entire Business. The Transferred Assets include all of the properties and assets used or held for use by Seller or any Affiliate of Seller exclusively in connection with the Business, except as set forth in Section 9.2 and in Schedule 1.2(viii). Except as set forth in Schedule 1.2(viii), the production line Equipment set forth in Schedule 1.1(i)(A) comprises all the material equipment (excluding fixtures) used by Seller at Seller's plant at Olathe, Kansas and necessary for the conduct of the Business in all material respects as currently conducted at Seller's plant at Olathe, Kansas. -19- 3.13 Brokers and Finders. Seller has not incurred any liability for finder's or similar fees to any finders, brokers, agents or others in connection with the transactions contemplated by this Agreement other than to Morgan Stanley & Co. Incorporated, whose fees and expenses will be borne by Seller. 3.14 Equipment. The Equipment shall be transferred on an "as is, where is" basis; provided, however, that on the Closing Date, the Equipment, taken as a whole, shall be in good working order and repair (commensurate with age and useful life) sufficient to manufacture the products of the Business theretofore manufactured on such Equipment, in accordance with past practice. 3.15 Inventory. The Inventory transferred at Closing will be sufficient and adequate in kind and amount for Buyer to operate the Business immediately after the Closing in the ordinary course of business. ARTICLE IV Representations and Warranties of Buyer Buyer hereby represents and warrants to Seller as follows: 4.1 Organization. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. 4.2 Authorization. Buyer has full corporate power and authority to execute and deliver this Agreement and all other agreements, certificates and documents contemplated hereby to be executed and delivered by Buyer and to consummate the transactions contemplated hereby and thereby. Buyer has taken all corporate action required by its certificate or articles of incorporation and By-laws to authorize the execution and delivery of this Agreement and all other agreements, certificates and documents contemplated hereby to be executed and delivered by Buyer and to authorize the consummation of the transactions -20- contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by Buyer and is a legal, valid and binding obligation of Buyer, enforceable against it in accordance with its terms. All other agreements, certificates and documents contemplated hereby to be executed and delivered by Buyer will on the Closing Date be duly and validly executed by Buyer and be legal, valid and binding obligations of Buyer, enforceable against it in accordance with their respective terms. 4.3 No Violations; No Consents or Approvals Required. Neither the execution and delivery of this Agreement or the other agreements contemplated hereby nor the consummation of the transactions contemplated hereby or thereby will (i) conflict with or violate any provision of the certificate or articles of incorporation or By-laws of Buyer, (ii) conflict with or violate any statute, law, rule, regulation, ordinance, order, writ, injunction, judgment or decree applicable to Buyer or (iii) conflict with or result in any breach of or constitute a default (or an event that with notice or lapse or time or both would constitute a default) under any agreement or other instrument to which Buyer is a party. Except for approvals required under the HSR Act, no notice, declaration, report or other filing or registration with, and no waiver, consent, approval or authorization of, any governmental or regulatory authority or any other person or entity is required to be made or obtained by Buyer in connection with the execution, delivery and performance of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby. 4.4 Brokers and Finders. There is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement. 4.5 Financing. Buyer has cash available or has existing borrowing facilities or binding firm commitments that together are sufficient to enable it to consummate the transactions contemplated by this Agreement. True and correct copies of any such facilities and commitments have been provided to Seller. The financing required to consummate the transactions contemplated by this Agreement -21- is collectively referred to as the "Financing". As of the date of this Agreement, Buyer has no reason to believe that any of the conditions to the Financing will not be satisfied or that the Financing will not be available on a timely basis for the transactions contemplated by this Agreement. ARTICLE V Covenants Pending the Closing 5.1 Conduct of the Business. From and after the date of this Agreement until the Closing Date, Seller shall not, with respect to the Business and the Transferred Assets, except as otherwise agreed to in writing by Buyer, (i) fail to carry on the Business only in the ordinary course in substantially the same manner as currently conducted and, to the extent consistent therewith, use all commercially reasonable efforts to preserve intact the Business' relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with the Business, (ii) fail to use commercially reasonable efforts to keep the Business and the Transferred Assets intact and to maintain the goodwill and reputation associated with the Business, (iii) fail to continue its existing practices relating to maintaining the Transferred Assets in their present operating condition and repair (ordinary wear and tear excepted), (iv) fail to replace or commit to replace any Equipment that is destroyed or becomes inoperable as a result of any casualty, loss or damage, (v) fail to maintain the existing registrations for the Trademarks, (vi) make any change in list pricing to trade buyers that would reasonably be expected to cause trade buyers to materially increase forward buying other than in the ordinary course of business consistent with past practice, (vii) take any action to incur or permit or suffer to exist any of the acts, transactions, events or occurrences of the type described in Section 3.7 or (viii) knowingly take any action with the intention of causing any of the representations or warranties of Seller to be untrue. 5.2 Access. From the date of this Agreement until the Closing Date, Seller shall (i) give to Buyer and its representatives reasonable access during normal business hours and upon reasonable notice to Seller's properties, -22- books, records and Contracts relating to the Business and (ii) furnish to Buyer such documents and information concerning the Business as Buyer from time to time may reasonably request (but Buyer shall promptly reimburse Seller its out-of-pocket costs associated therewith). Nothing contained in this Section 5.2 shall obligate Seller to breach any duty of confidentiality owed to any Person whether such duty arises contractually, statutorily or otherwise. 5.3 Best Efforts. Each party will use its best efforts (except as otherwise provided in Sections 5.7 and 5.8) to take or cause to be taken all actions and to do or cause to be done all things necessary or appropriate to perform its obligations hereunder, to satisfy the conditions to the Closing, to consummate the transactions contemplated hereby and to comply promptly with all legal requirements that may be imposed on it or any of its Affiliates with respect to the Closing. 5.4 Other Agreements. At or prior to the Closing, Buyer and Seller (or Buyer and Quest, in the case of the Flavor Supply Agreement and the Flavor Escrow Agreement) shall enter into the License Agreement, the Shared Technology License Agreement, the Patent License Agreement, the Transition Services Agreement, the Co-Pack Agreement, the Flavor Supply Agreement and the Flavor Escrow Agreement. 5.5 No Shop. From the date of this Agreement until the earlier of (i) the termination of this Agreement pursuant to Section 7.1 and (ii) the Closing Date, Seller shall not, and shall cause its subsidiaries, Affiliates, agents, representatives, and any other person acting on behalf of Seller not to, directly or indirectly solicit, negotiate with respect to, actively facilitate or accept any offers for the purchase or sale of or otherwise transfer the Business or the Transferred Assets (other than sale of Inventory in the ordinary course of business), or otherwise effect any transaction inconsistent with the transactions contemplated hereby or agree to do any of the foregoing, and Seller shall terminate any such existing activities or discussions with any party other than Buyer and its representatives. -23- 5.6 Tax Certification. At or prior to the Closing, Seller shall furnish to Buyer a certification of Seller's non-foreign status as set forth in Treas. Reg. Sec. 1.1445-2(b). 5.7 Audited Financials. Seller shall use commercially reasonable efforts to provide to Buyer on or prior to the Closing Date, Statements of Operations of the Business on a fully allocated basis through and including net income ("Statements of Operations") for the years ended December 31, 1994 and 1995 and the nine months ended September 30, 1996, and a Statement of Assets to be Acquired as of September 30, 1996, in each case prepared from the books and records of VdBF relating to the Business in accordance with United States generally accepted accounting principles, together with a report thereon prepared and certified by Coopers & Lybrand LLP ("C&L") (the "Audited Financials"), at Seller's sole cost and expense. 5.8 Additional Financial Statements. Subsequent to the Closing, Seller shall use commercially reasonable efforts to provide to Buyer, at Buyer's request and at Seller's sole cost and expense: (i) by January 15, 1997, unaudited Statements of Operations for the years ended December 31, 1992 and 1993 and the first nine months of 1995; and (ii) by March 1, 1997, an unaudited Statement of Operations for each calendar quarter of 1996. 5.9 Price Waterhouse Re-Audit and Audit and Other Financial Information. Commencing as soon as practicable after the date hereof, Seller shall cooperate in a commercially reasonable manner with Buyer and its accountants, Price Waterhouse LLP ("PW"), so that PW (whose fees and costs shall be borne by Buyer) (i) may prepare a report and certification (the "PW Re-Audit") of the financial statements that comprise the Audited Financials and (ii) may prepare an audit (the "PW Audit") by March 1, 1997, of a Statement of Assets to be Acquired as of December 31, 1996 and Statements of Operations for the year ended December 31, 1996 and for any period subsequent to December 31, 1996, during which the Business was continued to be owned by Seller, prepared by the Seller from the -24- books and records of VdBF relating to the Business in accordance with United States generally accepted accounting principles, together with a report thereon prepared and certified by PW (the "Additional Financials"), so that (A) the PW Re-Audit of the Audited Financials can be in form, scope and time sufficient for use by Buyer in a Rule 144A Offering Memorandum on or about January 15, 1997 and in any registration statements filed under the Securities Act of 1933 or reports under the Securities Exchange Act of 1934 (collectively, "Public Filings") issued or filed by Buyer on or after such date and (B) the PW Audit of the Additional Financials can be in form, scope and time sufficient for use by Buyer in Public Filings issued or filed by Buyer on or after March 1, 1997. Seller shall also cooperate in a commercially reasonable manner with Buyer so Buyer can obtain information sufficient for Buyer to comply with the requirements for the Management's Discussion and Analysis portion of the Public Filings in comparing the 1996 year, or nine months as the case may be, to 1995 and 1995 to 1994. The foregoing cooperation of Seller shall include but not be limited to (i) compiling the requisite financial information including supplying financial information for purposes of comfort letters in connection with Public Filings, (ii) granting Buyer and Price Waterhouse LLP full and complete access to the books and records of VdBF and any relevant books and records of affiliated entities and to personnel knowledgeable about such books and records, in each case, to the extent reasonably required by Price Waterhouse LLP for purposes of the PW Re-Audit and the PW Audit, (iii) using commercially reasonable efforts to cause C&L to give full and complete access to its work papers and any other supporting information relating to the Audited Financials and to C&L personnel and (iv) signing customary management representation letters relating to the Audited Financials, the Additional Financials and any comfort letters. ARTICLE VI Conditions to Closing 6.1 Conditions to Buyer's Obligation to Close. The obligation of Buyer to purchase the Transferred Assets, assume the Assumed Liabilities and otherwise consummate the -25- transactions contemplated hereby shall be subject to the satisfaction (or waiver by Buyer), at or before the Closing, of the following conditions: 6.1.1 No Law shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or any governmental or regulatory authority or instrumentality that prohibits the consummation of the transactions contemplated hereby, and no action or proceeding shall be pending by any governmental or regulatory authority or instrumentality seeking the foregoing. 6.1.2 The required filings under the HSR Act shall have been made and the applicable waiting period shall have expired or been terminated. 6.1.3 Seller shall have performed in all material respects the obligations required under this Agreement to be performed by it at or prior to the Closing. 6.1.4 The representations and warranties of Seller contained herein shall have been true and correct in all material respects when made and shall be true and correct in all material respects at and as of the Closing Date, except that any representation or warranty that by its terms is stated to be true as of a particular date need be true and correct in all material respects only as of such date. 6.1.5 Seller shall have delivered to Buyer a certificate, dated the Closing Date and signed by an officer of Seller, as to the satisfaction of the conditions set forth in Sections 6.1.3 and 6.1.4. 6.1.6 Seller shall have obtained the requisite consents to transfer in connection with the Material Contracts and the Material Permits. 6.1.7 Seller shall have delivered to Buyer the closing documents referred to in Section 2.2. -26- 6.1.8 Seller shall have delivered to Buyer the Audited Financials. 6.2 Conditions to Seller's Obligation to Close. The obligation of Seller to sell, transfer and assign the Transferred Assets and otherwise consummate the transactions contemplated hereby shall be subject to the satisfaction (or waiver by Seller), at or before the Closing, of the following conditions: 6.2.1 No Law shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or any governmental or regulatory authority or instrumentality that prohibits the consummation of the transactions contemplated hereby, and no action or proceeding shall be pending by any governmental or regulatory authority or instrumentality seeking the foregoing. 6.2.2 The required filings under the HSR Act shall have been made and the applicable waiting period shall have expired or been terminated. 6.2.3 Buyer shall have performed in all material respects the obligations required under this Agreement to be performed by it at or prior to the Closing. 6.2.4 The representations and warranties of Buyer contained herein shall have been true and correct in all material respects when made and shall be true and correct in all material respects at and as of the Closing Date, except that any representation or warranty that by its terms is stated to be true as of a particular date need be true and correct in all material respects only as of such date. 6.2.5 Buyer shall have delivered to Seller a certificate, dated the Closing Date and signed by an officer of Buyer, as to the satisfaction of the conditions set forth in Sections 6.2.3 and 6.2.4. -27- 6.2.6 Buyer shall have delivered to Seller the closing documents referred to in Section 2.3. ARTICLE VII Termination 7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing: (i) by mutual consent of Buyer and Seller; (ii) by Seller if it is not in breach of this Agreement and any of the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by Seller; (iii) by Buyer if it is not in breach of this Agreement and any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have been waived by Buyer; (iv) by either of the parties if it is not in breach of this Agreement and if the Closing shall not have occurred by the Termination Date (as defined below); or (v) by either of the parties if any governmental authority having competent jurisdiction shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement or the other agreements contemplated hereby, and such order, decree, ruling or other action shall have become final and non-appealable. "Termination Date" shall mean: (i) if any condition set forth in Article VI other than Section 6.1.8 shall not have theretofore been satisfied (or waived by the applicable party), December 31, 1996; or (ii) if all of the conditions set forth in Article VI other than Section 6.1.8 shall have been -28- satisfied (or waived by the applicable party) on or before December 31, 1996, March 15, 1997; provided, that if any such condition is satisfied after December 31, 1996 but before notice of termination is duly given by either party, then the failure to satisfy such condition on December 31, 1996 shall not be a basis for termination of this Agreement. 7.2 Effect of Termination. Upon termination of this Agreement, the undertakings of the parties set forth herein shall forthwith be and become of no further force and effect; provided, however, that this Section 7.2 and Sections 9.4 and 10.1 and rights and remedies for any breaches of this Agreement prior to its termination shall survive any such termination. Nothing in this Section 7.2 shall be deemed to release either party from any liability for any breach by such party of the terms and provisions of this Agreement or to impair the right of either party to compel specific performance by the other party of its obligations under this Agreement. ARTICLE VIII Indemnification 8.1 Obligation of Parties to Indemnify. 8.1.1 Indemnification by Seller. Subject to the limitations set forth in Section 8.3, Seller shall indemnify, defend and hold harmless Buyer and its Affiliates from and against any and all claims, losses, damages, liabilities, deficiencies, obligations or expenses, including without limitation reasonable legal fees and expenses (collectively, "Losses"), but net of any insurance recoveries or tax benefits actually received by Buyer and its Affiliates because of such Losses, arising or resulting from any of the following: (i) the failure of Seller to pay or otherwise discharge when due and payable the Retained Liabilities; (ii) the non-fulfillment or non-performance by Seller of any agreement or covenant of Seller hereunder; -29- (iii) the inaccuracy of any representation or breach of any warranty made by Seller herein or by Quest in Section 1.02 of the Escrow Agreement; and (iv) the conduct of the Business or the ownership of the Transferred Assets on or prior to the Closing Date, except to the extent such Loss constitutes or arises out of an Assumed Liability. 8.1.2 Indemnification by Buyer. Subject to the limitations set forth in Section 8.3, Buyer shall indemnify, defend and hold harmless Seller and its Affiliates from and against any and all Losses, but net of any insurance recoveries or tax benefits actually received by Seller and its Affiliates because of such Losses, arising or resulting from any of the following: (i) the failure of Buyer to pay or otherwise discharge when due and payable the Assumed Liabilities; (ii) the non-fulfillment or non-performance by Buyer of any agreement or covenant of Buyer hereunder; (iii) the inaccuracy of any representation or the breach of any warranty made by Buyer herein; and (iv) the conduct of the Business or the ownership of the Transferred Assets after the Closing Date. 8.2 Indemnification Procedure for Third Party Claims. If any party (the "Indemnified Party") receives written notice of the commencement of any action or proceeding or the assertion of any claim by a third party or the imposition of any penalty or assessment for which indemnity may be sought under this Article VIII (a "Third Party Claim"), and such Indemnified Party intends to seek indemnity pursuant to this Article VIII, the Indemnified Party shall promptly provide the other party (the "Indemnifying Party") with notice of such Third Party Claim. The Indemnifying Party shall be entitled to participate in or, at its option, assume the defense, appeal or settlement of such Third Party Claim. Such defense or settlement shall be conducted through counsel selected by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed, and the Indemnified Party shall fully -30- cooperate with the Indemnifying Party in connection therewith. In the event that the Indemnifying Party fails to assume the defense or settlement of any Third Party Claim within twenty (20) days after receipt of notice thereof from the Indemnified Party, the Indemnified Party shall have the right to undertake the defense, appeal or settlement of such Third Party Claim at the expense and for the account of the Indemnifying Party. The Indemnifying Party shall not settle any Third Party Claim the defense or settlement of which is controlled by it without the Indemnified Party's prior written consent (which consent shall not be unreasonably withheld or delayed), unless the terms of such settlement or compromise release such Indemnified Party from any and all liability with respect to such Third Party Claim. 8.3 Limitations on Indemnification. Notwithstanding the foregoing provisions of this Article VIII, (i) neither party shall be responsible, pursuant to Section 8.1.1(iii) or 8.1.2(iii), for any indemnifiable Losses suffered by the other party arising out of inaccuracies in the representations or breaches of warranties of such other party herein unless a claim therefor is asserted in writing (A) with respect to the representation and warranty set forth in Section 3.10, on or prior to the fourth anniversary of the Closing Date, (B) with respect to the representation and warranty set forth in Section 3.11, on or prior to the expiration of the applicable statute of limitations, (C) with respect to all other representations and warranties (other than those set forth in Sections 3.1, 3.2, 4.1 or 4.2) on or prior to the eighteen month anniversary of the Closing Date, and (D) with respect to the representations and warranties set forth in Sections 3.1, 3.2, 4.1 or 4.2, at any time after the Closing Date, failing which such claim shall be waived and extinguished, (ii) neither party shall be liable, pursuant to Section 8.1.1(iii) or 8.1.2(iii), for any Losses suffered by the other party arising out of inaccuracies in the representations or breaches of warranties herein unless the aggregate amount of such Losses exceeds $1,000,000.00, and then only to the extent of any such excess, and (iii) the aggregate liability of either party hereunder, pursuant to Section 8.1.1(iii) or 8.1.2(iii), for Losses suffered by the other shall in no event exceed fifty percent (50%) of the Closing Date Payment (as adjusted pursuant to Section 2.5). -31- 8.4 Tax Considerations. Notwithstanding any other provision of this Article VIII, neither Buyer nor Seller shall be required to alter any tax positions or elections it would otherwise take or make in order to reduce the amount of indemnifiable Losses under Section 8.1.1 or Section 8.1.2, as the case may be. ARTICLE IX Additional Agreements 9.1 Covenant Not to Compete. For a period of three (3) years from and after the Closing Date, Seller and its Affiliates will not engage, or have any ownership interest in any corporation, partnership or other business entity that engages, directly or indirectly, in the manufacture or sale in the United States of America, Canada or Puerto Rico of any pancake syrup or pancake or waffle mix products except pursuant to the Co-Pack Agreement, the Flavor Supply Agreement and the Transition Services Agreement; provided, however, that (i) Seller and its Affiliates may own as an investment, directly or indirectly, securities of any corporation or other entity which are publicly traded if Seller and its Affiliates do not, directly or indirectly, beneficially own in the aggregate five percent (5%) or more of the outstanding shares of such entity; and (ii) Seller and its Affiliates may have an ownership interest otherwise proscribed by this Section 9.1 if such interest arises as a result of the acquisition of a business entity not principally engaged in activities proscribed by this Section 9.1. 9.2 Certain Services and Benefits Provided by Affiliates. Buyer acknowledges that the Business currently receives from Affiliates certain administrative and corporate services and benefits, including without limitation: computer and information processing services; accounting and payroll services; environmental, safety and engineering services; treasury services (including banking, insurance administration, taxation and internal audit); legal services; and travel services. Buyer further acknowledges that all such services and benefits shall cease, and any agreement in respect thereof other than the Transition Services Agreement shall terminate, with respect to the Business as of the Closing Date. -32- 9.3 Seller's Access to Information. After the Closing Date, Buyer shall grant to Seller such access to financial records and other information in Buyer's possession related to Seller's conduct of the Business on or prior to the Closing Date and such cooperation and assistance as shall be reasonably required to enable Seller to complete its financial reports and tax returns for any period ending on or prior to or including the Closing Date. In the event that any tax return of Seller for any such period becomes the subject of any audit or investigation, Buyer shall give Seller all reasonable cooperation, access and assistance as needed during normal business hours with respect to books and records and other financial data included in the Transferred Assets to enable Seller to defend any such audit or investigation. Buyer will, for a period equal to the applicable statute of limitations plus any extensions granted in respect thereof plus any additional time during which Seller advises Buyer that there is an ongoing tax audit or investigation with respect to such periods, keep such materials reasonably accessible and not destroy or dispose of such materials without the written consent of Seller. Seller shall promptly reimburse Buyer for Buyer's reasonable out-of-pocket expenses associated with requests made by Seller under this Section 9.3, but no other charges shall be payable by Seller to Buyer in connection with such requests. 9.4 Public Announcements. Neither party will issue any press release or other public announcement with respect to this Agreement or the transactions contemplated hereby without the prior written approval of the other party, except as may be required by applicable Laws. 9.5 Termination of Insurance. Buyer acknowledges that Seller's insurance coverage for the Transferred Assets shall terminate as of the Closing Date. 9.6 Confidentiality. Seller shall keep confidential, and cause its Affiliates to keep confidential, all information relating to the Business, except as required by law or administrative process and except for information which is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 9.6. The covenant set -33- forth in this Section 9.6 shall terminate five (5) years after the Closing Date. 9.7 Further Assurances. After the Closing, each party shall take such further actions and execute such further documents as may be necessary or reasonably requested by the other party in order to effectuate the intent of this Agreement and to provide such other party with the intended benefits of this Agreement. ARTICLE X Miscellaneous 10.1 Expenses. Each of the parties hereto shall pay its own legal, accounting and other fees and expenses incurred in connection with the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant hereto and the consummation of the transactions contemplated hereby and any other costs and expenses incurred by such party, except as otherwise expressly set forth herein. 10.2 Notices. Any notice or other communication given under this Agreement shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other -34- communications shall be directed to the following addresses: Notices to Seller: Conopco, Inc. 390 Park Avenue New York, New York 10022 Attention: Secretary with copies to: Unilever United States, Inc. 390 Park Avenue New York, New York 10022-4698 Attention: General Counsel Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: James M. Edwards, Esq. Notices to Buyer: MBW Acquisition Corp. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Attn: Ray Chung Either party may, by notice given in accordance with this Section 10.2, specify a new address for notices under this Agreement. 10.3 Entire Agreement; No Third Party Beneficiaries; Amendment; Waiver. This Agreement and the exhibits and schedules annexed hereto and the Confidentiality Agreement dated August 12, 1996 between Buyer and Seller's parent corporation, Unilever United States, Inc., (a) constitute the entire understanding between the parties with respect to the subject matter hereof, and supersede all other understandings and negotiations with respect thereto and (b) except as provided in Article VIII, are not intended to -35- confer upon any person or entity other than the parties hereto and their successors and permitted assigns any rights or remedies hereunder. This Agreement may be amended only in a writing signed by both parties hereto. Any provision of this Agreement may be waived only in a writing signed by the party to be charged with such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. 10.4 Severability. In the event that any provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any jurisdiction, such provision shall be ineffective as to such jurisdiction to the extent of such invalidity, illegality or unenforceability without invalidating or affecting the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction. 10.5 Assignment. This Agreement may not be assigned in whole or in part by either party without the prior written consent of the other party. Notwithstanding the foregoing, Buyer may assign or delegate its rights, obligations or liabilities under this Agreement in whole or in part (i) to any purchaser of all or substantially all of the Business, (ii) to a subsidiary of Buyer so long as that in such event, Buyer shall remain fully liable for the fulfillment of all such obligations and (iii) as security to its lenders in respect of the Financing (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Buyer, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Buyer shall notify Seller of such assignment within two business days thereof. 10.6 Affiliates. For purposes of this Agreement, an "Affiliate" of any party means any person or entity controlling, controlled by or under common control with such party and, in the case of Seller, shall include Unilever N.V., Unilever PLC or any entity a majority of the voting shares of which is owned directly or indirectly by Unilever N.V. or Unilever PLC or both of them together. -36- 10.7 Governing Law. This Agreement shall be governed by the laws of the State of New York, applicable to agreements made and to be performed entirely therein. 10.8 Jurisdiction. Except as otherwise provided in Section 2.5.2 hereof, each party irrevocably agrees that any legal action, suit or proceeding against either of them with respect to its obligations or liability under or arising out of or in connection with this Agreement may be brought only in the United States District Court for the Southern District of New York or, if such court does not have jurisdiction, the state courts of New York located within New York County, and hereby irrevocably accepts and submits to the exclusive jurisdiction of the aforesaid courts in personam, with respect to any such action, suit or proceeding. 10.9 Service of Process. Each of the parties hereto irrevocably consents to the service of any and all legal process, summonses, notices and other documents which may be served in any action, suit or proceeding referred to in Section 10.8 above in the United States District Court for the Southern District of New York or the state courts of New York located in New York County, which service may be made by mailing a copy of such process by certified or registered mail, postage prepaid, to the party to be served at its address as provided in Section 10.2 hereof, with such service to be effective upon receipt. 10.10 Captions. The captions in this Agreement are for purposes of reference only and shall not limit or otherwise affect the interpretation hereof. 10.11 Defined Terms. References to defined terms in the singular shall include the plural and references to defined terms in the plural shall include the singular. 10.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -37- 10.13 Bulk Sales Law. Buyer hereby waives compliance with the provisions of all applicable bulk sales Laws. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. CONOPCO, INC. By:/s/ Mart Laius ----------------------------- Name: Mart Laius Title: Vice President MBW ACQUISITION CORP. By:/s/ James B. Ardrey ----------------------------- Name: James B. Ardrey Title: Executive Vice President -38- FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT FIRST AMENDMENT made this 31st day of December, 1996, to the ASSET PURCHASE AGREEMENT made the 18th day of December, 1996, between CONOPCO, INC., a corporation organized under the laws of New York ("Seller"), and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a corporation organized under the laws of Delaware ("Buyer"). WHEREAS Seller and Buyer have previously entered into the Asset Purchase Agreement pursuant to which Seller has agreed to sell and Buyer has agreed to purchase certain assets of Seller; and WHEREAS Seller and Buyer wish to amend the Asset Purchase Agreement as set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, Seller and Buyer hereby agree as follows: ARTICLE I Amendments 1.1 Amendment of Schedules. The Asset Purchase Agreement is hereby amended by deleting Schedule 3.4(A) thereto and replacing it with Schedule 3.4(A) hereto. ARTICLE II Miscellaneous 2.1 Governing Law. This First Amendment shall be governed by the laws of the State of New York, applicable to agreements made and to be performed entirely therein. 2.2 Counterparts. This First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2.3 Full Force and Effect. Except as specifically amended hereby, the Asset Purchase Agreement shall continue in full force and effect in accordance with the provisions thereof. As used therein, the terms "Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof", and words of similar import shall, unless the context otherwise requires, refer to the Asset Purchase Agreement as amended hereby. Any reference in any document to the Asset Purchase Agreement shall be deemed to be a reference to the Asset Purchase Agreement as amended hereby. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first set forth above. CONOPCO, INC. By:/s/ Mart Laius ----------------------------- Name: Mart Laws Title: Vice President MBW FOODS INC. By:/s/ Ray Chung ----------------------------- Name: Ray Chung Title: Executive Vice President -2- Exhibit A to Asset Purchase Agreement SHARED TECHNOLOGY LICENSE AGREEMENT (the "Agreement"), dated as of December 31, 1996, between CONOPCO, INC., a New York corporation ("Licensor"), and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a Delaware corporation ("Licensee"). WHEREAS Licensor and Licensee have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Asset Purchase Agreement"), providing for, among other things, the sale by Licensor of certain of its assets to Licensee; and WHEREAS, pursuant to Section 5.4 of the Asset Purchase Agreement, Licensor and Licensee have agreed to enter into a Shared Technology License Agreement pursuant to which Licensor shall grant certain rights in certain technology owned by Licensor to Licensee on the terms and conditions set forth herein. NOW,THEREFORE, in consideration of the mutual covenants and undertakings contained herein, the parties hereto agree as follows: 1. Interpretation. Capitalized terms used herein and not defined herein shall have the meanings assigned such terms in the Asset Purchase Agreement. 2. License. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a nonexclusive, perpetual and royalty-free right and license to use, in connection with Licensee's operation of the Business, any proprietary and/or confidential trade secrets, know-how, processes and other technology of Licensor used or held for use by Licensor in connection with the Business prior to the Closing Date other than the Transferred Technology (the "Licensed Technology"). Nothing herein shall be construed as creating any joint venture, partnership, or agency relationship between the parties hereto. Neither party hereto may make any commitment, or settle any claim for or on behalf of the other party without such other party's express written consent. 1 3. Infringements. Licensee shall notify Licensor of any infringement by third persons of the Licensed Technology that may come to Licensee's attention. Licensor shall have the sole right to determine what action, if any, shall be taken to remedy such infringements, which action shall be taken at Licensor's expense. 4. Notices. Any notice or other communication given under this Agreement shall be in writing and either shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: Notices to Licensor: Conopco, Inc. 390 Park Avenue New York, New York 10022 Attention: Company Secretary Notices to Licensee: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Attention: Ian R. Wilson 5. Assignment. This Agreement may not be assigned in whole or in part by Licensee without the prior written consent of Licensor; provided, however, that Licensee may assign, in whole or in part, its rights and obligations under this Agreement (i) to any party that 2 acquires all or any part of the Business and (ii) as security to its lenders in respect of the Financing (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Licensee, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Licensee shall notify Licensor of such assignment within two business days thereof. This Agreement may be assigned by Licensor without Licensee's consent. 6. Governing Law. This Agreement shall be governed by the laws of the State of New York, without regard to conflicts of laws principles. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names by their duty authorized representatives. CONOPCO, INC. By___________________________ Name: Title: MBW FOODS INC. By___________________________ Name: Title: 3 Exhibit B to Asset Purchase Agreement THIS LICENSE AGREEMENT effective on the 31st day of December 1996 (this "Agreement") is by and between CONOPCO, INC., having a principal place of business at 390 Park Avenue, New York, NY 10022 (hereinafter "CONOPCO") and UNILEVER PLC, an English company whose Head Office is at Unilever House, Blackfriars, London EC4, England (hereinafter "PLC") (hereinafter collectively "CONOPCO/PLC") and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a Delaware corporation (hereinafter "Purchaser"). WHEREAS CONOPCO is the owner through its Thomas J. Lipton division of the entire right, title and interest in and to Cirigiano, et al., US Patent No. 4,756,919 entitled "Acid Preservation Systems For Food Products", and PLC is the owner of corresponding Canadian Patent No. 1,283,800 (hereinafter the "Licensed Patents"); WHEREAS CONOPCO and Purchaser have entered into an Asset Purchase Agreement dated December 18, 1996 for the purchase of certain assets relating to the Mrs. Butterworth's pancake syrup and pancake and waffle mix business from CONOPCO; WHEREAS, in connection with the Purchase Agreement, Purchaser wishes to receive an exclusive license in the field of use limited to pancake syrups under the Patents solely to enable it to practice in the field of pancake syrups; and WHEREAS, CONOPCO wishes to retain exclusive rights under the Licensed Patents in all fields of use other than table syrups. NOW, THEREFORE, in consideration of the mutual promises contained herein and in the Purchase Agreement, the sufficiency as consideration of which is hereby acknowledged, the parties hereby agree as follows: SECTION 1. Grant. CONOPCO/PLC hereby grants Purchaser a royalty free, fully paid up, exclusive license, even as to CONOPCO/PLC, under the Licensed Patents to make, use, sell, offer to sell and import products in the field 1 of use limited to pancake syrups. This exclusive license for the field of pancake syrups shall likewise apply to any reissues or reexaminations of the Licensed Patents. SECTION 2. Title. CONOPCO warrants that it is the owner through its Thomas J. Lipton Division of Cirigiano, et al. US Patent No. 4,756,919. PLC warrants that it is the owner of corresponding Canadian Patent No. 1,283,800. SECTION 3. Term. The license granted by Section 1 hereof with respect to each Licensed Patent shall extend for the period during which such Licensed Patent is in force. SECTION 4. Assignment. This exclusive license in the field of use limited to pancake syrups may be assigned by Buyer. SECTION 5. Independent Contractors. The parties hereto intend by this Agreement to enter into a license agreement only and shall not in any way be deemed to establish any other relation between them. Neither CONOPCO nor PLC nor buyer shall be considered a partner, joint venturer, agent or other representative of the other for any purpose whatsoever and neither shall hold itself out as such. Neither Buyer nor CONOPCO nor PLC and no employee, officer, director or agent of any of them shall hold themselves out as an agent of the other party. SECTION 6. Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. SECTION 7. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all other prior agreements, understandings and negotiations, both written and oral, between the parties with respect hereto, except for the Purchase Agreement. SECTION 8. Amendment; Waiver. This Agreement may be amended only in a writing signed by all parties 2 hereto. Any provision of this Agreement may be waived only in a writing signed by the party to be bound by such waiver. No course of dealing between the parties should be effective to amend or waive any provision of this Agreement. SECTION 9. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. CONOPCO, INC., by _______________________________ Name: Title: UNILEVER PLC, By _______________________________ Name: Title: MBW FOODS INC., By_________________________________ Name: Title: Exhibit C to Asset Purchase Agreement TRANSITION SERVICES AGREEMENT This Transition Services Agreement ("Agreement"), is made as of December 31, 1996, by and between Conopco, Inc., a New York company acting through its division, Van den Bergh Foods Company, ("VDB"), and MBW Foods Inc. (f/k/a MBW Acquisition Corp.), a Delaware corporation ("Buyer"). W I T N E S S E T H: WHEREAS, pursuant to an Asset Purchase Agreement, dated as of December 18, 1996 (the "Purchase Agreement"), between Conopco and Buyer, Conopco has agreed to sell to Buyer the assets of the Business, as defined in the Purchase Agreement; and WHEREAS, it is a condition to Buyer's obligations under the Purchase Agreement that VDB and Buyer enter into this Agreement; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which the parties acknowledge, VDB and Buyer, intending to be bound legally, agree as follows: I. Definitions. Capitalized terms that are not otherwise defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. II. Transition Services. During the term of this Agreement as set forth in Section 6 (the "Transition Period"), VDB shall provide, or cause its Affiliates to provide, to Buyer or its designated Affiliates, the services set forth on Annex A, in the manner and at a level of service generally consistent with that provided by VDB, or its Affiliates, to the Business immediately preceding the date of this Agreement, it being acknowledged by Buyer that the Lipton and Van den Bergh Foods divisions of Conopco, Inc. are being merged. III. Payment. For the services rendered under this Agreement, Buyer will pay VDB fees as set forth in Annex B hereto, reduced for any partial weeks during which Buyer receives such services on a pro rata basis by multiplying the price specified in Annex B by a ratio determined as follows: the numerator of such ratio shall equal the actual number of Business Days during which Buyer receives 1 services during the partial week and the denominator shall equal five. IV. Cash Advances. As an advance for estimated collection of sales during a period, VDB will make cash advances by wire transfer ("Cash Advances") to Buyer, beginning January 31, 1997. The Cash Advances will be $1,000,000 on January 31, 1997, and $500,000 on the 15th and 30th of each subsequent month until the termination of the Transition Services Agreement. V. Reconciliation and Net Payment. From the Closing Date, at the end of each calendar month of the Transition Period, VDB will prepare a reconciliation (the "Reconciliation"), with supporting documentation as Buyer reasonably requests, of all payments required of VDB and Buyer to each other under this Agreement, including, without limitation, fees and cost reimbursement for services provided by VDB pursuant to this Agreement. From the Reconciliation, a determination of the net payment required, after adjusting for Cash Advances made during that month (the "Net Payment"), for that and the appropriate payee under this Agreement (i.e., to VDB or to Buyer) shall be made by VDB. Any Net Payment from VDB will be due 15 days following the end of each calendar month for which month payment is due. Any Net Payment from Buyer will be on the later of the 15th day following the end of each calendar month and 5 days after receipt by Buyer of the Reconciliation. Within 15 days of delivery of the Reconciliation to Buyer, either party may object to the calculation of the Reconciliation. Unresolved objections shall be resolved pursuant to Section 13 hereof. VI. Term of Agreement. The term of this Agreement shall commence on the Closing Date and shall continue for a period ending on the earlier of 6 months from the Closing Date or as to any services such date on which Buyer specifies, pursuant to Section 7 below, that such services shall terminate; provided, however, that Buyer will to the extent reasonably practicable make a good faith effort to cease using all services under this Agreement by five months from the Closing Date. 7. Partial Termination. Any or all of the services provided by a party under this Agreement are terminable by Buyer on 10 days prior written notice to VDB except as provided in Section I.C on Annex A hereto relating to brokers. Any such termination shall be final as to the services terminated. 2 8. Assignment. This Agreement shall not be assignable in whole or in part by any party without the prior written consent of the other party, except that Buyer may assign its rights under this Agreement to (A) any purchaser of all or substantially all of Buyer's business in respect of the Products, (B) to any of Buyer's Affiliates so long as that in such event Buyer shall remain fully liable for the fulfillment of all such obligations and (C) as security to Buyer's lenders in respect of the Financing or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of, or acquisitions by, Buyer, its successors or subsidiaries, if so requested; provided, however, that in the event of any such assignment of this Agreement, Buyer shall notify Seller of such assignment within two business days thereof. 9. Indemnification. Buyer hereby agrees to indemnify, defend and hold harmless VDB from and against any and all claims, losses, demands, costs, or liabilities, including reasonable attorneys' fees, resulting from or in connection with third party claims arising from VDB's performance of the services hereunder, unless such third party claims are due from VDB's gross negligence or willful misconduct in performing the services. Such indemnification shall survive the termination of this Agreement. Promptly upon receipt by VDB of notice of the assertion of any third party claim in respect to which indemnity may be sought against Buyer pursuant to this Section 9, VDB shall notify Buyer in writing thereof; but the omission to so notify Buyer will not relieve Buyer from any liability which it may have to VDB under this Section 9, except to the extent such failure to so notify materially prejudices the ability of Buyer to defend against such action. In defending against the claim, Buyer shall have the right to employ counsel of its own choosing and shall at all times have the power to direct the defense against the claim. VDB shall provide such assistance and cooperation, at Buyer's cost, as Buyer may reasonably request in connection with the defense of any claim with respect to which indemnity may be sought against Buyer pursuant to this Section 9. 10. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its provisions concerning conflicts or choice of law. The parties consent to the nonexclusive jurisdiction of the U.S. Federal Court situated in the Southern District of New York for the resolution of any disputes as to the construction of this Agreement. 3 11. Force Majeure. Neither party shall be considered in default in the performance of its obligations under this Agreement to the extent that its performance of such obligations is prevented or delayed by any cause beyond its reasonable control, including but not limited to strikes, labor disputes, civil disturbances, rebellion, invasion, epidemic, hostilities, war, embargo, natural disaster, acts of God, fire, sabotage, loss and destruction of property, changes in laws, regulations or orders, other events or situations which the party was unable to prevent or overcome despite the exercise of due diligence. 12. Confidentiality. Any and all information disclosed by one party to the other in connection with the performance of services under this Agreement, whether disclosed in writing, orally or visually, is considered confidential information, unless such information falls within the exceptions set forth below (hereinafter any and all such information shall be collectively referred to as "Confidential Information"). Each party agrees to disclose to the other party only such of its Confidential Information as may be reasonably necessary to provide the services contemplated hereunder. The recipient of Confidential Information agrees that Confidential Information disclosed to it hereunder shall be retained in confidence in the same manner used to protect its own confidential information and shall not be disclosed to others or used for purposes other than pursuant to this Agreement. Confidential Information shall not include any information which, in the form disclosed by the disclosing party, (a) was publicly available at the time of disclosure by the disclosing party; (b) became publicly available after disclosure by the disclosing party through no fault of the recipient; (c) was in the recipient's possession prior to disclosure by the disclosing party, as evidenced by the recipient's written record, and was not the subject of an earlier confidential relationship with the disclosing party; or (d) was rightfully acquired by the recipient after disclosure by the disclosing party from a third party who was lawfully in possession of the information and was under no obligation to the disclosing party to maintain its confidentiality. After termination of the Agreement, or at any other time requested by the disclosing party, the recipient shall return or destroy, at the disclosing party's direction, all documents, samples or other materials embodying Confidential Information, and shall retain no copies thereof. 13. Dispute Resolution. VDB and Buyer agree that, in the event that there is a disagreement with regard to 4 unresolved objections to the Reconciliation, senior management of the parties will meet and negotiate in good faith in an attempt to resolve the dispute. In the event that the parties are unable to resolve the dispute within 30 days from the date of written notice of disagreement, either party may submit the dispute to binding arbitration, which shall be conducted as follows: (i) the arbitration panel shall be composed of three arbitrators, one appointed by VDB, one appointed by Buyer and one chosen by the arbitrators appointed by VDB and Buyer; provided, however, the third arbitrator shall be an independent third party knowledgeable in accounting and administration and mutually satisfactory to VDB and Buyer; (ii) the arbitrators, in conducting such arbitration, shall have access to all relevant documents and records of the parties; (iii) the arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "Rules") in effect on the date such arbitration is commenced and shall be final and binding on the parties; and (iv) unless otherwise agreed, all arbitration proceedings shall be conducted in New York, N.Y. In the event a mutually satisfactory third arbitrator is not appointed within 30 days of submission of a dispute to binding arbitration, appointment of the third arbitrator shall be as provided in the Rules; provided, however, that the third arbitrator so appointed shall be an independent third party knowledgeable in accounting and administration. 14. Independent Contractor. At all times during the term hereof, VDB shall be an independent contractor in providing services hereunder with the sole right to supervise, manage, operate, control, and direct the performance of such services and the sole obligation to employ, compensate, and mange its employees and business affairs. Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture, to create the relationships of employee/employer or principal/agent, or otherwise create any liability whatsoever of either party with respect to the indebtedness, liabilities, obligations or actions of the other or any of their employees or agents, or any other person or entity. 15. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 16. Notices. All notices, requests, demands, or other communications to (a) VDB shall be given in 5 accordance with Section 10.2 of the Purchase Agreement with respect to notices to Seller and (b) Buyer shall be given in accordance with Section 10.2 of the Purchase Agreement with respect to notices to Buyer. 17. Modification, Non-Waiver, Severability. Neither this Agreement nor any part of this Agreement may be changed, altered, or amended orally. Any modification must be made by written instrument signed by the parties. Failure by either party to exercise promptly any right granted in this Agreement or to require strict performance of any obligation imposed under this Agreement shall not be deemed a waiver of such rights. If any provision of this Agreement is held ineffective for any reason, the other provisions shall remain effective. IN WITNESS WHEREOF, the parties have caused this Transition Agreement to be executed as of the date first set forth above. CONOPCO, INC. By________________________ Name: Title: MBW FOODS INC. By________________________ Name: Title: 6 ANNEX A SERVICES TO BE PROVIDED BY VDB I. MARKETING AND SALES TRANSITION A. Sales Support VDB shall provide to Buyer reasonable access to the appropriate sales personnel, to provide sales planning data and any other information that is non-proprietary to VDB and is reasonably required to accomplish a successful transition. Such information shall include, but not be limited to, the following: o a current file of all Mrs. Butterworth's Products, including price lists, specifications, shipping requirements, current customer lists and any exceptions to pricing or shipping requirements from those published prices; o terms of payment and lead times as published to class of trade and any exceptions to those published terms or lead times that may be in practice or committed to; o details of all promotional price programs, inclusive of off-invoice, bill backs, and other funds used for or charged to Mrs. Butterworth's, including accrued funds and their handling by either Mrs. Butterworth's brokers or Seller's personnel; o the ending dates of price programs, inclusive of pre-price, off-invoice, billbacks and/or other financial commitments and any exceptions that may apply to published dates; o Quarterly Sales Plan Binder for all markets and channels inclusive of first and (to the extent available) second quarter of 1997 fiscal year as may have been given to Mrs. Butterworth's brokers for ANNEX A Page 2 implementation. If not included in the Quarterly Sales Plan Binder, VDB will advise Buyer of any Mrs. Butterworth's Products included in any VDB or Unilever umbrella promotions; o all available sales and/or marketing manuals, product information, product files and market files that are related to Mrs. Butterworth's. B. Marketing Services For a maximum of three person days in the aggregate, VDB shall provide reasonable consultation with existing marketing management to help transition consumer and marketing initiatives and marketing research. C. Brokers and Salesforce VDB shall direct its brokers and direct salesforce to continue to take customer orders and to perform sales-related activities including, but not limited to, deduction processing, trade deal payments, and other customer payment-related activities. VDB shall also make, on Buyer's behalf, brokerage payments to be reimbursed by Buyer. As appropriate, VDB's sales personnel shall work with Buyer's brokers to effect an orderly transition of its service. Buyer shall give VDB at least 45 days advance notice of Buyer's intent to discontinue using any of Seller's brokers. Buyer will to the extent reasonably practicable make a good faith effort to cease its use of VDB's salesforce after two months from the Closing Date. II. TRANSACTIONS PROCESSING A. VDB shall provide to Buyer the following services for transactions processing consistent with those currently provided to the Business: ANNEX A Page 3 o Order entry and customer invoicing services for all channels of distribution, including retail, food service, military, and export. o Credit and Collections Management-VDB shall provide to Buyer cash application, credit memo administration, deduction management, and other accounting and administrative processes related to the accounts receivable/deduction management function necessary to conduct the Business, including collection of accounts receivable for sales invoiced on behalf of Buyer. o Order Picking and Loading-VDB shall, on behalf of Buyer, generate the necessary documents and paperwork for filling an order, scheduling the carriers, and loading the order for shipment. o Trade and Consumer Promotions-VDB, on behalf of Buyer, shall make payments relating to trade promotions and consumer promotions, including coupons, for which Buyer is responsible pursuant to Section 1.4 of the Purchase Agreement. o Trade Damage and Product Returns-Any trade damage claim that is submitted to VDB shall be paid by VDB and reimbursed by Buyer, provided, however, that with respect to any such claims that are received during the 60 day period after the Closing Date, VDB shall be responsible for liabilities as described in the Asset Purchase Agreement. Buyer will not make any claims against VDB in connection with its payment of any trade damage claim other than based on VDB's gross negligence. As part of accounts receivable and invoice processing services, VDB will process credit memos for product returns to customers as required. B. Accounting Services o VDB shall provide accounting services to the Buyer to provide necessary information and transaction processing on behalf of the Buyer. The following services shall be provided: ANNEX A Page 4 1. Daily sales reporting of units and revenues 2. Monthly reporting of gross and net sales (net sales defined as sales invoiced to customers less cash discounts and allowances and trade damage.) 3. Monthly accounts receivable information regarding balance of open accounts, aged trial balance, and customer deduction activity. 4. Coupon accounting services including monthly reporting of coupon history, redemptions, and related payments. 5. Trade deal accounting services including monthly reporting of deal history, payments, deductions, and adjustments. 6. Monthly finished goods inventory balances by SKU. 7. Reasonable transition assistance to help Buyer establish stand-alone activities. o VDB shall provide the monthly reports in a manner similar to what is shown on Exhibit 1, along with supporting documentation, as reasonably requested by Buyer. III. OTHER A. Consumer Response o VDB shall provide consumer response services to Buyer generally consistent with those services currently provided to the Business: B. Information Services o VDB shall provide information services necessary to support the transition services in the Agreement. VDB will also provide reasonable ANNEX A Page 5 assistance to the Buyer to transition existing data to the Buyer's systems as required. ANNEX B SERVICE FEES Service Fee Per Week - ------- ------------ Brand Management (maximum of 3 person days) 0 Sales Management $17,000(1) Trade Marketing $ 3,000 Customer Relations $ 4,575 (including credit and accounts receivable, order invoicing) Transportation Management $ 900 Information Technology $ 4,000 Finance and Accounting $ 6,225 Military and Export (UMEX) $ 2,000 800 phone number $ 8.00 per contact - ---------- (1) The charge for Sales Management services will be reduced proportionately based on the number of markets as such services are assumed by Buyer. EXHIBIT 1 Mrs. Butterworth's Statement of Activity Month of ____________ Sales (supported by Sales to Customer Reporting) List Billed SKU CS Price OI Revenue --- -- ----- -- ------- $ $ $ ______ ______ ______ $_____ $_____ $_____ Invoice Receivable (supported by aging, by customer) Balance Beginning of Period $ Billed Revenue Invoices Closed (A) ______ Balance End of Period $_____ Cash Discounts Taken (B) $_____ Deduction Receivable (supported by aging, by customer) Balance Beginning of Period $ Deductions created (C) Deductions - to reserves - to expense Deductions Repaid (D) ______ Balance End of Period $_____ EXHIBIT 1 Page 2 Mrs. Butterworth's Statement of Activity Month of ____________ Promotional Reserves - Trade (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared ___________ Balance End of Period $ =========== Promotional Reserves - Consumer Coupons (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared ___________ Balance End of Period $ =========== Promotional Reserves - Other Consumer (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared ___________ Balance End of Period $ =========== Damage Reserve Balance Beginning of Period $ Accruals Authorized EXHIBIT 1 Page 3 Cash Paid Deductions Cleared ___________ Balance End of Period $ =========== EXHIBIT 1 Page 4 Mrs. Butterworth's Statement of Activity Month of ____________ Inventory (supported by balance on hand, by SKU) Units ----- Balance Beginning of Period $ Inventory Produced Inventory Purchased Inventory Adjustments** Inventory Sold ______ ______ ___ Ending Inventory ______ $_____ ___ Customer Delivery Costs (supported by customer invoice, by zone report) ______ $_____ Broker Commissions (supported by commission statements ______ $_____ ** During the initial month of the transition, inventory adjustments shall reflect a deduction for the finished goods conveyed to Buyer at Closing. EXHIBIT 2 Mrs. Butterworth's Summary of Cash Activity Month of _______________ Due to Due From Buyer Buyer --------------------- Accounts Receivable Collected, Net (A - B - C + D) $ $ Inventory Produced Inventory Purchased Customer Delivery Costs Broker Commissions Promotional Payments: Trade Consumer Coupons Other Consumer Damages and Unsaleables Service Fee _________ $_____ Net Due to/from Buyer $ $ ========== ====== Exhibit D to Asset Purchase Agreement CO-PACK AGREEMENT dated as of December 31, 1996 (this "Agreement") between Van den Bergh Foods Company, a division of Conopco, Inc., a New York corporation ("Supplier"), and MBW Foods Inc. (f/k/a MBW Acquisition Corp.), a Delaware corporation ("Purchaser"). WHEREAS, Supplier and Purchaser have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Purchase Agreement"), providing for, among other things, the sale by Supplier to Purchaser of the Transferred Assets (as defined in the Purchase Agreement); WHEREAS, Section 5.4 of the Purchase Agreement also provides that Supplier and Purchaser shall enter into a manufacturing and supply agreement pursuant to which Supplier shall supply and Purchaser shall purchase the products listed on Schedule A hereto (the "Products") under the terms and conditions set forth herein; and WHEREAS, the Transferred Assets include certain Equipment used in connection with the Business (each as defined in the Purchase Agreement). NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the parties hereto agree as follows: ARTICLE I Binding Forecasts; Estimated Forecasts; Purchase Orders; Equipment 1.1. Binding Forecasts; Estimated Forecasts. On the date hereof, Purchaser shall provide Supplier with an initial written forecast of Purchaser's projected demand for Products during the three (3) month period beginning January 1, 1997. Thereafter, no later than the 15th day of each month, Purchaser shall supply a written forecast of Purchaser's projected demand during the following three months. The initial month's forecast for such Products (the "Binding Forecast") shall set forth the total quantity of Products that Purchaser shall order for delivery during such month and shall represent a commitment by Purchaser to purchase the amount of Product indicated thereunder. The last two months of each such forecast shall be a nonbinding, good faith estimate of the quantity of Products that Purchaser expects to order for delivery during the second and third months (the "Estimated Forecasts"). The Estimated Forecasts are for planning purposes only and shall not be construed as a firm commitment to Supplier. Supplier shall invoice Purchaser and Purchaser shall thereafter pay for any Product specified in a Binding Forecast but not ordered by Purchaser during the month to which such Binding Forecast relates. 1.2. Purchase Orders. All purchases of Product by Purchaser hereunder shall be pursuant to written purchase orders, which shall be delivered at least 20 days prior to the requested delivery date. A purchase order shall specify the Products ordered, the quantities of each Product ordered and the requested time and manner of delivery, all of which shall be subject to the amount of Products specified in the Binding Forecast and the provisions of Articles II and III. 1.3. Acceptance of Purchase Orders. Supplier may reject any purchase order that specifies a quantity that is inconsistent with the provisions of Article II or that, when added to the other quantities of Products delivered or to be delivered during any month, exceeds the Binding Forecast for such month or that contains a delivery schedule that is inconsistent with the provisions of Article III. 1.4. Removal of Equipment. Following expiration or termination of this Agreement, the Equipment shall be removed from Supplier's applicable facility in accordance with the provisions of the Purchase Agreement. In addition, upon such expiration or termination, Supplier shall immediately account for and return to Purchaser, freight collect, Specifications (as defined in Section 5.1) and co-pack manuals related exclusively to the Products and other confidential processing information owned and/or supplied by Purchaser pursuant to this Agreement. ARTICLE II Quantity; Purchased Inventory 2.1. Quantity. Purchaser shall purchase from Supplier, and Supplier shall, subject to the last sentence of this Section 2.1, sell to Purchaser, all Purchaser's requirements as forecasted and ordered during the term of, and subject to all the other terms of, this Agreement, provided, however, that Supplier shall have no obligation to supply any amount of Product in excess of the amount specified in the Binding Forecast for such month. In addition, no Binding Forecast shall be in excess of the maximum supply limits or below the minimum supply limits for the Products set forth on the attached Schedule B. If, during any period, Purchaser desires to purchase a quantity of Products that exceeds the maximum supply limits on any Binding Forecast, Purchaser shall notify Supplier in writing, and Supplier may, in its sole discretion, accommodate Purchaser, but shall be under no obligation to supply such additional quantities and shall not be responsible for any losses or damages that may be suffered by the Purchaser as a result of such failure to supply the additional Products. If Purchaser 2 wishes to reduce its purchases of Product hereunder to less than all of its requirements, (i) it may do so on 60 days notice to Supplier if the reduction in quantity is substantially the same percentage reduction for each SKU (with pricing thereafter to be in accordance with Schedule C-1) or (ii) if the reduction in quantity is not substantially the same percentage reduction for each SKU, Supplier and Purchaser shall negotiate in good faith the price increase that shall result from such reduction. Until 60 days (or as otherwise mutually agreed by Supplier and Purchaser) after Supplier and Purchaser have reached agreement with respect to the matters described in clause (ii) of the preceding sentence, Purchaser shall continue to purchase all of Purchaser's requirements from Supplier. 2.2. Purchased Materials. Pursuant to the Purchase Agreement, Purchaser has purchased certain raw materials and packaging supplies (the "Purchased Materials"), which shall be used by Supplier to manufacture the Products hereunder. All Purchased Materials shall be used by Supplier to produce the Products on a "first in, first out" basis before Supplier uses any similar raw materials or packaging supplies purchased after the date hereof. Purchaser's cost for the Purchased Materials is the amount set forth in respect thereof on the Closing Date Inventory Statement (as defined in the Purchase Agreement) (the "Purchased Material Cost"). ARTICLE III Delivery; Invoices; Title 3.1. Delivery. Prior to the expiration or termination of the Transition Services Agreement, Supplier shall deliver the Products as set forth in the Transition Services Agreement. Following the expiration or termination of the Transition Services Agreement, Supplier shall make the Products available for shipping by Purchaser's designated carrier, F.O.B., Supplier's Olathe, Kansas facility or Rochester, New York facility, as the case may be, on the date specified in the purchase orders, but, if a purchase order requests delivery less than 20 days after the receipt by Supplier of the purchase order, Supplier shall have 20 days after its receipt of the purchase order to deliver the Products ordered in such purchase order. Supplier shall use commercially reasonable efforts to manufacture and have ready for shipment orders of Products by any earlier requested shipment date, so long as such efforts do not interfere with Supplier's normal operations at Supplier's facilities. 3.2. Invoices; Payment. Following the expiration or termination of the Transition Services Agreement, all orders for Products under this Agreement shall be invoiced at the time of manufacture and any Products specified in a Binding Forecast but not ordered in the related calendar month shall be invoiced on the 3 business day following such month. All invoices hereunder shall be due and payable net thirty (30) days from the invoice date. Any amount not paid when due shall accrue interest at the rate of one and one-half percent (1-1/2%) per month until paid in full. 3.3. Title. Title to, and risk of loss regarding, the Products shall be in and pass to Purchaser upon Supplier's manufacture of the Products. ARTICLE IV Price 4.1. Price. The price for Products sold by Supplier to Purchaser shall be as described on Schedule C and Schedule C-1. ARTICLE V Quality 5.1. Specifications. The specifications for the Products are set forth on Schedule D (the "Specifications") and are the Specifications that were used by Supplier for the manufacture of the Products immediately prior to the Closing Date. Purchaser shall have the right, at its sole option, to modify from time to time the formulations for Products included as part of the Specifications (such modified Products are referred to herein as "Modified Products"); provided such modifications do not require any alterations or additions to the Equipment or process changes and would not interfere with Supplier's other business operations. Purchaser shall bear any additional costs which are required in order to manufacture Products in accordance with such modified formulations. A condition to any such modification shall be that the price for Products with modified formulations shall have been adjusted by mutual agreement of the parties to reflect the increased or decreased cost of manufacture by Supplier. At the request of the Purchaser, Supplier shall furnish to Purchaser records, invoices and other data pertaining to the prices for any such modified Products and/or the costs of Supplier for the manufacture thereof. Supplier shall code each Product as outlined in the Specifications and shall not mix different Product code dates in the same carton and/or case. Supplier shall consider in good faith any other requested changes by Purchaser; provided, however, that Supplier shall not be required to make any such other changes. 5.2. Nonconforming Products. Any Products delivered hereunder that do not conform to the Specifications shall be deemed to be "Nonconforming Products". Purchaser shall notify Supplier of any Nonconforming Products within 10 days after such Products were shipped from Supplier's facility; provided, that the 4 failure to give such notice shall not relieve Supplier of any liability hereunder except to the extent Supplier is actually prejudiced thereby; and provided, further, such notice must be given prior to the expiration of the shelf life of the Nonconforming Product at issue or Supplier shall have no liability in respect thereof. Any such Nonconforming Products shall be returned to Supplier at Supplier's cost, but prior to any such return, Supplier shall have the right to examine and test any Products that Purchaser claims are Nonconforming Products. At Supplier's option, it shall either issue Purchaser a credit for such Nonconforming Products or promptly replace, at Supplier's cost, such Nonconforming Products with Products that meet the Specifications. 5.3. Right To Inspect. During the term hereof, Purchaser shall have the right, at Purchaser's sole cost and expense, during normal business hours and upon reasonable written notice to Supplier, (i) to enter and inspect that portion of Supplier's facility where the Products are manufactured to ensure that the Products comply with the Specifications and to monitor all aspects of production of Products, (ii) to inspect the Equipment and (iii) to audit and inspect the books and records of Supplier's operations at the Supplier's facility to the extent related to the quality control of the manufacture of Product; provided, however, that any inspection pursuant to this Section 5.3 shall not interfere with Supplier's normal operations at such facilities and that such inspections are subject to the execution of confidentiality agreements reasonably satisfactory to Supplier. Supplier will promptly submit to Purchaser copies of all quality assurance reports as required by the Specifications. 5.4. Purchase of Raw Materials and Supplies. (a) Except for the Purchased Materials, Supplier shall purchase all ingredients, raw materials and packaging supplies necessary to produce the Products manufactured hereunder during the term hereof. Supplier shall make such purchases either as the agent of Purchaser or as a principal. (b) During the three months prior to the expiration of this Agreement or following such time as when notice has been given hereunder that either party hereto intends to terminate this Agreement, Supplier and Purchaser shall cooperate to minimize the quantities of ingredients, raw materials and packaging supplies that are held by Supplier for the manufacture of the Products. 5.5. Recall. Purchaser shall provide recall or withdrawal services in a manner which is consistent with the policies and procedures applied in recalling or withdrawing products in other food businesses for which Dartford Partnership provides management services, except that the decision to recall or withdraw the Products will be made in the sole discretion of Purchaser. Purchaser will, however, make all reasonable efforts to discuss the matter with Supplier. 5 5.6. Quality Control. Supplier agrees that it will not materially change the practices which were observed by Supplier with respect to the manufacture of Product prior to Purchaser's purchase of the Business, including, without limitation, sanitation, pest control, formula control, product evaluation procedures, shelf life, hold procedures, product safety plans and employee training. ARTICLE VI Term and Termination 6.1. Term. (a) This Agreement shall commence on the date hereof and shall continue in effect through the first anniversary of the Closing Date (as defined in the Purchase Agreement). (b) Any extension of this Agreement with respect to the supply of food service pancake mix from Supplier to Purchaser shall be agreed upon, on terms and conditions mutually agreeable to Supplier and Purchaser, at least three months prior to the termination of this Agreement; provided, however, neither party hereto shall be required to extend the term of this Agreement. 6.2. Termination. Notwithstanding the provisions of Section 6.1, this Agreement may be terminated prior to the expiration of the term, upon prior written notice as set forth below: (i) either in its entirety or with respect to one or more Products by mutual agreement of the parties; (ii) by Supplier, if Purchaser fails to pay any amount when due hereunder and such failure continues for a period of five (5) days following written notice thereof (unless the unpaid amount of such invoice is being contested in good faith by Purchaser); (iii) by either party if the other party commits a breach of any provision of this Agreement and such failure continues for a period of thirty (30) days following written notice; (iv) by either party, effective immediately, if the other party files, or has filed against it, a petition for voluntary or involuntary bankruptcy or pursuant to any other insolvency law or the other party makes or seeks to make a general assignment for the benefit of its creditors or applies for or consents to the appointment of a trustee, receiver or custodian for it or a substantial part of its property; or 6 (v) by either party, in the event of a Force Majeure occurrence affecting the other party which continues for more than sixty (60) days. 6.3. Effect of Termination. (a) Upon the termination or expiration of this Agreement, Purchaser shall purchase from Supplier (i) at the price provided in Section 4.1, all existing inventory of Products that have not already been paid for by Purchaser, and (ii) at the price paid by Supplier therefor, all quantities of ingredients, raw materials and packaging supplies, wherever located, excluding Purchased Materials, that are intended to be used in the manufacture of Products at the Supplier's facility. In addition, any Purchased Materials that remain in Supplier's possession shall be returned to Purchaser and Supplier shall pay to Purchaser the portion of the Purchased Material Cost attributable to Purchased Materials used by Supplier to manufacture the Products hereunder. Purchaser shall pay all shipping and delivery charges in respect of the inventories and Purchased Materials acquired under this Section 6.3(a). (b) Upon the termination or expiration of this Agreement, the Supplier shall cease manufacturing the Products. (c) In the event of expiration or termination of this Agreement for any reason, any obligations, claims, damages, losses, liabilities or debts arising prior to such expiration or termination shall survive the expiration or termination hereof for any reason whatsoever. ARTICLE VII Warranties 7.1. Supplier Warranties. Supplier warrants that the Products supplied hereunder shall be manufactured in accordance with and shall comply with the Specifications therefor and shall be manufactured in accordance with all applicable laws or regulations, including, without limitation, the provisions of the Federal Food, Drug and Cosmetics Act, as amended, and will not constitute "adulterated or misbranded goods" within the meaning of such Act; provided, however, that with respect to Modified Products, Supplier only warrants that such Modified Products will have been manufactured in accordance with the formulas and recipes therefor. WITHOUT LIMITING THE FOREGOING WARRANTIES, SUPPLIER MAKES NO OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND SUPPLIER SPECIFICALLY DISCLAIMS ANY SUCH WARRANTIES. 7.2. Purchaser Warranties. Purchaser warrants that (i) any Modified Product manufactured in accordance with its applicable formula will comply with the Specifications for such Modified 7 Product, (ii) the Specifications for Modified Products shall comply with all applicable laws or regulations, including, without limitation, the provisions of the Federal Food Drug and Cosmetics Act, as amended, and (iii) Modified Products manufactured in accordance with the applicable formulas will not constitute "adulterated or misbranded goods" within the meaning of such Act. ARTICLE VIII Limitation of Liability 8.1. Limitation of Liability. Except for Supplier's obligations under Section 9.1(b), the liability of Supplier with respect to the Products delivered hereunder shall be limited solely to the replacement or refund of Nonconforming Products as provided in Section 5.3 and Supplier shall have no other liability whatsoever with respect to the Products or Nonconforming Products. 8.2. No Consequential Damages. Except as may arise pursuant to the indemnification provided for in Article IX, neither party shall be liable for any indirect, special or consequential damages or for lost profits or revenues of any kind resulting from the failure of any Products to meet the Specifications or for any breach of this Agreement. ARTICLE IX Indemnification 9.1. Indemnification. (a) Purchaser shall indemnify, defend and hold Supplier and its affiliates harmless from and against any and all claims, losses, damages, liabilities, deficiencies, obligations, out of pocket costs or expenses, including without limitation reasonable attorneys' fees and expenses and costs and expenses of investigation (collectively "Losses") arising out of or resulting from (i) the sale or distribution of the Products or Modified Products; (ii) actual or alleged personal injury (including illness or death) in connection with or related to the use of the Products or Modified Products (in the case of clauses (i) and (ii), excluding Losses for which Supplier is liable pursuant to Section 9.1(b)) or (iii) breaches of Purchaser's warranties contained in Section 7.2 hereunder. (b) Supplier shall indemnify, defend and hold Purchaser and its affiliates harmless from and against all Losses in respect of actual or alleged personal injury (including illness or death) to the extent resulting from breaches of Supplier's warranties contained in Section 7.1 hereunder. 9.2. Indemnification Procedure for Third Party Claims. If a party entitled to indemnification hereunder (an "Indemnified Party") receives written notice of the commencement of any action 8 or proceeding, the assertion of any claim by a third-party or the imposition of any penalty or assessment for which indemnity may be sought under this Article IX (a "Third Party Claim") and the Indemnified Party intends to seek indemnity pursuant to this Article IX, the Indemnified Party shall promptly provide the party providing indemnification hereunder (the "Indemnifying Party") with written notice of such Third Party Claim. The Indemnifying Party shall be entitled to participate in or, at its option, assume the defense, appeal or settlement of such Third Party Claim, with counsel selected by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall fully cooperate with the Indemnifying Party in connection therewith. The Indemnified Party shall be entitled at any time to employ separate counsel to represent itself, but if the defense, appeal or settlement of such Third Party Claim has been assumed by the Indemnifying Party with its approved counsel as provided above, any separate counsel employed by the Indemnified Party shall be at the Indemnified Party's expense. The Indemnifying Party shall not settle any Third Party Claim, the defense or settlement of which is controlled by it, without the Indemnified Party's prior written consent. In the event that the Indemnifying Party fails to assume the defense, appeal or settlement of any Third Party Claim within ten (10) days after receipt of notice thereof from the Indemnified Party, the Indemnified Party shall have the right to undertake the defense, appeal or settlement of such Third Party Claim at the expense and for the account of the Indemnifying Party. 9.3. Survival. The indemnification provisions of this Article IX shall survive the expiration or termination of this Agreement for any reason whatsoever. ARTICLE X Other Agreements 10.1. Intellectual Property. The parties hereto understand and acknowledge that nothing contained in this Agreement shall be deemed to give Supplier or any other Person any right, title or interest to Purchaser's trademarks and trade names, or any other trademarks, trade names or other intellectual property of Purchaser and its affiliates, and the same shall at all times remain in Purchaser and its affiliates. Neither Supplier nor any other Person shall have any right to use, adopt or register any of such trademarks or trade names or other intellectual property, except as required to perform the services set forth herein or as authorized in writing by Purchaser. 10.2. Confidentiality. Supplier acknowledges that Purchaser will be providing Supplier with proprietary technical 9 information and know-how, including without limitation the Specifications (including all formulas), all of which information and know-how are closely guarded secrets and assets of Purchaser and its affiliates or customers. Supplier shall hold in confidence all such information and know-how received from Purchaser and shall use such information and know-how only for the purpose of manufacturing Products for Purchaser hereunder. Upon the termination or expiration of this Agreement, Supplier shall return to Purchaser all such information and know-how, together with all copies thereof, and shall retain none for its files. Supplier shall inform its employees of the confidential nature of such information and know-how. Supplier shall be responsible for any breaches of such confidentiality by its employees. 10.3. Ownership of Equipment. The Equipment shall at all times remain the property of Purchaser and such ownership shall be clearly designated. Supplier will perform routine maintenance, at a level and in a manner as historically performed by Supplier, on all Equipment. Purchaser shall be fully responsible for all non-routine or otherwise extraordinary repairs or maintenance, and for any replacement of, or capital improvements to, the Equipment, as needed. Purchaser shall assume the entire risk of loss or damage to the Equipment from any cause whatsoever while the Equipment is in Supplier's control and/or possession. Supplier shall not, at any time prior to return to Purchaser hereunder, remove the Equipment from the Supplier's facility. Supplier shall not use the Equipment for the processing or manufacturing of any product other than Products for sale to Purchaser hereunder. 10.4. Personnel. Supplier shall render the services agreed upon in this Agreement with its own personnel, and Supplier has the necessary and qualified personnel to perform such services. The personnel of Supplier performing any services hereunder shall be the employees of Supplier, and Purchaser shall have no labor relationship with such personnel nor shall Purchaser be liable for wages or collective bargaining liabilities to such employees. ARTICLE XI Miscellaneous 11.1. Notices. Any notice or other communication hereunder shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight 10 delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Supplier: Van den Bergh Foods Company 2200 Cabot Drive Lisle, Illinois 60532 Telecopier: (630) 955-5531 Attn: Arnold Friede with a copy to: Unilever United States, Inc. 390 Park Avenue New York, New York 10022 Telecopier: (212) 688-3411 Attn: General Counsel If to Purchaser: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Telecopier: (415) 982-3023 Attention: Ray Chung Either party may, by notice given in accordance with this Section 11.1, specify a new address for notices under this Agreement. 11.2. Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the interpretation hereof. 11.3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of 11 New York, without reference to its principles of conflict of laws. 11.4. Assignment. Neither party may assign its rights and obligations under this Agreement to any third party without the prior written consent of the other party; provided, however, that (i) Supplier may assign its rights and obligations hereunder (A) to any affiliate of Supplier that is capable of performing Supplier's obligations hereunder or (B) to any purchaser of Supplier's business or facility, and (ii) Purchaser may assign its rights and obligations hereunder (A) to any purchaser of all or substantially all of Purchaser's business in respect of the Products, (B) to any of Purchaser's affiliates so long as Purchaser shall remain fully liable for the fulfillment of all such obligations and (C) as security to Purchaser's lenders in respect of the Financing (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Purchaser, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Purchaser shall notify Supplier of such assignment within two business days thereof. 11.5. No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties and their successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 11.6. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.7. Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. 11.8. Independent Status. Supplier is an independent contractor engaged by Purchaser for the provision of the Products. Except as provided in Section 5.4, nothing in this Agreement shall constitute Supplier as an employee, agent or general representative of Purchaser. Except as provided in Section 5.4, this Agreement shall not constitute either party as 12 the legal representative or agent of the other nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of or on behalf of, the other party. 11.9. Force Majeure. Except for the payment of money, neither party shall be in default hereunder by reason of any failure or delay in the performance of its obligations hereunder where such failure or delay is due to circumstances or causes beyond such party's reasonable control, such as acts of God, labor disputes, strikes, war, threat of war, riot, intervention by governmental authorities, embargoes, priorities repealed or required by civil authorities, floods, fire, accident, delays in transportation or other occurrences of a similar nature. Any party affected by a "Force Majeure" occurrence shall provide written notice thereof to the other and shall indicate the projected length of such Force Majeure occurrence. 11.10. Jurisdiction; Service of Process. Supplier and Purchaser irrevocably consent and agree that any legal action, suit or proceeding against either of them with respect to their obligations or liabilities under or arising out of or in connection with this Agreement may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York sitting in New York County and each hereby irrevocably accepts and submits to the exclusive jurisdiction of each of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Supplier and Purchaser irrevocably consent and agree that the service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding arising hereunder may be made by mailing a copy thereof by certified or registered mail, postage prepaid, return receipt requested, to the party to be served at the address set forth in Section 11.1 hereof, with such service to be effective upon receipt. 11.11. Amendment; Waivers. This Agreement may be amended only in a writing signed by both parties hereto. Any provision of this Agreement may be waived only in a writing signed by the 13 party to be bound by such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. VAN DEN BERGH FOODS COMPANY, by: _______________________________ Name: Title: MBW FOODS INC., by: _______________________________ Name: Title: 14 Exhibit E to Asset Purchase Agreement FLAVOR SUPPLY AGREEMENT dated as of December 31, 1996 (this "Agreement"), between QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY ("Supplier"), and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a Delaware corporation ("Customer"). Supplier and Customer are referred to collectively in this Agreement as "the Parties". WHEREAS Conopco, Inc. and Customer have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Purchase Agreement"), providing for, among other things, the sale by Conopco, Inc. to Customer of the Transferred Assets (as defined in the Purchase Agreement); and WHEREAS Section 5.4 of the Purchase Agreement also provides that Supplier and Customer shall enter into a flavor supply agreement pursuant to which Supplier shall supply and Customer shall purchase two mixtures (each, a "Mixture" and together the "Mixtures"), as specified on Schedule A hereto, of the flavors listed on Schedule B hereto (the "Flavors") solely for use under the terms and conditions set forth herein; and WHEREAS Section 5.4 of the Purchase Agreement also provides that Supplier and Customer and an escrow agent (the "Escrow Agent") shall enter into an Escrow Agreement (the "Escrow Agreement") pursuant to which the formulations for the Flavors have been placed in escrow. NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the conditions herein set forth, the Parties agree as follows: ARTICLE I Term and Termination 1.1 Term. The term of this Agreement shall be for 12 years from the date hereof; provided, however, that this Agreement may be terminated by either party on the first anniversary of the date hereof, provided that such party gave written notice of the termination to the other party at least 90 days prior to the date of termination, or after such first anniversary, provided that such party gave written notice of the termination to the other party at least 135 days prior to the date of termination. 1 1.2 Termination. Notwithstanding the provisions of Section 1.1, this Agreement may be terminated prior to the expiration of the term, upon prior written notice as set forth below: (i) by mutual agreement of the Parties; (ii) by Supplier, if there exists a Customer Material Breach (as defined in Section 1.6); (iii) by Customer, if there exists a Supplier Material Breach (as defined in Section 1.6); (iv) by Customer, if there exists a Critical Supply Event (as defined in Section 1.7); or (v) by a party, in the event of a Force Majeure occurrence affecting the other party which continues for more than 180 consecutive days. 1.3 Termination Event. A "Termination Event" shall have occurred if this Agreement is terminated (a) by Customer pursuant to Sections 1.2(iv) or 1.2(v) or (b) by Supplier pursuant to the proviso to Section 1.1. 1.4 Withdrawal Event. A "Withdrawal Event" shall have occurred (a) if this Agreement is terminated pursuant to Section 1.2(i), (b) if this Agreement is terminated by Supplier pursuant to Sections 1.2(ii) or 1.2(v), (c) if there exists a Customer Material Breach in respect of which Supplier could have terminated this Agreement pursuant to Section 1.2(ii) but Supplier has waived such breach and continues to supply the Mixture, (d) if this Agreement is terminated by Customer pursuant to Section 1.2(iii), (e) if Customer delivers notice of termination pursuant to the proviso to Section 1.1, (f) on the twelfth anniversary of the date hereof or (g) if a Change of Control shall have occurred. For purposes of this Agreement, "Change of Control" means any transaction or series of related transactions resulting in any Competitor (A) acquiring beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of (i) so long as Customer has not consummated an initial public offering of its equity securities, 50% or more and (ii) thereafter, 20% or more, of the voting interests entitled to vote in the election of the board of directors (or similar governing body) of Customer or acquiring the power to appoint a majority of such board or (B) merging with Customer. As used herein, "Competitor" means any person or entity which is, or whose Affiliate (as defined in the Purchase Agreement) is, engaged, directly or indirectly, in the business of marketing, selling, manufacturing, developing or distributing 2 margarines, butters or other yellow fats or similar spreads (or any combinations thereof). 1.5 Effect of Termination. Upon termination of this Agreement, the undertakings of the Parties set forth herein shall forthwith be and become of no further force and effect; provided, however, that this Section 1.5, Sections 5.1, Section 8.1 and Article VII and rights and remedies for breaches of this Agreement prior to its termination shall survive such termination. Upon termination or expiration of this Agreement, Customer shall purchase from Supplier at the price provided in Article VI all existing inventory of Mixtures (in an amount not to exceed the sum of (a) quantities contained in unfilled purchase orders of Customer and (b) quantities of Mixtures representing one-quarter of the amounts ordered by Customer during the twelve-month period immediately preceding the date of notice of such termination and (c) any additional quantities of Mixtures in excess of those described in clause (b) above manufactured and stored at the request of Customer prior to such termination) and related packaging materials. 1.6 Material Breaches. (a) A "Supplier Material Breach" shall occur if (i) Supplier fails to supply the Mixtures in at least the quantities contained in purchase orders of Customer that comply with Articles II, III and IV and such failure is not cured within 30 days of receipt of notice from Customer to Supplier of such failure or (ii) Supplier breaches its warranty set forth in Section 9.1(a) or Section 9.1(b) hereof and such breach is not remedied within 30 days of receipt of notice from Customer to Supplier of such breach by replacement of the nonconforming Mixture with Mixture that complies with such warranties or (iii) Supplier breaches its warranty set forth in Section 9.1(c) hereof and such breach is not remedied within 30 days of receipt of notice from Customer to Supplier of such breach by replacement of the nonconforming Mixture with either (A) Mixture that complies with such warranty or (B) supply of the individual Flavors comprising the applicable Mixture (in which case all references in this Agreement to such Mixture shall be deemed to be references to the Flavors unless the context shall otherwise require). (b) A "Customer Material Breach" shall occur if (i) Customer fails to pay any invoice delivered pursuant to Section 4.2 within 45 days of the date of such invoice, provided that Supplier shall have notified Customer of such non-payment at least 5 days prior to the end of such period (unless the unpaid amount of such invoice is being contested in good faith by Customer), (ii) in any calendar year, Customer orders less than $100,000 (such amount to be increased on the first day of each succeeding calendar year from the amount in effect on the last day of the preceding 3 calendar year to reflect the average net price increase or decrease during such preceding calendar year) of Mixtures and such failure is not cured within 30 days after the end of such calendar year or (iii) there is a breach of Section 5.1, Section 7.2 or Section 8.1. 1.7 Critical Supply Event. (a) A "Critical Supply Event" shall occur if any of the following shall have occurred and shall have continued without being cured for 90 consecutive days so long as the notices specified in Section 1.7(b) were timely given by Customer in respect thereof: (i) Supplier fails to supply the Mixtures in at least the quantities contained in purchase orders of Customer that comply with Articles II, III and IV and such failure continues without being cured or (ii) Supplier breaches its warranty set forth in Section 9.1(a) or Section 9.1(b) hereof and such breach continues without being cured by replacement of the nonconforming Mixture with Mixture that complies with such warranties or (iii) Supplier breaches its warranty set forth in Section 9.1(c) hereof and such breach continues without being cured by replacement of the nonconforming Mixture with either (A) Mixture that complies with such warranty or (B) supply of the individual Flavors comprising the applicable Mixture (in which case all references in this Agreement to such Mixture shall be deemed to be references to the Flavors unless the context shall otherwise require). (b) If any of the events specified in Section 1.7(a)(i), (ii) or (iii) shall have occurred, Customer shall give notice of the applicable occurrence to Supplier and the Escrow Agent under the Escrow Agreement on the 30th, the 60th and the 85th consecutive day of the applicable 90 consecutive day period. ARTICLE II Binding Forecasts; Estimated Forecasts; Purchase Orders 2.1 Binding Forecasts; Estimated Forecasts. On the date hereof, Customer shall provide Supplier with an initial written forecast of Customer's projected demand for each Mixture during the three month period beginning on the date hereof. Thereafter, no later than the 15th day of each month, Customer shall supply a written forecast of Customer's projected demand during the following three months. The initial month's forecast for Mixtures (the "Binding Forecast") shall set forth the total quantity of each Mixture that Customer shall order for delivery during such month and shall represent a commitment by Customer to purchase the 4 quantity of each Mixture indicated thereunder. The last two months of each such forecast shall be a nonbinding, good faith estimate of the quantity of each Mixture that Customer expects to order for delivery during the second and third months (the "Estimated Forecasts"). The Estimated Forecasts are for planning purposes only and shall not be construed as a firm commitment to Supplier. Supplier shall invoice Customer and Customer shall thereafter pay for any quantity of a Mixture specified in a Binding Forecast but not ordered by Customer during the month to which such Binding Forecast relates. 2.2 Purchase Orders. All purchases of Mixtures by Customer hereunder shall be pursuant to written purchase orders, which shall be delivered at least 20 days prior to the requested delivery date. A purchase order shall specify the quantity of each Mixture ordered and the requested time and manner of delivery, all of which shall be subject to the amount of each Mixture specified in the Binding Forecast and the provisions of Articles III and IV. 2.3 Acceptance of Purchase Orders. Supplier may reject any purchase order (a) that specifies a quantity that is inconsistent with the provisions of Article III or (b) that specifies a quantity less than the minimum order amount set forth on the attached Schedule C or (c) that, when added to the other quantities of the applicable Mixture delivered or to be delivered during any month, exceeds the Binding Forecast for such month or (d) that contains a delivery schedule that is inconsistent with the provisions of Article IV. 2.4 Co-Packers. Supplier and Customer agree that any co-packer designated by Customer in writing may provide the forecasts and purchase orders and other instructions required under this Agreement and Supplier shall be entitled to rely thereon in the same manner as if they had been provided by Customer. ARTICLE III Quantity 3.1 Quantity. Customer shall purchase from Supplier, and Supplier shall sell to Customer, all Customer's requirements during the term of, and subject to all the other terms of, this Agreement; provided, however, that Supplier shall have no obligation to supply any amount of a Mixture in excess of the amount specified in the Binding Forecast for such month. In addition, no Binding Forecast shall be in excess of the maximum supply limit or below the minimum supply limit for such Mixture set forth on the attached 5 Schedule C. If, during any period, Customer desires to purchase a quantity of a Mixture that exceeds the maximum supply limits on any Binding Forecast, Customer shall notify Supplier in writing, and Supplier may, in its sole discretion, accommodate Customer, but shall be under no obligation to supply such additional quantity and shall not be responsible for any losses or damages that may be suffered by the Customer as a result of such failure to supply the additional Mixture. ARTICLE IV Delivery; Invoices; Title 4.1 Delivery. Supplier shall make the Mixtures available for shipping by Customer's designated carrier, F.O.B., Supplier's facility, on the date specified in the purchase orders, but, if a purchase order requests delivery less than 20 days after the receipt by Supplier of the purchase order, Supplier shall have 20 days after its receipt of the purchase order to deliver the Mixtures ordered in such purchase order. Supplier shall use commercially reasonable efforts to manufacture and have ready for shipment orders of Mixtures by any earlier requested shipment date, so long as such efforts do not interfere with Supplier's normal operations at Supplier's facilities. 4.2 Invoices; Payment. All orders for Mixtures under this Agreement shall be invoiced at the time of shipment and any Mixture specified in a Binding Forecast but not ordered in the related calendar month shall be invoiced on the business day following such month. All invoices hereunder shall be due and payable net thirty days from the invoice date. Any amount not paid when due shall accrue interest at the rate of one and one-half percent (1-1/2%) per month until paid in full. Notwithstanding anything herein to the contrary, if on three or more occasions Customer's invoices have become past due, Supplier may, on notice to Customer, require cash on delivery or security satisfactory to Supplier as a condition of delivery. 4.3 Title. Title to, and risk of loss regarding, a Mixture shall be in and pass to Customer upon Supplier's delivery of such Mixture to the carrier, pursuant to Section 4.1. 6 ARTICLE V Exclusive Use; No Development 5.1 Use. Customer shall not use the Mixtures or the Flavors in margarines, butters or other yellow fats or similar spreads (or any combinations thereof). Except as otherwise provided in Section 2.01(b) of the Escrow Agreement if then applicable, Customer shall not provide, assign, sell, license or otherwise transfer to any third party the Mixtures or the Flavors; provided, that Customer may provide the Mixtures to a third party co-packer for the purpose of manufacturing end products incorporating the Mixtures so long as (A) such co-packer is not a Competitor and (B) such co-packer agrees in writing to be bound by the provisions of Section 5.1, Article VII and Section 8.1 (including agreeing that Supplier and Unilever N.V. shall be third party beneficiaries of such agreement), it being agreed that Customer shall be responsible for any breaches of such provisions by such co-packer and any such breach shall be deemed to be a breach by Customer. For avoidance of doubt, the foregoing restriction shall not prevent Customer from selling end products which incorporate the Mixtures or the Flavors. This Section shall survive the termination or expiration of this Agreement, or the rendering of services or sale of Mixtures or Flavors pursuant to this Agreement. 5.2 No Development. For avoidance of doubt, Customer acknowledges and agrees that Supplier shall not have any obligation to undertake research and development activities for Seller in respect of the Mixtures or the Flavors. ARTICLE VI Pricing 6.1 Base Price. The initial price for each Mixture (the "Base Price") will be in proportion to the prices for the component Flavors comprising such Mixture set forth on Schedule D hereto. Supplier represents and warrants to Customer that: (a) The respective prices set forth on Schedule D hereto are the prices at which Supplier provided the respective Flavors to Seller (as defined in the Purchase Agreement) immediately prior to the Closing Date (as defined in the Purchase Agreement); and (b) During the 11-month period ending November 30, 1996, Seller's aggregate purchases of the Flavors comprising the Mixtures were $350,927. 7 6.2 Adjustment of Base Price. (a) The Base Price for each Mixture is subject to upward or downward adjustment at the end of each three-month period during the term of this Agreement, to reflect increases or decreases, if any, in Supplier's direct expenses incurred in manufacturing and supplying Customer with such Mixture pursuant to this Agreement, on a per unit of Mixture sold basis ("Direct Expenses"). (b) At least 30 days prior to the end of the first three-month period of the term of this Agreement, or at least 30 days prior to the expiration of each successive three-month period, as the case may be, Supplier may notify Customer of an increase or decrease in Direct Expenses if during the current three-month period the Direct Expenses increased or decreased from the Direct Expenses for the previous three-month period. Effective at the commencement of the next three-month period following such notice, the price at that time (as previously adjusted pursuant to this Section) would be adjusted by an amount that is equal to the increase or decrease in Supplier's Direct Expenses for such Mixture. With such notice, Supplier will provide Customer with an officer's certificate certifying that any such price adjustment reflects only the increase or decrease in Supplier's Direct Expenses as provided in the immediately preceding sentence. Supplier will keep accurate records and books of account on all Direct Expenses and related information required for the orderly administration of the price adjustment provisions set forth in this Section. ARTICLE VII Confidentiality 7.1 Definitions. "Confidential Information" as used herein shall mean all proprietary and other information not available to the general public and disclosed by Supplier or its representatives to Customer or its officers, employees, directors, shareholders, affiliates, subsidiaries, parents, contractors, agents or other representatives (collectively, "Representatives"), in connection with selling the Mixtures and the Flavors to Customer pursuant to this Agreement, whether orally or in writing, or obtained by inspection of the facilities, documents or other material of the other party. Customer acknowledges that the composition and formulation of, and recipes for, the Mixtures and the Flavors are proprietary information of Supplier and Unilever N.V. and are deemed to be Confidential Information. 7.2 Confidentiality. (a) Except as otherwise provided in Section 2.01(b) of the Escrow Agreement if then applicable and in Section 7.2(h) herein, Customer shall hold 8 Confidential Information in strict confidence and shall not disclose Confidential Information to any third party without the prior written consent of Supplier. (b) Customer shall be bound by the obligations to maintain Confidential Information as confidential, and agrees to cooperate with Supplier in enforcing said obligation in the event of breach by Customer or its Representatives. (c) Customer agrees not to use Confidential Information in any way for its own benefit or for the benefit of others. (d) Customer agrees not to use Confidential Information directly or indirectly against Supplier in the future. (e) Customer agrees not to disclose anything about this Agreement, or the nature of the services performed thereunder, or the existence of any business partnership to any third party without the prior written consent of Supplier, except as required by applicable law or as otherwise required to perform this Agreement. (f) Customer agrees to indemnify and hold Supplier harmless on account of any loss, injury, damage, or claim that may result from breach of this Section 7.2. Further, Customer agrees that damages alone would be inadequate to compensate Supplier for a breach of the covenants of this Section 7.2, and in the event of such breach, the Supplier may obtain equitable relief, including without limitation an injunction, from a court of competent jurisdiction. (g) The obligations of Customer under this Section 7.2 shall survive the termination or expiration of this Agreement or the discontinuance of services or the providing of Flavors pursuant to this agreement. This Section is binding on the Representatives, successors and assigns of Customer. (h) Confidential Information obtained by Customer shall be disclosed to its Representatives only on a "need to know" basis and Customer shall be responsible for any breaches of this Agreement by Customer's Representatives. Nothing contained herein shall prevent Customer from disclosing to third parties or using in any manner information which Customer can in good faith show: (i) Has been published and has become part of the public domain other than by the acts, omissions or fault of Customer or its Representatives; or 9 (ii) Has been furnished or made known to the Customer by third parties (other than those acting on behalf of Supplier) who have provided such information as a matter of legal right without restrictions on its disclosure; or (iii) Was in Customer's possession (as shown by tangible evidence) prior to the date of this Agreement and disclosure thereof by Supplier to Customer; or (iv) Was compelled to be disclosed by lawful order or subpoena, but only after prior notice to Supplier and Supplier has had a reasonable opportunity to take appropriate action to protect such information from disclosure. ARTICLE VIII Covenant Not to Reverse Engineer or Analyze 8.1 Non-analysis. Customer agrees that neither it nor any of its Representatives, successors or assigns, or any third party acting on Customer's behalf, directly or indirectly, will make any attempt to reverse engineer, analyze or discover the composition, recipe or formulation of either Mixture or the Flavors; provided, that Customer may engage in testing solely (i) for purposes of quality control or (ii) as required by applicable law. Customer agrees that it shall be responsible for any breach of this Section by its Representatives. ARTICLE IX Warranties 9.1 Warranties. (a) Supplier warrants that all Mixtures sold pursuant to this Agreement shall meet, in all material respects, the applicable specifications therefor existing immediately prior to the Closing Date. (b) Supplier warrants that all Mixtures sold pursuant to this Agreement shall comply with all applicable laws and regulations, including but not limited to the regulations of the United States Food and Drug Administration. (c) Supplier warrants that supplying the Flavors in the Mixtures as opposed to individually will not adversely affect the integrity or taste of Mrs. Butterworth's syrups as 10 compared to their taste as manufactured by Seller immediately prior to the date hereof. (d) (i) Supplier warrants that at the time of shipment by Supplier the Mixtures shall be fit for the ordinary purposes for which such Mixtures are used. NO OTHER REPRESENTATION OR WARRANTY SHALL BE BINDING UPON SUPPLIER. SUPPLIER MAKES NO OTHER WARRANTIES TO CUSTOMER OR ANY OTHER PERSONS OR PARTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND IN PARTICULAR, BUT NOT BY WAY OF LIMITATION, SUPPLIER MAKES NO WARRANTY OF MERCHANTABILITY AND NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. (ii) Customer assumes all risk and liability with respect to Customer's manufacturing process and the use of the Mixtures in combination with any other ingredients or products. (iii) The liability of Supplier for any breach of this Agreement shall not exceed the purchase price of the applicable Mixture and shall be limited to the repayment of the purchase price for the particular Mixture in question. In no event shall Supplier be liable to Customer or to any other person or party for any incidental or consequential damages of any nature arising out of or because of this Agreement, the use of the Mixtures or the nonconformity of the Mixtures. If notice of any claims by Customer with respect to any Mixture is not given to Supplier within 21 days of the delivery date of such Mixture (provided Customer must properly store the Mixtures), such claims shall be waived and extinguished. ARTICLE X General Provisions 10.1 Notices. Any notice or other communication hereunder shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the 11 fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Supplier: Quest International Flavors & Food Ingredients Company 5115 Sedge Boulevard Hoffman Estates, IL 60192 Telecopier: (847) 645-7070 Attn: Business Unit Manager ABC&T with a copy to: Unilever United States, Inc. 390 Park Avenue New York, NY 10022 Telecopier: (212) 688-3411 Attn: General Counsel If to Customer: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Telecopier: (415) 982-3023 Attn: Ray Chung Either party may, by notice given in accordance with this Section 10.1, specify a new address for notices under this Agreement. 10.2 Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the interpretation hereof. 10.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflict of laws. 12 10.4 Assignment. Neither party may assign its rights and obligations under this Agreement to any third party without the prior written consent of the other party; provided, however, that (i) Supplier may assign its rights and obligations hereunder (A) to any affiliate of Supplier that is capable of performing Supplier's obligations hereunder or (B) to any purchaser of Supplier's business or facility, and (ii) Customer may assign its rights and obligations hereunder, in whole but not in part, (A) to any purchaser of all or substantially all of Customer's Mrs. Butterworth's syrup business, (B) to any of Customer's affiliates so long as that in such event Customer shall remain fully liable for the fulfillment of all such obligations and (C) as security to its lenders in respect of the Financing (as defined in the Purchase Agreement) (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Customer, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Customer shall notify Supplier of such assignment within two business days thereof. 10.5 No Third Party Beneficiaries. Except for the provisions of Section 5.1, Article VII and Section 8.1, which are also intended to benefit Unilever N.V., this Agreement shall be binding upon and inure solely to the benefit of the parties and their successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 10.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.7 Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. 10.8 Independent Status. Supplier is an independent contractor engaged by Customer for the provision of the Mixtures. Nothing in this Agreement shall constitute Supplier as an employee, agent or general representative of 13 Customer. This Agreement shall not constitute either party as the legal representative or agent of the other nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of or on behalf of, the other party. 10.9 Force Majeure. Except for the payment of money, neither party shall be in default hereunder by reason of any failure or delay in the performance of its obligations hereunder where such failure or delay is due to circumstances or causes beyond such party's reasonable control, such as acts of God, labor disputes, strikes, war, threat of war, riot, intervention by governmental authorities, embargoes, priorities repealed or required by civil authorities, floods, fire, accident, delays in transportation or other occurrences of a similar nature. Any party affected by a "Force Majeure" occurrence shall provide written notice thereof to the other and shall indicate the projected length of such Force Majeure occurrence. 10.10 Jurisdiction; Service of Process. Supplier and Customer irrevocably consent and agree that any legal action, suit or proceeding against either of them with respect to their obligations or liabilities under or arising out of or in connection with this Agreement may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York sitting in New York County and each hereby irrevocably accepts and submits to the exclusive jurisdiction of each of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Supplier and Customer irrevocably consent and agree that the service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding arising hereunder may be made by mailing a copy thereof by certified or registered mail, postage prepaid, return receipt requested, to the party to be served at the address set forth in Section 11.1 hereof, with such service to be effective upon receipt. 10.11 Amendment; Waivers. This Agreement may be amended only in a writing signed by both parties hereto. Any 14 provision of this Agreement may be waived only in a writing signed by the party to be bound by such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. MBW FOODS INC. by ______________________ Name: Title: QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY, by ______________________ Name: Title: 15 Exhibit F to Asset Purchase Agreement ESCROW AGREEMENT dated as of , 1996, among QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY ("Supplier"), MBW ACQUISITION CORP., a Delaware corporation ("Customer") and BANK, a national banking association, as Escrow Agent (the "Escrow Agent"). WHEREAS CONOPCO, INC. ("Seller") and Customer have entered into an Asset Purchase Agreement dated as of ___________, 1996 (the "Purchase Agreement"), providing for, among other things, the sale by Seller to Customer of the Transferred Assets (as defined in the Purchase Agreement); WHEREAS in connection with the transactions contemplated by the Purchase Agreement, Supplier and Customer are entering into a Flavor Supply Agreement of even date herewith (the "Flavor Supply Agreement") pursuant to which Supplier shall supply and Customer shall purchase the Mixtures of the Flavors (each as defined in the Flavor Supply Agreement); WHEREAS it is a condition to Customer's obligations under the Purchase Agreement that Supplier enter into this Agreement; and WHEREAS in connection with the transactions contemplated by the Flavor Supply Agreement there is being deposited with the Escrow Agent pursuant to this Agreement the formulations for the Flavors (the "Formulations"). Capitalized terms used but not defined herein shall have the meaning assigned to such terms in the Flavor Supply Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Flavor Supply Agreement, the parties hereto hereby agree as follows: ARTICLE I Creation of Escrow; Supplier's Representations and Warranties SECTION 1.01. Creation of Escrow. The Escrow Agent hereby agrees to accept the Formulations from Supplier and to hold same in escrow pursuant to the terms of this Agreement. The Escrow Agent hereby agrees that the 1 Formulations held hereunder shall be held for the account of Supplier. SECTION 1.02. Representations and Warranties. Supplier represents and warrants to Customer that: (a) Unilever N.V., an Affiliate (as defined in the Purchase Agreement) of Supplier owns the Formulations (other than Maple N&A DY08551) ("Maple"), which is owned by Supplier free and clear of any liens, mortgages, pledges or other encumbrances of any nature) free and clear of any liens, mortgages, pledges or other encumbrances of any nature; (b) Supplier has a valid, non-exclusive, perpetual license to use the Formulations (other than Maple) for the manufacture of the Flavors; (c) Supplier has full power and authority to grant the license set forth in Section 2.01(d); and (d) the Formulations constitute the complete formulae for the Flavors. ARTICLE II Distribution of Escrowed Formulations SECTION 2.01. Termination of Escrow and Distribution of Escrowed Formulations to Customer. (a) If Customer delivers written notice to the Escrow Agent (with a copy to Supplier, receipt of which shall be verified by the Escrow Agent telephonically and in writing) that a Critical Supply Event (as defined in the Flavor Supply Agreement) shall have occurred, then if Customer shall have timely delivered the notices required by Section 1.7(b) of the Flavor Supply Agreement in respect of such Critical Supply Event (delivery of which to Supplier shall be verified by the Escrow Agent telephonically and in writing), the Escrow Agent shall deliver the Formulations to Customer and the escrow created hereunder shall terminate. (b) In the event that Customer obtains the Formulations pursuant to Section 2.01(a): (i) Customer shall use the Formulations solely for the manufacture of the Flavors; (ii) Customer shall not use the Flavors in margarines, butters or other yellow fats or similar spreads (or any combinations thereof); 2 (iii) Customer shall not assign, sell, license or otherwise provide to any third party the Flavors or the Formulations (except as otherwise provided pursuant to Section 2.01(b)(iv)); provided, that Customer may assign the Formulations, in whole but not in part, to any purchaser of all or substantially all of Customer's Mrs. Butterworth's syrup business so long as such purchaser is not a Competitor (as defined below) and such purchaser agrees in writing to be bound by the provisions of this Section 2.01(b) and Section 2.01(c); (iv) Customer shall hold the Formulations in strict confidence and shall not, and shall cause its Representatives not to, disclose the Formulations to any third party without the prior written consent of Supplier; provided, that Customer may disclose the Formulations to a third party supplier for the purpose of manufacturing the Flavors for Customer so long as (A) such supplier is not a Competitor and (B) such supplier agrees in writing to be bound by the provisions of this Section 2.01(b) (including agreeing that Supplier and Unilever N.V. shall be third party beneficiaries of such agreement), it being agreed that Customer shall be responsible for any breaches of this Section 2.01(b) by such supplier and any such breach shall be deemed to be a breach by Customer; and (v) Customer shall disclose the Formulations to its Representatives only on a "need to know" basis and Customer shall be responsible for any breaches of this Section 2.01(b) by Customer's Representatives and any such breach shall be deemed to be a breach by Customer. For purposes of this Agreement, "Competitor" means any person or entity which is, or whose Affiliate (as defined in the Purchase Agreement) is, engaged, directly or indirectly, in the business of marketing, selling, manufacturing, developing or distributing margarines, butters or other yellow fats or similar spreads (or any combinations thereof). (c) Customer agrees to indemnify and hold Supplier harmless on account of any loss, injury, damage, or claim that may result from breach of Section 2.01(b) or Section 2.01(d). Further, Customer agrees that damages alone would be inadequate to compensate Supplier for a breach of the covenants of Section 2.01(b), and in the event of such breach, Supplier may obtain equitable relief, including, without limitation, an injunction, from a court of competent jurisdiction. The obligations of Customer under Section 2.01(b), this Section 2.01(c) and Section 2.01(d) shall (i) survive the termination or expiration of this Agreement or the escrow and (ii) be 3 binding upon the Representatives, successors and assigns of Customer. (d) Supplier hereby grants Customer a nonexclusive, perpetual, royalty-free license to use the Formulations solely for the manufacture of the Flavors, which Flavors shall not be used in margarines, butters or other yellow fats or similar spreads (or any combinations thereof). The foregoing license shall become effective when and if Customer obtains the Formulations pursuant to Section 2.01(a). In the event that Customer breaches any provision of Section 2.01(b) in any material respect, the foregoing license shall automatically terminate. SECTION 2.02. Termination of Escrow and Distribution of Escrowed Formulations to Supplier. If Supplier delivers written notice to the Escrow Agent (with a copy to Customer, receipt of which shall be verified by the Escrow Agent telephonically and in writing) that a Withdrawal Event (as defined in the Flavor Supply Agreement) shall have occurred, then on the fifteenth business day following receipt of such notice by the Escrow Agent and Customer, the Escrow Agent shall deliver the Formulations to Supplier and the escrow created hereunder and the license granted pursuant to Section 2.01(d) shall terminate, unless the Escrow Agent shall have received, within such fifteen business day period, a written objection from Customer to such delivery setting forth Customer's contention that the Withdrawal Event identified by Supplier is in dispute and the nature of the dispute, in which case the Escrow Agent shall continue to hold the Formulations in escrow hereunder until either (A) receipt of a certificate signed by Customer and Supplier directing the Escrow Agent to deliver the Formulations to Supplier or (B) receipt of a formal order of a court of competent jurisdiction directing the Escrow Agent to deliver the Formulations to Supplier. ARTICLE III The Escrow Agent SECTION 3.01. General. The Escrow Agent shall not deal with the escrowed Formulations except in accordance with (a) this Agreement, (b) written instructions given in conformity with this Agreement or (c) instructions agreed to in writing by Customer and Supplier. The Escrow Agent shall not be bound in any way by the Purchase Agreement or the Flavor Supply Agreement or by any agreement or contract between Customer or Supplier (whether or not the Escrow Agent has knowledge thereof), it being understood that the Escrow Agent's only duties and responsibilities shall be to hold and distribute the escrowed Formulations in accordance 4 with the terms of this Agreement. The Escrow Agent shall have no liability with respect to any action taken by it except for its own gross negligence or wilful misconduct. The Escrow Agent makes no representations and has no responsibility as to the validity, genuineness or sufficiency of any of the documents or instruments included in the subject matter of the escrow. The Escrow Agent may rely and shall be protected in relying upon any resolution, certificate, opinion, request, communication, demand, receipt or other paper or document in good faith believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent may act in reliance upon the advice of counsel satisfactory to it in reference to any matter in connection with the escrow and shall not incur any liability for any action taken in good faith in accordance with such advice. SECTION 3.02. Fees. The Escrow Agent's fees and expenses (including the reasonable fees, expenses and disbursements of its counsel) in acting hereunder shall be paid by Customer. SECTION 3.03. Resignation. The Escrow Agent or any successor Escrow Agent hereunder may resign by giving 30 days' prior written notice of resignation to Customer and Supplier, and such resignation shall be effective from the date specified in such notice. In case the office of Escrow Agent shall become vacant for any reason, Supplier may appoint a bank or trust company having capital and undivided surplus (as reflected in its latest publicly available certified financial statements) of not less than $25 million and having an office in New York, NY, as successor Escrow Agent hereunder by an instrument or instruments in writing delivered to such successor Escrow Agent, the retiring Escrow Agent, and Customer, whereupon such successor Escrow Agent shall succeed to all the rights and obligations of the retiring Escrow Agent as if this Agreement were originally executed by such successor Escrow Agent, and the retiring Escrow Agent shall duly transfer and deliver to such successor Escrow Agent the escrowed Formulations. ARTICLE IV Miscellaneous SECTION 4.01. Expenses. Customer and Supplier shall pay its own costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby. 5 SECTION 4.02. Notices. Any notice or other communication hereunder shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Supplier: Quest International Flavors & Food Ingredients Company 5115 Sedge Boulevard Hoffman Estates, IL 60192 Telecopier: (847) 645-7070 Attn: Business Unit Manager ABC&T with a copy to: Unilever United States, Inc. 390 Park Avenue New York, NY 10022 Telecopier: (212) 688-3411 Attn: General Counsel If to Customer: MBW Acquisition Corp. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Telecopier: Attn: Ray Chung 6 If to the Escrow Agent: Telecopier: Attn: Either party may, by notice given in accordance with this Section 4.02, specify a new address for notices under this Agreement. SECTION 4.03. Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the interpretation hereof. SECTION 4.04. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflict of laws. SECTION 4.05. Assignment. Customer may not assign its rights and obligations under this Agreement to any third party without the prior written consent of Supplier; provided, however, that Customer may assign its rights and obligations hereunder, in whole but not in part, (A) to any purchaser of all or substantially all of Customer's Mrs. Butterworth's syrup business so long as such purchaser is not a Competitor and such purchaser agrees in writing to be bound by the provisions of this Agreement and (B) as security to its lenders in respect of the Financing (as defined in the Purchase Agreement) (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Customer, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Customer shall notify Supplier of such assignment within two business days thereof. Customer's rights and obligations under this Agreement may not be assigned (including by operation of law) to a Competitor and any such attempted assignment shall be null and void and shall result in the immediate termination of the escrow created hereunder and the license granted pursuant to Section 2.01(d). SECTION 4.06. No Third Party Beneficiaries. Except for the provisions of Section 2.01(b) and (c), which are also intended to benefit Unilever N.V., this Agreement shall be binding upon and inure solely to the benefit of the 7 parties and their successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 4.07. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 4.08. Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. SECTION 4.09. Jurisdiction; Service of Process. Supplier, Customer and the Escrow Agent irrevocably consent and agree that any legal action, suit or proceeding against either of them with respect to their obligations or liabilities under or arising out of or in connection with this Agreement may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York sitting in New York County and each hereby irrevocably accepts and submits to the exclusive jurisdiction of each of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Supplier, Customer and the Escrow Agent irrevocably consent and agree that the service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding arising hereunder may be made by mailing a copy thereof by certified or registered mail, postage prepaid, return receipt requested, to the party to be served at the address set forth in Section 4.02 hereof, with such service to be effective upon receipt. SECTION 4.10. Amendment; Waivers. This Agreement may be amended only in a writing signed by all parties hereto. Any provision of this Agreement may be waived only in a 8 writing signed by the party to be bound by such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY by _______________________ [Corporate Seal] Attest: _________________________ (Assistant) Secretary MBW ACQUISITION CORP., by _______________________ [Corporate Seal] Attest: _________________________ (Assistant) Secretary BANK, as Escrow Agent, by _______________________ 9 Exhibit G to Asset Purchase Agreement [Legal Opnion of Cravath, Swaine & Moore] 1 Exhibit H to Asset Purchase Agreement LICENSE AGREEMENT This License Agreement (the "Agreement") made this 31st day of December, 1996, between MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a corporation organized under the laws of Delaware, with its address at c/o Dartford Partnership L.L.C., 801 Montgomery Street, Suite 400, San Francisco, California 94133 ("Licensor"), and CONOPCO, INC., a corporation organized under the laws of New York, with its address at 390 Park Avenue, New York, New York 10022 ("Licensee"). WHEREAS, Licensor and Licensee entered into an Asset Purchase Agreement by and between them on the 18th day of December, 1996, (the "Asset Purchase Agreement") which defined the terms under which Licensee will sell to Licensor and Licensor will purchase certain assets relating exclusively to the manufacture and sale of pancake syrup and pancake and waffle mix under the MRS. BUTTERWORTH'S trademark; WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the parties agreed to execute a royalty-free license granting Licensee the right to use the MRS. BUTTERWORTH'S trademark in the Territory during the Term solely in connection with certain bakery products, and dough, icing and mixes for bakery products as further defined below; and WHEREAS, Licensor desires to grant to Licensee the license for the MRS. BUTTERWORTH'S trademark on the terms and conditions set forth herein. 1 NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, Licensor and Licensee hereby agree as follows: 1. Definitions. (a) Products. The term "Products" shall refer to only those bakery products, and dough, icing and mixes for bakery products listed on Schedule 1.2 (iii) to the Asset Purchase Agreement. (b) Trademark. The term "Trademark" shall refer to the mark MRS. BUTTERWORTH'S and the trademark registrations listed on Schedule 2 attached hereto covering the Products. (c) Territory. The term "Territory" shall mean the United States, Puerto Rico, and Canada. (d) Term. The term "Term" shall have the meaning set forth in Section 9. 2. License Grant. Licensor grants to Licensee an exclusive (except for Licensor, its successors, assigns and licensees), royalty-free license to use the Trademark solely in connection with the manufacture, distribution, sale, advertising and promotion of the Products in the Territory during the Term and in accordance with the terms and provisions of this Agreement. Licensee represents that it shall only use the Trademark in connection with Product SKUs that use the Trademark on the date hereof. 3. Royalty. The parties agree that no royalties or other payments shall be required for the grant of the license hereunder. 4. Quality Control. Licensor has inspected and does hereby approve of the nature, character and quality of the Products using the Trademark heretofore sold by Licensee which are to be sold by Licensee under the Trademark. It is understood and agreed that the quality of Products heretofore sold by Licensee preceding the effective date of this Agreement is acceptable to Licensor throughout the term of this Agreement. The approval given by Licensor shall continue so long as this license is in effect and provided the Products sold by 2 Licensee are of substantially the same nature, character and quality as initially approved by Licensor. Licensee covenants and agrees that the Products which shall be manufactured and sold during the Term shall be at least of such quality. If any Product sold under the Trademark substantially changes so that it no longer meets Licensor's reasonable standards for Products sold under that Trademark, Licensor shall notify Licensee of that defect, and Licensee shall have ninety (90) days to remedy such defect, failing which Licensor may give notice to Licensee that the license herein granted for use of the Trademark on such Product shall be terminated. 5. Compliance; Inspections. (a) Licensee covenants and agrees that the Products shall be manufactured and sold in conformance with good manufacturing practices, as that term is used in the United States in 21 C.F.R. ss.110 and as defined elsewhere, where applicable, by law and that the Products shall be truthfully and not misleadingly labelled and advertised. Each Product shall comply in all material respects with the labelling, packaging, advertising and other relevant laws and regulations of all countries and jurisdictions into which the Products are sold. (b) Upon Licensor's reasonable written request and at Licensor's expense, once per calendar year, Licensee agrees to submit to Licensor a representative sample of any Products for examination and testing. (c) Licensee shall permit Licensor or its authorized representatives to inspect at reasonable times during regular business hours upon at least 10 days' prior written notice, the relevant portion of the facilities where, and systems by which, Products are manufactured and packaged in order to verify that the Products are manufactured and packaged in compliance with this Agreement; provided, however, that any such inspection shall not interfere with Licensee's normal operations at such facilities and that such inspections are subject to the execution of confidentiality agreements reasonably satisfactory to Licensee. Licensee may restrict access by Licensor's representatives to those areas of Licensee's facilities where the Products and ingredients and materials for the Products are manufactured and packaged. 3 6. Protections; Packaging Advertising. (a) Licensee shall cause each use of the Trademark to be accompanied by the appropriate R or TM registration symbol (provided that Licensee's existing stock of labels may be used in their current form regardless of whether such symbol is used thereon). (b) Licensor approves of all labels, packaging, advertising and promotional materials bearing the Trademark being used by Licensee prior to the date hereof. Licensee's use of labels, packaging advertising and promotional materials bearing the Trademark during the Term of this Agreement shall be of a nature and character which is consistent with such prior use. 7. No Changes to Trademark. Licensee shall use the Trademark only in the form in which it is currently registered and not make any changes to the graphic representation of the Trademark or the font or type face in which the Trademark are portrayed without Licensor's prior written consent, which consent shall not be unreasonably withheld or delayed. 8. Trademark Ownership and Protection. Licensee acknowledges and agrees that Licensor is, and Licensor (or, where applicable, an affiliate of Licensor) or its successors or assigns shall remain the owner of the Trademark. Licensee shall acquire no ownership interest in the Trademark through this Agreement or otherwise. Licensee agrees to reasonably cooperate with Licensor, at Licensor's expense, in efforts to obtain, perfect and enforce Licensor's rights in the Trademark. Licensee agrees that it shall not, in any country or jurisdiction, register or attempt to register the Trademark. Licensee further agrees that it shall not, in any country or jurisdiction, use, register or attempt to register any other trademark or trade name which is confusingly similar to the Trademark. Licensee shall not contest or assist any other party in contesting the validity of Licensor's ownership of the Trademark. 9. Term. This Agreement shall commence on the 31st day of December, 1996, and continue in force for a term of three (3) years. Upon expiration of this Agreement, Licensee shall have ninety (90) days to sell off its inventory of Products using the Trademark. 4 10. Infringements. Licensee shall notify Licensor of any infringement by third persons of the Trademark in the Territory which may come to Licensee's attention. Licensor shall have the sole right to determine what action, if any, shall be taken to remedy such infringements, which action shall be taken at Licensor's expense. Licensor makes no representation or warranty of any nature as to the validity or enforceability of the Trademark. 11. Nonconforming or Unsafe Product and Product Emergencies. (a) Licensee acknowledges that Licensor has an overriding interest in protecting the reputation of the Trademark. Accordingly, if Licensee, at any time, discovers that any Product is materially mislabelled or does not otherwise conform to federal, state or local labelling or manufacturing requirements, or presents any threat to the public health or safety or is otherwise not in full conformity with all applicable laws and has been released into the stream of commerce (any of such occurrences being a "Product Event"), Licensee shall, as soon as reasonably practicable after such discovery, notify Licensor of the facts giving rise to such belief. Similarly, Licensee shall, as soon as reasonably practicable after such discovery, notify Licensor of any actual or threatened action, by any governmental agency, consumer or environmental group, media or other organization or any individual(s), directed towards removing any quantity of the Products from any markets (a "Third Party Action"). In all such cases, Licensee shall, to the extent practicable, closely coordinate with Licensor with respect to any actions Licensee or Licensor might take or permit, and in respect to all public statements either party might make regarding the Product Event or Third Party Action. (b) Any and all expenses relating to any Product Event, Third Party Action or to any recall or retrieval of the Products shall be borne by Licensee, including but not limited to the cost of labor in removing the Products from retailers, wholesalers, distributors and warehouses having possession thereof, all costs for reimbursement of such parties, all costs for disposal of the Products and all other expenses and costs actually incurred in connection with such Product Event, Third Party Action, recall or retrieval. 5 12. Indemnification. Licensor and its officers, directors, employees, agents, successors and assigns shall be indemnified and held harmless by Licensee from any and all liabilities, losses, damages, claims, costs and expenses, interest, awards, judgments and penalties (including reasonable legal costs and expenses) actually suffered or incurred by Licensor to the extent arising out of or resulting from: (a) the breach of any covenants by Licensee contained herein; or (b) any actual or alleged destruction of property, injury, death, loss or damage arising out of the manufacture, distribution, advertising, sale or consumption of the Products. 13. No Further Use of Trademark. Upon termination or expiration of this Agreement for any reason, except as expressly set forth in Section 9, Licensee shall discontinue use of the Trademark, and shall not register or use any trademark confusingly similar to the Trademark. 14. Assignment and Sublicense. (a) This Agreement may not be assigned, transferred, sublicensed or otherwise delegated (collectively, an "Assignment") by Licensee without the prior written consent of Licensor (not to be unreasonably withheld or delayed). Licensee may, however, assign this Agreement in connection with the sale of Licensee's business relating to Products without the consent of Licensor. (b) This Agreement may be assigned, transferred, sublicensed or otherwise delegated by Licensor without the prior written consent of Licensee. 15. Notices. Any notice or other communications given under this Agreement shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly 6 given (i) on the date of delivery, if delivered personally; (ii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Licensor: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street, Suite 400 San Francisco, CA 94133 Facsimile No.: 415-982-3023 Attention: Ian R. Wilson If to Licensee: Conopco, Inc. 390 Park Avenue New York, New York 10022 Facsimile No.: 212-688-3411 Attention: Company Secretary 16. Governing Law. This Agreement shall be governed by the laws of the State of New York, applicable to agreements made and to be performed entirely therein without regard to its 7 internal conflicts of laws provisions. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. MBW FOODS INC. By: ____________________________ Name: Title: CONOPCO, INC. By: ____________________________ Name: Title: 8 Exhibit I to Asset Purchase Agreement [Legal Opnion of Richards & O'Neil, LLP] 1 EX-3.1 4 CERT. OF INCORPORATION EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF SSC ACQUISITION CORP. - A Delaware Corporation - FIRST: Name. The name of the Corporation is SSC Acquisition Corp. (hereinafter referred to as the "Corporation"). SECOND: Registered Office and Registered Agent. The address of the registered office of the Corporation in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. The Corporation shall possess and may exercise all the powers and privileges granted by the General Corporation Law of the State of Delaware or by any other law or this Certificate of Incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation set forth in the preceding sentence hereof. FOURTH: Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is 3,000 shares of common stock, par value $1.00 per share. FIFTH: Incorporator. The name and mailing address of the sole incorporator of the Corporation are Sandra J. Mitchell, c/o Richards & O'Neil, 885 Third Avenue, New York, New York 10022-4873. SIXTH: Management of the Affairs of the Corporation. The following provisions relate to the management of the business and the conduct of the affairs of the Corporation and are inserted for the purpose of creating, defining, limiting and regulating the powers of the Corporation and its directors and stockholders: (1) The election of directors may be conducted in any manner provided in the By-laws of the Corporation, and need not be by written ballot. (2) The Board of Directors shall have the power to make, adopt, alter, amend or repeal the By-laws of the Corporation. SEVENTH: Reorganization. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of ss.291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of ss.279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agrees to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.] EIGHTH: Liability of Directors. No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of Delaware is amended after the date hereof to authorize corporate action further eliminating or limiting the liability of directors, then the liability of each director of the Corporation shall automatically be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. Any repeal or modification of the provisions of this Article EIGHTH shall not adversely affect any right or protection of a director of the Corporation existing pursuant to this Article EIGHTH at the time of such repeal or modification. THE UNDERSIGNED, being the sole incorporator of the Corporation, for the purpose of forming a corporation under the laws of the State of Delaware, does hereby sign this Certificate of Incorporation this 22nd day of November, 1996. INCORPORATOR: /s/ Sandra J. Mitchell ---------------------- Sandra J. Mitchell CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION BEFORE PAYMENT OF CAPITAL OF DARTFORD SSC ACQUISITION CORP. DARTFORD SSC ACQUISITION CORP., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1. That Article FIRST of the Certificate of Incorporation be amended to read as follows: "FIRST: The name of the Corporation is MBW Acquisition Corp. (hereinafter referred to as the "Corporation")." 2. That the corporation has not received any payment for any of its stock. 3. That the amendment was duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Dartford SSC Acquisition Corp. has caused this certificate to be signed by its sole incorporator this 25th day of November, 1996. DARTFORD SSC ACQUISITION CORP. By: /s/ Sandra J. Mitchell ---------------------- Sandra J. Mitchell Sole Incorporator CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF MBW FOODS INC. (Under Section 241 of the General Corporation Law) It is hereby certified that: 1. The name of the corporation is MBW Foods Inc. (hereinafter referred to as the "Corporation"). 2. The certificate of incorporation of the Corporation is hereby amended by striking out Article FOURTH thereof relating to the Capital Stock of the Corporation and by substituting in lieu of said Article the following new Article: "FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 3,000 shares of common stock, par value $.01 per share." 3. The Corporation has not received any payment for any of its stock. 4. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by James B. Ardrey, its Executive Vice President, this 23rd day of December, 1996. MBW FOODS INC. By: /s/ James B. Ardrey ------------------- James B. Ardrey, Executive Vice President Attest: /s/ Craigh Leonard ------------------ Craigh Leonard, Assistant Secretary EX-3.2 5 AMENDED AND RESTATED BY-LAWS Exhibit 3.2 MBW FOODS INC. (Formerly MBW Acquisition Corp.) -- A Delaware Corporation -- AMENDED AND RESTATED BY-LAWS ARTICLE I Meetings of Stockholders Section 1.1. Annual Meetings. The annual meeting of the stockholders for the election of directors and for the transaction of such other business as may properly come before such meeting shall be held each year on such date and at such time and place, within or without the State of Delaware, as may be designated by the Board of Directors. Section 1.2. Special Meetings. Special meetings of the stockholders may be called by the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President, or the holders of a majority of the shares of the Corporation then issued and outstanding and entitled to vote at such meeting. Any such meeting shall be held on such date and at such time and place, within or without the State of Delaware, as may be designated by the person or persons calling such meeting. Section 1.3. Notice of Meetings; Waiver of Notice. (a) Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given by mail, facsimile, telegram, cable or personal delivery by or at the direction of the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President, the Secretary, any Assistant Secretary or other persons calling the meeting, and shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than 14 nor more than 50 days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be directed to each stockholder at his address as it appears on the records of the Corporation. (b) Waiver of Notice. Whenever notice is required to be given to the stockholders under any provision of law, the Certificate of Incorporation of the Corporation or these By-laws, a written waiver signed by a stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the Certificate of Incorporation of the Corporation. Section 1.4. Quorum. The presence at any meeting, in person or by proxy, of the holders of record of a majority of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law or the Certificate of Incorporation of the Corporation. Section 1.5. Adjournments. In the absence of a quorum, a majority in interest of the stockholders entitled to vote, present in person or by proxy at a meeting, or, if no stockholder entitled to vote is present in person or by proxy, any officer entitled to act as chairman or secretary of such meeting, may adjourn the meeting to another time or place. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.6. Organization. The Chairman of the Board, or, if there is no Chairman or in his absence or disability, the Vice Chairman, if any, the President or any Vice President, or, in the absence of all of them, a chairman appointed by the stockholders, shall act as chairman of all meetings of stockholders. The Secretary or, in his absence or disability, any Assistant Secretary, or, in the absence of both of them, a Secretary appointed by the chairman of the meeting, shall act as secretary at all meetings of stockholders. Section 1.7. Voting. Unless otherwise provided in the Certificate of Incorporation of the Corporation or required by law, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder which is registered in his name on the record date for the meeting. Unless otherwise provided in the Certificate of Incorporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Except as otherwise provided by law, in all other matters the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Voting, including voting for the election of directors, need not be by written ballot. -2- Section 1.8. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate actions in writing may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. Section 1.9. Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address and number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the entire time thereof, and may be inspected by any stockholder who is present. Section 1.10. Inspectors of Election. In advance of any stockholders' meeting, the Board of Directors may appoint one or more inspectors to act at the meeting and make a written report thereof. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. Section 1.11. Fixing the Record Date. So that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and (i) in the case of a meeting, shall not be more than 50 nor less than 14 days before the date of such meeting, or (ii) in the case of a written consent, shall not exceed by more than 14 days the date upon which the resolution fixing the record date is adopted by the Board, or (iii) in the case of any other action, shall not be more than 50 days prior to such action. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any stock on the books of the Corporation after any such record date fixed by the Board of Directors. -3- ARTICLE II Consent of Stockholders In Lieu of Meeting Unless otherwise provided in the Certificate of Incorporation, any action required by law or these By-laws to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation as required by law. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not so consented in writing. ARTICLE III Board of Directors Section 3.1. Number. The Board of Directors shall consist of one or more directors, as fixed from time to time by resolution of either the Board of Directors or the stockholders in accordance with applicable law (each being subject to any subsequent resolutions of either of them). So long as "McCown De Leeuw" (as defined below) holds more than 50% of the then outstanding "Voting Units" (as defined below), McCown De Leeuw shall have the right, by taking such action as would be required under the Delaware General Corporation Law (including without limitation Section 228 of the Delaware General Corporation Law) for a majority shareholder to act without a meeting, to designate a number of additional persons for election as members of the Board of Directors of the Corporation which, when added to the persons previously designated by McCown De Leeuw, would constitute a majority of members of the Board of Directors of the Corporation. "McCown De Leeuw" and "Voting Units" shall have the respective meanings given such terms in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996 (the "LLC Agreement"). Section 3.2. Election and Term of Office. Directors shall be elected at the annual meeting of the stockholders, except as provided in Sections 3.3 or 3.11 of these By-laws. Each director (whether elected at an annual meeting or to fill a vacancy or otherwise) shall hold office until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal in the manner hereinafter provided. Section 3.3. Vacancies and Additional Directorships. Unless otherwise provided in the Certificate of Incorporation of the Corporation, vacancies and newly created -4- directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Unless otherwise provided in the Certificate of Incorporation of the Corporation, when one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to be effective upon the effectiveness of such resignation or resignations. Section 3.4. Meetings. (a) Regular Meetings. The Board of Directors may by resolution provide for the holding of regular meetings for the organization of the Corporation, for the election of officers and for the transaction of such other business as may properly come before the meeting, and may fix the times and places at which such meetings shall be held. Notice of regular meetings shall not be required to be given, provided that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be given promptly by mail, facsimile, telegram, radio, cable, telephone or personal delivery to each director who shall not have been present at the meeting at which such action was taken, addressed, sent, delivered or communicated to him at his residence or usual place of business. (b) Special Meetings. Special meetings of the Board of Directors may be called by or at the direction of the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President or one-third of the directors then in office, except that when the Board of Directors consists of one director, then such director may call a special meeting. Except as otherwise required by law, notice of each special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least seven days before the day on which such meeting is to be held, or shall be sent to him at such place by facsimile, telegram, radio or cable, or telephoned or delivered to him personally, not later than seven days before the day on which such meeting is to be held. Such notice shall state the time and place of such meeting, but need not state the purpose thereof, unless otherwise required by law, the Certificate of Incorporation of the Corporation or these By-laws. (c) Waiver of Notice. Whenever notice is required to be given to the directors under any provision of law, the Certificate of Incorporation of the Corporation or these By-laws, a written waiver, signed by the director entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any -5- written waiver of notice unless so required by the Certificate of Incorporation of the Corporation. (d) Participation by Conference Call. Members of the Board of Directors may participate in any meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting. Section 3.5. Quorum; Voting. Unless the Certificate of Incorporation of the Corporation provides otherwise, at each meeting of the Board of Directors a majority of the total number of members of the Board of Directors shall constitute a quorum for the transaction of business, except that when the Board consists of only one director, then one director shall constitute a quorum. Unless otherwise required by the Certificate of Incorporation of the Corporation or these By-laws, a vote of the majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. Section 3.6. Adjournments. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. Notice of any adjournment of a meeting of the Board of Directors to another time or place shall be given to the directors who were not present at the time of the adjournment and, unless such time and place are announced at such meeting, to the directors who were present. Section 3.7. Organization. The Chairman of the Board, or if there is no Chairman or in his absence or disability, the Vice Chairman, if any, the President, or any Vice President, or in the absence of all of them, a chairman appointed by the directors present at such meeting, shall act as chairman at meetings of directors. The Secretary, or in his absence or disability, any Assistant Secretary, or in the absence of all of them, a secretary appointed by the chairman of the meeting, shall act as secretary at all meetings of the Board of Directors. Section 3.8. Action of Board Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the Board. Section 3.9. Manner of Acting. A member of the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees of the Board, or by any other person as to matters the director reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. -6- Section 3.10. Resignation of Directors. Any director may resign at any time upon giving written notice of such resignation to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President or the Secretary. Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and acceptance of such resignation shall not be necessary to make it effective. Section 3.11. Removal of Directors. At any meeting of the stockholders duly called as provided in these By-laws, any director or directors may be removed from office, either with or without cause, as provided by law. At such meeting, a successor or successors may be elected by a plurality of the votes cast, or if any such vacancy is not so filled, it may be filled by the directors as provided in Section 3.3 of these By-laws. Section 3.12. Compensation of Directors. Directors may receive such reasonable compensation for their services as directors, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing contained herein shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV Committees of the Board Section 4.1. Designation and Powers. The Board of Directors may, by a resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in such resolution and permitted by law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no such committee shall have the power or authority to (i) amend the Certificate of Incorporation of the Corporation, except as permitted by law, (ii) adopt an agreement of merger or consolidation, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property or assets, (iv) recommend to the stockholders a dissolution of the Corporation, or a revocation of a dissolution, or (v) amend the By-laws of the Corporation. Any such committee, to the extent provided in such resolution, shall have the power and authority to (i) declare a dividend, (ii) authorize the issuance of stock, or (iii) adopt a certificate of ownership and merger as permitted by law. Section 4.2. Term of Office. The term of office of the members of each committee shall be as fixed from time to time by the Board of Directors, subject to these By- -7- laws; provided, however, that any committee member who ceases to be a member of the Board of Directors shall ipso facto cease to be a member of any committee thereof. Section 4.3. Alternate Members and Vacancies. The Board of Directors may designate one or more directors as alternate members of any committee who, in the order specified by the Board of Directors, may replace any absent or disqualified member at any meeting of the committee. If at a meeting of any committee one or more of the members thereof should be absent or disqualified, and if either the Board of Directors has not so designated any alternate member or members or the number of absent or disqualified members exceeds the number of alternate members who are present at such meeting, then the member or members of such committee (including alternates) present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member. If any vacancy shall occur in any committee by reason of death, resignation, disqualification, removal or otherwise, the remaining member or members of such committee, so long as a quorum is present, may continue to act until such vacancy is filled by the Board of Directors. Section 4.4. Meetings. Each committee shall fix its own rules of procedure, and shall meet where and as and upon such notice as provided by such rules or by resolution of the Board of Directors. Each committee shall keep regular minutes of its proceedings and all actions by each committee shall be reported to the Board of Directors at its next regular meeting succeeding any such action. Members of any committee designated by the Board may participate in a meeting of the committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting. Section 4.5. Quorum; Voting. At each meeting of any committee the presence of a majority of the total number of its members then in office shall constitute a quorum for the transaction of business; except that when a committee consists of one member, then one member shall constitute a quorum. A vote of the majority of committee members present at any meeting of a committee at which a quorum is present shall be the act of such committee. Section 4.6. Adjournments. A majority of the members of a committee present, whether or not a quorum is present, may adjourn any meeting of such committee to another place and time. Section 4.7. Action of Committee Without Meeting. Any action required or permitted to be taken at any meeting of any committee designated by the Board of Directors may be taken without a meeting if all members of such committee consent thereto in writing and such writing or writings are filed with the minutes of the proceedings of such committee. -8- Section 4.8. Manner of Acting. A member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or other committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation. Section 4.9. Resignation of Committee Members. Any member of a committee may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President or the Secretary. Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and acceptance of such resignation shall not be necessary to make it effective. Section 4.10. Removal of Committee Members. Any member of any committee may be removed with or without cause at any time by the Board of Directors. Section 4.11. Compensation of Committee Members. Committee members may receive such reasonable compensation for their services as committee members, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing contained herein shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE V Chairman of the Board and Officers Section 5.1. Chairman of the Board and Officers. The Corporation shall have a Chairman of the Board (if elected by the Board of Directors). The officers of the Corporation shall be a Vice Chairman of the Board (if elected by the Board of Directors), a President, one or more Vice Presidents (if elected by the Board of Directors), a Secretary, a Treasurer, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these By-laws. Section 5.2. Election, Term of Office and Qualifications. The Chairman of the Board and each officer (except such officers as may be appointed in accordance with the provisions of Section 5.3 of these By-laws) shall be elected or appointed by a majority of the Board of Directors present at any meeting at which such election is held. Unless otherwise provided in the resolution of election, the Chairman of the Board and each officer (whether -9- elected at the first meeting of the Board of Directors after the annual meeting of stockholders or to fill a vacancy or otherwise) shall hold his office until the first meeting of the Board of Directors after the next annual meeting of stockholders and until his successor shall have been elected and qualified, or until his earlier death, resignation or removal. Section 5.3. Subordinate Officers and Agents. The Board of Directors may from time to time appoint other officers or agents (including, without limitation, one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers), to hold office for such periods, have such authority and perform such duties as are provided in these By-laws or as may be provided in the resolutions appointing them. The Board of Directors may delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authority and duties. Section 5.4. The Chairman of the Board. The Chairman of the Board shall be elected by the Board of Directors. He shall preside at all meetings of the Board of Directors and stockholders and shall see that all orders and resolutions of the Board of Directors are carried into effect. Subject to the direction of the Board of Directors, he shall have general charge of the business, affairs and property of the Corporation and general supervision over its officers and agents. He may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent. From time to time the Chairman shall report to the Board of Directors all matters within his knowledge which the interests of the Corporation may require to be brought to the attention of the directors. He shall also have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors or these By-laws. Section 5.5. The Vice Chairman. At the request of the Chairman of the Board, if there is one, or in his absence or disability, the Vice Chairman, if there is one, shall perform all the duties of the Chairman of the Board and, when so acting, shall have all the powers of and be subject to all the restrictions on the Chairman of the Board. The Vice Chairman may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent. The Vice Chairman shall also have such other powers and perform such other -10- duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or these By-laws. Section 5.6. The President. If there is no Chairman of the Board or Vice Chairman, or at the request of the Chairman of the Board or the Vice Chairman, or, in the absence or disability of the Chairman of the Board and the Vice Chairman, the President shall be the chief executive officer of the Corporation. Subject to the authority and direction of the Chairman of the Board and the Vice Chairman, if any, and the Board of Directors, the President shall have all the powers of and be subject to all the restrictions on the Chairman of the Board, and shall have charge of the day to day supervision of the business, affairs and property of the Corporation. The President may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent. The President shall also have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman or these By-laws. Section 5.7. Vice Presidents. At the request of the President, or in his absence or disability, the Vice President designated by the Board of Directors shall perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions on the President. Any Vice President may also sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent. Each Vice President shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws. Section 5.8. The Secretary. The Secretary shall (a) record all the proceedings of meetings of the stockholders, the Board of Directors, and any committees thereof in a book or books to be kept for that purpose; (b) cause all notices to be duly given in accordance with the provisions of these By-laws and as required by law; -11- (c) whenever any committee shall be appointed pursuant to a resolution of the Board of Directors, furnish the chairman of such committee with a copy of such resolution; (d) be custodian of the records and the seal of the Corporation, and cause such seal to be affixed to (or a facsimile to be reproduced on) all certificates representing stock of the Corporation prior to the issuance thereof and all instruments the execution of which in the name and on behalf of the Corporation and under its seal shall have been duly authorized; (e) see that the lists, books, reports, statements, certificates and other documents and records required by law are properly kept and filed; (f) have charge of the stock and transfer books of the Corporation, and exhibit such books at all reasonable times to such persons as are entitled by law to have access thereto; (g) sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent; and (h) in general, perform all duties incident to the office of Secretary and have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws. Section 5.9. Assistant Secretaries. At the request of the Secretary, or in his absence or disability, the Assistant Secretary designated by the Secretary, the Board of Directors, the Chairman of the Board, the Vice Chairman, or the President, shall perform all the duties of the Secretary, and, when so acting, shall have all the powers of and be subject to all the restrictions on the Secretary. Each Assistant Secretary shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, the Secretary or these By-laws. Section 5.10. The Treasurer. The Treasurer shall (a) have charge of and supervision over and be responsible for the funds, securities, receipts and disbursements of the Corporation; -12- (b) cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies, or with such bankers or other depositaries, as shall be selected in accordance with Section 7.3 of these By-laws, or to be otherwise dealt with in such manner as the Board of Directors may direct from time to time; (c) cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, and cause to be taken and preserved proper vouchers for all moneys disbursed; (d) render to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, and/or the President, whenever requested, a statement of the financial condition of the Corporation and of all of his transactions as Treasurer; (e) cause to be kept at the Corporation's principal office correct books of account of all of the Corporation's business and transactions and such duplicate books of account as he shall determine and, upon application, cause such books or duplicates thereof to be exhibited to any director; (f) be empowered, from time to time, to require from the officers or agents of the Corporation reports or statements giving such information as he may desire or deem appropriate with respect to any or all financial transactions of the Corporation; (g) sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent; and (h) in general, perform all duties incident to the office of Treasurer and have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws. Section 5.11. Assistant Treasurer. At the request of the Treasurer, or in his absence or disability, the Assistant Treasurer designated by the Treasurer, the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, or the President shall perform all the duties of the Treasurer, and, when so acting, shall have all the powers of and -13- be subject to all the restrictions on the Treasurer. Each Assistant Treasurer shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, the Treasurer or these By-laws. Section 5.12. Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, any Vice President or the Secretary. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and the acceptance of such resignation shall not be necessary for it to be effective. Section 5.13. Removal. Any officer specifically designated in Section 5.1 of these By-laws may be removed with or without cause at any meeting of the Board of Directors by the affirmative vote of a majority of the directors then in office. Any officer or agent appointed pursuant to the provisions of Section 5.3 of these By-laws may be removed with or without cause at any meeting of the Board of Directors by the affirmative vote of a majority of the directors present at such meeting or at any time by any superior officer or agent upon whom such power of removal shall have been conferred by the Board of Directors. Section 5.14. Vacancies. Any vacancy in any office (whether by reason of death, resignation, removal, disqualification or otherwise) shall be filled for the unexpired portion of the term in the manner prescribed by these By-laws for regular elections or appointments to such office. Section 5.15. Compensation. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person the power to fix the salaries or other compensation of any officers or agents appointed pursuant to the provisions of Section 5.3 of these By-laws. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. Section 5.16. Bonding The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise. Section 5.17. Limitation on Actions. Notwithstanding anything set forth in these By-Laws to the contrary, the Chairman of the Board and the officers of the Corporation shall not be authorized to take or cause the occurrence of, and are hereby expressly prohibited from taking or causing the occurrence of, any of the "Transactions" (as defined below) listed in Section 6.12 of the LLC Agreement, unless the required approval of the Board of Member Managers of MBW Investors LLC or the Board of Directors of the Corporation as set forth in -14- such Section 6.12 has been obtained. The term "Transactions" shall have the respective meanings given such terms in the LLC Agreement. ARTICLE VI Indemnification The Corporation shall indemnify, in the manner and to the fullest extent permitted by applicable law, any person (or the estate of any person) who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director, officer, employee, fiduciary or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. To the extent and in the manner provided by applicable law, any such expenses shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding even if such director, officer, employee or agent is alleged to have not met the applicable standard of conduct required under this Section or is alleged to have committed conduct so that, if true, such director, officer, employee or agent would not be entitled to indemnification under this Section, upon receipt of an undertaking, which need not be secured, by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Section. Unless otherwise permitted by applicable law, the indemnification provided for herein shall be made only as authorized in the specific case upon a determination, made in the manner provided by applicable law, that indemnification of such director, officer, employee or agent is proper in the circumstances. The Corporation may, to the fullest extent permitted by applicable law, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability which may be asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under applicable law. The indemnification and advancement of expenses provided for herein shall not be deemed to limit the right of the Corporation to indemnify or make advances to any other person for any expenses (including attorneys' fees), judgments, fines or other amounts to the fullest extent permitted by applicable law, nor shall they be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and -15- as to action in another capacity while holding such office. Any repeal or modification of this Section or any repeal or modification of relevant provisions of the Delaware General Corporation Law or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the Corporation arising hereunder. If this Section or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless (i) indemnify each director, officer, employee and agent of the Corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any proceeding, including an action by or in the right of the Corporation, and (ii) advance expenses (including attorneys' fees), in each case to the fullest extent permitted by any applicable portion of this Section that shall not have been invalidated and to the full extent permitted by applicable law. ARTICLE VII Execution of Instruments and Deposit of Corporate Funds Section 7.1. Execution of Instruments Generally. Subject to the approval of the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors may authorize any officer or officers or agent or agents to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation, and such authorization may be general or confined to specific instances. Section 7.2. Borrowing. No loans or advances shall be obtained or contracted for by or on behalf of the Corporation, and no negotiable paper shall be issued in the name of the Corporation, unless and except as authorized by the Board of Directors. Such authorization may be general or confined to specific instances. Any officer or agent of the Corporation thereunto so authorized may obtain loans and advances for the Corporation, and in connection with such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation. Any officer or agent of the Corporation so authorized may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation any and all stocks, bonds, other securities and other personal property at any time held by the Corporation, and to that end may endorse, assign and deliver the same and do every act and thing necessary or proper in connection therewith. Section 7.3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such -16- bankers or other depositaries as the Board of Directors may select, or as may be selected by any officer or officers or agent or agents authorized to do so by the Board of Directors. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries shall be made in such manner as the Board of Directors may from time to time determine. Section 7.4. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, and all notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers or agent or agents of the Corporation, and in such manner, as from time to time shall be determined by the Board of Directors. Section 7.5. Proxies. Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chairman of the Board, the Vice Chairman, the President, or any Vice President, or by any other person or persons thereunto authorized by the Board of Directors. ARTICLE VIII Stock Section 8.1. Form and Execution of Certificates. The shares of capital stock of the Corporation shall be represented by certificates in the form approved by the Board of Directors from time to time. The certificates shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the Vice Chairman, the President or any Vice President, and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any or all of the signatures on the certificates may be facsimile signatures. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 8.2. Regulations. The Board of Directors may make such rules and regulations consistent with any governing statute as it may deem expedient concerning the issue, transfer and registration of certificates of stock and concerning certificates of stock issued, transferred or registered in lieu or replacement of any lost, stolen, destroyed or mutilated certificates of stock. Section 8.3. Transfer Agent and Registrar. The Board of Directors may appoint a transfer agent or transfer agents and a registrar or registrars of transfers for any or all -17- classes of the capital stock of the Corporation, and may require stock certificates of any or all classes to bear the signature of either or both. ARTICLE IX Corporate Seal The corporate seal shall be circular in form, shall bear the name of the Corporation and words and figures denoting its organization under the laws of the State of Delaware and the year thereof, and otherwise shall be in such form as shall be approved from time to time by the Board of Directors. ARTICLE X Fiscal Year The fiscal year of the Corporation shall begin on the first day of January in each year or such other day as the Board of Directors may determine by resolution. ARTICLE XI Amendments In addition to the provisions, if any, in the Certificate of Incorporation of the Corporation relating to the amendment of the Corporation's By-laws, the By-laws of the Corporation may be amended or repealed, and new By-laws may be made and adopted, by a majority of the votes cast at any annual or special stockholders' meeting by holders of outstanding shares of stock of the Corporation entitled to vote thereon; provided, that Section 5.17 of these By-Laws and this proviso of this Article XI shall not be amended or repealed unless such amendment or repeal is approved by Members holding 96% of the outstanding Voting Units (as such term is defined in the LLC Agreement). -18- EX-4.1 6 INDENTURE DATED 2/10/97 Exhibit 4.1 CONFORMED COPY ============================================= MRS. BUTTERWORTH'S MBW FOODS INC. 97/8% Senior Subordinated Notes due 2007 =============== INDENTURE Dated as of February 10, 1997 =============== WILMINGTON TRUST COMPANY Trustee ============================================= CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1)...........................................................7.10 (a)(2)...........................................................7.10 (a)(3)...........................................................N.A. (a)(4)...........................................................N.A. (b)..............................................................7.8; 7.10 (c)..............................................................N.A. 311(a)..............................................................7.11 (b)..............................................................7.11 (c)..............................................................N.A. 312(a)..............................................................2.5 (b).............................................................11.3 (c).............................................................11.3 313(a)..............................................................7.6 (b)(1)...........................................................N.A. (b)(2)...........................................................7.6 (c)..............................................................7.6 (d)..............................................................7.6 314(a)..............................................................4.2 ....................................................................4.11; 12.2 (b)..............................................................N.A. (c)(1)..........................................................12.4 (c)(2)..........................................................12.4 (c)(3)...........................................................N.A. (d)..............................................................N.A. (e).............................................................12.5 (f)..............................................................4.10 315(a)..............................................................7.1 (b)..............................................................7.5; 12.2 (c)..............................................................7.1 (d)..............................................................7.1 (e)..............................................................6.11 316(a)(last sentence)..............................................12.6 (a)(1)(A)........................................................6.5 (a)(1)(B)........................................................6.4 (a)(2)...........................................................N.A. (b)..............................................................6.7 317(a)(1)...........................................................6.8 (a)(2)...........................................................6.9 (b)..............................................................2.4 318(a).............................................................12.1 N.A. means Not Applicable. - ---------- Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture. TABLE OF CONTENTS Page ---- ARTICLE I Definitions and Incorporation by Reference............... 1 SECTION 1.1. Definitions............................................ 1 SECTION 1.2. Other Definitions...................................... 17 SECTION 1.3. Incorporation by Reference of Trust Indenture Act...... 17 SECTION 1.4. Rules of Construction.................................. 18 ARTICLE II The Securities............................. 19 SECTION 2.1. Form and Dating........................................ 19 SECTION 2.2. Execution and Authentication........................... 20 SECTION 2.3. Registrar and Paying Agent............................. 20 SECTION 2.4. Paying Agent To Hold Money in Trust.................... 21 SECTION 2.5. Securityholder Lists................................... 21 SECTION 2.6. Transfer and Exchange.................................. 21 SECTION 2.7. Replacement Securities................................. 26 SECTION 2.8. Outstanding Securities................................. 27 SECTION 2.9. Temporary Securities................................... 27 SECTION 2.10. Cancellation.......................................... 27 SECTION 2.11. Defaulted Interest.................................... 28 SECTION 2.12. CUSIP Numbers......................................... 28 ARTICLE III Redemption............................... 28 SECTION 3.1. Notices to Trustee..................................... 28 SECTION 3.2. Selection of Securities To Be Redeemed................. 28 SECTION 3.3. Notice of Redemption................................... 29 SECTION 3.4. Effect of Notice of Redemption......................... 29 SECTION 3.5. Deposit of Redemption Price............................ 30 SECTION 3.6. Securities Redeemed in Part............................ 30 ARTICLE IV Covenants............................... 30 SECTION 4.1. Payment of Securities.................................. 30 SECTION 4.2. SEC Reports............................................ 30 Page ---- SECTION 4.3. Limitation on Indebtedness............................. 31 SECTION 4.4. Limitation on Restricted Payments...................... 32 SECTION 4.5. Limitation on Restrictions on Distributions from Subsidiaries ......................................... 34 SECTION 4.6. Limitation on Sales of Assets.......................... 34 SECTION 4.7. Limitation on Affiliate Transactions................... 37 SECTION 4.8. Change of Control...................................... 37 SECTION 4.9. Limitation on Sale of Subsidiary Capital Stock......... 38 SECTION 4.10. Future Security Guarantors............................ 38 SECTION 4.11. Limitation on Lines of Business....................... 39 SECTION 4.12. Maintenance of Office or Agency for Registration of Transfer, Exchange and Payment of Securities......... 39 SECTION 4.13. Appointment to Fill a Vacancy in the Office of Trustee 39 SECTION 4.14. Provision as to Paying Agent.......................... 39 SECTION 4.15. Maintenance of Corporate Existence.................... 40 SECTION 4.16. Compliance Certificate................................ 41 SECTION 4.17. Further Instruments and Acts.......................... 41 ARTICLE V Successor Company........................... 41 SECTION 5.1. When Company May Merge or Transfer Assets.............. 41 ARTICLE VI Defaults and Remedies......................... 42 SECTION 6.1. Events of Default...................................... 42 SECTION 6.2. Acceleration........................................... 44 SECTION 6.3. Other Remedies......................................... 44 SECTION 6.4. Waiver of Past Defaults................................ 45 SECTION 6.5. Control by Majority.................................... 45 SECTION 6.6. Limitation on Suits.................................... 45 SECTION 6.7. Rights of Holders to Receive Payment................... 46 SECTION 6.8. Collection Suit by Trustee............................. 46 SECTION 6.9. Trustee May File Proofs of Claim....................... 46 SECTION 6.10. Priorities............................................ 46 SECTION 6.11. Undertaking for Costs................................. 47 ARTICLE VII Trustee................................ 47 SECTION 7.1. Duties of Trustee...................................... 47 SECTION 7.2. Rights of Trustee...................................... 48 SECTION 7.3. Individual Rights of Trustee........................... 49 SECTION 7.4. Trustee's Disclaimer................................... 49 SECTION 7.5. Notice of Defaults..................................... 49 SECTION 7.6. Reports by Trustee to Holders.......................... 50 SECTION 7.7. Compensation and Indemnity............................. 50 - ii - Page ---- SECTION 7.8. Replacement of Trustee................................. 51 SECTION 7.9. Successor Trustee by Merger............................ 51 SECTION 7.10. Eligibility; Disqualification......................... 52 SECTION 7.11. Preferential Collection of Claims Against Company..... 52 ARTICLE VIII Discharge of Indenture; Defeasance................... 52 SECTION 8.1. Discharge of Liability on Securities; Defeasance....... 52 SECTION 8.2. Conditions to Defeasance............................... 53 SECTION 8.3. Application of Trust Money............................. 54 SECTION 8.4. Repayment to Company................................... 55 SECTION 8.5. Indemnity for U.S. Government Obligations.............. 55 SECTION 8.6. Reinstatement.......................................... 55 ARTICLE IX Amendments............................... 55 SECTION 9.1. Without Consent of Holders............................. 55 SECTION 9.2. With Consent of Holders................................ 56 SECTION 9.3. Compliance with Trust Indenture Act.................... 57 SECTION 9.4. Revocation and Effect of Consents and Waivers.......... 57 SECTION 9.5. Notation on or Exchange of Securities.................. 58 SECTION 9.6. Trustee To Sign Amendments............................. 58 ARTICLE X Subordination............................. 58 SECTION 10.1. Agreement To Subordinate.............................. 58 SECTION 10.2. Liquidation, Dissolution, Bankruptcy.................. 58 SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior Indebtedness......................................... 59 SECTION 10.4. Acceleration of Payment of Securities................. 60 SECTION 10.5. When Distribution Must Be Paid Over................... 61 SECTION 10.6. Subrogation........................................... 61 SECTION 10.7. Relative Rights....................................... 61 SECTION 10.8. Subordination May Not Be Impaired by Company or the Subsidiary Guarantors................................ 61 SECTION 10.9. Rights of Trustee and Paying Agent.................... 61 SECTION 10.10. Distribution or Notice to Representative............. 62 SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To Accelerate........................... 62 SECTION 10.12. Trust Moneys Not Subordinated........................ 62 SECTION 10.13. Trustee Entitled To Rely............................. 63 SECTION 10.14. Trustee To Effectuate Subordination.................. 63 - iii - Page ---- SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness or Guarantor Senior Indebtedness..................... 63 SECTION 10.16. Changes in Senior Indebtedness....................... 63 SECTION 10.17. Reliance by Holders of Senior Indebtedness and Guarantor Senior Indebtedness on Subordination Provisions...... 64 SECTION 10.18. Legend............................................... 64 ARTICLE XI Subsidiary Guarantee.......................... 65 SECTION 11.1. Subsidiary Guarantee.................................. 65 SECTION 11.2. Limitation on Liability............................... 66 SECTION 11.3. Successors and Assigns................................ 67 SECTION 11.4. No Waiver............................................. 67 SECTION 11.5. Right of Contribution................................. 67 SECTION 11.6. No Subrogation........................................ 67 SECTION 11.7. Modification.......................................... 68 ARTICLE XII Miscellaneous............................. 68 SECTION 12.1. Trust Indenture Act Controls.......................... 68 SECTION 12.2. Notices............................................... 68 SECTION 12.3. Communication by Holders with other Holders........... 69 SECTION 12.4. Certificate and Opinion as to Conditions Precedent.... 69 SECTION 12.5. Statements Required in Certificate or Opinion......... 70 SECTION 12.6. When Securities Disregarded........................... 70 SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.......... 70 SECTION 12.8. Legal Holidays........................................ 70 SECTION 12.9. Governing Law......................................... 70 SECTION 12.10. No Recourse Against Others........................... 70 SECTION 12.11. Successors........................................... 71 SECTION 12.12. Multiple Originals................................... 71 SECTION 12.13. Variable Provisions.................................. 71 SECTION 12.14. Qualification of Indenture........................... 71 SECTION 12.15. Table of Contents; Headings.......................... 71 EXHIBIT C Form of Transferee Letter of Representation - iv - INDENTURE dated as of February 10, 1997, between MBW FOODS INC., a Delaware corporation (the "Company") and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company's 97/8% Senior Subordinated Notes due 2007 (the "Initial Notes") and, if and when issued in exchange for Initial Notes as provided in the Registration Rights Agreement (as hereinafter defined), the Company's 97/8% Senior Subordinated Notes due 2007 (the "Exchange Notes" and, together with the Initial Notes, the "Securities"): ARTICLE I Definitions and Incorporation by Reference SECTION 1.1. Definitions. "Acquisition Closing Date" means December 31, 1996. "Additional Assets" means (i) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Subsidiary in a Related Business; (ii) the Capital Stock of a Person that becomes a Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Subsidiary; or (iii) Capital Stock constituting a minority interest in any Person that at such time is a Subsidiary of the Company; provided, however, that, in the case of clauses (ii) and (iii) of this definition, such Subsidiary is primarily engaged in a Related Business. "Affiliate" of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any Person who is a director or officer (A) of such Person, (B) of any Subsidiary of such Person or (C) of any Person described in clause (i) above. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the covenants described in Sections 4.4, 4.6 and 4.7 only, "Affiliate" shall also mean any beneficial owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Applicable Premium" means, with respect to a Security at any redemption date, the greater of (i) 1.0% of the principal amount of such Security and (ii) the excess of 2 (A) the present value at such time of (1) the redemption price of such Security at February 15, 2002 (such redemption price being described in the Security) plus (2) all required interest payments due on such Security through February 15, 2002, computed using a discount rate equal to the Treasury Rate plus 50 basis points based on 360-day year of twelve 30-day months, over (B) the principal amount of such Security. "Asset Disposition" means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions that are part of a common plan) of shares of Capital Stock of a Subsidiary (other than directors' qualifying shares), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction) other than (i) a disposition by a Subsidiary to the Company or a Wholly-Owned Subsidiary or by the Company or a Subsidiary to a Wholly-Owned Subsidiary, (ii) a disposition of inventory or Temporary Cash Investments in the ordinary course of business, (iii) a disposition of obsolete equipment or equipment that is no longer useful in the conduct of the business of the Company and its Subsidiaries and that is disposed of in each case in the ordinary course of business, (iv) the sale of other assets so long as the fair market value of the assets disposed of pursuant to this clause (iv) does not exceed $1.0 million in the aggregate in any fiscal year and $5.0 million in the aggregate prior to February 15, 2007, (v) for the purposes of the covenant described in Section 4.6 only, a disposition subject to the covenant described in Section 4.4 and (vi) the disposition of all or substantially all of the assets of the Company in the manner permitted pursuant to Section 5.1 or any disposition that constitutes a Change of Control pursuant to this Indenture. "Attributable Indebtedness" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Senior Credit Documents and any Indebtedness that is incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) Indebtedness under such Senior Credit Documents including Indebtedness that refinances such Indebtedness, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in 3 bankruptcy or for reorganization relating to the Company whether or not a claim for post filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof (including, without limitation, cash collateralization of letters of credit). "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board of Directors. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York City or Wilmington, Delaware are authorized or required by law to close. "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. "Cash Equivalents" means (i) securities issued or directly and fully guaranteed or insured by the United States Government, or any agency or instrumentality thereof, having maturities of not more than one year from the date of acquisition; (ii) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of "A" or better from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (iii) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances having maturities of not more than one year from the date of acquisition thereof issued by any domestic commercial bank the long-term debt of which is rated at the time of acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's Ratings Group, or "A" or the equivalent thereof by Moody's Investors Service, Inc., and having capital and surplus in excess of $500.0 million; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i), (ii) and (iii) entered into with any bank meeting the qualifications specified in clause (iii) above; (v) commercial paper rated at the time of acquisition thereof at least "A-2" or the equivalent thereof by Standard & Poor's Ratings Group or "P-2" or the equivalent thereof by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in either case maturing within 270 days after the date of acquisition 4 thereof; and (vi) interests in any investment company which invests solely in instruments of the type specified in clauses (i) through (v) above. "Change of Control" means the occurrence of any of the following events: (i) prior to the first public offering of Voting Stock of the Company, Holdings or MBW LLC, as the case may be, the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of majority voting power of the Voting Stock of the Company, whether as a result of issuance of securities of the Company, Holdings or MBW LLC, as the case may be, any merger, consolidation, liquidation or dissolution of the Company, Holdings or MBW LLC, as the case may be, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders will be deemed to beneficially own any Voting Stock of a Person (the "specified corporation") held by any other Person (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, a majority of the voting power of the Voting Stock of the parent corporation); (ii) following the first public offering of Voting Stock of the Company, Holdings or MBW LLC, as the case may be, any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in clause (i) above, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company, Holdings or MBW LLC, as the case may be; provided that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company, Holdings or MBW LLC, as the case may be, than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company, Holdings or MBW LLC, as the case may be, (for purposes of this clause (ii), such other person shall be deemed to beneficially own any Voting Stock of a specified corporation held by a parent corporation, if such other person "beneficially owns" (as defined in this clause (ii)), directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent corporation and the Permitted Holders "beneficially own" (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent corporation and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent corporation); or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or 5 whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means MBW Foods Inc., a Delaware corporation. "Consolidated Cash Flow" for any period means the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest Expense (iii) depreciation expense, (iv) amortization expense, in each case for such period, (v) other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) and (vi) for the period ending on the first anniversary of the Issue Date only, non-recurring relocation and start-up expenses not in excess of $3 million, in each case for such period, and minus, to the extent not already deducted in calculating Consolidated Net Income, (i) the aggregate amount of "earnout" payments paid in cash during such period in connection with acquisitions previously made by the Company and (ii) non-cash items increasing Consolidated Net Income for such period. "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (A) if the Company or any of its Subsidiaries has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (B) if since the beginning of such period the Company or any of its Subsidiaries shall have made any Asset Disposition, Consolidated Cash Flow for such period shall be reduced by an amount equal to the Consolidated Cash Flow (if positive) attributable to the assets which are the subject of such Asset Disposition for such period or increased by an amount equal to the Consolidated Cash Flow (if negative) attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense attributable to any Indebtedness of the Company or any of its Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Subsidiary of the Company is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Subsidiary to the extent the Company and its continuing Subsidiaries are no longer liable for such Indebtedness after such sale), (C) if 6 since the beginning of such period the Company or any of its Subsidiaries (by merger or otherwise) shall have made an Investment in any Subsidiary of the Company (or any Person which becomes a Subsidiary of the Company) or an acquisition of assets, including any Investment in a Subsidiary of the Company or any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness and including the pro forma expenses and cost reductions calculated on a basis consistent with Regulation S-X of the Securities Act) as if such Investment or acquisition occurred on the first day of such period and (D) if since the beginning of such period any Person (that subsequently became a Subsidiary of the Company or was merged with or into the Company or any Subsidiary of the Company since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (B) or (C) above if made by the Company or a Subsidiary of the Company during such period, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Subsidiaries, plus, to the extent not included in such interest expense, (i) interest expense attributable to Capitalized Lease Obligations and imputed interest with respect to Attributable Indebtedness, (ii) amortization of debt discount and debt issuance cost (other than those debt discounts and debt issuance costs incurred on the Acquisition Closing Date and the Issue Date), (iii) capitalized interest, (iv) non-cash interest expense, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) interest actually paid by the Company or any such Subsidiary under any Guarantee of Indebtedness or other obligation of any other Person, (vii) net costs associated with Currency Agreements and Interest Rate Agreements (including amortization of fees), (viii) the product of (A) all Preferred Stock dividends in respect of all Preferred Stock of Subsidiaries of the Company and Disqualified Stock of the Company held by Persons other than the Company or a Wholly-Owned Subsidiary multiplied by (B) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined Federal, state and local statutory tax rate of the Company, expressed as a decimal, in each case, determined on a consolidated basis in accordance with 7 GAAP and (ix) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust. "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income (loss) of any Person if such Person is not a Subsidiary, except that (A) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Subsidiary, to the limitations contained in clause (iii) below) and (B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income; (ii) any net income (loss) of any person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; (iii) any net income (loss) of any Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Subsidiary, directly or indirectly, to the Company, except that (A) subject to the limitations contained in (iv) below, the Company's equity in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Subsidiary during such period to the Company or another Subsidiary as a dividend (subject, in the case of a dividend that could have been made to another Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income; (iv) any gain (but not loss) realized upon the sale or other disposition of any assets of the Company or its consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which are not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person; (v) any extraordinary gain or loss; and (vi) the cumulative effect of a change in accounting principles. "Consolidated Net Worth" means the total of the amounts shown on the balance sheet of the Company and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of the end of the most recent fiscal quarter of the Company ending prior to the taking of any action for the purpose of which the determination is being made as (i) the par or stated value of all outstanding Capital Stock of the Company plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit and (B) any amounts attributable to Disqualified Stock. 8 "Currency Agreement" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Depositary" means The Depository Trust Company, its nominees and their respective successors. "Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii) any other Senior Indebtedness which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $5.0 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture. "Disqualified Stock" means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to 123 days after the Stated Maturity of the Securities. "Equity Investors" means the equity owners of MBW LLC on the Issue Date. "Equity Offering" means any public or private sales of equity securities (excluding Disqualified Stock) of the Company, Holdings or MBW LLC. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "GAAP" means generally accepted principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as are approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP as in effect on the Issue Date. "Governmental Authority" means any nation or government, any state or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 9 "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of any other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guarantor Senior Indebtedness" means, with respect to a Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter issued, any Guarantee of the Bank Indebtedness by such Subsidiary Guarantor, all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company and all Indebtedness of such Subsidiary Guarantor, including interest and fees thereon, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that the obligations of such Subsidiary Guarantor in respect of such Indebtedness are not superior in right of payment to the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee; provided, however, that Guarantor Senior Indebtedness shall not include (i) any obligations of such Subsidiary Guarantor to the Company or any other Subsidiary of the Company, (ii) any liability for Federal, state, local or other taxes owed or owing by such Subsidiary Guarantor, (iii) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (iv) any Indebtedness, Guarantee or obligation of such Subsidiary Guarantor that is expressly subordinate or junior in right of payment to any other Indebtedness, Guarantee or obligation of such Subsidiary Guarantor, including any Guarantor Senior Subordinated Indebtedness and Guarantor Subordinated Obligations of such Subsidiary Guarantor or (v) any Capital Stock. "Guarantor Senior Subordinated Indebtedness" means, with respect to a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor that specifically provides that such Indebtedness is to rank pari passu in right of payment with the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such Subsidiary Guarantor. "Guarantor Subordinated Obligation" means, with respect to a Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee pursuant to a written agreement. 10 "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Holdings" means MBW Holdings Inc., a Delaware corporation. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary. "Indebtedness" means, with respect to any Person on any date of determination (without duplication), (i) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money, (ii) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto) (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i), (ii) and (v)) entered into in the ordinary course of business of such Person to the extent that such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (other than contingent or "earn-out" payment obligations and Trade Payables and accrued expenses incurred in the ordinary course of business), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, (v) all Capitalized Lease Obligations and all Attributable Indebtedness of such Person, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, provided, however, that the amount of Indebtedness of such Person shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons, (vii) all Indebtedness of other Persons to the extent Guaranteed by such Person, (viii) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any accrued dividends) and (ix) to the extent not otherwise included in this definition, obligations of such Person under Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above as such amount would be reflected on a balance sheet in accordance with GAAP and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "Indenture" means this Indenture as amended or supplemented from time to time. 11 "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extension of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. "Issue Date" means the date on which the Initial Notes are originally issued. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Management Services Agreement" means (i) the Management Services Agreement dated as of December 31, 1996 between the Company and Dartford Partnership L.L.C. (and its permitted successors and assigns thereunder), (ii) the Advisory Services Agreement dated as of December 31, 1996 between the Company and MDC Management Company III, L.P. (and its permitted successors and assigns thereunder) and (iii) the Services Agreement dated as of December 31, 1996 between the Company and Fenway Partners Capital Fund, L.P. (and its permitted successors and assigns thereunder), in each case without giving effect to any amendment or other modification thereto. "MBW LLC" means MBW Investors LLC, a Delaware limited liability company. "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in 12 order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition, (iii) all distributions and other payments required to be made to any Person owning a beneficial interest in assets subject to sale or minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Subsidiary of the Company after such Asset Disposition and (v) any portion of the purchase price from an Asset Disposition placed in escrow (whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise in connection with such Asset Disposition) provided, however, that upon the termination of such escrow, Net Available Cash shall be increased by any portion of funds therein released to the Company or any Subsidiary. "Net Cash Proceeds", with respect to any issuance or sale of Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale. "Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers (in the case of the annual Officers' Certificate delivered pursuant to Section 4.16, at least one of such Officers shall be the principal executive officer, principal financial officer or principal accounting officer of the Company) and that complies with Sections 12.4 and 12.5 of this Indenture and is delivered to the Trustee. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee and that complies with Sections 12.4 and 12.5 of this Indenture and delivered to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Permitted Holders" means the Equity Investors and their respective Affiliates. "Permitted Investment" means (i) any Investment in a Subsidiary of the Company or a Person which will, upon making such Investment, become a Subsidiary; provided, however, that the primary business of such Subsidiary is a Related Business; (ii) any Investment in another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Subsidiary of the Company; provided, however, that such Person's primary business is a Related Business; (iii) any Investment in Temporary Cash Investments; (iv) receivables owing to the Company or any of its Subsidiaries, if created or acquired in 13 the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (v) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (vi) loans or advances to employees made in the ordinary course of business of the Company or such Subsidiary; (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any of its Subsidiaries or in satisfaction of judgments or claims; (viii) Investments the payment for which consists exclusively of equity securities (exclusive of Disqualified Stock) of the Company; (ix) loans or advances to employees and directors to purchase equity securities of the Company, Holdings or MBW LLC; provided that the aggregate amount of such loans and advances shall not exceed $2.0 million at any time outstanding; (x) any Investment in another Person to the extent such Investment is received by the Company or any Subsidiary as consideration for Asset Disposition effected in compliance with Section 4.6; (xi) prepayment and other credits to suppliers made in the ordinary course of business consistent with the past practices of the Company and its Subsidiaries; (xii) Investments in connection with pledges, deposits, payments or performance bonds made or given in the ordinary course of business in connection with or to secure statutory, regulatory or similar obligations, including obligations under health, safety or environmental obligations; and (xiii) any Investment in another Person not to exceed in the aggregate $2.0 million at any one time outstanding (measured as of the date made and without giving effect to subsequent changes in value). "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Security means the principal of the Security plus the premium, if any, payable on the security which is due or overdue or is to become due at the relevant time. "QIB" means any "qualified institutional buyer" (as defined under the Securities Act). "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, "refinances," and "refinanced" shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any 14 Subsidiary and Indebtedness of any Subsidiary that refinances Indebtedness of another Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced and (iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus the amount of any premium required to be paid in connection therewith and plus reasonable fees and expenses in connection therewith); provided further that Refinancing Indebtedness shall not include Indebtedness of a Subsidiary which refinances Indebtedness of the Company. "Registered Exchange Offer" shall have the meaning set forth in the Registration Rights Agreement. "Registration Rights Agreement" means the Exchange and Registration Rights Agreement, dated as of February 10, 1997, between the Company and Chase Securities Inc. "Related Business" means the food business and such other business activities which are incidental or related thereto. "Representative" means any trustee, agent or representative (if any) of an issue of Senior Indebtedness. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Subsidiary transfers such property to a Person and the Company or a Subsidiary leases it from such Person. "SEC" or "Commission" means the Securities and Exchange Commission. "Secured Indebtedness" means any Indebtedness of the Company secured by a Lien. "Security Guarantee" means any guarantee pursuant to a supplemental Indenture which may from time to time be executed and delivered by a Subsidiary of the company pursuant to Section 4.10. "Securities Act" means the Securities Act of 1933, as amended. "Securities Custodian" means the custodian with respect to the Global Security (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee. 15 "Senior Credit Agreement" means the Credit Agreement dated as of December 31, 1996, among the Company, Holdings, the lenders parties thereto, and The Chase Manhattan Bank, as administrative agent and Chase Securities Inc., as arranging agent. "Senior Credit Documents" means the collective reference to the Senior Credit Agreement, the notes issued pursuant thereto and the Holdings Guaranty, the Subsidiary Guaranty, the Security Agreement, the Pledge Agreement, the Collateral Account Agreement and the Patent and Trademark Security Agreement (each as defined in the Senior Credit Agreement) and each of the mortgages and other security agreements, guarantees and other instruments and documents executed and delivered pursuant to any of the foregoing or the Senior Credit Agreement, in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amounts of available borrowing thereunder provided that such increase in borrowing is permitted by Section 4.3 or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement whether by the same or any other agent, lender or group of lenders. "Senior Indebtedness" means the principal of, premium (if any), and interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company regardless of whether post-filing interest is allowed in such proceeding) on, and fees and other amounts owing in respect of, the Bank Indebtedness and all other Indebtedness of the Company, whether outstanding on the Issue Date or thereafter issued, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that the obligations in respect of such Indebtedness are not superior in right of payment to the Securities; provided, however, that Senior Indebtedness will not include (i) any obligation of the Company to any Subsidiary, (ii) any liability for Federal, state, foreign, local or other taxes owed or owing by the Company, (iii) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities), (iv) any Indebtedness, Guarantee or obligation of the Company that is expressly subordinate or junior in right of payment to any other Indebtedness, Guarantee or obligation of the Company, including any Senior Subordinated Indebtedness and any Subordinated Obligations or (v) any Capital Stock. "Senior Subordinated Indebtedness" means the Securities and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Securities in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. 16 "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on February 5, 1997. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Securities pursuant to a written agreement. "Subsidiary" of any Person means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary shall refer to a Subsidiary of the Company. "Subsidiary Guarantor" means any Subsidiary which is required to guarantee the Securities pursuant to Section 4.10. "Temporary Cash Investments" means any of the following: (i) any Investment in direct obligations of the United States of America or any agency thereof or obligations Guaranteed by the United States of America or any agency thereof, (ii) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $250.0 million (or the foreign currency equivalent thereof) and whose long-term debt, or whose parent holding company's long-term debt, is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above, (iv) Investments in commercial paper, maturing not more than 180 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings Group. 17 "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Transfer Restricted Securities" means Securities that bear or are required to bear the legend set forth in Section 2.6(d) hereof. "Treasury Rate" means, at the time of computation, the yield to maturity of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the redemption date to February 15, 2002; provided, however, that if the period from the redemption date to February 15, 2002 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Voting Stock" of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors. "Wholly-Owned Subsidiary" means a Subsidiary of the Company, all of the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary. 18 SECTION 1.2. Other Definitions. Defined in Term Section "Affiliate Transaction".................................. 4.7 "Agent Member"........................................... 2.1(c) "Authenticating Agent"................................... 2.2 "Bankruptcy Law"......................................... 6.1 "Blockage Notice"........................................ 10.3 "covenant defeasance option"............................. 8.1(b) "Custodian".............................................. 6.1 "Definitive Securities".................................. 2.1 "Event of Default"....................................... 6.1 "Global Security"........................................ 2.1 "legal defeasance option"................................ 8.1(b) "Legal Holiday".......................................... 12.8 "Obligations"............................................ 11.1 "Offer" ................................................. 4.6(b) "Offer Amount"........................................... 4.6(c)(ii) "Offer Period"........................................... 4.6(c)(ii) "pay the Securities"..................................... 10.3 "Paying Agent"........................................... 2.3 "Payment Blockage Period"................................ 10.3 "Purchase Agreement"..................................... 2.1(b) "Purchase Date".......................................... 4.6(c)(i) "Registrar".............................................. 2.3 "Restricted Payment"..................................... 4.4(a) "Successor Company"...................................... 5.1 SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. 19 "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by the TIA by reference to another statute or defined by an SEC rule have the meanings assigned to them by such definitions. SECTION 1.4. Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive; (iv) "including" means including without limitation; (v) words in the singular include the plural and words in the plural include the singular; (vi) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (vii) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and (viii) the principal amount of any Preferred Stock shall be (A) the maximum liquidation value of such Preferred Stock or (B) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater. 20 ARTICLE II The Securities SECTION 2.1. Form and Dating. (a) The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is hereby incorporated by reference and expressly made a part of this Indenture. The Exchange Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit B, which is hereby incorporated by reference and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibits A and B. The Company and the Trustee shall approve the forms of the Securities and any notation, endorsement or legend on them. Each Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms. (b) Global Securities. The Initial Notes are being offered and sold by the Company pursuant to a Purchase Agreement, dated February 5, 1997, between the Company and Chase Securities Inc. (the "Purchase Agreement"). Initial Notes shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form without interest coupons with the Global Securities Legend and Restricted Securities Legend set forth in Exhibit A hereto (each, a "Global Security"), which shall be deposited on behalf of the purchasers of the Initial Notes represented thereby with the Trustee, at its corporate trust office, as custodian for the Depository, and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by endorsements made on such Global Securities by the Trustee, the Securities Custodian or the Depository or its nominee as hereinafter provided. (c) Book-Entry Provisions. This Section 2.1(c) shall apply only to Global Securities deposited with the Trustee, as custodian for the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between 21 the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of an owner of a beneficial interest in any Global Security. (d) Certificated Securities. Except as provided in Section 2.6, owners of beneficial interests in Global Securities will not be entitled to receive Definitive Securities (as hereinafter defined). Definitive Securities will bear the Restricted Securities Legend set forth on Exhibit A unless removed in accordance with Section 2.6(f) hereof. SECTION 2.2. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually authenticates the Security. The signature of the Trustee on a Security shall be conclusive evidence that such Security has been duly and validly authenticated and issued under this Indenture. The Trustee shall authenticate and deliver: (i) Initial Notes for original issue in an aggregate principal amount of $100.0 million and (ii) Exchange Notes for issue only in a Registered Exchange Offer pursuant to the Registration Rights Agreement, and only in exchange for Initial Notes of an equal principal amount, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and whether the Securities are to be Initial Notes or Exchange Notes. The aggregate principal amount of Securities outstanding at any time may not exceed $100.0 million except as provided in Section 2.7. The Trustee may appoint an agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. SECTION 2.3. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or 22 more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.7. The Company or any of its domestically incorporated Wholly-Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent. The Paying Agent or the Registrar may resign as such upon 30 days' prior written notice to the Company and the Trustee; upon resignation of any Paying Agent or Registrar, the Company shall appoint a successor Paying Agent or Registrar, as the case may be, no later than 30 days thereafter and shall provide notice to the Trustee of such successor Paying Agent or Registrar. The Company initially appoints the Trustee as Registrar and Paying Agent for the Securities. SECTION 2.4. Paying Agent To Hold Money in Trust. By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal or interest when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by such Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section 2.4, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Securities. SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders. 23 SECTION 2.6. Transfer and Exchange. (a) Restrictions on Transfer and Exchange of Global Securities. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary or the Trustee, as the custodian for the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein) and the procedures of the Depositary therefor. (ii) A Global Security shall be exchangeable pursuant to this Section 2.6(a) for Definitive Securities registered in the names of Persons owning beneficial interests in such Global Security only if (A) such exchange is made in compliance with the provisions of this Section 2.6 and (B) any of the following events shall have occurred: (1) the Depositary for such Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary ceases to be a clearing agency registered under the Exchange Act, at a time when such Depositary is required to be so registered in order to act as Depositary, and a successor depositary is not appointed by the Company within 90 days thereafter, (2) the Company executes and delivers to the Trustee an Officers' Certificate stating that such Global Security shall be so exchangeable or (3) there shall have occurred and be continuing an Event of Default with respect to the Securities and any of the Company, the Depositary or the Trustee so requests. Upon exchange of a Global Security for one or more Definitive Securities, such Definitive Securities shall not thereafter be exchangeable for beneficial interests in a Global Security. (iii) Any Global Security that is exchangeable for Definitive Securities registered in the name of the owners of beneficial interests therein pursuant to this Section 2.6 shall be surrendered by the Depositary to the Trustee to be so exchanged, without charge, and the Company shall sign and the Trustee shall authenticate and deliver, upon such exchange of such Global Security, an equal aggregate principal amount of Definitive Securities of authorized denominations. Definitive Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 2.6 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee in writing. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities are so registered in accordance with the instructions of the Depositary. All Definitive Securities representing the Initial Notes delivered in exchange for a Global Security which bore the Restricted Securities Legend set forth in Exhibit A shall, except as otherwise provided in Section 2.6(d), bear the Restricted Securities Legend set forth in Exhibit A hereto. (iv) The registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. 24 (v) In the event of the occurrence of any of the events specified in Section 2.6(a)(ii), the Company will promptly make available to the Trustee a reasonable supply of Definitive Securities. (vi) Notwithstanding any other provision of this Indenture, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary. (b) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for Definitive Securities, redeemed, repurchased or canceled, such Global Security shall be returned to the Depositary for cancellation or retained and canceled by the Trustee. (c) Transfer and Exchange of Definitive Securities. When Definitive Securities are presented by a Holder to the Registrar or a co-registrar with a request (i) to register the transfer of such Definitive Securities; or (ii) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Registrar or co-registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that: (i) such Definitive Securities shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar or co-registrar, duly executed by such Holder or his attorney duly authorized in writing; and (ii) if such Definitive Securities are Transfer Restricted Securities, such Definitive Securities shall also be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse of the Security); or (B) if such Transfer Restricted Securities are being transferred (x) to the Company or to a QIB in accordance with Rule 144A under the Securities Act or (y) pursuant to an effective registration statement under the Securities Act, a certification from such Holder to that effect (in the form set forth on the reverse of the Security); or (C) if such Transfer Restricted Securities are being transferred (w) pursuant to an exemption from registration in accordance with Rule 144 or 25 Regulation S under the Securities Act; or (x) an "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that is an institutional investor and that is acquiring the Security for its own account, or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the Securities of $250,000 for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act; or (y) in reliance on another exemption from the registration requirements of the Securities Act: (i) a certification to that effect from such Holder (in the form set forth on the reverse of the Security), (ii) if the Company or the Trustee so requests, an Opinion of Counsel reasonably acceptable to the Company and to the Trustee to the effect that such transfer is in compliance with the Securities Act and (iii) in the case of clause (x), a signed letter from the transferee substantially in the form of Exhibit C hereto. (d) Legend. (i) Except in the case of Exchange Notes or as permitted by the following paragraph (ii), each Security certificate evidencing Global Securities and Definitive Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED 26 INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE." (ii) Upon any sale, exchange or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Security) after the Resale Restriction Termination Date (as defined in the legend set forth in paragraph (i) above) or pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act: (A) in the case of any Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the legend set forth in paragraph (i) above and rescind any restriction on the transfer of such Security; and (B) in the case of any such Transfer Restricted Security represented by a Global Security, such Transfer Restricted Security shall not be required to 27 bear the legend set forth in paragraph (i) above, although it shall continue to be subject to the provisions of Section 2.6(a) hereof. (e) Obligations with Respect to Transfers and Exchanges of Securities. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Definitive Securities and Global Securities at the Registrar's or co-registrar's request. (ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charges payable upon exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or pursuant to paragraph 5 of the Securities). (iii) The Registrar or co-registrar shall not be required to register the transfer of or exchange of (A) any Definitive Security selected for redemption in whole or in part pursuant to Article III, except the unredeemed portion of any Definitive Security being redeemed in part or (B) any Security for a period beginning (1) 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Securities and ending at the close of business on the day of such mailing or (2) 15 Business Days before an interest payment date and ending on such interest payment date. (iv) Prior to the due presentation for registration of transfer of any Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose name a Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected by notice to the contrary. (v) All Securities issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Securities surrendered upon such transfer or exchange. (f) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any owner of a beneficial interest in a Global Security, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the 28 Depositary) of any notice (including any notice of redemption) or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of owners of beneficial interests in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Depositary participants, members or owners of beneficial interests in any Global Security); provided that the Trustee shall have the right to require such certifications, Opinions of Counsel or other documentation in respect of exchanges of beneficial ownership interests in Global Securities for Definitive Securities as it may reasonably request. SECTION 2.7. Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the Company provides the Trustee with an Officer's Certificate stating that the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.8. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser. 29 If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture, then on and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.9. Temporary Securities. Until Definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Securities. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute, and the Trustee shall authenticate and deliver in exchange therefor, one or more Definitive Securities representing an equal principal amount of Securities. Until so exchanged, the Holder of temporary Securities shall in all respects be entitled to the same benefits under this Indenture as a holder of Definitive Securities. SECTION 2.10. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Trustee to deliver canceled Securities to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix or cause to be fixed (or upon the Company's failure to do so the Trustee shall fix pursuant to a written instruction of Holders of at least a majority in principal amount of the Securities) any such special record date and payment date to the reasonable satisfaction of the Trustee which specified record date shall not be less than 10 days prior to the payment date for such defaulted interest and shall promptly mail or cause to be mailed to each Securityholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. The Company shall notify the Trustee in 30 writing of the amount of defaulted interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when so deposited to be held in trust for the benefit of the Person entitled to such defaulted interest as provided in this Section 2.11. SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders, provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE III Redemption SECTION 3.1. Notices to Trustee. If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Securities to be redeemed. The Company shall give each notice to the Trustee provided for in this Section 3.1 at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and, if the Trustee so requests, an Opinion of Counsel to the effect that such redemption will comply with the conditions herein. If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and set forth in the related notice given to the Trustee, which record date shall be not less than 15 days after the date of such notice. SECTION 3.2. Selection of Securities To Be Redeemed. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee considers fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this 31 Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.3. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (i) the redemption date; (ii) the redemption price; (iii) the name and address of the Paying Agent; (iv) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (v) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed; (vi) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; (vii) the CUSIP number, if any, printed on the Securities being redeemed; and (viii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section 3.3. SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date; provided that if the redemption date is after a regular record date and 32 on or prior to the interest payment date, the accrued interest shall be payable to the Securityholder of the redeemed Securities registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.5. Deposit of Redemption Price. By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which are owned by the Company or a Subsidiary and have been delivered by the Company or such Subsidiary to the Trustee for cancellation. SECTION 3.6. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in a principal amount to the unredeemed portion of the Security surrendered. ARTICLE IV Covenants SECTION 4.1. Payment of Securities. The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Securityholders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest payments hereunder. SECTION 4.2. SEC Reports. Notwithstanding that the Company may not be required to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the Commission, and within 15 days after such reports are 33 filed, provide the Trustee and the Holders (at their addresses as set forth in the register of Securities) with the annual reports and the information, documents and other reports which are otherwise required pursuant to Section 13 and 15(d) of the Exchange Act. Such requirements may also be satisfied, prior to April 11, 1997, with the filing with the Commission of a registration statement under the Securities Act that contains the foregoing information (including financial statements) and by providing copies thereof to the Trustee and the Holders. In addition, following the registration of the common stock of the Company pursuant to Section 12(b) or 12(g) of the Exchange Act, the Company shall furnish to the Trustee and the Holders, promptly upon their becoming available, copies of the Company's annual report to stockholders and any other information provided by the Company to its public stockholders generally. SECTION 4.3. Limitation on Indebtedness. (a) The Company shall not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness; provided, however, that the Company and any of its Subsidiaries may Incur Indebtedness if on the date thereof the Consolidated Coverage Ratio would be greater than 2.00:1.00. (b) Notwithstanding Section 4.3(a), the Company and its Subsidiaries may Incur the following Indebtedness: (i) Bank Indebtedness provided that the aggregate principal amount of Indebtedness Incurred pursuant to this clause (i) does not exceed an amount outstanding at any time equal to $60.0 million less the aggregate amount of permanent reductions of commitments to extend credit thereunder and repayments of principal thereof (without duplication of repayments required as a result of such reductions of commitments); (ii) Indebtedness (A) of the Company to any Wholly-Owned Subsidiary and (B) of any Subsidiary to the Company or any Wholly-Owned Subsidiary; (iii) Indebtedness represented by the Securities, any Indebtedness (other than the Indebtedness described in clauses (i)-(ii) above) outstanding on the date hereof and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) or this paragraph (b); (iv) Indebtedness represented by the Security Guarantees and Guarantees of Indebtedness Incurred pursuant to clause (i) above; (v) Indebtedness under Currency Agreements and Interest Rate Agreements which are entered into for bona fide hedging purposes of the Company or its Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company) and correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Company or its Subsidiaries Incurred without violation of the Indenture or to business transactions of the Company or its Subsidiaries on customary terms entered into in the ordinary course of business; (vi) Indebtedness of the Company attributable to Capitalized Lease Obligations, or Incurred to finance the acquisition, construction or improvement of fixed or capital assets, or constituting Attributable Indebtedness in respect of Sale/Leaseback Transactions, in an aggregate principal amount at any one time outstanding not in excess of $5.0 million; and (vii) Indebtedness of the Company or any of its Subsidiaries (which may comprise Bank Indebtedness) in an aggregate principal amount at any time outstanding not in excess of $10.0 million. 34 (c) Notwithstanding any other provision of this Section 4.3, the Company shall not Incur any Indebtedness (i) pursuant to Section 4.3(b) if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Securities to at least the same extent as such Subordinated Obligations or (ii) pursuant to Section 4.3(a) or 4.3(b) if such Indebtedness is subordinate or junior in ranking in any respect to any Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. (d) The Company shall not Incur any Secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Securities equally and ratably with such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien. SECTION 4.4. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company) except (A) dividends or distributions payable in its Capital Stock (other than Disqualified Stock) and (B) dividends or distributions payable to the Company or another Subsidiary (and, if such Subsidiary is not a Wholly-Owned Subsidiary, to its other stockholders on a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any Subsidiary held by Persons other than the Company or another Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition) or (iv) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment"), if at the time the Company or such Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and be continuing (or would result therefrom); or (2) the Company could not Incur at least an additional $1.00 of Indebtedness pursuant to Section 4.3(a); or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments declared (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution of the Board of Directors) or made subsequent to the Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the Issue Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment as to which financial results are available (but in no event more than 135 days prior to the date of such Restricted Payment) (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock (other than Disqualified 35 Stock) or other cash contributions to its capital subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); (C) aggregate Net Cash Proceeds from issue or sale of its Capital Stock to an employee stock ownership plan or similar trust, provided, however, that if such plan or trust Incurs any Indebtedness to or Guaranteed by the Company to finance the acquisition of such Capital Stock, such aggregate amount shall be limited to any increase in the Consolidated Net Worth of the Company resulting from principal repayments made by such plan or trust with respect to Indebtedness Incurred by it to finance the purchase of such Capital Stock; and (D) the amount by which Indebtedness of the Company or its Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary) subsequent to the Issue Date of any Indebtedness of the Company or its Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or other property, distributed by the Company or any Subsidiary upon such conversion or exchange). (b) The provisions of Section 4.4(a) shall not prohibit: (i) any purchase or redemption of Capital Stock or Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries); provided, however, that (A) such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale shall be excluded from clause Section 4.4(a)(3)(B); (ii) any purchase or redemption of Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iii) any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted under Section 4.6; provided, however, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments; (iv) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; or (v) payment of dividends or other distributions by the Company for the purposes set forth in clauses (A) through (C) below; provided, however, that any such dividend or distribution described in clauses (A) and (B) will be excluded in the calculation of the amount of Restricted Payments and any such dividend or distribution described in clause (C) will be included in the calculation of the amount of Restricted Payments: (A) in amounts equal to the amounts required for Holdings and MBW LLC to pay franchise taxes and other fees required to maintain its legal existence and provide for audit, accounting, legal and other operating costs of up to $500,000 per fiscal year; (B) in amounts equal to amounts required for Holdings and MBW LLC to pay Federal, state and local income taxes to the extent such income taxes are attributable to the income of the Company and its Subsidiaries; and (C) in amounts equal to amounts expended by the Company, Holdings or MBW LLC to repurchase Capital Stock of the Company, Holdings or MBW 36 LLC owned by employees (including former employees) of the Company or its Subsidiaries or their assigns, estates and heirs; provided that the aggregate amount paid, loaned or advanced pursuant to this clause (C) shall not, in the aggregate, exceed the sum of $3.0 million plus any amounts contributed by MBW LLC or Holdings to the Company as a result of resales of such repurchased shares of Capital Stock; or (vi) any repurchase of equity interest deemed to occur upon exercise of stock options if such equity interests represent a portion of the exercise price of such options. SECTION 4.5. Limitation on Restrictions on Distributions from Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries to, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any such Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligation owed to the Company, (ii) make any loans or advances to the Company or (iii) transfer any of its property or assets to the Company; except: (A) any encumbrance or restriction pursuant to an agreement in effect on the Issue Date, including those arising under the Senior Credit Documents; (B) any encumbrance or restriction with respect to a Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by a Subsidiary prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary was acquired by the Company); (C) any encumbrance or restriction with respect to a Subsidiary pursuant to an agreement effecting a refinancing of Indebtedness Incurred pursuant to an agreement referred to in clauses (A) or (B) or this clause (C) or contained in any amendment, supplement or modification (including an amendment and restatement) to an agreement referred to in clauses (A) or (B) or this clause (C); provided, however, that the encumbrances and restrictions contained in any such refinancing agreement or amendment taken as a whole are no less favorable to the holders of the Securities in any material respect than encumbrances and restrictions contained in such agreements; (D) in the case of clause (iii), any encumbrance or restriction (1) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license, or similar contract, (2) by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Subsidiary not otherwise prohibited by this Indenture, or (3) contained in security agreements securing Indebtedness of a Subsidiary to the extent such encumbrance or restrictions restrict the transfer of the property subject to such security agreements; (E) any such restriction imposed by applicable law; (F) any restriction with respect to a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Subsidiary pending the closing of such sale or disposition; and (G) purchase obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired. 37 SECTION 4.6. Limitation on Sales of Assets. (a) The Company shall not, and shall not permit any Subsidiary to, make any Asset Disposition unless (i) the Company or such Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value, of the shares and assets subject to such Asset Disposition, (ii) at least 85% of the consideration thereof received by the Company or such Subsidiary is in the form of cash and (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Subsidiary, as the case may be) (A) first, to the extent the Company elects (or is required by the terms of any Senior Indebtedness or Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary), to prepay, repay or purchase Senior Indebtedness or such Indebtedness (other than Preferred Stock) of a Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within one-year after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B) second, to the extent of the balance of Net Available Cash after application in accordance with clause (A), to the extent the Company or such Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Subsidiary with Net Available Cash received by the Company or another Subsidiary) within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to purchase Securities pursuant and subject to the conditions of this Indenture to the Holders at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to the purchase date, and (D) fourth, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A), (B) and (C), to (x) acquire Additional Assets (other than Indebtedness and Capital Stock) or (y) prepay, repay or purchase Indebtedness of the Company (other than Indebtedness owed to an Affiliate of the Company and other than Disqualified Stock of the Company) or Indebtedness of any Subsidiary (other than Indebtedness owed to the Company or an Affiliate of the Company), in each case described in this clause (D) within one year from the receipt of such Net Available Cash or, if the Company has made an Offer pursuant to clause (C), six months from the date such Offer is consummated; provided, however, that, in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C) or (D) above, the Company or such Subsidiary shall retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the Company and its Subsidiaries shall not be required to apply any Net Available Cash in accordance herewith except to the extent that the aggregate Net Available Cash from all Asset Dispositions which are not applied in accordance with this Section 4.6 at any time exceed $1.0 million. The Company shall not be required to make an offer for Securities pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (A) and (B)) is less than $10.0 million for any particular Asset Disposition (which lesser amounts shall be carried forward for purposes of determining whether an offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). 38 For the purposes of this Section 4.6, the following will be deemed to be cash: (x) the assumption of Indebtedness (other than Disqualified Stock) of the Company or any Subsidiary and the release of the Company or such Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition and (y) securities received by the Company or any Subsidiary of the Company from the transferee that are promptly converted by the Company or such Subsidiary into cash. (b) In the event of an Asset Disposition that requires the purchase of Securities pursuant to Section 4.6(a)(iii)(C), the Company will be required to purchase Securities tendered pursuant to an offer by the Company for the Securities (the "Offer") at a purchase price of 100% of their principal amount plus accrued interest to the purchase date in accordance with the procedures (including prorating in the event of oversubscription) set forth in Section 4.6(c). If the aggregate purchase price of the Securities tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of the Securities, the Company will apply the remaining Net Available Cash in accordance with Section 4.6(a)(iii)(D). (c) (i) Promptly, and in any event within 10 days after the Company is required to make an Offer, the Company shall deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his or her Securities purchased by the Company either in whole or in part (subject to prorating as hereinafter described in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the "Purchase Date"). (ii) Not later than the date upon which such written notice of an Offer is delivered to the Trustee and the Holders, the Company shall deliver to the Trustee an Officers' Certificate setting forth (A) the amount of the Offer (the "Offer Amount"), (B) the allocation of the Net Available Cash from the Asset Dispositions as a result of which such Offer is being made and (C) the compliance of such allocation with the provisions of Section 4.6(a). Upon the expiration of the period (the "Offer Period") for which the Offer remains open, the Company shall deliver to the Trustee for cancellation the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price of the Securities tendered by such Holder to the extent such funds are available to the Trustee. (iii) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice prior to the expiration of the Offer Period. Each Holder will be entitled to withdraw its election if the Trustee or the Company receives, not later than one Business Day prior to the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter from such Holder setting forth the name of such Holder, the principal 39 amount of the Security or Securities which were delivered for purchase by such Holder and a statement that such Holder is withdrawing its election to have such Security or Securities purchased. If at the expiration of the Offer Period the aggregate principal amount of Securities surrendered by Holders exceeds the Offer Amount, the Company shall select the Securities to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Securities in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose Securities are purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. (d) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.6. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.6, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Indenture by virtue thereof. SECTION 4.7. Limitation on Affiliate Transactions. (a) The Company will not, and will not permit any Subsidiary to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction are no less favorable to the Company or such Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate amount in excess of $1.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company and by a majority of the disinterested members of such Board, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in (i) above); and (iii) in the event such Affiliate Transaction involves an aggregate amount in excess of $5.0 million, the Company has received a written opinion from an independent investment banking firm of nationally recognized standing that such Affiliate Transaction is fair to the Company or such Subsidiary, as the case may be, from a financial point of view. (b) The provisions of Section 4.7(a) will not prohibit (i) any Restricted Payment permitted to be made pursuant to Section 4.4 (and in the case of Permitted Investments, only those described in clauses (v), (vi) and (ix) of the definition of Permitted Investments), (ii) the performance of the Company's or Subsidiary's obligations under any employment contract, collective bargaining agreement, employee benefit plan, related trust agreement or any other similar arrangement heretofore or hereafter entered into in the ordinary course of business, (iii) payment of compensation to, and indemnity provided on behalf of, employees, officers, directors or consultants (excluding the Management Services Agreement) in the ordinary course of business, (iv) maintenance in the ordinary course of 40 business of benefit programs or arrangements for employees, officers or directors, including vacation plans, health and life insurance plans, deferred compensation plans, and retirement or savings plans and similar plans, (v) any transaction between the Company and a Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries or (vi) the payment of certain fees under the Management Services Agreement as in effect on the Issue Date. SECTION 4.8. Change of Control. (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part of such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), such repurchase to be made in accordance with Section 4.8(b). (b) Within 30 days following any Change of Control, unless the Company has mailed a redemption notice with respect to all the outstanding Securities in connection with such Change of Control, the Company shall mail a notice to each Holder of record with a copy to the Trustee stating: (i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date); (ii) the circumstances and relevant facts and financial information concerning such Change of Control; (iii) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and (iv) the procedures determined by the Company, consistent with this Indenture, that a Holder must follow in order to have its Securities purchased. (c) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Each Holder will be entitled to withdraw its election if the Company receives, not later than one Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter from such Holder setting forth the name of such Holder, the principal amount of the Security or Securities which were delivered for purchase by such Holder and a statement that such Holder is withdrawing his election to have such Security or Securities purchased. (d) On the purchase date, all Securities purchased by the Company under this Section 4.8 shall be delivered to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto. (e) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Section 4.8. To the extent that the provisions of any securities laws or regulations conflict with provisions of 41 this Section 4.8, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue thereof. SECTION 4.9. Limitation on Sale of Subsidiary Capital Stock. The Company (i) will not, and will not permit any Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Capital Stock of any Subsidiary to any Person (other than to the Company or a Wholly-Owned Subsidiary) and (ii) will not permit any Subsidiary to issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Company or a Wholly-Owned Subsidiary; provided, however, that this Section 4.9 shall not prohibit such conveyance, sale, lease or other disposition of all the Capital Stock of a Subsidiary if the net cash proceeds from such transfer, conveyance, sale, lease, other disposition or issuance are applied in accordance with Section 4.6. SECTION 4.10. Future Security Guarantors. The Company will cause each Subsidiary which Incurs Indebtedness or which is a guarantor of Indebtedness Incurred pursuant to Section 4.3(b)(i) to execute and deliver to the Trustee a Security Guarantee pursuant to which such Subsidiary will Guarantee, jointly and severally, to the Holders and the Trustee, subject to subordination provisions in Article X, the full and prompt payment of the Securities in the Indenture. Each Security Guarantee will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by that Subsidiary without rendering the Security Guarantee, as it relates to such Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 4.11. Limitation on Lines of Business. The Company will not, and will not permit any Subsidiary to, engage in any business, other than the food business and such other business activities which are incidental or related thereto. SECTION 4.12. Maintenance of Office or Agency for Registration of Transfer, Exchange and Payment of Securities. So long as any of the Securities shall remain outstanding, the Company will maintain an office or agency in the Borough of Manhattan, the City of New York, State of New York, where the Securities may be surrendered for exchange or registration of transfer as in this Indenture provided, and where notices and demands to or upon the Company in respect to the Securities may be served, and where the Securities may be presented or surrendered for payment. The Company may also from time to time designate one or more other offices or agencies where Securities may be presented or surrendered for any and all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York, State of New York for such purposes. The Company will give to the Trustee prompt written notice of the location of any such office or agency and of any change of location thereof. The Company initially appoints the Trustee c/o Harris Trust 42 Company of New York, 77 Water Street, New York, New York 10005 for each of said purposes. In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, such surrenders, presentations and demands may be made and notices may be served at the principal office of the Trustee in the City of Wilmington, State of Delaware, and the Company hereby appoints the Trustee its agent to receive at the aforesaid office all such surrenders, presentations, notices and demands. The Trustee will give the Company prompt notice of any change in location of the Trustee's principal office. SECTION 4.13. Appointment to Fill a Vacancy in the Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.8, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 4.14. Provision as to Paying Agent. (a) If the Company shall appoint a paying agent other than the Trustee, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall undertake, subject to the provisions of this Section 4.14, (i) that it will hold all sums held by it as such agent for the payment of the principal of, premium, if any, or interest on the Securities whether such sums have been paid to it by the Company (or by any other obligor on the Securities) in trust for the benefit of the holders of the Securities and will notify the Trustee of the receipt of sums to be so held, (ii) that it will give the Trustee notice of any failure by the Company (or by any other obligor on the Securities) to make any payment of the principal of, premium, if any, or interest on the Securities when the same shall be due and payable, (iii) that it will at any time during the continuance of any Event of Default specified in Section 6.1(i) or 6.1(ii), upon the written request of the Trustee, deliver to the Trustee all sums so held in trust by it, and (iv) acknowledge, accept and agree to comply in all aspects with the provisions of this Indenture relating to the duties, rights and liabilities of such Paying Agent, including, without limitation, the provision of Article X hereof. (b) If the Company shall not act as its own Paying Agent, it will, by 10:00 a.m. on the Business Day prior to each due date of the principal of or premium, if any, or interest on any Securities, deposit with such Paying Agent a sum in same day funds sufficient to pay the principal of, premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the holders of Securities entitled to such principal of or premium, if 43 any, or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. (c) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal of or premium, if any, or interest on the Securities, set aside, segregate and hold in trust for the benefit of the persons entitled thereto, a sum sufficient to pay such principal or premium or interest so becoming due and will notify the Trustee of any failure to take such action. (d) Anything in this Section 4.14 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by it, or any Paying Agent hereunder, as required by this Section 4.14, such sums to be held by the Trustee upon the trusts herein contained. (e) Anything in this Section 4.14 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 4.14 is subject to the provisions of Sections 8.4 and 8.6. SECTION 4.15. Maintenance of Corporate Existence. So long as any of the Securities shall remain outstanding, the Company will at all times (except as otherwise provided or permitted in this Section 4.15 or elsewhere in this Indenture) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and franchises and the corporate existence and franchises of each Subsidiary; provided that nothing herein shall require the Company to continue the corporate existence or franchises of any Subsidiary if in the judgment of the Company it shall be necessary, advisable or in the interest of the Company to discontinue the same. SECTION 4.16. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default or Event of Default and whether or not the signers know of any Default or Event of Default that occurred during such period. If they do, the certificate shall describe the Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA ss. 314(a)(4). SECTION 4.17. Further Instruments and Acts. The Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture or as may be reasonably requested by the Trustee. ARTICLE V 44 Successor Company SECTION 5.1. When Company May Merge or Transfer Assets. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") is a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) expressly assumes by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional $1.00 of Indebtedness pursuant to Section 4.3(a); (iv) immediately after giving effect to such transaction, the Successor Company will have Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Company immediately prior to such transaction; and (v) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, but the predecessor, the Company, in the case of a lease of all or substantially all its assets shall not be released from the obligation to pay the principal of and interest on the Securities. Notwithstanding Section 5.1(ii) and 5.1(iii), (i) any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another wholly-owned Subsidiary of the Company; and (ii) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. 45 ARTICLE VI Defaults and Remedies SECTION 6.1. Events of Default. An "Event of Default" occurs if: (i) the Company defaults in any payment of interest on any Security when the same becomes due and payable, whether or not such payment shall be prohibited by Article X, and such default continues for a period of 30 days; (ii) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise, whether or not such payment shall be prohibited by Article X; (iii) the Company fails to comply with Section 5.1; (iv) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10 or 4.11 (in each case other than a failure to repurchase Securities when required pursuant to Section 4.6 or 4.8 which failure shall constitute an Event of Default under Section 6.1(ii)) and such failure continues for 30 days after the notice specified below; (v) the Company fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in (i), (ii), (iii) or (iv) above) and such failure continues for 60 days after the notice specified below; (vi) Indebtedness of the Company or any Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such unpaid or accelerated Indebtedness exceeds $5.0 million or its foreign currency equivalent at the time and such default shall not have been cured or such acceleration rescinded within a 10-day period; (vii) the Company or a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; or 46 (D) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Significant Subsidiary in an involuntary case; (B) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or (C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days; (ix) any judgment or decree for the payment of money in excess of $5.0 million or its foreign currency equivalent at the time (to the extent not covered by insurance) is entered against the Company or any Significant Subsidiary which is final and non-appealable and is not discharged and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree and is not promptly stayed or (B) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged or the execution thereof stayed; or (x) the failure of any Security Guarantee to be in full force and effect (except as contemplated by the terms thereof) or the denial or disaffirmation by any Security Guarantor of its obligations hereunder or any Security Guarantee if such default continues for 10 days. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. 47 Notwithstanding the foregoing, a Default under Section 6.1(iv) or Section 6.1(v) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company of the Default and the Company does not cure such Default within the time specified in said clause (iv) or (v) after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee: (i) within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any Event of Default under clause (vi) and any event which with the giving of notice or the lapse of time would become an Event of Default under clause (iv), (v) or (ix), its status and what action the Company is taking or proposes to take with respect thereto; and (ii) within 120 days after the end of each fiscal year, written notice in the form of an Officer's Certificate indicating whether the Officers signing such Officer's Certificate knew or were aware of any Default that occurred during such previous fiscal year. SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(vii) or (viii) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in outstanding principal amount of the Securities by notice to the Company and the Trustee, may declare the principal of and accrued and unpaid interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.1(vii) or (viii) with respect to the Company occurs and is continuing, the principal of and accrued and unpaid interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in principal amount of the Securities by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or Event of Default or impair any right consequent thereto. SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. 48 SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in outstanding principal amount of the Securities by notice to the Trustee may waive an existing Default or Event of Default and its consequences except (i) a Default or Event of Default in the payment of the principal of or interest on a Security or (ii) a Default or Event of Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Holder affected. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right. SECTION 6.5. Control by Majority. The Holders of a majority in outstanding principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.1, that the Trustee determines is unduly prejudicial to the rights of other Holders (it being understood that, subject to Section 7.1, the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders) or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.6. Limitation on Suits. Except to enforce the right to receive payment of principal, premium, (if any) or interests when due, a Holder may not pursue any remedy with respect to this Indenture or the Securities unless: (i) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (ii) the Holders of at least 25% in outstanding principal amount of the Securities make a written request to the Trustee to pursue the remedy; (iii) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (v) the Holders of a majority in principal amount of the Securities do not give the Trustee a direction that, in the opinion of the Trustee are inconsistent with the request during such 60-day period. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. 49 SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.8. Collection Suit by Trustee. If an Event of Default specified in Section 6.1(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.7. SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its Subsidiaries or their respective creditors or properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.7. SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order: FIRST: Costs and expenses of collection, including all sums paid or advanced by the Trustee hereunder and the compensation, expenses and disbursements of the Trustee, its agents, and counsel and all other amounts due to the Trustee under Section 7.7; SECOND: to holders of Senior Indebtedness to the extent required by Article X; THIRD: to Holders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and FOURTH: to the Company. 50 The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Securities. ARTICLE VII Trustee SECTION 7.1. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) this paragraph does not limit the effect of Section 7.1(b); (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.1(a), 7.1(b) and 7.1(c). 51 (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1 and to the provisions of the TIA. SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed in good faith. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) Prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, Officer's Certificate, or other certificated statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal 52 amount of the Securities then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Company or, if advanced by the Trustee, shall be repaid by the Company upon demand. (g) The Trustee shall not be required to give any bond or surety in respect of the performance of its power and duties hereunder. (h) The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions, or agreements on the part of the Company, except as otherwise set forth herein, but the Trustee may require of the Company full information and advice as to the performance of the covenants, conditions and agreements contained herein and shall be entitled in connection herewith to examine the books, records and premises of the Company. (i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful default. (j) Except for (i) a default under Sections 6.1(i) or (ii) hereof, or (ii) any other event of which the Trustee has "actual knowledge" and which event, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Indenture, the Trustee shall not be deemed to have notice of any default or event unless specifically notified in writing of such event by the Company or the Holders of not less than 25% in aggregate principal amount of the Securities Outstanding; as used herein, the term "actual knowledge" means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto. SECTION 7.3. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, it shall not be responsible for the use or application of any money received by any Paying Agent (other than itself as Paying Agent), and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. 53 SECTION 7.5. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual knowledge thereof, the Trustee shall mail to each Holder notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, or interest on, any Security (including payments pursuant to the optional redemption or required repurchase provisions of such Security, if any), the Trustee may withhold the notice if and so long as its board of directors, the Executive Committee of its board of directors or a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 7.6. Reports by Trustee to Holders. As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Holder a brief report dated as of such May 15 that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b). The Trustee shall also transmit by mail all reports required by TIA ss. 313(c). A copy of each report at the time of its mailing to Holders shall be filed by the Company with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.7. Compensation and Indemnity. The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled to, compensation for its services as set forth in a separate fee agreement between the Trustee and the Company. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and mailing of notices to Holders and reasonable costs of counsel retained by the Trustee in connection with the delivery of an Opinion of Counsel or otherwise, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify and hold harmless the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, including the costs and expenses of enforcing this Indenture (including this Section 7.7) and of defending itself against any claims (whether asserted by any Holder, the Company or otherwise). The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct or negligence. 54 To secure the Company's payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. The Trustee's right to receive payment of any amounts due under this Section 7.7 shall not be subordinate to any other liability or indebtedness of the Company. The Company's payment obligations pursuant to this Section 7.7 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.1(vii) or (viii) with respect to the Company, the expenses are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.8. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in outstanding principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (i) the Trustee fails to comply with Section 7.10; (ii) the Trustee is adjudged bankrupt or insolvent; (iii) a receiver or other public officer takes charge of the Trustee or its property; or (iv) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed by the Company or by the Holders of a majority in outstanding principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.7. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in outstanding principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall continue for the benefit of the retiring Trustee. 55 SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee. If at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and if at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined capital and surplus of at least $400 million as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA ss. 310(b); provided, however, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated. ARTICLE VIII Discharge of Indenture; Defeasance SECTION 8.1. Discharge of Liability on Securities; Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.7) for cancellation or (ii) all outstanding Securities have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article III hereof and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Securities (other than Securities replaced pursuant to Section 2.7), including interest thereon to maturity or such redemption date, and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.1(c), cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company (accompanied by an Officers' Certificate and an Opinion of Counsel 56 stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with) and at the cost and expense of the Company. (b) Subject to Sections 8.1(c) and 8.2, the Company at any time may terminate (i) all its obligations under the Securities and this Indenture and all obligations of the Subsidiary Guarantors under the Subsidiary Guarantee and this Indenture ("legal defeasance option") or (ii) its obligations under Sections 4.2 through 4.15, 5.1(iii) and 5.1(iv) and the operation of Sections 6.1(iv), 6.1(v), 6.1(vi), 6.1(vii) (but only with respect to a Subsidiary), 6.1(viii) (but only with respect to a Subsidiary) and 6.1(ix) ("covenant defeasance option"); provided, however, no deposit under this Article VIII shall be effective to terminate the obligations of the Company under the Securities or this Indenture prior to 123 days following any such deposit. The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.1(iv), 6.1(vi), 6.1(vii) (but only with respect to a Subsidiary), 6.1(viii) (but only with respect to a Subsidiary), 6.1(ix) and 6.1(x) or because of the failure of the Company to comply with Section 5.1(iii) and Section 5.1(iv). Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding the provisions of Sections 8.1(a) and (b), the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.4, 8.5 and 8.6 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall survive. SECTION 8.2. Conditions to Defeasance. The Company may exercise its legal defeasance option or its covenant defeasance option only if: (i) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of and interest on the Securities to maturity or redemption, as the case may be; (ii) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited money without reinvestment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; 57 (iii) (A) no Event of Default (excluding a Default or Event of Default arising from breach of Section 4.3 as a result of the borrowing of funds to be applied to such deposit) shall have occurred or be continuing on the date of such deposit and (B) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.1(vii) or 6.1(viii) with respect to the Company occurs which is continuing at the end of such period; (iv) the deposit does not constitute a default under any other agreement binding on the Company and is not prohibited by Article X; (v) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (vi) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date hereof there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (vii) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; (viii) The Holders shall have a perfected security interest under applicable law in the cash or U.S. Government Obligations deposited pursuant to Section 8.2(i) above; (ix) The Company shall have delivered to the Trustee an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, to the effect that, after the passage of 123 days following the deposit, the trust funds will not be subject to any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors' rights generally; (x) such defeasance shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company; and 58 (xi) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities and this Indenture as contemplated by this Article VIII have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article III. SECTION 8.3. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. Money and securities so held in trust are not subject to Article X. SECTION 8.4. Repayment to Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them upon payment of all the obligations under this Indenture. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal of or interest on the Securities that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors. SECTION 8.5. Indemnity for U.S. Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and the Subsidiary Guarantors under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 59 ARTICLE IX Amendments SECTION 9.1. Without Consent of Holders. The Company and the Trustee may amend this Indenture or the Securities without notice to or consent of any Holder: (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article V; (iii) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; (iv) to make any change in Article X that would limit or terminate the benefits available to any holder of Senior Indebtedness (or Representatives therefor) under Article X; (v) to add Guarantees with respect to the Securities or to secure the Securities; (vi) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (vii) to comply with any requirement of the SEC in connection with qualifying this Indenture under the TIA; (viii) to make any change that does not adversely affect the rights of any Holder; or (ix) to provide for the issuance of the Exchange Notes, which will have terms substantially identical in all material respects to the Initial Notes (except that the transfer restrictions contained in the Initial Notes will be modified or eliminated, as appropriate), and which will be treated, together with any outstanding Initial Notes, as a single issue of securities. An amendment under this Section 9.1 may not make any change that adversely affects the rights under Article X of any holder of Senior Indebtedness or Guarantor Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent to such change. 60 After an amendment under this Section 9.1 becomes effective, the Company shall mail to each Holder a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.1. SECTION 9.2. With Consent of Holders. The Company and the Trustee may amend this Indenture or the Securities without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Securities. However, without the consent of each Holder affected, an amendment may not: (i) reduce the amount of Securities whose Holders must consent to an amendment; (ii) reduce the rate of or extend the time for payment of interest on any Security; (iii) reduce the principal of or extend the Stated Maturity of any Security; (iv) reduce the premium payable upon the redemption or repurchase of any Security or change the time at which any Security may or shall be redeemed or repurchased in accordance with this Indenture; (v) make any Security payable in money other than that stated in the Security; (vi) modify or affect in any manner adverse to the Holders the terms and conditions of the obligation of the Company for the due and punctual payment of the principal of or interest on Securities; or (vii) make any change in Section 6.4 or 6.7 or the second sentence of this Section 9.2. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section 9.2 may not make any change that adversely affects the rights under Article X of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent) consent to such change. After an amendment under this Section 9.2 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such 61 notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.2. SECTION 9.3. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.4. Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Holder. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall become valid or effective more than 120 days after such record date. SECTION 9.5. Notation on or Exchange of Securities. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article IX if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. ARTICLE X 62 Subordination SECTION 10.1. Agreement To Subordinate. The Company and each Subsidiary Guarantor agrees, and each Holder by accepting a Security and the related Subsidiary Guarantee agrees, that the Indebtedness evidenced by the Securities and the related Subsidiary Guarantee is subordinated in right of payment, to the extent and in the manner provided in this Article X, to the prior payment in full in cash or Cash Equivalents when due of (i) all Senior Indebtedness in the case of the Securities and (ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of its obligations under the Subsidiary Guarantee and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness and such Guarantor Senior Indebtedness. The Securities shall in all respects rank pari passu with all other Senior Subordinated Indebtedness of the Company, the related Subsidiary Guarantee of each Subsidiary Guarantor shall in all respects rank pari passu with all Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor and only Indebtedness of the Company which is Senior Indebtedness will rank senior to the Securities and only Indebtedness of such Subsidiary Guarantor which is Guarantor Senior Indebtedness of such Subsidiary Guarantor shall rank senior to the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee in accordance with the provisions set forth herein. For purposes of these subordination provisions, the Indebtedness evidenced by the Securities is deemed to include the liquidated damages payable pursuant to the provisions set forth in the Securities. All provisions of this Article X shall be subject to Section 10.12. SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution of the assets of the Company or any Subsidiary Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or such Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or such Subsidiary Guarantor or their respective properties: (i) holders of Senior Indebtedness in the case of the Company or holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of such Subsidiary Guarantor shall be entitled to receive payment in full in cash or Cash Equivalents of all Senior Indebtedness in the case of the Company or all such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor before the Holders shall be entitled to receive any payment of principal of or interest on or other amounts with respect to the Securities from the Company or such Subsidiary Guarantor, whether directly by the Company or pursuant to the Subsidiary Guarantee; and (ii) until the Senior Indebtedness in the case of the Company or such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor is paid in full in cash or Cash Equivalents, any payment or distribution to which Securityholders would be entitled but for this Article X shall be made to holders of Senior Indebtedness in the case of payments or distributions made by the Company or the 63 holders of such Guarantor Senior Indebtedness in the case of payments or distributions made by such Subsidiary Guarantor, in each case as their respective interests may appear. SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior Indebtedness. Neither the Company nor any Subsidiary Guarantor may pay the principal of, premium (if any) or interest on or other amounts with respect to the Securities or make any deposit pursuant to Section 8.1 or repurchase, redeem or otherwise retire any Securities, whether directly by the Company or by such Subsidiary Guarantor under the Subsidiary Guarantee (collectively, "pay the Securities") if (i) any Senior Indebtedness in the case of the Company or any Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of such Subsidiary Guarantor is not paid when due or (ii) any other default on Senior Indebtedness in the case of the Company or such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantee occurs and the maturity of such Senior Indebtedness in the case of the Company or such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded in writing or (y) such Senior Indebtedness in the case of the Company or such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor has been paid in full in cash or Cash Equivalents; provided, however, that the Company or such Subsidiary Guarantor may pay the Securities, whether directly or pursuant to the Subsidiary Guarantee, without regard to the foregoing if the Company or such Subsidiary Guarantor and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness in the case of the Company or such Guarantor Senior Indebtedness in the case of such Subsidiary Guarantor with respect to which either of the events set forth in clause (i) or (ii) of the immediately preceding sentence has occurred and is continuing. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, neither the Company (in the case of Designated Senior Indebtedness of the Company) nor any Subsidiary Guarantor (in the case of Designated Senior Indebtedness of such Subsidiary Guarantor) may pay the Securities, either directly or pursuant to the Subsidiary Guarantee, for a period (a "Payment Blockage Period") commencing upon the receipt by the Company and the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a "Blockage Notice") of such default from the Representative of the holders of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company or such Subsidiary Guarantor from the Person or Persons who gave such Blockage Notice, (ii) because the default giving rise to such Blockage Notice is no longer continuing or (iii) by repayment in full in cash or Cash Equivalents of such Designated Senior Indebtedness). Notwithstanding the provisions of the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 10.3), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall 64 have accelerated the maturity of such Designated Senior Indebtedness, the Company or such Subsidiary Guarantor may resume payments on the Securities, either directly or pursuant to the Subsidiary Guarantee, after such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period; provided, however, that if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness (other than the Bank Indebtedness), the Representative of the Bank Indebtedness may give another Blockage Notice within such period; provided further, however, that in no event may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360 consecutive day period (unless the Designated Senior Indebtedness in respect of which such default exists has been declared due and payable in its entirety, in which case no payment may be made on the Securities until such acceleration has been rescinded or annulled. SECTION 10.4. Acceleration of Payment of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company, the Subsidiary Guarantors or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness and their Representatives of the acceleration. If any Designated Senior Indebtedness is outstanding, neither the Company (in the case of any Designated Senior Indebtedness of the Company) nor any Subsidiary Guarantor (in the case of any Designated Senior Indebtedness of such Subsidiary Guarantor) may pay the Securities, either directly or pursuant to the Subsidiary Guarantee, until five Business days after the Representative of such Designated Senior Indebtedness receives notice of such acceleration and, thereafter, the Company (in the case of any Designated Senior Indebtedness of the Company) or such Subsidiary Guarantor (in the case of any Designated Senior Indebtedness of such Subsidiary Guarantor) may pay the Securities, either directly or pursuant to the Subsidiary Guarantee, only if this Article X otherwise permits payments at that time. SECTION 10.5. When Distribution Must Be Paid Over. If a distribution is made to the Trustee or the Securityholders that because of this Article X should not have been made to them or which the Trustee or the Securityholders are otherwise not entitled to retain under the provisions of this Article X, the Trustee or the Securityholders who receive the distribution shall hold it in trust for holders of Senior Indebtedness and Guarantor Senior Indebtedness and promptly pay it over to them as their respective interests may appear. SECTION 10.6. Subrogation. After all Senior Indebtedness and Guarantor Senior Indebtedness is paid in full in cash or Cash Equivalents and all commitments in respect of the Senior Indebtedness have expired or terminated and until the Securities are paid in full, Securityholders shall be subrogated (without any duty on the part of the holders of Senior Indebtedness to warrant, create, effectuate, preserve or protect such subrogation) to the rights of holders of Senior Indebtedness and Guarantor Senior Indebtedness to receive distributions applicable to Senior Indebtedness and Guarantor Senior Indebtedness. A distribution made under this Article X to holders of Senior Indebtedness or Guarantor Senior 65 Indebtedness which otherwise would have been made to Securityholders is not, as between the Company and Securityholders, a payment by the Company of Senior Indebtedness or, as between a Subsidiary Guarantor and Securityholders, a payment by such Subsidiary Guarantor of Guarantor Senior Indebtedness. SECTION 10.7. Relative Rights. This Article X defines the relative rights of Securityholders and holders of Senior Indebtedness and Guarantor Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Company or the Subsidiary Guarantors, as the case may be, and Securityholders, the obligation of the Company or the Subsidiary Guarantors, as the case may be, which is absolute and unconditional, to pay principal of and interest on the Securities in accordance with their terms; or (ii) prevent the Trustee or any Securityholder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness and Guarantor Senior Indebtedness to receive distributions otherwise payable to Securityholders. SECTION 10.8. Subordination May Not Be Impaired by Company or the Subsidiary Guarantors. No right of any holder of Senior Indebtedness or Guarantor Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Securities or the related Subsidiary Guarantee shall be impaired by any act or failure to act by the Company or any Subsidiary Guarantor or by failure of any of them to comply with this Indenture or by any act or failure to act on the part of any such holder or any other holder of Senior Indebtedness, regardless of any knowledge thereof which any such holder or any other holder of Senior Indebtedness may have or otherwise be charged with. SECTION 10.9. Rights of Trustee and Paying Agent. The Company shall give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities, but failure to give such notice shall not affect the subordination of the Securities to the Senior Indebtedness provided in this Article X and shall not result in any default or event of default under this Indenture or the Securities. Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to pay the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of any such payment, a Trust Officer of the Trustee receives written notice satisfactory to it that payments may not be made under this Article X. The Company, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness or Guarantor Senior Indebtedness may give the notice; provided, however, that, if an issue of Senior Indebtedness or Guarantor Senior Indebtedness has a Representative, only the Representative may give the notice. Nothing in this Section 10.9 is intended to or shall relieve any Securityholder from the obligations imposed under this Article X with respect to monies or other distributions received in violation of the provisions 66 hereof. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Indebtedness (or a Representative of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or Representative thereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness or Guarantor Senior Indebtedness with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article X with respect to any Senior Indebtedness or Guarantor Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness or Guarantor Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of any of its rights as such holder. Nothing in this Article X shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.7. SECTION 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness or Guarantor Senior Indebtedness, the distribution may be made and the notice given to their Representative (if any). SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To Accelerate. The failure to make a payment in respect of the Securities, whether directly or pursuant to the Subsidiary Guarantee, by reason of any provision in this Article X shall not be construed as preventing the occurrence of a Default or Event of Default. Nothing in this Article X shall have any effect on the right of the Securityholders or the Trustee to accelerate the maturity of the Securities, subject, however, to the rights under this Article X of the holders of Senior Indebtedness to receive payments or other distributions otherwise payable to or received by the Securityholders or the Trustee upon the exercise of any remedy in connection with such acceleration. SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article VIII by the Trustee for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness or Guarantor Senior Indebtedness or subject to the restrictions set forth in this Article X, and none of the Securityholders shall be obligated to pay over any such amount to the Company, any Subsidiary Guarantor, any holder of Senior Indebtedness of the Company, any holder of Guarantor Senior Indebtedness or any other creditor of the Company or any Subsidiary Guarantor. SECTION 10.13. Trustee Entitled To Rely. Upon any payment or distribution pursuant to this Article X, the Trustee and the Securityholders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.2 are pending, (ii) upon a certificate of 67 the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Securityholders or (iii) upon the Representatives for the holders of Senior Indebtedness or Guarantor Senior Indebtedness for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness, Guarantor Senior Indebtedness and other Indebtedness of the Company or the Subsidiary Guarantors, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article X. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness or Guarantor Senior Indebtedness to participate in any payment or distribution pursuant to this Article X, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness or Guarantor Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article X, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article X. SECTION 10.14. Trustee To Effectuate Subordination. Each Securityholder by accepting a Security authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Securityholders and the holders of Senior Indebtedness and Guarantor Senior Indebtedness as provided in this Article X and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness or Guarantor Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness or Guarantor Senior Indebtedness and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Securityholders or the Company, the Subsidiary Guarantors or any other Person, money or assets to which any holders of Senior Indebtedness or Guarantor Senior Indebtedness shall be entitled by virtue of this Article X or otherwise. SECTION 10.16. Changes in Senior Indebtedness. Any holder of Senior Indebtedness may at any time and from time to time without the consent of or notice to any Securityholder or the Trustee: (i) extend, renew, modify, waive or amend the terms of the Senior Indebtedness; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any guarantor or any other person (except the Company) liable in any manner for the Senior Indebtedness or amend or waive the terms of any guaranty of the Senior Indebtedness; (iv) exercise or refrain from exercising any rights against the Company or any other person; (v) apply any sums by whomever paid or however realized to Senior Indebtedness; and (vi) take any other action which otherwise might be deemed to impair the rights of the holders of the Senior 68 Indebtedness. Any and all of such actions may be taken by the holders of Senior Indebtedness without incurring responsibility to any Securityholder or the Agent and, subject to the provisions of the definition of Senior Indebtedness, without impairing or releasing the obligations of any Securityholder or the Trustee under this Article X. SECTION 10.17. Reliance by Holders of Senior Indebtedness and Guarantor Senior Indebtedness on Subordination Provisions. Each Securityholder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness or Guarantor Senior Indebtedness, whether such Senior Indebtedness or Guarantor Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness or Guarantor Senior Indebtedness and such holder of Senior Indebtedness or Guarantor Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness or Guarantor Senior Indebtedness. SECTION 10.18. Legend. The Notes shall be conspicuously legended indicating that their payment is subordinated to Senior Indebtedness in accordance with this Article X. ARTICLE XI Subsidiary Guarantee SECTION 11.1. Subsidiary Guarantee. Subject to the subordination provisions contained in Article X, each Subsidiary Guarantor which becomes a party hereto by executing and delivering a supplement to this Indenture pursuant to Section 4.10 hereby, jointly and severally, unconditionally and irrevocably, Guarantees to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment of principal of, premium (if any) and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations owing of the Company under this Indenture (including obligations owing to the Trustee) and the Securities and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities (all the foregoing being hereinafter collectively called the "Obligations"). The Subsidiary Guarantors further agree that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from the Subsidiary Guarantors, and that the Subsidiary Guarantors will remain bound under this Article XI notwithstanding any extension or renewal of any Obligation. 69 The Subsidiary Guarantors waive presentation to, demand of, payment from and protest to the Company of any of the Obligations and also waive notice of protest for nonpayment. The Subsidiary Guarantors waive notice of any default under the Securities or the Obligations. The obligations of the Subsidiary Guarantors hereunder shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (ii) any extension or renewal of any Obligation; (iii) any rescission, waiver, amendment, modification or supplement of any of the terms or provisions of this Indenture (other than this Article XI), the Securities or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (v) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Obligations; or (vi) any change in the ownership of the Company. The Subsidiary Guarantors further agree that their Guarantees herein constitute a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waive any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations. The Guarantee of each Subsidiary Guarantor is, to the extent and in the manner set forth in Article X, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Guarantor Senior Indebtedness of such Subsidiary Guarantor and this Guarantee is made subject to such provisions of this Indenture. The obligations of the Subsidiary Guarantors hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense, setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of the Subsidiary Guarantors herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Subsidiary Guarantors or would otherwise operate as a discharge of the Subsidiary Guarantors as a matter of law or equity. The Subsidiary Guarantors further agree that their Guarantees herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. 70 In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against the Subsidiary Guarantors by virtue hereof, upon the failure of the Company to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Obligation, the Subsidiary Guarantors hereby promise to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Obligations, (ii) accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Obligations of the Company to the Holders and the Trustee. The Subsidiary Guarantors agree that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article VI for the purposes of the Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Article VI, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purposes of this Section 11.1. The Subsidiary Guarantors also agree to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section 11.1. SECTION 11.2. Limitation on Liability. Any term or provision of this Indenture to the contrary notwithstanding, the maximum, aggregate liability of each Subsidiary Guarantor hereunder shall not exceed the maximum amount that can be guaranteed by such Subsidiary Guarantor under applicable federal and state laws relating to insolvency of debtors. SECTION 11.3. Successors and Assigns. (a) This Article XI shall be binding upon the Subsidiary Guarantors and their successors and assigns and shall enure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. (b) Notwithstanding the foregoing, all obligations of a Subsidiary Guarantor under this Article XI shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon (i) the unconditional release of such Subsidiary from its liability in respect of the Indebtedness in connection with which it became a Subsidiary Guarantor hereunder pursuant to Section 4.10; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a 71 Subsidiary of the Company, of all of the Capital Stock in, or all or substantially all of the assets of, such Subsidiary Guarantor; provided that (i) such sale or disposition of such Capital Stock or assets is otherwise in compliance with this Indenture and (ii) such Subsidiary Guarantor has been unconditionally released from its liability in respect of the Indebtedness in connection with which it became a Subsidiary Guarantor hereunder pursuant to Section 4.10. SECTION 11.4. No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article XI shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article XI at law, in equity, by statute or otherwise. SECTION 11.5. Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder who has not paid its proportionate share of such payment. Each Subsidiary Guarantor's right of contribution shall be subject to the terms and conditions of Section 11.6. The provisions of this Section 11.5 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Trustee and the Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Subsidiary Guarantor hereunder. SECTION 11.6. No Subrogation. Notwithstanding any payment or payments made by any of the Subsidiary Guarantors hereunder, no Subsidiary Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Obligations are paid in full. If any amount shall be paid to any Subsidiary Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Subsidiary Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Subsidiary Guarantor, and shall, forthwith upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the exact form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary Guarantor to the Trustee, if required), to be applied against the Obligations. 72 SECTION 11.7. Modification. No modification, amendment or waiver of any provision of this Article XI, nor the consent to any departure by the Subsidiary Guarantors therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Subsidiary Guarantors in any case shall entitle the Subsidiary Guarantors to any other or further notice or demand in the same, similar or other circumstances. ARTICLE XII Miscellaneous SECTION 12.1. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the provision required by the TIA shall control. SECTION 12.2. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company: MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, OH 43235 Attention: Thomas J. Ferraro if to the Subsidiary Guarantors: c/o MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, OH 43235 Attention: Thomas J. Ferraro if to the Trustee: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890 73 Attention: Corporate Trust Administration. The Company, any of the Subsidiary Guarantors, or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3. Communication by Holders with other Holders. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). SECTION 12.4. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall, if requested, furnish to the Trustee: (i) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (ii) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.5. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (i) a statement that the individual making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 12.6. When Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company 74 shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. SECTION 12.7. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or in the State of Delaware. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 12.9. Governing Law. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. SECTION 12.10. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 12.11. Successors. All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Securities shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 12.13. Variable Provisions. The Company initially appoints the Trustee as Paying Agent and Registrar and custodian with respect to any Global Securities. SECTION 12.14. Qualification of Indenture. The Company shall qualify this Indenture under the TIA in accordance with the terms and conditions of the Registration Rights Agreement and shall pay all reasonable costs and expenses (including attorneys' fees for the Company, the Trustee and the Holders) incurred in connection therewith, including, 75 but not limited to, costs and expenses of qualification of the Indenture and the Securities and printing this Indenture and the Securities. The Trustee shall be entitled to receive from the Company any such Officers' Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the TIA. SECTION 12.15. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. MBW FOODS INC. By: /s/ James B. Ardrey ----------------------------------- Title: Executive Vice President WILMINGTON TRUST COMPANY, as Trustee By: /s/ Donald G. MacKelcan ----------------------------------- Title: Assistant Vice President EXHIBIT A to Indenture [FORM OF FACE OF INITIAL NOTE] [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Securities Legend] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY 2 PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS SECURITY IS SUBORDINATED TO SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE (AS DEFINED HEREIN), AND THE OBLIGATIONS OF EACH SUBSIDIARY GUARANTOR UNDER THE SUBSIDIARY GUARANTEE CONTAINED IN THE INDENTURE ARE SUBORDINATED TO GUARANTOR SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE, OF SUCH SUBSIDIARY GUARANTOR. No. 1 Principal Amount $100,000,000 CUSIP NO. _______________ 9 7/8% Senior Subordinated Note due 2007 MBW Foods Inc., a Delaware corporation, promises to pay to CEDE & CO., or registered assigns, the principal sum of One Hundred Million Dollars on February 15, 2007. Interest Payment Dates: February 15 and August 15 commencing August 15, 1997. Record Dates: February 1 and August 15. Additional provisions of this Security are set forth on the other side of this Security. Dated: MBW FOODS INC. by__________________________________________ [SEAL] __________________________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION WILMINGTON TRUST COMPANY as Trustee, certifies that this is one of the Securities referred to in the Indenture. by Authorized Signatory [FORM OF REVERSE SIDE OF INITIAL NOTE] 9 7/8% Senior Subordinated Note due 2007 1. Interest MBW Foods Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year commencing August 15, 1997. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities or, if no interest has been paid, from February 10, 1997. The Company shall pay interest on overdue principal or premium, if any, at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall transfer by wire to the accounts specified by the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except defaulted interest) to the Persons who are registered Holders of Securities at the close of business on the February 1 or August 1 next preceding the interest payment date even if Securities are cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar Initially, Wilmington Trust Company, a Delaware banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. The Company or any of its domestically incorporated Wholly-Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 2 4. Indenture The Company issued the Securities under an Indenture dated as of February 10, 1997 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the "Indenture"), between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured senior subordinated obligations of the Company limited to $100 million aggregate principal amount (subject to Section 2.7 of the Indenture). This Security is one of the Initial Notes referred to in the Indenture. The Securities include the Initial Notes and any Exchange Notes issued in exchange for the Initial Notes pursuant to the Indenture and the Registration Rights Agreement. The Initial Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the Incurrence of Indebtedness by the Company and its Subsidiaries, the payment of dividends and other distributions on the Capital Stock of the Company and its Subsidiaries, the purchase or redemption of Capital Stock of the Company and Capital Stock of such Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the business activities and investments of the Company and its Subsidiaries and transactions with Affiliates. In addition, the Indenture limits the ability of the Company and its Subsidiaries to restrict distributions and dividends from Subsidiaries. In addition, the Indenture requires Subsidiaries of the Company (in the circumstances specified in Section 4.10 of the Indenture and on the terms and conditions specified in Article XI of the Indenture), to enter into a supplement to the Indenture providing for a guarantee by such Subsidiaries (on a senior subordinated basis) of the due and punctual payment of the principal of, premium (if any) and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture. 5. Optional Redemption Except as set forth in this paragraph 5, the Securities will not be redeemable at the option of the Company prior to February 15, 2002. On and after such date, the Securities will be redeemable, at the Company's option, in whole or in part, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's registered address, at the following redemption prices (expressed as percentages of principal 3 amount) plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date): If redeemed during the 12-month period commencing on February 15 of the years set forth below: Year Redemption Price ---- ---------------- 2002................................... 104.9375% 2003................................... 103.2917% 2004................................... 101.6458% 2005 and thereafter.................... 100.0000% Notwithstanding the foregoing, at any time or from time to time prior to February 15, 2000 the Company may redeem up to $35 million of the aggregate original principal amount of the Securities with the cash proceeds of one or more Equity Offerings received by or invested in, the Company at a redemption price (expressed as a percentage of principal amount) of 109.875% plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to such redemption, at least $65 million of the aggregate principal amount of the Securities remain outstanding after each such redemption. At any time on or prior to February 15, 2002, the Securities may also be redeemed in whole, but not in part, at the option of the Company upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days' prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). 6. Notice of Redemption Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at such Holder's registered address. Securities in denominations of principal amount larger than $1,000 may be redeemed in part but only in integral multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the 4 redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 7. Put Provisions Upon a Change of Control, unless the Company shall have exercised its right to redeem the Securities pursuant to paragraph 5 of the Securities in connection with such Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount thereof plus accrued interest to the date of repurchase as provided in, and subject to the terms of, the Indenture. 8. Subordination The Securities are subordinated to Senior Indebtedness, as defined in the Indenture, and the obligations of each Subsidiary Guarantor under the Subsidiary Guarantee contained in Article XI of the Indenture are subordinated to Guarantor Senior Indebtedness, as defined in the Indenture, of such Subsidiary Guarantor. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid, and Guarantor Senior Indebtedness of a Subsidiary Guarantor must be paid before such Subsidiary Guarantor may make payments under the Subsidiary Guarantee. The Company agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give them effect and appoints the Trustee as attorney-in-fact for such purpose. 9. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange (i) any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) for a period beginning 15 days before a selection of Securities to be redeemed and ending on the date of selection or (ii) any Securities for a period beginning 15 days before an interest payment date and ending on such interest payment date. 5 10. Persons Deemed Owners The registered holder of this Security may be treated as the owner of it for all purposes. 11. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 12. Defeasance Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 13. Amendment, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in outstanding principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in outstanding principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities or to secure the Securities, or to add additional covenants for the benefit of the Holders or surrender rights and powers conferred on the Company, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder, or to provide for the issuance of Exchange Notes. 14. Defaults and Remedies 6 Under the Indenture, Events of Default include: (i) default for 30 days in payment of interest on the Securities when the same becomes due and payable; (ii) default in payment of principal on the Securities when the same becomes due and payable at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon required repurchase, upon declaration or otherwise; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company or its Subsidiaries if the amount accelerated (or so unpaid) exceeds $5 million and such acceleration or failure to pay is not rescinded or cured within a 10-day period; (v) certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary; (vi) certain final, non-appealable judgments or decrees for the payment of money in excess of $5 million; and (vii) the failure of any Subsidiary Guarantee to be in full force and effect or the denial or disaffirmation by any Subsidiary Guarantor of its obligations under the Indenture or the Securities in certain cases. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. 15. Trustee Dealings with the Company Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its affiliates and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. 16. No Recourse Against Others A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each 7 Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Security. 18. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act). 19. CUSIP Numbers Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 20. Governing Law This Security shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: MBW Foods Inc., 445 Hutchinson Avenue, Columbus, Ohio 43235, Attention: President. ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ______________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: ____________________ Your Signature: ___________________ Signature Guarantee: ____________________________________ (Signature must be guaranteed) ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is three years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being: CHECK ONE BOX BELOW: 1 |_| acquired for the undersigned's own account, without transfer; or 2 |_| transferred to the Company; or 3 |_| transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or 4 |_| transferred pursuant to an effective registration statement under the Securities Act; or 5 |_| transferred pursuant to and in compliance with Regulation S under the Securities Act of 1933; or 2 6 |_| transferred to an "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that is an institutional investor and that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter appears as Exhibit C to the Indenture); or 7 |_| transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Securities, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. This certificate and the statements contained herein are made for the benefit of the Company, the Guarantors, Wilmington Trust Company, as Trustee, and Chase Securities Inc., the Initial Purchaser of such Notes being transferred and each of you are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding with respect to the materials covered hereby. __________________________________ Signature Signature Guarantee: __________________________ __________________________________ Signature (Signature must be guaranteed) _______________________________________________________________________________ [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made:
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized Date of Principal Amount of this Principal Amount of this Global Security following officer of Trustee or Exchange Global Security Global Security such decrease or increase Securities Custodian
OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box: |_| If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the amount in principal amount (must be integral multiple of $1,000): $ Date: __________ Your Signature ____________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: _______________________________________ (Signature must be guaranteed) EXHIBIT B to Indenture [FORM OF FACE OF EXCHANGE NOTE] [Global Securities Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THIS SECURITY IS SUBORDINATED TO SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE (AS DEFINED HEREIN), AND THE OBLIGATIONS OF EACH SUBSIDIARY GUARANTOR UNDER THE SUBSIDIARY GUARANTEE CONTAINED IN THE INDENTURE ARE SUBORDINATED TO GUARANTOR SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE, OF SUCH SUBSIDIARY GUARANTOR. 2 No. _____ Principal Amount $100,000,000 CUSIP NO. 9 7/8% Senior Subordinated Note due 2007 MBW Foods Inc., a Delaware corporation, promises to pay to CEDE & CO., or registered assigns, the principal sum of One Hundred Million Dollars on February 15, 2007. Interest Payment Dates: February 15 and August 15 commencing August 15, 1997. Record Dates: February 15 and August 1. Additional provisions of this Security are set forth on the other side of this Security. Dated: MBW FOODS INC. by__________________________________________ by__________________________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION WILMINGTON TRUST COMPANY as Trustee, certifies that this is one of the Securities referred to in the Indenture. by Authorized Signatory [FORM OF REVERSE SIDE OF EXCHANGE NOTE] 9 7/8% Senior Subordinated Note due 2007 1. Interest MBW Foods Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities or, if no interest has been paid, from February 10, 1997. The Company shall pay interest on overdue principal or premium, if any, at the rate borne by the Securities to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment By at least 10:00 a.m. (New York City time) on the date on which any principal of or interest on any Security is due and payable, the Company shall transfer by wire to the accounts specified by the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except defaulted interest) to the Persons who are registered Holders of Securities at the close of business on the February 1 or August 1 next preceding the interest payment date even if Securities are cancelled, repurchased or redeemed after the record date and on or before the interest payment date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar Initially, Wilmington Trust Company, a Delaware banking corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Securityholder. The Company or any of its domestically incorporated Wholly-Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture The Company issued the Securities under an Indenture dated as of February 10, 1997 (as it may be amended or supplemented from time to time in accordance with the 2 terms thereof, the "Indenture"), between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured senior subordinated obligations of the Company limited to $100 million aggregate principal amount (subject to Section 2.7 of the Indenture). This Security is one of the Exchange Notes referred to in the Indenture. The Securities include the Initial Notes and any Exchange Notes issued in exchange for the Initial Notes pursuant to the Indenture and the Registration Rights Agreement. The Initial Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the Incurrence of Indebtedness by the Company and its Subsidiaries, the payment of dividends and other distributions on the Capital Stock of the Company and its Subsidiaries, the purchase or redemption of Capital Stock of the Company and Capital Stock of such Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the business activities and investments of the Company and its Subsidiaries and transactions with Affiliates. In addition, the Indenture limits the ability of the Company and its Subsidiaries to restrict distributions and dividends from Subsidiaries. In addition, the Indenture requires Subsidiaries of the Company (in the circumstances specified in Section 4.10 of the Indenture and on the terms and conditions specified in Article XI of the Indenture), to enter into a supplement to the Indenture providing for a guarantee by such Subsidiaries (on a senior subordinated basis) of the due and punctual payment of the principal of, premium (if any) and interest on the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture. 5. Optional Redemption Except as set forth in this paragraph 5, the Securities will not be redeemable at the option of the Company prior to February 15, 2002. On and after such date, the Securities will be redeemable, at the Company's option, in whole or in part, upon not less than 30 nor more than 60 days' prior notice mailed by first-class mail to each Holder's registered address, at the following redemption prices (expressed as percentages of principal amount) plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date): 3 If redeemed during the 12-month period commencing on February 15 of the years set forth below: Year Redemption Price ---- ---------------- 2002................................... 104.9375 % 2003................................... 103.2917 % 2004................................... 101.6458 % 2005 and thereafter.................... 100.0000 % Notwithstanding the foregoing, at any time or from time to time prior to February 15, 2000, the Company may redeem up to $35 million of the aggregate original principal amount of the Securities with the cash proceeds of one or more Equity Offerings received by or invested in, the Company at a redemption price (expressed as a percentage of principal amount) of 109.875% plus accrued and unpaid interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to such redemption, at least $65 million of the aggregate principal amount of Securities remain outstanding after such redemption. At any time on or prior to February 15, 2002, the Securities may also be redeemed in whole, but not in part, at the option of the Company upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days' prior notice (but in no event more than 90 days after the occurrence of such Change of Control) mailed by first-class mail to each Holder's registered address, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). 6. Notice of Redemption Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at such Holder's registered address. Securities in denominations of principal amount larger than $1,000 may be redeemed in part but only in integral multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 4 7. Put Provisions Upon a Change of Control, unless the Company shall have exercised its right to redeem the Notes pursuant to paragraph 5 of the Securities in connection with such Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount thereof plus accrued interest to the date of repurchase as provided in, and subject to the terms of, the Indenture. 8. Subordination The Securities are subordinated to Senior Indebtedness, as defined in the Indenture, and the obligations of each Subsidiary Guarantor under the Subsidiary Guarantee contained in Article XI of the Indenture are subordinated to Guarantor Senior Indebtedness, as defined in the Indenture, of such Subsidiary Guarantor. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid, and Guarantor Senior Indebtedness of a Subsidiary Guarantor must be paid before such Subsidiary Guarantor may make payments under the Subsidiary Guarantee. The Company agrees, and each Securityholder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give them effect and appoints the Trustee as attorney-in-fact for such purpose. 9. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange (i) any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) for a period beginning 15 days before a selection of Securities to be redeemed and ending on the date of selection or (ii) any Securities for a period beginning 15 days before an interest payment date and ending on such interest payment date. 10. Persons Deemed Owners The registered holder of this Security may be treated as the owner of it for all purposes. 11. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request 5 unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 12. Defeasance Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to redemption or maturity, as the case may be. 13. Amendment, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in outstanding principal amount of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in outstanding principal amount of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities or to secure the Securities, or to add additional covenants for the benefit of the Holders or surrender rights and powers conferred on the Company or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make any change that does not adversely affect the rights of any Securityholder, or to provide for the issuance of Exchange Notes. 14. Defaults and Remedies Under the Indenture, Events of Default include: (i) default for 30 days in payment of interest on the Securities when the same becomes due and payable; (ii) default in payment of principal on the Securities when the same becomes due and payable at maturity, upon redemption pursuant to paragraph 5 of the Securities, upon required repurchase, upon declaration or otherwise; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company or its Subsidiaries if the amount accelerated (or so unpaid) exceeds $5.0 million and such acceleration or failure to pay is not rescinded or cured within a 10-day period; (v) certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary; (vi) certain final, non-appealable judgments or decrees for the payment of money in excess of $5.0 million; and (vii) the failure of any Subsidiary Guarantee to be in full force and effect or the denial or disaffirmation by any Subsidiary Guarantor of its obligations under the Indenture or the Securities in certain cases. If an 6 Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being due and payable immediately upon the occurrence of such Events of Default. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. 15. Trustee Dealings with the Company Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its affiliates and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. 16. No Recourse Against Others A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Security. 18. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act). 7 19. CUSIP Numbers Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 20. Governing Law This Security shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. The Company will furnish to any Securityholder upon written request and without charge to the Securityholder a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to: MBW Foods Inc., 445 Hutchinson Avenue, Columbus, Ohio 43235, Attention: President. ________________________________________________________________________________ ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint _______________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: _______________ Your Signature ____________________ Signature Guarantee: ____________________________________ (Signature must be guaranteed) ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box: |_| If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the amount in principal amount (must be integral multiple of $1,000): $ Date: _______________ Your Signature: _____________________________________________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: _______________________________________ (Signature must be guaranteed) EXHIBIT C to Indenture [FORM OF TRANSFEREE LETTER OF REPRESENTATION] MBW Foods Inc. 445 Hutchinson Avenue Columbus, Ohio 43235 Attn: President Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attn: Corporate Trust Administration Dear Sirs: This certificate is delivered to request a transfer of $_________ principal amount of the 9 7/8% Senior Subordinated Notes due 2007 (the "Notes") of MBW Foods Inc. Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: Name: ___________________________________ Address: ________________________________ Taxpayer ID Number: _____________________ The undersigned represents and warrants to you that: 1. We are an "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities Act")) that is an institutional accredited investor ("Institutional Accredited Investor") purchasing for our own account or for the account of such an institutional "accredited investor," at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Notes and invest in or purchase securities similar to 2 the Notes in the normal course of our business. We and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 2. We understand that the Notes have not been registered under the Securities Act or any other applicable securities law, and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date which is three years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act, to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or 7 under the Securities Act) that is purchasing for its own account or for the account of such an institutional "accredited investor", in each case in a minimum principal amount of Notes of $250,000 or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or 7 under the Securities Act) that is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee. 3. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Notes that the purchase and holding of the Notes will not constitute a transaction in violation of Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a prohibited transaction, as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), which could be subject to, respectively, a civil penalty assessed pursuant to Section 502 of ERISA or a tax imposed by Section 4975 of the Code. This representation is made in reliance upon the list furnished to us by the Company, if we so request, of the employee 3 benefit plans with respect to which the Company is a party in interest or a disqualified person, as of the date such list is so furnished, and is based upon our determination that a statutory or administrative exemption is applicable or that the Company and its Affiliates are not parties in interest with respect to any employee benefit plan that purchases or holds, or the assets of which could be deemed to purchase or hold, the Notes. As used in this paragraph, the terms "employee benefit plan" and "party in interest" shall have the meanings assigned to such terms in Section 3 of ERISA, the term "Affiliate" shall have the meaning assigned to such term in Section 407(d)(7) of ERISA and the term "disqualified person" shall have the meaning assigned to such term in Section 4975 of the Code. TRANSFEREE:_____________________ BY______________________________ EX-4.5 7 REGISTRATION RIGHTS AGMT Exhibit 4.5 REGISTRATION RIGHTS AGREEMENT February 10, 1997 CHASE SECURITIES INC. 270 Park Avenue New York, New York 10017 Dear Sirs: MBW Foods Inc., a Delaware corporation (the "Company"), proposes to issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a purchase agreement dated February 5, 1997 (the "Purchase Agreement"), $100,000,000 principal amount of its 9 7/8% Senior Subordinated Securities due 2007 (the "Securities") which Securities shall be unsecured and will be subordinated to all existing and future Senior Indebtedness of the Company and will be effectively subordinated to all obligations of each subsidiary of the Company as may exist from time to time. Capitalized terms used but not specifically defined herein have the respective meanings ascribed thereto in the Purchase Agreement. As an inducement to the Initial Purchaser to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Company agrees with you, for the benefit of the holders of the Securities (including the Initial Purchaser) (the "Holders"), as follows: 1. Registered Exchange Offer. The Company shall prepare and, not later than 60 days following the Issue Date (as hereinafter defined), shall file with the Commission a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer (the "Registered Exchange Offer") to the Holders to issue and deliver to such Holders, in exchange for the Securities, a like aggregate principal amount of debt securities of the Company (the "Exchange Securities") identical in all material respects to the Securities, except for the transfer restrictions relating to the Securities, shall use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 150 days after the Issue Date and to be consummated no later than 180 days after the Issue Date, and shall keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). The Exchange Securities will be issued under the Indenture or an indenture (the "Exchange Securities Indenture") between the Company and the Trustee or such other bank or trust company reasonably satisfactory to you, as trustee (the "Exchange Securities Trustee"), such indenture to be identical in all material respects to the Indenture except for the transfer restrictions relating to the Securities (as described above). 2 Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not (i) an affiliate of the Company within the meaning of the Securities Act or (ii) an Exchanging Dealer (as defined below) not complying with the requirements of the next sentence, (b) acquires the Exchange Securities in the ordinary course of such Holder's business and (c) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company, the Initial Purchaser and each Exchanging Dealer (as defined below) acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, (i) each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if the Initial Purchaser elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment it is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such a sale. In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange offer open for not less than 30 days after the date notice of the Exchange Offer is mailed to the Holders (or longer if required by applicable law); (c) utilize the services of a Depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and 3 (e) otherwise comply in all respects with all laws applicable to the Registered Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer, the Company shall: (a) accept for exchange all Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (b) deliver to the Trustee for cancellation all Securities so accepted for exchange; and (c) cause the Trustee or the Exchange Securities Trustee, as the case may be, promptly to authenticate and deliver to each Holder of Securities, Exchange Securities equal in principal amount to the Securities of such Holder so accepted for exchange. The Company shall make available for a period of 90 days after the consummation of the Registered Exchange Offer, a copy of the prospectus forming part of the Exchange Offer Registration Statement to any broker-dealer for use in connection with any resale of any Exchange Securities. Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Securities surrendered in exchange therefor or, if no interest has been paid on the Securities, from the date of original issue of the Securities. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act and (iii) such Holder is not an affiliate of the Company within the meaning of the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or 4 necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include, as of the consummation of the Registered Exchange Offer, an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Shelf Registration. If (i) applicable interpretations of the staff of the Commission do not permit the Company to effect the Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) for any other reason the Registered Exchange Offer is not consummated within 165 days after the Issue Date or (iii) any Holder either (A) is not eligible to participate in the Registered Exchange Offer or (B) participates in the Registered Exchange Offer and does not receive freely transferrable Exchange Securities in exchange for tendered Securities the following provisions shall apply: (a) The Company shall use all reasonable efforts to as promptly as practicable file with the Commission and thereafter shall use its reasonable best efforts to cause to be declared effective a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders from time to time in accordance with the methods of distribution set forth in such registration statement (hereafter, a "Shelf Registration Statement" and, together with any Exchange Offer Registration Statement, a "Registration Statement"); provided, however, that no Holder of Securities or Exchange Securities (other than the Initial Purchaser) shall be entitled to have Securities or Exchange Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be usable by Holders for a period of three years from the Issue Date or such shorter period that will terminate when all the Securities and Exchange Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities or Exchange Securities covered thereby not being able to offer and sell such Securities or Exchange Securities during that period, unless such action is required by applicable law; provided, however, that the foregoing shall not apply to actions taken by the Company in good faith and for valid business reasons (not including avoidance of its obligations hereunder), including, without limitation, the acquisition or divestiture of assets, so long as the Company within 120 days thereafter complies with the requirements of Section 4(i) hereof. Any such period during which the Company fails to keep the registration statement effective and usable for offers and sales of Securities and Exchange Securities is referred to as a "Suspension Period." A Suspension Period shall commence on 5 and include the date that the Company gives notice that the Shelf Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of Securities and Exchange Securities and shall end on the date when each Holder of Securities and Exchange Securities covered by such registration statement either receives the copies of the supplemented or amended prospectus contemplated by Section 4(i) hereof or is advised in writing by the Company that use of the prospectus may be resumed. If one or more Suspension Periods occur, the three-year time period referenced above shall be extended by the number of days included in each such Suspension Period. (c) Notwithstanding any other provisions hereof, the Company will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company by or on behalf of any Holder specifically for use therein (the "Holders' Information")) does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Liquidated Damages. (a) The parties hereto agree that the Holders of Securities will suffer damages if the Company fails to fulfill its obligations under Section 1 or Section 2, as applicable, and that it would not be feasible to ascertain the extent of such damages. Accordingly, if (i) the applicable Registration Statement is not filed with the commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is not declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's Staff, if later, within 45 days after publication of the change in law or interpretation), (iii) the Registered Exchange Offer is not consummated on or prior to 180 days after the Issue Date, or (iv) the Shelf Registration Statement is filed and declared effective within 150 days after the Issue Date (or in the case of a Shelf Registration Statement required to be filed in response to a change in law or the applicable interpretations of Commission's Staff, if later, within 45 days after publication of the change in law or interpretation) but shall thereafter cease to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) without being succeeded within 60 days by an additional Registration Statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company will generally be obligated to pay liquidated damages to each holder of Transfer Restricted Securities (as defined below), during the period of such Registration 6 Default, in an amount equal to $0.192 per week per $1,000 principal amount of the Securities constituting Transfer Restricted Securities held by such holder until the applicable Registration Statement is filed or declared effective, the Registered Exchange Offer is consummated or the Shelf Registration Statement again becomes effective, as the case may be; provided, however, no liquidated damages shall be payable for a Registration Default under clause (iii) above if a Shelf Registration Statement covering resales of the Transfer Restricted Securities for which the Exchange Offer was intended shall have been declared effective. Following the cure of all Registration Defaults, the accrual of liquidated damages will cease. "Transfer Restricted Securities" means each Security or Exchange Security until (i) the date on which such Security or Exchange Security has been exchanged for a freely transferrable Exchange Security in the Registered Exchange Offer, (ii) the date on which such Security or Exchange Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iii) the date on which such Security or Exchange Security is distributed to the public pursuant to Rule 144 under the Securities Act or is salable pursuant to Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary in this Section 3(a), the Company shall not be required to pay liquidated damages to the holder of Transfer Restricted Securities if such holder: (a) failed to comply with its obligations to make the representations in the second to last paragraph of Section 1; or (b) failed to provide the information required to be provided by it, if any, pursuant to Section 4(m). (b) The Company shall notify the Trustee and the Paying Agent under the Indenture immediately upon the happening of each and every Registration Default. The Company shall pay the liquidated damages due on the Transfer Restricted Securities by depositing with the Paying Agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the liquidated damages then due. The liquidated damages due shall be payable on each interest payment date specified by the Indenture to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay liquidated damages shall be deemed to accrue from and including the applicable Registration Default. (c) The parties hereto agree that the liquidated damages provided for in this Section 3 constitute a reasonable estimate of and are intended to constitute the sole damages that will be suffered by holders of Transfer Restricted Securities by reason of the failure of the Shelf Registration Statement or the Exchange Offer Registration Statement, as the case may be, to be filed, to be declared effective or to remain effective, or the Exchange Offer to be consummated, as the case may be, to the extent required by this Agreement. 4. Registration Procedures. In connection with any Registration Statement, the following provisions shall apply: 7 (a) The Company shall (i) furnish to you, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that the Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration, shall use reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as you reasonably may propose; (ii) if applicable, include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by the Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement. (b) The Company shall advise you and, if requested by the Holders, but only as to events set forth in clauses (i) and (ii) below, the Holders and, if requested by you, confirm such advice in writing (which advice pursuant to clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities or the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iv) of the happening of any event that requires the making of any changes in any Registration Statement or the prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (c) The Company will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment 8 thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those incorporated by reference). (d) The Company will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offering and sale of the Transfer Restricted Securities covered by the prospectus or any amendment or supplement thereto. (e) The Company will furnish to each Exchanging Dealer or the Initial Purchaser, as applicable, which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing, all exhibits (including those incorporated by reference). (f) The Company will, during the Exchange Offer Registration Period, promptly deliver to each Exchanging Dealer or the Initial Purchaser, as applicable, without charge, as many copies of the prospectus included within the coverage of Exchange Offer Registration Statement and any amendment or supplement thereto as such Exchanging Dealer or the Initial Purchaser, as applicable, may reasonably request for delivery by (i) such Exchanging Dealer in connection with a sale of Exchange Securities received by it pursuant to the Registered Exchange Offer or (ii) the Initial Purchaser in connection with a sale of Exchange Securities received by it in exchange for Securities constituting any portion of an unsold allotment; and the Company consents to the use of the prospectus or any amendment or supplement thereto by any such Exchanging Dealer or the Initial Purchaser, as applicable, as aforesaid. (g) Prior to any public offering of Securities or Exchange Securities pursuant to any Registration Statement, the Company will use its reasonable best efforts to register or qualify or cooperate with the Holders of Securities included therein and its counsel in connection with the registration or qualification of such securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by such Registration Statement; provided, however, that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. 9 (h) The Company will cooperate with the Holders of Securities or Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities or Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request in writing prior to sales of Securities or Exchange Securities pursuant to such Registration Statement. (i) If (i) any event contemplated by paragraphs (b)(ii) through (iv) above occurs during the period in which the Company is required to maintain an effective Registration Statement or (ii) any Suspension Period remains in effect more than 120 days after the occurrence thereof, the Company will promptly prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities or purchasers of Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities or Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities or Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (k) The Company will use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and will make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act; provided that in no event shall such earnings statement be delivered later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the applicable Registration Statement, which statements shall cover such 12-month period. (l) The Company will cause the Indenture or the Exchange Securities Indenture, as the case may be, to be qualified under the Trust Indenture Act as required by applicable law in a timely manner. (m) The Company may require each Holder of Transfer Restricted Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Registration Statement, and the Company may exclude from such registration the Transfer 10 Restricted Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (n) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 4(i) hereof, or until advised in writing (the "Advice") by the Company that the use of the applicable prospectus may be resumed. If the Company shall give any notice under Section 4(b)(ii) through (iv) during the period that the Company is required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(i) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required). 5. Registration Expenses. The Company will bear all expenses incurred in connection with the performance of its obligations under Sections 1, 2, 3 and 4 hereof and the Company will reimburse the Initial Purchaser and the Holders for the reasonable fees and disbursements of one firm of attorneys chosen by the Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities to be sold pursuant to each Registration Statement (the "Special Counsel") acting for the Initial Purchaser or Holders in connection therewith. 6. Indemnification. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser, as applicable, the Company shall indemnify and hold harmless each Holder, its directors, officers, agents and employees and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the directors, officers, agents and employees of such controlling persons against any and all loss, liability, claim and damage, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplements thereto or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and shall reimburse each Holder promptly upon demand for any and all expense (including, subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by the indemnified party), reasonably incurred as such expenses are incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental or regulatory agency or body, 11 commenced or threatened, or any claim based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided, however, that (i) this indemnity shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with Holders' Information and (ii) this indemnity with respect to any untrue statement or alleged untrue statement or omission or alleged omission in any related preliminary prospectus shall not enure to the benefit of any indemnified party from whom the person asserting any such loss, claim, damage or liability received Securities or Exchange Securities if such persons did not receive a copy of the final prospectus at or prior to the confirmation of the sale of such Securities or Exchange Securities to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of material fact contained in the related preliminary prospectus was corrected in the final prospectus unless such failure to deliver the final prospectus was a result of noncompliance by the Company with Sections 4(c), 4(d), 4(e) or 4(f). (b) In the event of a Shelf Registration Statement, each Holder agrees to indemnify and hold harmless the Company, its directors, officers, agents and employees and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the directors, officers, agents and employees of such controlling persons against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 6(a) hereof, as incurred, arising out of or based upon any untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment or supplement thereto) in reliance on and in conformity with Holders' Information furnished to the Company by such Holder; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities or Exchange Securities pursuant to the Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any claim or action commenced against it in respect of which indemnity may be sought hereunder; provided, however, that failure to so notify an indemnifying party shall not relieve such indemnifying party from any obligation that it may have pursuant to this Section except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; provided further, however, that the failure to notify an indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than on account of this indemnity agreement. If any such claim or action shall be brought against an indemnified party, the indemnified party shall notify the indemnifying party thereof, and the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any 12 legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that an indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on the written advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on the written advice of counsel to the indemnified party) between the indemnified party and indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel for the indemnified party will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent, but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If a claim by an indemnified party for indemnification under this Section 6 is unenforceable even though the express provisions hereof provide for indemnification in such case, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions, statements or omissions that resulted in such losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such 13 indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any losses shall be deemed to include, subject to the limitations set forth in Section 6(c) herein, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section, an indemnifying party that is a holder of Transfer Restricted Securities or Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Transfer Restricted Securities or Exchange Securities sold by such indemnifying party and distributed to the public were offered to the public exceeds the amount of any damages that such indemnifying party would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to any contribution from any person who was not guilty of such fraudulent misrepresentation. 7. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of the Securities and the Exchange Securities, taken as a single class. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holders of Securities or Exchange Securities whose Securities or Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities or Exchange Securities being sold by such Holders pursuant to such Registration Statement. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 7(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Chase Securities Inc.; (2) if to you, initially at your address set forth in the Purchase Agreement; and 14 (3) if to the Company, initially at the address of the Company set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if telecopied. (c) Successors And Assigns. This Agreement shall be binding upon the Company and its successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopies) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. (g) No Inconsistent Agreements. The Company has not and shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the holders of Transfer Restricted Securities in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person. Without limiting the generality of the foregoing, without the written consent of the holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities, the Company shall not grant to any person the right to request the Company to register any debt securities of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of the Agreement. (h) No Piggyback on Registrations. Neither the Company, nor any of its security holders (other than the holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities. 15 (i) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (j) Remedies. In the event of a breach by the Company, or by any holder of Transfer Restricted Securities, of any of their obligations under this Agreement, each holder of Transfer Restricted Securities or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages (other than the recovery of damages for a breach by the Company of its obligations under Sections 1 or 2 hereof for which liquidated damages have been paid pursuant to Section 3 hereof), will be entitled to specific performance of its rights under this Agreement. The Company and each holder of Transfer Restricted Securities agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. Please confirm that the foregoing correctly sets forth the agreement among the Company and you. Very truly yours, MBW FOODS INC. By:/s/ James B. Ardrey ------------------- Title: Executive Vice President Accepted in New York, New York CHASE SECURITIES INC. By: /s/ Joseph C. Purcell --------------------- Title: Vice President ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 90 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until _______________, 199_, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.1 The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. - -------- 1 In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus. ANNEX D |_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: _______________________________________ Address: _______________________________________ _______________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. FORM OF OPINION OF WHITE & CASE White & Case shall furnish to the Initial Purchaser their written opinion, as counsel to the Company, addressed to the Initial Purchaser and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchaser, to the effect that: 1. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, and has all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged as described in the Offering Memorandum. The Company has no subsidiaries. 2. The Company's authorized capitalization is 3,000 shares of common stock, of which 1,000 are issued and outstanding, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. 3. The statements in the Offering Memorandum under the caption "Certain United States Federal Income Tax Considerations", insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects. 4. The Company has the corporate right, power and authority to execute and deliver the Transaction Documents and to perform its obligations thereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby have been duly and validly taken. 5. Each of the Purchase Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Company, and each constitutes a valid and legally binding agreement, enforceable in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 6. The Indenture has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery 2 thereof by the Trustee, constitutes a valid and legally binding agreement of the Company enforceable in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 7. The Notes have been duly authorized, executed and issued by the Company and, assuming due authentication thereof by the Trustee and upon payment and delivery in accordance with the Purchase Agreement, will constitute valid and legally binding obligations of the Company enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, or other similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). The statements made in the Offering Memorandum under the caption "Description of Notes" and "Exchange and Registration Rights Agreement," insofar as they purport to constitute summaries of certain terms of the Indenture, the Notes and the Registration Rights Agreement, constitute accurate summaries of the terms of such documents in all material respects. 8. The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument known to us to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties or assets except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances as would not have a Material Adverse Effect; and to our knowledge no consent, approval, authorization or order of, or filing or registration with, any such court or arbitrator or governmental agency or body under any such statute, judgment, order, decree, rule or regulation is required for the execution, delivery and performance by the Company of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for 3 such consents, approvals, authorizations, filings, registrations or qualifications (i) which have been obtained or made prior to the Closing Date and (ii) as may be required to be obtained or made under the Securities Act and applicable state securities laws as provided in the Registration Rights Agreement. 9. Neither the consummation of the transactions contemplated by this Agreement nor the sale, issuance, execution or delivery of the Notes will violate Regulation G, T, U or X of the Federal Reserve Board. 10. To the knowledge of such counsel, there are no pending actions or suits or judicial, arbitral, rule-making, administrative or other proceedings to which the Company is a party or of which any property or assets of the Company is the subject which questions the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and to the knowledge of such counsel, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. 11. The Company is not an "investment company" or a company "controlled" by an investment company within the meaning of the Investment Company Act. 12. Assuming (i) the accuracy of the representations, warranties and agreements of the Company and of the Initial Purchaser contained in the Purchase Agreement, (ii) that the persons who buy the Notes in the initial resale thereof are Qualified Institutional Buyers or institutional Accredited Investors, and (iii) the accuracy of the representations and warranties made by each institutional Accredited Investor as set forth in the letters of representation executed by such institutional Accredited Investors in the form of Annex A to the Offering Memorandum, the issuance and sale of the Notes and the offer, resale and delivery of the Notes in the manner contemplated in the Offering Memorandum and the Purchase Agreement, are exempt from the registration requirements of the Securities Act and it is not necessary to qualify the Indenture under the Trust Indenture Act. Such counsel shall state that they have participated in conferences with representatives of the Company and with representatives of its independent accountants, at which conferences the contents of the Offering Memorandum, any amendment thereof and supplement thereto and related matters were discussed, and, although such counsel assume no responsibility for the factual accuracy or completeness of the Offering Memorandum, any amendment thereof or supplement thereto (except as expressly provided above), such counsel believes that the Offering Memorandum or any amendment thereof or supplement thereto (other than the financial statements and other financial and statistical information contained therein, as to which such counsel need express no belief) contains any untrue statement of a 4 material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and public officials which are furnished to the Initial Purchaser. EX-5.1 8 OPINION OF WHITE & CASE EXHIBIT 5.1 March , 1997 MBW Foods Inc. Community Corporate Center 445 Hutchison Avenue Columbus, Ohio 43235 Gentlemen: We have acted as special counsel to MBW Foods Inc. (the "Company") in connection with the Registration Statement on Form S-4 (the "Registration Statement") to be filed with the Securities Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of $100 million aggregate principal amount of 9 7/8% Series B Senior Subordinated Notes due 2007 of the Company (the "New Notes") to be offered and issued by the Company under an Indenture dated as of February 10, 1997 by and among the Company and Wilmington Trust Company, as Trustee. Upon the basis of the foregoing, we are of the opinion that, upon issuance thereof in the manner described in the Registration Statement the New Notes will be valid and binding obligations of the Company, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law). We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the heading "Legal Matters" in the Prospectus which is part of the Registration Statement. Very truly yours, /s/ WHITE & CASE EX-8.1 9 OPINION OF WHITE & CASE REGARDING TAX MATTERS EXHIBIT 8.1 March __, 1997 MBW Foods Inc. Community Corporate Center 445 Hutchison Avenue Columbus, Ohio 43235 Ladies and Gentlemen: We have acted as your special counsel in connection with the transactions described in the Registration Statement on Form S-4 (Registration No.____________) (the "Registration Statement") filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Securities Act"), on ___________, 1997 by MBW Foods Inc., a Delaware corporation (the "Company"), and described in the Company's Offer to Exchange 9 7/8% Series B Senior Subordinated Notes due 2007 (the "New Notes") for all outstanding 9 7/8% Senior Subordinated Notes due 2007 (the "Old Notes") set forth in the Prospectus (the "Prospectus") contained within the Registration Statement. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed thereto in the Registration Statement. Our opinion is based on an examination of the Registration Statement, the Prospectus, and such other documents, corporate records and materials as we have deemed necessary or appropriate for the purposes of this opinion. We assume that all transactions relating to the exchange pursuant to the Exchange Offer will be carried out in accordance with the terms of the governing documents without any amendments thereto or waiver of any terms thereof, and that such documents represent the entire agreement of the parties thereto. We understand the relevant facts to be as follows: MBW Foods Inc. Page 2 The Old Notes were originally issued and sold on February 10, 1997 in a transaction not registered under the Securities Act, in reliance upon the exemptions provided in Rule 144A and Regulation D under the Securities Act. Accordingly, the Old Notes are generally subject to substantial transfer restrictions unless such notes are registered pursuant to the Securities Act or unless an applicable exemption from the registration requirements of the Securities Act is available. Pursuant to a Registration Rights Agreement dated as of February 10, 1997 (the "Registration Rights Agreement") between the Company and Chase Securities Inc., as the initial purchaser (the "Initial Purchaser"), with respect to the Old Notes, the Company agreed to file within 60 days of the initial sales of the Old Notes to the Initial Purchaser the registered Exchange Offer pursuant to which holders of the Old Notes would be offered an opportunity to exchange their Old Notes for the New Notes which would be issued without legends restricting the transfer thereof and use its best efforts to cause such filing to become effective within 150 days after the date of such filing. Alternatively, under certain circumstances, the Company agreed to file a Shelf Registration Statement covering resales of the Old Notes and to cause such Shelf Registration statement to be declared effective under the Securities Act. Failure of the Company to comply with the requirements of the Registration Rights Agreement could result in the Company becoming obligated to pay Liquidated Damages to the holders of the Old Notes up to a maximum of $0.192 per week per $1,000 in principal amounts of the Old Notes; the New Notes will not be subject to such Liquidated Damages. In general, the New Notes will be freely transferable after the Exchange Offer without further registration under the Securities Act. Except as noted above, the terms of the New Notes are identical to those of the Old Notes. Based on the foregoing and subject to the assumptions, qualifications and limitations contained herein, we hereby confirm that the statements set forth in the Prospectus under the heading "Certain United States Federal Income Tax Consequences" constitute our opinion with respect to the material United States Federal income tax consequences of the exchange pursuant to the Exchange Offer, and the ownership and disposition of the Old Notes or the New Notes by holders who hold such notes as capital assets. The possibility exists that contrary positions may be taken by the Internal Revenue Service and that a court may agree with such contrary position. The foregoing opinion is specific to the transactions and the documents referred to herein, and is based upon the facts known to us as of the date hereof. MBW Foods Inc. Page 3 The foregoing opinion is predicated upon the Code, the regulations thereunder, the administrative and judicial interpretations of the Code and regulations, in each case as in effect on the date hereof. Any change in applicable law or in any of the facts or other assumptions upon which we have relied, may adversely affect such opinion. We hereby consent to the filing with the Securities and Exchange Commission of this opinion as an exhibit to MBW Foods Inc.'s Registration Statement on Form S-4 relating to the exchange of the Old Notes for the New Notes and to the reference to our firm under the heading "Certain United States Federal Income Tax Consequences" in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. Very truly yours, /s/ White & Case EX-10.1 10 DARTFORD MGMT SERVICES AGMT Exhibit 10.1 CONFORMED VERSION DARTFORD PARTNERSHIP L.L.C. 801 Montgomery Street, Suite 400 San Francisco, CA 94133 December 31, 1996 MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, Ohio 43235 Re: Management Services Agreement Gentlemen: This letter sets forth our understanding with respect to the engagement by you, MBW Foods Inc., a Delaware corporation (the "Company"), of Dartford Partnership L.L.C., a Delaware limited liability company ("Dartford"), to provide management services to the Company. 1. Terms of Agreement and Duties. (a) Engagement. The Company hereby retains Dartford to provide management services to the Company on a non-exclusive basis for a period (the "Term") beginning on the date hereof and ending on the Termination Date (as such term is hereinafter defined ), on the terms and conditions set forth in this Agreement. (b) Duties. During the Term, Dartford will render such management services, including, without limitation, providing organization and strategic direction, oversight of operations, corporate and financial planning, production of business plans, identification of possible acquisitions and advice with respect to the financing thereof, definition and development of business opportunities, investment recommendations and analysis and such other advisory work in connection with the organization, financing, management and operations of the Company, as the Company may reasonably request from time to time. MBW Foods Inc. December 31, 1996 Page 2 The Company will use the services of Dartford and Dartford will make itself available for the performance of services under this Agreement upon reasonable notice during the Term. Dartford will perform its services at the times and places reasonably requested by the Company to meet its needs and requirements, taking into account other engagements that Dartford may have. 2. Compensation of Dartford. (a) Subject to the terms and conditions hereof, during the Term the Company shall pay Dartford a management fee (the "Management Fee"). The Management Fee shall be paid in at least quarterly installments for the period from the date hereof to the Termination Date at a rate per annum equal to a percentage of the consolidated annual net sales ("Sales") of MBW Investors LLC and its subsidiaries. The percentage of Sales shall be as follows: Sales Percentage of Sales - ----- ------------------- Up to $250,000,000................ 0.5% $250,000,000 to $500,000,000...... An additional amount equal to 0.375% of Sales above $250,000,000 (but less than $500,000,000) Above $500,000,000................ An additional amount equal to 0.25% of Sales above $500,000,000 For example, if Sales are $350,000,000, the Management Fee shall be at a rate of $1,625,000 per annum (which equals the sum of $250,000,000 x .005) + ($100,000,000 x .00375). Notwithstanding the foregoing, the Management Fee shall be at a rate of $600,000 per annum for the period beginning on the date hereof and ending on the earlier of (x) December 31, 1997 and (y) the closing date of any Acquisition (as such term is defined in Section 2(b)(2) below), at which time the Management Fee shall be subject to adjustment as provided in Section 2(b)(2) below). MBW Foods Inc. December 31, 1996 Page 3 (b) Adjustment to Management Fee. (1) The Management Fee shall be adjusted annually as of January 1st of each year (beginning as of January 1, 1998) to reflect the sales for the year then ended; provided, that in no event shall the Management Fee be less than $600,000 per annum. (2) In the event that the Company, MBW Holdings Inc. (the Company's parent) or MBW Investors LLC (the parent of MBW Holdings Inc.) or any direct or indirect subsidiary of MBW Investors LLC consummates an acquisition of the stock or assets of another entity (including, without limitation, by way of merger or consolidation), enters into a joint venture with another entity, or effects any similar investment or business combination during the Term (each such transaction being an "Acquisition") the Management Fee shall be increased as of the closing date of such Acquisition to reflect the additional Sales of the entity or business acquired pursuant to such Acquisition. In the event that, during the six-month period following the consummation of an Acquisition, the Company, MBW Holdings Inc. or MBW Investors LLC consummates a sale or divestiture of a material portion of the assets or business acquired pursuant to such Acquisition, the Management Fee shall be decreased as of the closing date of such sale or divestiture to reflect the Sales of the business or division sold or divested. (3) In the event that the Company, MBW Holdings Inc. or MBW Investors LLC hereafter hires or appoints a Chief Executive Officer or other senior executive with responsibility and authority for providing to the Company the management services provided by Dartford under this Agreement, the Management Fee shall be reduced by an amount equal to the base salary, benefits (as valued by the Board of Directors of the Company in good faith) and annual base bonus which the Chief Executive Officer would receive if the Company achieved exactly 100% of its projected earnings before interest, taxes, depreciation and amortization as set forth in the Company's annual MBW Foods Inc. December 31, 1996 Page 4 budget for the upcoming fiscal year (as determined in accordance with the Chief Executive Officer's employment agreement). (4) In the event of a sale to the public by the Company, MBW Holdings Inc. or MBW Investors LLC for its own account of shares of capital stock or limited liability company interests pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, the Management Fee shall be subject to reduction by an amount mutually agreed upon by the Company and Dartford, with the decrease to reflect the good faith estimate of the underwriter for such public sale of the reduction needed to satisfactorily consummate such public sale. (5) If this Agreement terminates pursuant to Section 3(a)(i) below, the Management Fee payable for the 3-month period immediately preceding the Termination Date shall be at a rate equal to 50% of the rate which would otherwise be payable absent this clause (5). (6) Payment of the Management Fee may, at the election of the Company, be deferred (i) during any period in which a payment event of default exists and is continuing or (ii) during any period, commencing 30 days after a financial condition covenant default has occurred, that such financial condition covenant default is continuing, in either case under the credit agreement or indenture relating to indebtedness for borrowed money incurred by the Company, but the Management Fee shall nonetheless continue to accrue during any period of such deferral. 3. Termination; Severance. (a) This Agreement and the Company's engagement of Dartford hereunder shall terminate on the date (the "Termination Date") that is the earlier of (i) the date that is six months following a sale of substantially all of the equity securities or assets of MBW Foods Inc. December 31, 1996 Page 5 the Company or of MBW Holdings Inc., the Company's parent, or of MBW Investors LLC, the parent of MBW Holdings Inc., (ii) December 31, 2001, provided that unless either the Company or Dartford shall have given notice prior to July 1, 2001 or prior to July 1st of any year thereafter of its election not to extend this Agreement, the first date set forth in this subclause (ii) shall automatically be extended to December 31st of the following year; (iii) at the Company's election on written notice to Dartford, upon repeated willful neglect by Dartford of any duty or responsibility created pursuant to Section 1(b) of this Agreement, which breach or neglect shall not have been cured within 30 days after written notice thereof from the Company to Dartford; (iv) 30 days following written notice from the Company to Dartford given within six months of notice to the Company that any of Messrs. Wilson, Ardrey or Chung, other than by reason of death or Permanent Disability (as hereinafter defined), have ceased to be actively involved in Dartford's affairs, including its performance under this Agreement, (v) by the Company upon theft or misappropriation by Dartford of funds or property of the Company or any of its subsidiaries or other like willful breach; (vi) by the Company upon the breach by Dartford of its covenant contained in Section 4 of this Agreement or its obligations under Section 16.1 of the MBW LLC Agreement (as hereinafter defined); (vii) by Dartford on written notice to the Company; or (viii) by the Company on written notice to Dartford for any reason other than those set forth in clauses (iii), (iv), (v) or (vi) above. "Permanent Disability" shall mean the failure by or inability of any of Messrs. Wilson, Ardrey or Chung, as a result of physical or mental illness or incapacity, to be actively involved in Dartford's affairs for a period of four consecutive months or for an aggregate of more then six months in any 12-month period, as reasonably determined by the Board in good faith. (b) In the event the Company terminates this Agreement and the Company's engagement of Dartford pursuant to Section 3(a)(viii) above, Dartford shall be entitled to receive an amount (the "Severance Amount") equal to the following: (1) If the effective date of such termination under Section 3(a)(viii) is prior to December 31, 1998 and, at the effective date of such termination, the Company does not have $200,000,000 of Sales (as adjusted to reflect the additional Sales of any entity or business acquired pursuant to an Acquisition and as adjusted to reflect any divestiture provided in Section 2(b)(2) above), the Severance MBW Foods Inc. December 31, 1996 Page 6 Amount shall be an amount equal to the Management Fee per annum as of such effective date. (2) For any termination under Section 3(a)(viii) above that does not satisfy the conditions set forth in cause (1) of this Section 3(b), the Severance Amount shall be an amount equal to the lesser of (x) 200% of the Management Fee per annum as of such effective date and (y) the aggregate Management Fee payable under this Agreement for the remainder of the then current Term. The Company shall pay the Severance Amount to Dartford on the effective date of its termination under Section 3(a)(viii). 4. Limitations on Dartford Activities. (a) The Company acknowledges Dartford's existing management and equity relationships with the VDK Foods LLC group, the Windy Hill Pet Food L.L.C. group and the New Age Beverages Investments Limited group (each a "Platform" and, collectively with the MBW Investors LLC group, the "Existing Platforms"). The Company acknowledges and agrees that, from time to time during the Term, but subject to Dartford's obligations under Section 16.1 of the MBW LLC Agreement, Dartford and its partners may, without the participation of the Company, MBW Investors LLC or its principal equity owners, pursue business opportunities relating to an Acquisition (as such term is defined in Section 2(b)(2) above) through any of the Existing Platforms. (b) From the date hereof until the earlier of (x) June 30, 1998 and (y) the termination of the Term, Dartford will not organize and participate in another business group (i.e., another "Platform") for the purpose of effecting Acquisitions, and will not effect Acquisitions other than in connection with the Existing Platforms, unless: (1) a Change of Control, as such term is defined in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996 (the "MBW LLC Agreement"), has occurred with respect to an Existing Platform, with "Change of Control" to be construed with respect to such Existing MBW Foods Inc. December 31, 1996 Page 7 Platform in a manner comparable to its use in the MBW LLC Agreement; or (2) the management services agreement between Dartford and a member company of an Existing Platform has been terminated. If an event described in clause (1) or clause (2) above has occurred with respect to an Existing Platform, Dartford may, subject to its obligations under Section 16.1 of the MBW LLC Agreement, organize or participate in another business group (i.e., another Platform, which shall thereafter qualify as an "Existing Platform") and pursue business opportunities relating to Acquisitions without the participation of the Company, MBW Investors LLC or its principal equity owners. In no event from the date hereof until June 30, 1998, during the Term shall Dartford be eligible hereunder to effect Acquisitions through more than four Platforms. (c) From and after July 1, 1998 until the termination of the Term, subject to its obligations under Section 16.1 of the MBW LLC Agreement, Dartford may organize and participate in an additional Platform and effect Acquisitions through such additional Platform (in addition to Dartford's right to effect Acquisitions through the Existing Platforms) to the extent that one of the following occurs: (1) an event described in Section 4(b)(1) above occurs with respect to an Existing Platform; (2) an event described in Section 4(b)(2) above occurs with respect to an Existing Platform; or (3) no event described in Sections 4(b)(1) or 4(b)(2) occurs with respect to an Existing Platform, but for purposes of each additional platform an individual not presently a member of Dartford joins Dartford as a member and participates in a material respect in Dartford's performance of its services with respect to an Existing Platform. MBW Foods Inc. December 31, 1996 Page 8 5. Future Transaction Fees. (a) Transaction Fees. In the event that during the Term the Company, MBW Holdings Inc. or MBW Investors LLC either (i) consummates an Acquisition or (ii) initiates any discussions or negotiations or undertakes a review of a possible Acquisition that Dartford introduces to the MBW Investors LLC group during the Term and that is ultimately consummated within one year following termination of the Term, then in either case the Company shall pay to Dartford on the closing date of such Acquisition, in consideration of services rendered with respect thereto, a transaction fee (a "Transaction Fee") in an amount equal to 1.25% of the Acquisition Price (as defined below). For purposes of this Section 5, "Acquisition Price" means the sum of (A) the cash purchase price (including any installment payments), (B) the value of any equity securities issued to the seller in connection with the Acquisition, (C) the face value of any promissory note or other debt instrument issued to the seller in connection with such Acquisition, (D) the amount of any liabilities assumed by the MBW Investors LLC group in connection with such Acquisition (other than ordinary course of business trade payables). (b) Adjustments. In the event the Acquisition Price for a single Acquisition is greater than $250,000,000, Dartford and the Company agree to negotiate in good faith as to a reduction in the percentage of that portion of the Acquisition Price exceeding $250,000,000 payable to Dartford as part of the Transaction Fee. 6. Notices. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed first class, certified mail, return receipt requested, postage and registry fees prepaid and addressed as follows: If to Dartford: Dartford Partnership L.L.C. 801 Montgomery Street, Suite 400 San Francisco, CA 94133 Attention: Ian R. Wilson MBW Foods Inc. December 31, 1996 Page 9 If to the Company: MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, Ohio 43235 Attention: President With copies to: McCown De Leeuw & Co. 101 East 52nd Street, 31st Floor New York, NY 10022 Attention: Charles Ayres Addresses may be changed by a notice in writing in accordance with the provisions of this Section 6. 7. Miscellaneous. This Agreement shall be construed and enforced in accordance with, and shall be governed by the laws of the State of New York, without giving effect to the conflict of laws principles thereof. This Agreement embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings relating to the subject matter hereof. This Agreement may not be modified or amended, and no term or provision hereof may be waived or discharged, except in a writing signed by the party against which such modification, amendment, waiver or discharge is sought to be enforced. This Agreement cannot be assigned by either party hereto. The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [the remainder of this page is intentionally left blank] MBW Foods Inc. December 31, 1996 Page 10 If you are in agreement with the foregoing, please so indicate by signing the enclosed copy of this letter, whereupon it shall become a binding agreement between the parties hereto as of the day and year first above written. DARTFORD PARTNERSHIP L.L.C. By:/s/ Ray Chung --------------------- Title: Member Agreed to and accepted: MBW FOODS INC. By:/s/ Ray Chung -------------------------------- Title: Executive Vice President EX-10.2 11 MDC ADVISORY SERVICES AGMT Exhibit 10.2 ADVISORY SERVICES AGREEMENT THIS ADVISORY SERVICES AGREEMENT (this "Agreement") is entered into as of December 31, 1996, by and between MBW FOODS INC., a Delaware corporation (the "Company"), and MDC MANAGEMENT COMPANY III, L.P., a California limited partnership ("MDC"). A. WHEREAS, the Company is a wholly-owned subsidiary of MBW Holdings Inc., a Delaware corporation, which in turn is a wholly-owned subsidiary of MBW Investors LLC, a Delaware limited liability company; and B. WHEREAS, contemporaneously with the execution of this Agreement, certain affiliates of MDC will acquire membership interests in MBW Investors LLC; and C. WHEREAS, contemporaneously with the execution of this Agreement, the Company will acquire substantially all of the business and assets comprising the Mrs. Butterworth's business (the "Asset Purchase") pursuant to an Asset Purchase Agreement, dated as of December 18, 1996, between Conopco, Inc. and the Company; and D. WHEREAS, the execution and delivery of this Agreement is a condition precedent to consummation of the foregoing described transactions. NOW, THEREFORE, in consideration of the mutual promises of the parties hereinafter set forth, MDC and the Company hereto agree as follows: 1. Retention as Advisor. Subject to each of the terms, conditions and provisions of this Agreement, the Company hereby retains MDC to perform, and MDC hereby agrees to perform, those advisory functions set forth in Section 4 of this Agreement. 2. Term. 2.1 Subject to the provisions for termination set forth herein, this Agreement shall be effective as of the date hereof and expire on the earlier of (a) the fifth anniversary of the date hereof and (b) the date that is six months following a sale of substantially all of the equity securities or assets of the Company, MBW Holdings Inc. or MBW Investors LLC (the "Term"); provided, however, that this Agreement shall be renewable automatically annually for one-year terms unless MDC receives notice of the termination prior to the renewal date. 2.2 The Company, by written notice to MDC, authorized by a majority of the directors other than those who are representatives of MDC, may terminate this Agreement for justifiable cause, which shall mean any of the following events: (i) material breach by MDC of any of its obligations hereunder; (ii) misappropriation by MDC of funds or property of the Company or other willful breach in the course of the consultancy; or (iii) gross neglect by MDC in the fulfillment of its obligations hereunder. 2.3 MDC, by thirty (30) days prior written notice to the Company, may terminate this Agreement at any time. 3. Compensation. 3.1 Upon execution and delivery of this Agreement, the Company shall pay to MDC a transaction fee equal to One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) for services rendered in connection with the Asset Purchase. 3.2 As compensation to MDC for its advisory services to the Company under this Agreement, the Company agrees to pay MDC an annual fee (the "Monitoring Fee") at a rate per annum equal to a percentage of consolidated annual net sales ("Sales") of MBW Investors LLC and its subsidiaries; provided, however, that in no event shall the Monitoring Fee be less than $250,000 per annum; and provided further that if McCown De Leeuw & Co., its affiliates and its Permitted Transferees (as defined in that certain Amended and Restated Limited Liability Company Agreement of MBW Investors LLC (collectively, the "MDC Entities") shall cease to own, directly or indirectly, at least 50% of the voting common equity of the Company (other than as a result of a public offering as contemplated in Section 3.5 below), then the Monitoring Fee shall be fixed for the remaining Term at an amount equal to the Monitoring Fee in effect immediately prior to the event giving rise to the MDC Equities ceasing to own, directly or indirectly, at least 50% of the common equity of the Company. The percentage of Sales shall be as follows: -2- Sales Monitoring Fee ----- -------------- $0 to $120,000,000 $250,000 $120,000,000 to $250,000,000 The sum of (i) $250,000 and (ii) .12821% of Sales above $120,000,000 $250,000,000 to $500,000,000 The sum of (i) $416,667 and (ii) .125% of Sales above $250,000,000 Above $500,000,000 The sum of (i) $729,167 and (ii) .083% of Sales above $500,000,000. 3.3 The Monitoring Fee shall be adjusted annually as of January 1st of each year (beginning as of January 1, 1998) to reflect the sales for the year then ended. 3.4 In the event that the Company, MBW Holdings Inc. (the Company's parent) or MBW Investors LLC (the parent of MBW Holdings Inc.) or any direct or indirect subsidiary of MBW Investors LLC consummates an acquisition of the stock or assets of another entity (including, without limitation, by way of merger or consolidation), enters into a joint venture with another entity, or effects any similar investment or business combination during the Term (each such transaction being an "Acquisition") the Monitoring Fee shall be increased as of the closing date of such Acquisition to reflect the additional Sales of the entity or business acquired pursuant to such Acquisition. In the event that, during the six-month period following the consummation of an Acquisition, the Company, MBW Holdings Inc. or MBW Investors LLC consummates a sale or divestiture of a material portion of the assets or business acquired pursuant to such Acquisition, the Monitoring Fee shall be decreased as of the closing date of such sale or divestiture to reflect the Sales of the business or division sold or divested. 3.5 In the event of a sale to the public by the Company, MBW Holdings Inc. or MBW Investors LLC for its own account of shares of capital stock or limited liability company interests pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, the Monitoring Fee shall be subject to reduction by an amount mutually agreed upon by the Company and MDC, with the decrease to reflect the good faith estimate of the underwriter for such public sale of the reduction needed to satisfactorily consummate such public sale. 3.6 If this Agreement terminates pursuant to clause (b) of Section 2.1, -3- the Monitoring Fee payable for the 3-month period immediately preceding the termination date shall be at a rate equal to 50% of the rate which would otherwise be payable absent this Section 3.6. 3.7 Payment of the Monitoring Fee may, at the election of the Company, be deferred (i) during any period in which a payment event of default exists and is continuing or (ii) during any period, commencing 30 days after a financial condition covenant default has occurred, that such financial condition covenant default is continuing, in either case under the credit agreement or indenture relating to indebtedness for borrowed money incurred by the Company, but the Monitoring Fee shall nonetheless continue to accrue during any period of such deferral. 3.8 In the event that during the Term the Company, MBW Holdings Inc. or MBW Investors LLC either (i) consummates an Acquisition or (ii) initiates any discussions or negotiations or undertakes a review of a possible Acquisition that is ultimately consummated within one year following termination of the Term, then in either case the Company shall pay to MDC on the closing date of such Acquisition, in consideration of services rendered with respect thereto, a transaction fee (a "Transaction Fee") equal to .65625% of the Acquisition Price. For purposes of this Section 3.8, "Acquisition Price" means the sum of (A) the cash purchase price (including any installment payments), (B) the value of any equity securities issued to the seller in connection with the Acquisition, (C) the face value of any promissory note or other debt instrument issued to the seller in connection with such Acquisition, (D) the amount of any liabilities assumed by the MBW Investors LLC group in connection with such Acquisition (other than ordinary course of business trade payables). In the event the Acquisition Price for a single Acquisition is greater than $250,000,000, MDC and the Company agree to negotiate in good faith as to a reduction in the percentage of that portion of the Acquisition Price exceeding $250,000,000 payable to MDC as part of the Transaction Fee. 3.9 The Company agrees to pay actual and direct out-of-pocket expenses (including, but not limited to, reasonable fees and disbursements of attorneys, accountants and other professionals and consultants retained by MDC in connection with the services provided hereunder) incurred by MDC and its personnel in performing services hereunder to the Company and its subsidiaries which shall be reimbursed to it by the Company upon MDC's rendering of an invoice statement therefor together with such supporting data as the Company reasonably shall require. 4. Duties as Advisor. MDC's duties as an advisor to the Company under the provisions of this -4- Agreement shall include providing services in obtaining equity, debt, lease and acquisition financing, as well as providing other financial, advisory and consulting services for the operation and growth of the Company at any time during the term of this Agreement (the "Services"). Such Services shall be rendered upon the reasonable request of the Company. MDC shall devote as much time as reasonably necessary to the affairs of the Company. 5. Decisions. The Company reserves the right to make all decisions with regard to any matter upon which MDC has rendered its advice and consultation, and there shall be no liability to MDC for any such advice accepted by the Company pursuant to the provisions of this Agreement. 6. Authority of Advisor. MDC shall have authority only to act as a consultant and advisor to the Company. MDC shall have no authority to enter into any agreement or to make any representation, commitment or warranty binding upon the Company or to obtain or incur any right, obligation or liability on behalf of the Company. Nothing contained herein shall be interpreted as restricting, modifying or waiving the rights, privileges or obligations of MDC or any of its affiliates as a shareholder, director or officer of the Company. 7. Independent Contractor. Except as may be expressly provided elsewhere in this Agreement, MDC shall act as an independent contractor and shall have complete charge of its personnel engaged in the performance of the Services. 8. Books and Records. MDC's books and records with respect to the Services ("Books and Records") shall be kept at MDC's office located at 3000 Sand Hill Road, Building 3, Suite 290, Menlo Park, California 94025. The Books and Records shall be kept in accordance with recognized accounting principles and practices, consistently applied, and shall be made available for the Company or the Company's representatives' inspection and copying at all times during regular office hours. MDC shall not be required to maintain the Books and Records for more than three (3) years after termination of this Agreement. -5- 9. Confidential Information. The parties acknowledge that during the course of provision of the Services, the Company may disclose information to MDC or its affiliated companies. MDC shall treat such information as the Company's confidential property and safeguard and keep secret all such information about the Company, including reports and records, customer lists, trade lists, trade practices, and prices pertaining to the Company's business coming to the attention or knowledge of MDC because of any activities conducted by MDC under or pursuant to this Agreement; provided, however, that nothing contained herein shall be construed as prohibiting MDC from disclosing information regarding the Company to its investors and other affiliates as MDC may deem necessary, advisable or convenient. 10. Notices and Communications. 10.1 All communications relating to the day-to-day activities necessary to render the Services shall be exchanged between the respective representatives of the Company and MDC, who will be designated by the parties promptly upon commencement of the Services. 10.2 All other notices, demands, and communications required or permitted hereunder shall be in writing and shall be delivered personally to the respective representatives of the Company and MDC set forth below or shall be mailed by registered mail, postage prepaid, return receipt requested. Notices, demands and communications hereunder shall be effective: (i) if delivered personally, on delivery; or (ii) if mailed, forty-eight (48) hours after deposit thereof in the United States mail addressed to the party to whom such notice, demand, or communication is given. Until changed by written notice, all such notices, demands and communications shall be addressed as follows: If to the Company: MBW Foods Inc. 445 Hutchinson Avenue Columbus, Ohio 43235 Attn: Thomas Ferraro -6- If to MDC: McCown De Leeuw & Co. 101 East 52nd Street 31st Floor New York, NY 10022 Attn: Charles Ayres and McCown De Leeuw & Co. 3000 Sand Hill Road Building 3, Suite 290 Menlo Park, California 94025 Attn: Steven A. Zuckerman With copies to: White & Case 1155 Avenue of the Americas New York, New York 10036 Attn: Frank L. Schiff, Esq. 11. Assignments. MDC shall not assign this Agreement in whole or in part without the prior written consent of the Company; provided, however, that such consent shall not be unreasonably withheld with respect to assignments to MDC's affiliates or wholly-owned subsidiaries. Subject to the foregoing, all the terms and conditions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. 12. Limitation of Liability; Indemnity. MDC shall have no liability to the Company on account of any advice which it rendered to the Company provided MDC believed in good faith that such advice was useful or beneficial to the Company at the time it was rendered. The Company will indemnify and hold harmless MDC and its affiliates, and each of their respective directors, officers, partners, principals, employees, agents and representatives, from and against any actual or threatened claims, lawsuits, actions or liabilities (including the fees and expenses of counsel and other litigation costs) of any kind or nature, arising as a result of or in connection with this Agreement and their services, activities and decisions hereunder, except that the Company will not be -7- obligated to so indemnify any indemnified party if, and to the extent that, such claims, lawsuits, actions or liabilities against such indemnified party directly result from the gross negligence or willful misconduct of such indemnified party as admitted in any settlement by such indemnified party or held in any final, non-appealable judicial or administrative decision. In connection with such indemnification, the Company will promptly remit or pay to MDC any amounts which MDC certifies to the Company in writing are payable to MDC or other indemnified parties hereunder. 13. Applicable Law and Severability. This document shall, in all respects, be governed by the laws of the State of New York applicable to agreements executed and to be wholly performed within the State of New York. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provisions contained herein and any contrary present or future statute, law, ordinance or regulation, the latter shall prevail, but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 14. Further Assurances. Each of the parties hereto shall execute and deliver any and all additional papers, documents and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 15. Attorneys' Fees and Costs. The prevailing party in any proceeding brought to enforce or interpret any provision of this Agreement shall be entitled to recover its reasonable attorneys' fees, costs and disbursements incurred in connection with such proceeding, including but not limited to the reasonable costs of experts, accountants and consultants and all other reasonable costs and services related to the proceeding, including those incurred in any appeal, jointly and severally, from the nonprevailing party or parties. 16. Time of the Essence. Time is of the essence of this Agreement and all the terms, provisions, covenants and conditions hereof. -8- 17. Captions. The captions appearing at the commencement of the Sections hereof are descriptive only and for convenience and reference. Should there be any conflicts between any such caption and the Section at the head of which it appears, the Section and not such caption shall control and govern in the construction of this document. 18. Modifications or Amendments. No amendment, change or modification of this document shall be valid unless it is in writing and signed by all the parties hereto and expressly states that an amendment, change or modification of this Agreement is intended. 19. Separate Counterparts. This document may be executed in one or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and be one and the same. 20. Entire Agreement. This Agreement shall constitute the entire understanding and agreement between the parties hereto and shall supersede any and all letters of intent, whether written or oral, pertaining to the subject matter of this Agreement. [SIGNATURE PAGE FOLLOWS] -9- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers on the date first appearing above. MBW FOODS INC. By: /s/ James B. Ardrey ------------------------------- Title: Executive Vice President MDC MANAGEMENT COMPANY III, L.P., a California limited partnership By: /s/ Charles Ayres ------------------------------- General Partner -10- EX-10.3 12 FENWAY AGREEMENT EXHIBIT 10.3 AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of December 31,1996, by and between MBW FOODS INC., a Delaware corporation (the "Company"), and FENWAY PARTNERS, INC., a Delaware corporation ("Fenway"). A. WHEREAS, the Company is a wholly-owned subsidiary of MBW Holdings Inc., a Delaware corporation, which in turn is a wholly-owned subsidiary of MBW Investors LLC, a Delaware limited liability company ("MBW LLC"); and B. WHEREAS, contemporaneously with the execution of this Agreement, Fenway Partners Capital Fund, L.P., a Delaware limited partnership (the "Fund"), will acquire membership interests in MBW LLC pursuant to that certain Amended and Restated Limited Liability Company Agreement, dated as of December 31, 1996, among MBW LLC and the members party thereto (the "LLC Agreement"); and C. WHEREAS, contemporaneously with the execution of this Agreement, the Company will acquire substantially all of the business and assets comprising the Mrs. Butterworth's business pursuant to an Asset Purchase Agreement, dated as of December 18, 1996, between Conopco, Inc. and the Company; and D. WHEREAS, the execution and delivery of this Agreement is a condition precedent to consummation of the foregoing described transactions. Now, THEREFORE, in consideration of the mutual promises of the parties hereinafter set forth, Fenway and the Company hereto agree as follows: 1. Term. 1.1 Subject to the provisions for termination set forth herein, this Agreement shall be effective as of the date hereof and expire on the earlier of (A) the fifth anniversary of the date hereof, (B) a sale of substantially all of the equity securities or assets of the Company, MBW Holdings Inc. or MBW LLC, and (C) the date on which (i) the Fund and its Permitted Transferees (as defined in the LLC Agreement) no longer hold 10% of the outstanding Voting Units (as defined in the LLC Agreement) of MBW LLC or (ii) the Fund breaches its covenant under Section 16.1(b) of the LLC Agreement (the "Term"); provided, however, that this Agreement shall be renewable automatically annually for one-year terms unless Fenway receives notice of termination prior to the renewal date. 1.2 The Company, by written notice to Fenway, authorized by a majority of the directors other than those who are representatives of Fenway, may terminate this Agreement for justifiable cause, which shall mean any of the following events: (i) material breach by Fenway of any of its obligations hereunder; (ii) misappropriation by Fenway of funds or property of the Company or other willful breach during the Term; or (iii) gross neglect by Fenway in the fulfillment of its obligations hereunder. 1.3 Fenway, by thirty (30) days prior written notice to the Company, may terminate this Agreement at any time. 2. Compensation. In the event that during the Term the Company, MBW Holdings Inc. or MBW LLC either (i) consummates an acquisition of the stock or assets of another entity (including, without limitation, by way of merger or consolidation), enters into a joint venture with another entity, or the effects any similar investment or business combination (each such transaction being an "Acquisition"), or (ii) initiates any discussions or negotiations or undertakes a review of a possible Acquisition that is ultimately consummated within one year following termination of the Term, then in either case the Company shall pay to Fenway on the closing date of such Acquisition, in consideration of services rendered with respect thereto, a transaction fee (a "Transaction Fee") equal to .21875% of the Acquisition Price. For purposes of this Agreement, "Acquisition Price" means the sum of (A) the cash purchase price (including any installment payments), (B) the value of any equity securities issued to the seller in connection with the Acquisition, (C) the face value of any promissory note or other debt instrument issued to the seller in connection with such Acquisition, (D) the amount of any liabilities assumed by the MBW LLC group in connection with such Acquisition (other than ordinary course of business trade payables). In the event the Acquisition Price for a single Acquisition is greater than $250,000,000, Fenway and the Company agree to negotiate in good faith as to a reduction in the percentage of that portion of the Acquisition Price exceeding $250,000,000 payable to Fenway as part of the Transaction Fee. 3. Notices and Communications. All notices, demands, and communications required or permitted here- -2- under shall be in writing and shall be delivered personally to the respective representatives of the Company and Fenway set forth below or shall be mailed by registered mail, postage prepaid, return receipt requested. Notices, demands and communications hereunder shall be effective: (i) if delivered personally, on delivery; or (ii) if mailed, forty-eight (48) hours after deposit thereof in the United States mail addressed to the party to whom such notice, demand, or communication is given. Until changed by written notice, all such notices, demands and communications shall be addressed as follows: If to the Company: MBW Foods Inc. 445 Hutchinson Avenue Columbus, Ohio 43235 Attn: Thomas Ferraro If to Fenway: Fenway Partners, Inc. 152 West 57th Street New York, New York 10019 Attn: Peter Lamm 4. Assignments. Fenway shall not assign this Agreement in whole or in part without the prior written consent of the Company; provided, however, that such consent shall not be unreasonably withheld with respect to assignments to Fenway's affiliates or wholly-owned subsidiaries. Subject to the foregoing, all the terms and conditions contained herein shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. 5. Applicable Law and Severability. This document shall, in all respects, be governed by the laws of the State of New York applicable to agreements executed and to be wholly performed within the State of New York. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provisions contained herein and any contrary present or future statute, law, ordinance or regulation, the latter shall prevail, but the provision of this document which is affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. -3- 6. Further Assurances. Each of the parties hereto shall execute and deliver any and all additional papers, documents and other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties hereto. 7. Attorneys' Fees and Costs. The prevailing party in any proceeding brought to enforce or interpret any provision of this Agreement shall be entitled to recover its reasonable attorneys' fees, costs and disbursements incurred in connection with such proceeding, including but not limited to the reasonable costs of experts, accountants and consultants and all other reasonable costs and services related to the proceeding, including those incurred in any appeal, jointly and severally, from the nonprevailing party or parties. 8. Time of the Essence. Time is of the essence of this Agreement and all the terms, provisions, covenants and conditions hereof. 9. Captions. The captions appearing at the commencement of the Sections hereof are descriptive only and for convenience and reference. Should there be any conflicts between any such caption and the Section at the head of which it appears, the Section and not such caption shall control and govern in the construction of this document. 10. Modifications or Amendments. No amendment, change or modification of this document shall be valid unless it is in writing and signed by all the parties hereto and expressly states that an amendment, change or modification of this Agreement is intended. 11. Separate Counterparts. This document may be executed in one or more separate counterparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and be one and the same. -4- 12. Entire Agreement. This Agreement shall constitute the entire understanding and agreement between the parties hereto and shall supersede any and all letters of intent, whether written or oral, pertaining to the subject matter of this Agreement. [SIGNATURE PAGE FOLLOWS] -5- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers on the date first appearing above. MBW FOODS INC. By: /s/ RAY CHUNG ------------------------------- Name: Ray Chung Title: Executive Vice President FENWAY PARTNERS, INC. By: /s/ ANDREA GEISSER ------------------------------- Name: Andrea Geisser Title: Managing Director -6- EX-10.4 13 CREDIT AGMT DATED 12/31/96 Exhibit 10.4 CONFORMED COPY ================================================================================ CREDIT AGREEMENT DATED AS OF DECEMBER 31, 1996 AMONG MBW FOODS INC., AS BORROWER, MBW HOLDINGS INC., AS GUARANTOR, THE LENDERS LISTED HEREIN, AS LENDERS, THE CHASE MANHATTAN BANK, AS ADMINISTRATIVE AGENT, AND CHASE SECURITIES INC., AS ARRANGING AGENT ================================================================================ MBW FOODS INC. CREDIT AGREEMENT TABLE OF CONTENTS Page SECTION 1. DEFINITIONS.............................. 2 1.1 Certain Defined Terms................................................ 2 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement...................................................... 35 1.3 Other Definitional Provisions........................................ 35 SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS........................... 35 2.1 Commitments; Loans................................................... 35 2.2 Interest on the Loans................................................ 43 2.3 Fees................................................................. 47 2.4 Repayments, Prepayments and Reductions in Revolving Loan Commit- ments; General Provisions Regarding Payments; Application of Proceeds of Collateral and Payments under Guaranties.......................... 48 2.5 Use of Proceeds...................................................... 57 2.6 Special Provisions Governing Eurodollar Rate Loans................... 58 2.7 Increased Costs; Taxes; Capital Adequacy............................. 60 2.8 Obligation of Lenders and Issuing Lenders to Mitigate................ 65 SECTION 3. LETTERS OF CREDIT........................... 65 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein.............................................................. 65 3.2 Letter of Credit Fees................................................ 68 3.3 Drawings and Payments and Reimbursement of Amounts Paid Under Letters of Credit.................................................... 69 3.4 Obligations Absolute................................................. 71 3.5 Indemnification; Nature of Issuing Lender's Duties................... 72 3.6 Increased Costs and Taxes Relating to Letters of Credit.............. 74 SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT........................... 75 4.1 Conditions to Term Loans and Acquisition Revolving Loans............. 75 4.2 Conditions to All Loans.............................................. 81 4.3 Conditions to Letters of Credit...................................... 82 (i) Page SECTION 5. REPRESENTATIONS AND WARRANTIES................... 83 5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries................................................... 83 5.2 Authorization of Borrowing, etc...................................... 84 5.3 Financial Condition; Projections..................................... 86 5.4 No Material Adverse Change; No Restricted Junior Payments............ 86 5.5 Title to Properties; Liens; Intellectual Property.................... 87 5.6 Litigation; Adverse Facts............................................ 87 5.7 Payment of Taxes..................................................... 88 5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts............................................................ 88 5.9 Governmental Regulation.............................................. 88 5.10 Securities Activities................................................ 89 5.11 Employee Benefit Plans............................................... 89 5.12 Certain Fees......................................................... 89 5.13 Environmental Protection............................................. 89 5.14 Employee Matters..................................................... 91 5.15 Solvency............................................................. 91 5.16 Matters Relating to Collateral....................................... 91 5.17 Related Agreements................................................... 92 5.18 Disclosure........................................................... 92 5.19 Subordination of Seller Notes........................................ 93 SECTION 6. AFFIRMATIVE COVENANTS........................ 93 6.1 Financial Statements and Other Reports............................... 93 6.2 Corporate Existence, etc............................................. 99 6.3 Payment of Taxes and Claims; Tax Consolidation....................... 99 6.4 Maintenance of Properties; Insurance................................. 99 6.5 Inspection; Lender Meeting........................................... 100 6.6 Compliance with Laws, etc............................................ 100 6.7 Environmental Disclosure and Inspection.............................. 100 6.8 Company's Remedial Action Regarding Hazardous Materials.............. 102 6.9 Execution of Subsidiary Guaranty and Subsidiary Security Agreements by Subsidiaries and Future Subsidiaries.............................. 102 6.10 Conforming Leasehold Interests; Matters Relating to Additional Real Property Collateral.................................................. 103 6.11 Further Assurances................................................... 105 SECTION 7. NEGATIVE COVENANTS.......................... 106 7.1 Indebtedness......................................................... 106 (ii) Page 7.2 Liens and Related Matters............................................ 107 7.3 Investments; Joint Ventures.......................................... 109 7.4 Contingent Obligations............................................... 110 7.5 Restricted Junior Payments........................................... 111 7.6 Financial Covenants.................................................. 112 7.7 Restriction on Fundamental Changes; Asset Sales...................... 115 7.8 Sales and Lease-Backs................................................ 117 7.9 Transactions with Shareholders and Affiliates........................ 117 7.10 Disposal of Subsidiary Stock......................................... 118 7.11 Conduct of Business.................................................. 118 7.12 Amendments or Waivers of Certain Related Agreements; Amendments of Documents Relating to Subordinated Indebtedness; Designation of "Designated Senior Indebtedness"; Preferred Stock.................... 118 7.13 Fiscal Year.......................................................... 119 SECTION 8. EVENTS OF DEFAULT.......................... 119 8.1 Failure to Make Payments When Due.................................... 120 8.2 Default in Other Agreements.......................................... 120 8.3 Breach of Certain Covenants.......................................... 120 8.4 Breach of Warranty................................................... 120 8.5 Other Defaults Under Loan Documents.................................. 121 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc................. 121 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................... 121 8.8 Judgments and Attachments............................................ 122 8.9 Dissolution.......................................................... 122 8.10 Employee Benefit Plans............................................... 122 8.11 Change in Control.................................................... 122 8.12 Invalidity of Guaranties............................................. 123 8.13 Failure of Security.................................................. 123 8.14 Failure to Consummate Acquisition.................................... 123 8.15 Termination or Breach of Certain Transition Agreements............... 124 8.16 Conduct of Business By Holdings and MBW LLC.......................... 124 8.17 Default Under Subordination Provisions............................... 124 SECTION 9. AGENTS................................ 125 9.1 Appointment.......................................................... 125 9.2 Powers; General Immunity............................................. 127 9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness..................................................... 128 9.4 Right to Indemnity................................................... 128 9.5 Successor Agents and Swing Line Lender............................... 129 (iii) Page 9.6 Collateral Documents................................................. 129 SECTION 10. MISCELLANEOUS............................ 130 10.1 Assignments and Participations in Loans, Letters of Credit........... 130 10.2 Expenses............................................................. 133 10.3 Indemnity............................................................ 134 10.4 Set-Off; Security Interest in Deposit Accounts....................... 134 10.5 Ratable Sharing...................................................... 135 10.6 Amendments and Waivers............................................... 136 10.7 Independence of Covenants............................................ 137 10.8 Notices.............................................................. 138 10.9 Survival of Representations, Warranties and Agreements............... 138 10.10 Failure or Indulgence Not Waiver; Remedies Cumulative................ 138 10.11 Marshalling; Payments Set Aside...................................... 138 10.12 Severability......................................................... 139 10.13 Obligations Several; Independent Nature of Lenders' Rights........... 139 10.14 Headings............................................................. 139 10.15 Applicable Law....................................................... 139 10.16 Successors and Assigns............................................... 140 10.17 Consent to Jurisdiction and Service of Process....................... 140 10.18 Waiver of Jury Trial................................................. 141 10.19 Confidentiality...................................................... 141 10.20 Counterparts; Effectiveness.......................................... 142 Signature pages...................................................... S-1 (iv) EXHIBITS I FORM OF NOTICE OF BORROWING II FORM OF NOTICE OF CONVERSION/CONTINUATION III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT IV FORM OF TERM NOTE V FORM OF REVOLVING NOTE VI FORM OF SWING LINE NOTE VII FORM OF SUBSIDIARY GUARANTY VIII FORM OF HOLDINGS GUARANTY IX FORM OF PLEDGE AGREEMENT X FORM OF SECURITY AGREEMENT XI FORM OF PATENT AND TRADEMARK SECURITY AGREEMENT XII FORM OF COMPLIANCE CERTIFICATE XIII FORM OF OPINIONS OF COUNSEL TO LOAN PARTIES XIV FORM OF OPINION OF O'MELVENY & MYERS LLP XV FORM OF ASSIGNMENT AGREEMENT XVI FORM OF PERMITTED SELLER NOTE XVII FORM OF CERTIFICATE RE NON-BANK STATUS XVIII FORM OF COLLATERAL ACCOUNT AGREEMENT XIX FORM OF COLLATERAL ACCESS AGREEMENT (v) SCHEDULES 2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES; LENDING OFFICES 4.1C CORPORATE AND CAPITAL STRUCTURE; MANAGEMENT 5.1 SUBSIDIARIES OF HOLDINGS 5.5B OTHER NECESSARY INTELLECTUAL PROPERTY RIGHTS 5.8 MATERIAL CONTRACTS 7.6E STIPULATED CONSOLIDATED EBITDA AND CONSOLIDATED CAPITAL EXPENDITURES (vi) MBW FOODS INC. CREDIT AGREEMENT This CREDIT AGREEMENT is dated as of December 31, 1996 and entered into by and among MBW FOODS INC. a Delaware corporation ("Company"), MBW HOLDINGS INC., a Delaware corporation ("Holdings"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and collectively as "Lenders"), THE CHASE MANHATTAN BANK, as administrative agent for Lenders (in such capacity, "Administrative Agent"), and CHASE SECURITIES INC., as arranging agent (in such capacity, "Arranging Agent"). R E C I T A L S WHEREAS, Holdings and Company, its direct Wholly Owned Subsidiary (capitalized terms used in these Recitals without definition shall have the respective meanings assigned in subsection 1.1 hereof), have been formed by the MDC Entities and Dartford for the purpose of acquiring certain assets of Seller relating exclusively to the manufacture and sale of pancake syrup and pancake and waffle mix marketed under the Mrs. Butterworth's and Country Crock brand names, and assuming certain liabilities in connection therewith (such assets and liabilities being collectively the "Business"), on the terms set forth in that certain Asset Purchase Agreement dated as of December 18, 1996, by and between Company and Seller; WHEREAS, on or before the Closing Date, (i) the MDC Entities, Dartford, Fenway and the Management Investors will purchase all of the membership interests of MBW Investors LLC, a Delaware limited liability company ("MBW LLC"), for aggregate cash consideration of not less than $33,800,000, (ii) MBW LLC will contribute to Holdings, as common equity, the consideration received by MBW LLC from such sale of the membership interests of MBW LLC, and (iii) Holdings will contribute to Company, as common equity, the consideration received by Holdings from such equity contribution by MBW LLC; WHEREAS, on or before the Closing Date, Company will borrow not less than $50,000,000 in aggregate principal amount of Subordinated Bridge Loans; WHEREAS, Company desires that Lenders extend certain credit facilities to Company in an aggregate principal amount of $60,000,000 which, together with the proceeds of the Subordinated Bridge Loans and the contribution by Holdings of not less than $33,800,000 in equity to Company, will be used (i) to finance the purchase price for the Business payable in connection with the Acquisition, (ii) to pay Transaction Costs and (iii) to provide financing for working capital and other general corporate purposes (including acquisitions) of Company and its Subsidiaries; WHEREAS, Holdings desires to guaranty, and Company desires that all of its future Subsidiaries guaranty, all of the obligations of Company with respect to the credit facilities provided by Lenders; WHEREAS, Company desires to secure all of the Obligations and desires that all of its future Subsidiaries secure their respective obligations under the Subsidiary Guaranty, and Holdings desires to secure its obligations under its Guaranty, by granting to Administrative Agent, for the benefit of Agents and Lenders, (i) a first priority Lien on substantially all of their respective real and personal property and (ii) a first priority pledge of all of the capital stock of their respective direct Subsidiaries; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Company, Holdings, Lenders and Agents agree as follows: SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. The following terms used in this Agreement shall have the following meanings: "Acquisition" means the transactions contemplated by the Acquisition Agreement. "Acquisition Agreement" means that certain Asset Purchase Agreement dated as of December 18, 1996, by and between Company and Seller, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Acquisition Revolving Loans" has the meaning assigned to that term in subsection 2.5A. "Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date, the rate per annum obtained by dividing (i) the London Interbank offered rate for deposits in U.S. Dollars for maturities comparable to the Interest Period for which such Adjusted Eurodollar Rate will apply as of approximately 11:00 A.M. (London time) on such Interest Rate Determination Date as set forth on Telerate Page 3750 by (ii) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D). "Administrative Agent" means Chase, in its capacity as Administrative Agent, and any successor to Chase in such capacity appointed pursuant to subsection 9.5A. "Affected Lender" has the meaning assigned to that term in subsection 2.6C. "Affected Loans" has the meaning assigned to that term in subsection 2.6C. "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agent" means, individually, each of Administrative Agent and Arranging Agent, and "Agents" means Administrative Agent and Arranging Agent, collectively. "Aggregate Amounts Due" has the meaning assigned to that term in subsection 10.5. "Agreement" means this Credit Agreement dated as of December 31, 1996, as it may be amended, restated, supplemented or otherwise modified from time to time. "Anniversary" means each of the dates that are anniversaries of the Closing Date. "Applicable Base Rate Margin" means (i) with respect to the Term Loans, 1.75% per annum, and (ii) with respect to the Revolving Loans, 1.25% per annum. "Applicable Eurodollar Rate Margin" means (i) with respect to the Term Loans, 3.00% per annum, and (ii) with respect to the Revolving Loans, 2.50% per annum. "Applied Amount" has the meaning assigned to that term in subsection 2.4C(ii). "Arranging Agent" has the meaning assigned to that term in the introduction to this Agreement. "Asset Sale" means the sale (including in any sale-leaseback transaction) by Company or any of its Subsidiaries to any Person (other than Company or any of its Wholly Owned Subsidiaries) of (i) any of the stock of any of Company's Subsidiaries, (ii) all or substantially all of the assets of any division or line of business of Company or any of its Subsidiaries, or (iii) any other assets other than sales of assets (including without limitation inventory) in the ordinary course of business and sales of obsolete equipment, excluding any such other assets to the extent that the aggregate value of such assets sold in any single transaction or transactions is equal to $2,000,000 or less in any one Fiscal Year. "Assignment Agreement" means an assignment agreement in substantially the form of Exhibit XV annexed hereto or in such other form as may be approved by Administrative Agent. "Assumption Agreement" means that certain Assignment and Assumption Agreement dated as of December 31, 1996, by and between Seller and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as now and hereafter in effect, or any successor statute. "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate. "Base Rate Loans" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A. "Business" has the meaning assigned to that term in the Recitals to this Agreement. "Business Day" means (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings, issuances and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day described in clause (i) above and that is also (a) a day for trading by and between banks in Dollar deposits in the London interbank market and (b) a day on which banking institutions are open for business in London. "Capital Lease" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Cash" means money, currency or a credit balance in a Deposit Account. "Cash Equivalents" means (i) marketable securities issued or directly and unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either Standard & Poor's Rating Service ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's, issued by any Lender or any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having unimpaired capital and surplus of not less than $250,000,000 (each Lender and each such commercial bank being herein called a "Cash Equivalent Bank"); and (v) Eurodollar time deposits having a maturity of less than one year purchased directly from any Cash Equivalent Bank (provided such deposit is with such Cash Equivalent Bank or any other Cash Equivalent Bank). "Cash Proceeds" means, with respect to any Asset Sale, Cash payments (including any Cash received by way of deferred payment pursuant to, or monetization of, a note receivable or otherwise, but only as and when so received) received by Company or any of its Subsidiaries from such Asset Sale. "Certificate re Non-Bank Status" means a certificate substantially in the form of Exhibit XVII annexed hereto delivered by a Lender to Administrative Agent pursuant to subsection 2.7B(iii). "Chase" means The Chase Manhattan Bank and its successors, including, without limitation, its successors by merger. "Closing Date" means the date on or before December 31, 1996 on which the initial Loans are made. "Collateral" means all of the properties and assets (including capital stock) in which Liens are purported to be granted by the Collateral Documents. "Collateral Access Agreement" means any landlord waiver, mortgagee waiver, bailee letter or any similar acknowledgement or agreement of any landlord or mortgagee in respect of any Real Property Asset where any Collateral is located or any warehouse- man or processor in possession of any Inventory of any Loan Party, substantially in the form of Exhibit XIX annexed hereto with such changes thereto as may be agreed to by Administrative Agent in the reasonable exercise of its discretion. "Collateral Account" has the meaning assigned to that term in the Collateral Account Agreement. "Collateral Account Agreement" means the Collateral Account Agreement executed and delivered by Company and Administrative Agent on the Closing Date, substantially in the form of Exhibit XVIII annexed hereto, pursuant to which Company may pledge cash to Administrative Agent to secure the obligations of Company to reimburse Issuing Lenders for payments made under one or more Letters of Credit as such Collateral Account Agreement may hereafter be amended, restated, supplemented or otherwise modified from time to time. "Collateral Documents" means the Pledge Agreement, the Security Agreement, the Patent and Trademark Security Agreement, the Collateral Account Agreement, the Mortgages and any other documents, instruments or agreements delivered by any Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant or perfect liens on any assets of such Loan Party as security for the Obligations. "Commercial Letter of Credit" means any letter of credit or similar instrument issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by Company or any of its Subsidiaries in the ordinary course of business of Company or such Subsidiary. "Commitments" means the commitments of Lenders to make Loans as set forth in subsection 2.1A. "Company" has the meaning assigned to that term in the introduction to this Agreement. "Company Common Stock" means the common stock of Company, par value $0.01 per share. "Compliance Certificate" means a certificate substantially in the form of Exhibit XII annexed hereto delivered to Administrative Agent by Company pursuant to subsection 6.1(iv). "Condemnation Proceeds" has the meaning assigned to that term in subsection 2.4B(iii)(d). "Conforming Leasehold Interest" means any Recorded Leasehold Interest as to which the lessor has agreed in writing for the benefit of Administrative Agent (which writing has been delivered to Administrative Agent), whether under the terms of the applicable lease, under the terms of a Landlord Consent and Estoppel, or otherwise, to the matters described in the definition of "Landlord Consent and Estoppel," which interest, if a subleasehold or sub-subleasehold interest, is not subject to any contrary restrictions contained in a superior lease or sublease. "Consolidated Capital Expenditures" means, for any period, the aggregate amount paid or accrued by Holdings and its Subsidiaries for the rental, lease, purchase (including by way of the acquisition of Securities of a Person), construction or use of any property during such period, the value or cost of which, in conformity with GAAP, would appear on the consolidated balance sheet of Holdings and its Subsidiaries in the category of "purchases of property, plant or equipment" at the end of such period, excluding any such expenditure made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with insurance proceeds or condemnation awards relating to any such damage, loss, destruction or condemnation; provided, however, that Consolidated Capital Expenditures shall not include expenditures up to an aggregate amount equal to the portion of the purchase price for any Permitted Acquisition made pursuant to subsection 7.7(vii) that would otherwise be treated as a Consolidated Capital Expenditure. "Consolidated Cash Interest Coverage Ratio" means, for any period, the ratio of (i) Consolidated EBITDA for such period to (ii) Consolidated Cash Interest Expense for such period. "Consolidated Cash Interest Expense" means, for any period, Consolidated Interest Expense payable in cash during such period. "Consolidated Current Assets" means, as at any date of determination, the total assets of Holdings and its Subsidiaries on a consolidated basis which may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents. "Consolidated Current Liabilities" means, as at any date of determination, the total liabilities of Holdings and its Subsidiaries on a consolidated basis which may properly be classified as current liabilities in conformity with GAAP. "Consolidated EBITDA" means, for any period, (i) the sum of the amounts for such period of (a) Consolidated Net Income, plus (b) to the extent deducted in determining such Consolidated Net Income, (1) Consolidated Interest Expense, (2) depreciation, (3) depletion, (4) amortization, (5) all Federal, state, local and foreign income taxes, (6) transaction fees paid to the MDC Entities and/or Dartford and/or Fenway in connection with acquisitions made after the Closing Date, so long as such transaction fees are paid in accordance with the terms of the MDC Advisory Services Agreement, the Dartford Management Agreement and the Fenway Agreement, (7) non-recurring charges incurred prior to June 30, 1998 with respect to (A) relocation of Company's assets, (B) the purchase of computers and computer-related equipment and (C) transition related expenses in connection with the foregoing, but only to the extent that such non-recurring charges, together with all expenditures excluded from Consolidated Capital Expenditures under clause (iii) of the definition of Consolidated Fixed Charges, do not exceed $3,000,000 in the aggregate, (8) all other non-cash items reducing Consolidated Net Income and (9) any extraordinary and unusual losses, minus (ii) the sum of the amounts for such period of (a) all other non-cash items increasing Consolidated Net Income, plus (b) any extraordinary and unusual gains, all of the foregoing as determined on a consolidated basis for Holdings and its Subsidiaries in conformity with GAAP. "Consolidated Excess Cash Flow" means, for any period, an amount (if positive) equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated EBITDA, (b) to the extent deducted from Consolidated EBITDA by virtue of clause (ii)(b) of the definition thereof, extraordinary and unusual cash gains, and (c) the Consolidated Working Capital Adjustment minus (ii) the sum, without duplication, of the amounts for such period of (a) voluntary and scheduled cash repayments of Consolidated Total Debt (excluding repayments of Revolving Loans except to the extent the Revolving Loan Commitments are permanently reduced in connection with such repayments), (b) Consolidated Capital Expenditures (net of any proceeds of any related financings with respect to such expenditures), (c) expenditures made in connection with any Permitted Acquisition pursuant to subsection 7.7(vii) (net of any proceeds of any related financings with respect to such acquisitions), including without limitation transaction fees paid in cash to the MDC Entities and/or Dartford and/or Fenway in connection with such acquisitions, so long as such transaction fees are paid in accordance with the terms of the MDC Advisory Services Agreement, the Dartford Management Agreement and the Fenway Agreement, (d) Consolidated Interest Expense, (e) to the extent added back to Consolidated EBITDA by virtue of clause (i)(b)(9) of the definition thereof, extraordinary and unusual cash losses, (f) to the extent added back to Consolidated EBITDA by virtue of clause (i)(b)(7) of the definition thereof, non-recurring charges paid in cash incurred prior to June 30, 1998, and (g) the provision for current taxes based on income of Holdings and its Subsidiaries and payable in cash with respect to such period. "Consolidated Fixed Charges" means, for any period, an amount equal to the sum of the amounts for such period of (i) scheduled amortization of Indebtedness of Holdings and its Subsidiaries (as reduced by prepayments previously made), and discount or premium relating to any such Indebtedness for such period, whether expensed or capitalized, (ii) Consolidated Cash Interest Expense, (iii) Consolidated Capital Expenditures (excluding expenditures which would otherwise be included in Consolidated Capital Expenditures incurred prior to June 30, 1998 with respect to (a) relocation of Company's assets, (b) the purchase of computers and computer-related equipment and (c) transition related expenses in connection with the foregoing, but only to the extent that such expenditures, together with all non-recurring charges added back to Consolidated EBITDA by virtue of clause (i)(b)(7) of the definition thereof, do not exceed $3,000,000 in the aggregate), and (iv) taxes actually paid in cash by Holdings or any of its Subsidiaries. "Consolidated Interest Expense" means, for any period, the net interest expense of Holdings and its Subsidiaries for such period (net of any interest income of Holdings and its Subsidiaries during such period) as determined on a consolidated basis in conformity with GAAP. "Consolidated Net Income" means, for any period, the net income (or loss) of Holdings and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (i) the income (or loss) of any Person in which any other Person (other than Holdings or any of the Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid in cash to Holdings or any of its Subsidiaries by such Person during such period and (ii) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or the date such Person's assets are acquired by Company any of its Subsidiaries. "Consolidated Total Debt" means, as at any date of determination, all outstanding Indebtedness of Holdings and its Subsidiaries as determined on a consolidated basis in conformity with GAAP. "Consolidated Working Capital" means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities. "Consolidated Working Capital Adjustment" means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another 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 (in whole or in part) against loss in respect thereof, (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (iii) under Interest Rate Agreements. Contingent Obligations shall include, without limitation, (a) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, (b) the obligation to make take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (x) 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 (y) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (x) or (y) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifically limited. "Continuing Director" shall mean, as of any date of determination, any member of the Board of Directors of Company who (i) was a member of such Board of Directors on the Closing Date or (ii) was nominated for election or elected to such Board of Directors with the affirmative vote of the MDC Entities and/or Dartford and/or Fenway. "Contractual Obligation" means, as applied to any Person, any provision of any Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "Co-Pack Agreement" means that certain Co-Pack Agreement dated as of December 31, 1996, by and between Seller and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "CSI" means Chase Securities Inc. and its successors and assigns, including, without limitation, its successors by merger. "Dartford Management Agreement" means that certain Management Services Agreement dated as of December 31, 1996, by and between Company and Dartford, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Dartford" means Dartford Partnership L.L.C., a limited liability company organized under the laws of the State of Delaware. "Defaulting Lender" means any Lender with respect to which a Lender Default is in effect. "Deposit Account" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "Dollars" and the sign "$" mean the lawful money of the United States of America. "Eligible Assignee" means (i) (a) a commercial bank organized under the laws of the United States or any state thereof; (b) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; (c) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses including, but not limited to, insurance companies, mutual funds and lease financing companies; and (d) any other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and has combined capital and surplus or net assets of at least $100,000,000, in each case (under clauses (a) through (d) above) that is reasonably acceptable to Administrative Agent; and (ii) any Lender and any Affiliate of any Lender; provided that no Affiliate of Company shall be an Eligible Assignee. "Employee Benefit Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA which is subject to ERISA and which is maintained or contributed to by Company or any of its ERISA Affiliates. "Employment Agreements" means, collectively, (i) that certain Employment Agreement dated as of December 31, 1996, by and between Company and Thomas Ferraro, and (ii) that certain Employment Agreement dated as of December 31, 1996, by and between Company and Gary Willett. "Environmental Claim" means any written accusation, allegation, notice of violation, claim, demand, abatement order or other order or direction (conditional or otherwise) by any governmental authority or any Person for any damage, including, without limitation, personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, in each case relating to, resulting from or in connection with Hazardous Materials and relating to Company, any of its Subsidiaries, any of their respective Affiliates that are directly or indirectly controlled by Company, or any Facility. "Environmental Laws" means all laws, statutes, ordinances, orders, rules, regulations, plans, policies or decrees and the like relating to (i) environmental matters, including, without limitation, those relating to fines, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials, (ii) the generation, use, storage, transportation or disposal of Hazardous Materials, or (iii) occupational safety and health, public health and safety, industrial hygiene or protection of wetlands, in any manner applicable to Company or any of its Subsidiaries or any of their respective properties, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution Control Act ( 33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as amended or supplemented, and any analogous future or present local, state and federal statutes and regulations promulgated pursuant thereto, each as in effect as of the date of determination. "Equity Proceeds" means the cash proceeds (net of underwriting discounts and commissions and other reasonable costs associated therewith) from the issuance of any equity Securities of Holdings or Company after the Closing Date. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA Affiliate" means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) solely for purposes of obligations under Section 412 of the Internal Revenue Code or under the applicable sections set forth in Section 414(t)(2) of the Internal Revenue Code, any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. "ERISA Event" means (i) a "reportable event" within the meaning of Section 4043(c) of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation or with respect to which no penalty will be assessed by the PBGC for failure to satisfy such notice requirements); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Company or any of its ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting, in either case, in liability pursuant to Section 4063 or 4064 of ERISA, respectively; (v) the institution by the PBGC of proceedings to terminate any Pension Plan pursuant to Section 4042 of ERISA; (vi) the imposition of liability on Company or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or any of its ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan resulting in withdrawal liability pursuant to Section 4201 of ERISA, or the receipt by Company or any of its ERISA Affiliates of written notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4042 of ERISA or under Section 4041A of ERISA if such termination would result in liability to Company or any of its ERISA Affiliates; (viii) the imposition on Company or any of its ERISA Affiliates of fines, penalties or taxes under Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan. "Eurodollar Rate Loans" means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A. "Event of Default" means each of the events set forth in Section 8. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "Facilities" means any and all real property (including, without limitation, all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Company or any of its Subsidiaries (but only as to portions of buildings actually leased or used) or any of their respective predecessors or any of their respective Affiliates that are directly or indirectly controlled by Company. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by Administrative Agent. "Fenway" means Fenway Partners Capital Fund, L.P., a Delaware limited partnership. "Fenway Agreement" means that certain Advisory Agreement dated as of December 31, 1996, by and between Company and Fenway, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "FFDC Act" means the Federal Food, Drug and Cosmetic Act, as amended from time to time, and any successor statute. "First Priority" means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that (i) such Lien has priority over any other Lien on such Collateral and (ii) such Lien is the only Lien (other than Permitted Encumbrances and Liens permitted pursuant to subsection 7.2A) to which such Collateral is subject. "Fiscal Quarter" means a fiscal quarter of a Fiscal Year. "Fiscal Year" means the fiscal year of Holdings and its Subsidiaries ending on the last Saturday in December of each calendar year. "Fixed Charge Component" has the meaning assigned to that term in subsection 7.6E(i). "Flavor Supply Agreement" means that certain Flavor Supply Agreement dated as of December 31, 1996, by and between Company and Quest, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Flood Hazard Property" means a Mortgaged Property located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards. "Funding and Payment Office" means the office of Administrative Agent and Swing Line Lender located at One Chase Manhattan Plaza, 8th Floor, New York, New York 10081 or such offices of Administrative Agent or any successor Administrative Agent specified by Administrative Agent or such successor Administrative Agent in a written notice to Loan Parties and Lenders). "Funding Date" means the date of the funding of a Loan. "GAAP" means, subject to the limitations on the application thereof set forth in subsection 1.2, generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the date of determination and specifically, terms used herein applicable to Company and its Subsidiaries defined by reference to GAAP shall give effect to the subtraction of minority interests. "Governmental Acts" has the meaning assigned to that term in subsection 3.5. "Governmental Authorization" means any permit, license, authorization, plan, directive, consent order or consent decree of or from any federal, state or local governmental authority, agency or court. "Guaranty" means, individually, each of the Holdings Guaranty, the Subsidiary Guaranty and any other guaranty of the Obligations, and "Guaranties" means the Holdings Guaranty, the Subsidiary Guaranty and each other guaranty of the Obligations, collectively. "Guarantors" means Holdings and the Subsidiary Guarantors. "Hazardous Materials" means (i) any chemical, material or substance defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous waste", "restricted hazardous waste", "infectious waste", "toxic substances" or any other formulations intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any applicable Environmental Laws; (ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. "Hazardous Materials Activity" means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. "Holdings" has the meaning assigned to that term in the introduction to this Agreement. "Holdings Common Stock" means the common stock of Holdings, par value $0.01 per share. "Holdings Guaranty" means the Holdings Guaranty executed and delivered by Holdings on the Closing Date, substantially in the form of Exhibit VIII annexed hereto, as such Holdings Guaranty may thereafter be amended, restated, supplemented or otherwise modified from time to time. "Immaterial Subsidiaries" means, with respect to any Person, any Subsidiary or Subsidiaries of such Person the assets of which constitute, individually or in the aggregate, less than 5% of the total assets of such Person and its Subsidiaries. "Indebtedness" means, as applied to any Person, (i) all indebtedness for borrowed money, (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money (other than accounts payable incurred in the ordinary course of business and accrued expenses incurred in the ordinary course of business), (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument, and (v) all indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. Obligations under Interest Rate Agreements constitute Contingent Obligations and not Indebtedness. "Indemnified Liabilities" has the meaning assigned to that term in subsection 10.3. "Indemnitee" has the meaning assigned to that term in subsection 10.3. "Initial Period" means the period commencing on and including the Closing Date and ending on (but excluding) the earlier of (i) 60 days after the Closing Date and (ii) the date on which Arranging Agent notifies Company that it has concluded its primary syndication of the Loans and the Commitments. "Insurance Proceeds" has the meaning assigned to that term in subsection 2.4B(iii)(d). "Intellectual Property" has the meaning assigned to that term in subsection 5.5B. "Interest Payment Date" means (i) with respect to any Base Rate Loan, each March 15, June 15, September 15 and December 15 of each year, commencing on March 15, 1997 and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided that in the case of each Interest Period of longer than three months, "Interest Payment Date" shall also include the date that is three months after the commencement of such Interest Period. "Interest Period" has the meaning assigned to that term in subsection 2.2B. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to hedge Company or any of its Subsidiaries against fluctuations in interest rates. "Interest Rate Determination Date" means each date for calculating the Adjusted Eurodollar Rate, for purposes of determining the interest rate in respect of an Interest Period. The Interest Rate Determination Date in respect of calculating the Adjusted Eurodollar Rate shall be the second Business Day prior to the first day of the related Interest Period. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter. "Inventory" means, with respect to any Person as of any date of determination, all goods, merchandise and other personal property which are then held by such Person for sale or lease, including raw materials and work in process. "Investment" means (i) any direct or indirect purchase or other acquisition by Company or any of its Subsidiaries of, or of a beneficial interest in, stock or other Securities of any other Person (other than a Person that, prior to such purchase or acquisition, was a Wholly Owned Subsidiary of Company), or (ii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Company or any of its Subsidiaries to any other Person other than a Wholly Owned Subsidiary of Company, including all indebtedness and accounts receivable acquired from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business; provided, however, that the term "Investment" shall not include (a) current trade and customer accounts receivable for goods furnished or services rendered in the ordinary course of business and payable in accordance with customary trade terms, (b) advances and prepayments to suppliers for goods and services in the ordinary course of business, (c) stock or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to Company or any of its Subsidiaries or as security for any such Indebtedness or claims, (d) Cash held in Deposit Accounts with banks and trust companies (other than Lenders) not exceeding $2,000,000 in aggregate amount, (e) Cash held in any Deposit Account with a Lender and (f) shares in a mutual fund that invests solely in Cash Equivalents. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment. "IP Collateral" means the Collateral under the Patent and Trademark Security Agreement. "Issuing Lender" means, with respect to any Letter of Credit, the Lender which agrees or is otherwise obligated to issue such Letter of Credit, determined as provided in subsection 3.1B(ii). "Joint Venture" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "Landlord Consent and Estoppel" means, with respect to any Leasehold Property, a letter, certificate or other instrument in writing from the lessor under the related lease, satisfactory in form and substance to Administrative Agent, pursuant to which such lessor agrees, for the benefit of Administrative Agent, (i) that without any further consent of such lessor or any further action on the part of the Loan Party holding such Leasehold Property, such Leasehold Property may be encumbered pursuant to a Mortgage and may be assigned to the purchaser at a foreclosure sale or in a transfer in lieu of such a sale (and to a subsequent third party assignee if Administrative Agent, any Lender, or an Affiliate of either so acquires such Leasehold Property), (ii) that such lessor shall not terminate such lease as a result of a default by such Loan Party thereunder without first giving Administrative Agent notice of such default and at least 30 days (or, if such default cannot reasonably be cured by Administrative Agent within such period, such longer period as may reasonably be required) to cure such default, (iii) to the matters contained in a Collateral Access Agreement, and (iv) to such other matters relating to such Leasehold Property as Administrative Agent may reasonably request. "Leasehold Property" means any leasehold interest of any Loan Party as lessee under any lease of real property, other than any such leasehold interest designated from time to time by Administrative Agent in its sole discretion as not being required to be included in the Collateral. "Lender" and "Lenders" means the persons identified as "Lenders" and listed on the signature pages of this Agreement, together with their successors and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall include Swing Line Lender unless the context otherwise requires, provided that the term "Lenders", when used in the context of a particular Commitment, shall mean Lenders having that Commitment. "Lender Default" shall mean (i) the refusal (which has not been retracted) of a Lender to make available its portion of any Loans (including any Revolving Loans made to pay Refunded Swing Line Loans or to reimburse drawings under Letters of Credit) in accordance with subsection 2.1A(iii) or its portion of any unreimbursed drawing or payment under a Letter of Credit in accordance with subsection 3.3C or (ii) a Lender having notified Company and/or Administrative Agent in writing that it does not intend to comply with its obligations under subsection 2.1 or subsections 3.1C, 3.3B or 3.3C. "Lending Office" means, as to any Lender, the office or offices of such Lender specified as the "Lending Office" on Schedule 2.1, or such other office or offices as such Lender may from time to time notify Company and Administrative Agent. "Letter of Credit" or "Letters of Credit" means Commercial Letters of Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders for the account of Company pursuant to subsection 3.1. "Letter of Credit Usage" means, as at any date of determination, the sum of (i) the maximum aggregate amount which is or at any time thereafter may become available for drawing under all Letters of Credit then outstanding (whether or not the conditions to drawing thereunder have been met) plus (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Lenders and not theretofore reimbursed by Company (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B). "Leverage Ratio" means, as of any date of determination, the ratio of Consolidated Total Debt, as of the date of determination, to Consolidated EBITDA, for the twelve-month period ending on the date of determination, in each case calculated for Company and its Subsidiaries on a consolidated basis in accordance with GAAP. "Lien" means any lien, mortgage, pledge, assignment, security interest, fixed or floating charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing. "Loan" or "Loans" means, as the context requires, one or more of the Term Loans, Revolving Loans and Swing Line Loans or any combination thereof. "Loan Documents" means this Agreement, the Notes, the Letters of Credit (and any applications for, or reimbursement agreements or other documents or certificates executed by Company in favor of an Issuing Lender relating to, the Letters of Credit), the Holdings Guaranty, the Subsidiary Guaranty, the Collateral Documents and any Interest Rate Agreement entered into by Company with a Lender or an Affiliate of any Lender. "Loan Party" means, individually, each of Holdings, Company and any Subsidiary Guarantors, and "Loan Parties" means Holdings, Company and each Subsidiary Guarantor, collectively. "Management Fees" means the fees payable by Company pursuant to the MDC Advisory Services Agreement, the Dartford Management Agreement and the Fenway Agreement. "Management Investors" shall mean such Persons other than the MDC Entities, Dartford and Fenway as shall hold membership interests in MBW LLC on or prior to the Closing Date, which Persons shall be reasonably acceptable to Administrative Agent and Lenders. "Margin Stock" has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Material Contract" means any of the Employment Agreements or any other contract or other arrangement to which Holdings or any of its Subsidiaries is a party (other than the Loan Documents) for which breach, nonperformance, cancellation or failure to renew could have a Material Adverse Effect. "Material Adverse Effect" means (i) a material adverse effect upon the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company and its Subsidiaries, taken as a whole, (ii) the material impairment of the ability of any Loan Party to perform the Obligations and (iii) a material adverse effect upon the legality, validity, binding effect or enforceability against a Loan Party of a Loan Document to which it is a party; provided that Company's consummation of the Acquisition in accordance with the terms of the Acquisition Agreement shall not be deemed to have a Material Adverse Effect for purposes of subsection 5.4. "Maximum Consolidated Capital Expenditures Amount" has the meaning assigned to that term in subsection 7.6D. "MBW LLC" has the meaning assigned to that term in the Recitals to this Agreement. "MBW LLC Agreement" means that certain Amended and Restated Limited Liability Company Agreement dated as of December 31, 1996, by and among the MDC Entities, Dartford, Fenway and the Management Investors, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "MDC Advisory Services Agreement" means that certain Advisory Services Agreement dated as of December 31, 1996, by and between Company and MDC Management Company III, L.P., as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "MDC Entities" means McCown De Leeuw & Co. III, L.P., a California limited partnership, McCown De Leeuw & Co. Offshore (Europe) III, L.P., a Bermuda limited partnership, McCown De Leeuw & Co. III (Asia), L.P., a Bermuda limited partnership and Gamma Fund LLC, a California limited liability company. "Mortgage" means any mortgage or legal charge (whether designated as a deed of trust or a mortgage or by any similar title) granted by Company or any of its Subsidiaries (or, at Administrative Agent's option, an amendment to an existing Mortgage, in form satisfactory to Administrative Agent, adding such Mortgaged Property to the Real Property Assets encumbered by an existing Mortgage) in any Real Property Asset to secure the Obligations, as such mortgage or legal charge may be amended, restated, supplemented or otherwise modified from time to time, and "Mortgages" means all such instruments collectively. "Mortgaged Property" has the meaning assigned to that term in subsection 6.10B. "Mortgage Policy" has the meaning assigned to that term in subsection 6.10B(iv). "Multiemployer Plan" means a "multiemployer plan", as defined in Section 4001(a)(3) of ERISA which is subject to Title IV of ERISA, to which Company or any of its ERISA Affiliates is contributing or to which Company or any of its ERISA Affiliates has an obligation to contribute. "Net Cash Proceeds" means, with respect to any Asset Sale, Cash Proceeds of such Asset Sale net of bona fide direct costs of sale including, without limitation, (i) income taxes reasonably estimated to be actually payable as a result of such Asset Sale within one year of the date of receipt of such Cash Proceeds, (ii) transfer, sales, use and other taxes payable in connection with such Asset Sale, (iii) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, and (iv) broker's commissions and reasonable fees and expenses of counsel, accountants and other professional advisors in connection with such Asset Sale. "Non-Defaulting Lender" means and includes each Lender other than a Defaulting Lender. "Non-US Lender" has the meaning assigned to that term in subsection 2.7B(iii). "Notes" means one or more of the Term Notes, Revolving Notes or Swing Line Note or any combination thereof. "Notice of Borrowing" means a notice in the form of Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant to subsection 2.1B with respect to a proposed borrowing. "Notice of Conversion/Continuation" means a notice substantially in the form of Exhibit II annexed hereto delivered by Company to Administrative Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein. "Notice of Issuance of Letter of Credit" means a notice in the form of Exhibit III annexed hereto delivered by Company to Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit. "Obligations" means all obligations of every nature of each Loan Party from time to time owed to Agents, Lenders or any of them under the Loan Documents, whether for principal, interest, reimbursement of amounts drawn under Letters of Credit or payments for early termination of Interest Rate Agreements, fees, expenses, indemnification or otherwise. "Officer's Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer), its president, its chief financial officer or a vice president; provided that every Officer's Certificate with respect to the compliance with a condition precedent to the making of any Loans hereunder shall include (i) a statement that the officer making or giving such Officer's Certificate has read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signer he or she has made or has caused to be made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signer, such condition has been complied with. "Operating Lease" means, as applied to any Person, any lease (including, without limitation, leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not a Capital Lease other than any such lease under which that Person is the lessor. "Patent and Trademark Security Agreement" means the Patent and Trademark Security Agreement entered into by and among Company, the Subsidiary Guarantors and Administrative Agent dated as of the date hereof, substantially in the form of Exhibit XI annexed hereto, as such Patent and Trademark Security Agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time. "Patent License Agreement" means that certain Patent License Agreement dated as of December 31, 1996, by and among Seller, Unilever PLC and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA (or any successor thereto). "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Title IV of ERISA. "Permitted Acquisition" means an acquisition of assets or a business effected in accordance with the provisions of subsection 7.7(vii). "Permitted Encumbrances" means the following types of Liens: (i) Liens for taxes, assessments or governmental charges or claims the payment of which is not, at the time, required by subsection 6.3; (ii) statutory Liens of landlords, statutory Liens of carriers, warehousemen, mechanics and materialmen and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA) incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) any attachment or judgment Lien not constituting an Event of Default under subsection 8.8; (v) leases or subleases granted to others not interfering in any material respect with the ordinary conduct of the business of Company or any of its Subsidiaries; (vi) easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of Company or any of its Subsidiaries; (vii) any (a) interest or title of a lessor or sublessor under any Capital Lease permitted by subsection 7.1(iii) or any operating lease not prohibited by this Agreement, (b) restriction or encumbrance that the interest or title of such lessor or sublessor may be subject to, or (c) subordination of the interest of the lessee or sublessee under such lease to any restriction or encumbrance referred to in the preceding clause (b); (viii) Liens arising from filing UCC financing statements relating solely to leases permitted by this Agreement; (ix) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (x) deposits in the ordinary course of business to secure liabilities to insurance carriers, lessors, utilities and other service providers; and (xi) bankers liens and rights of setoff with respect to customary depository arrangements entered into in the ordinary course of business. "Permitted Seller Note" means a promissory note substantially in the form of Exhibit XVI annexed hereto representing any Indebtedness of Company incurred in connection with any Permitted Acquisition payable to the seller in connection therewith, as such note may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B; provided that no Permitted Seller Note shall (i) be guarantied by any Subsidiary of Company or secured by any property of Company or any of its Subsidiaries or (ii) bear cash interest at a rate in excess of 12% per annum; and provided further, that no Permitted Seller Note shall provide for any prepayment or repayment of all or any portion of the principal thereof prior to the date of the final scheduled installment of principal of any of the Loans. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Pledge Agreement" means that certain Pledge Agreement by and among Company, Holdings, the Subsidiary Guarantors and Administrative Agent dated as of the date hereof and substantially in the form of Exhibit IX annexed hereto, as such Pledge Agreement may be amended, restated, supplemented or otherwise modified from time to time. "Pledged Collateral" means the "Pledged Collateral" as defined in the Pledge Agreement. "Potential Event of Default" means a condition or event that, after notice or after any applicable grace period has lapsed, or both, would constitute an Event of Default. "Prime Rate" means the rate of interest per annum publicly announced from time to time by Chase as its prime commercial lending rate in effect at its principal office in New York City. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Chase or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "Proceedings" has the meaning assigned to that term in subsection 6.1(x). "Pro Forma Calculation Period" has the meaning assigned to that term in subsection 7.6E(i). "Projections" has the meaning assigned to that term in subsection 5.3B. "Pro Rata Share" means (i) with respect to all payments, computations and other matters relating to the Term Loan Commitment or the Term Loan of any Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that Lender by (y) the aggregate Term Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to the Revolving Loan Commitment or the Revolving Loans of any Lender or any Letters of Credit issued by any Lender or any participations purchased by any Lender therein or in any Swing Line Loans, the percentage obtained by dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all Lenders; and (iii) for all other purposes with respect to each Lender, the percentage obtained by dividing (x) the sum of the Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all Lenders; in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of each Lender for purposes of each of clauses (i), (ii) and (iii) of the preceding sentence is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto. "PTO" means the United States Patent and Trademark Office or any successor or substitute office in which filings are necessary or, in the opinion of Administrative Agent, desirable in order to create or perfect Liens on any IP Collateral. "Pure Food and Drug Laws" means the FFDC Act and the pure food and drug laws of each of the states of the United States into which products of the Business are or have been shipped. "Quest" means Quest International Flavors & Food Ingredients Company. "Quest Agreements" means, collectively, (i) that certain Flavor Escrow Agreement dated as of December 31, 1996, by and among Quest, the escrow agent named therein and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A, and (ii) the Flavor Supply Agreement. "Real Property Asset" means, at any time of determination, any interest then owned by any Loan Party in any real property. "Recorded Leasehold Interest" means a Leasehold Property with respect to which a Record Document (as hereinafter defined) has been recorded in all places necessary or desirable, in Administrative Agent's reasonable judgment, to give constructive notice of such Leasehold Property to third-party purchasers and encumbrancers of the affected real property. For purposes of this definition, the term "Record Document" means, with respect to any Leasehold Property, (a) the lease evidencing such Leasehold Property or a memorandum thereof, executed and acknowledged by the owner of the affected real property, as lessor, or (b) if such Leasehold Property was acquired or subleased from the holder of a Recorded Leasehold Interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form reasonably satisfactory to Administrative Agent. "Refunded Swing Line Loans" has the meaning assigned to that term in subsection 2.1A(iii). "Register" has the meaning assigned to that term in subsection 2.1D. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Regulatory Shares" means, with respect to any Person, shares of such Person required to be issued as qualifying shares to directors or persons similarly situated or shares issued to Persons other than Company or a Wholly Owned Subsidiary of Company in response to regulatory requirements of foreign jurisdictions pursuant to a resolution of the Board of Directors of such Person, so long as such shares do not exceed one percent of the total outstanding shares of equity such Person and any owners of such shares irrevocably covenant with Company to remit to Company or waive any dividends or distributions paid or payable in respect of such shares. "Reimbursement Date" has the meaning assigned to that term in subsection 3.3B. "Related Agreements" means the Subordinated Bridge Loan Agreement, the Subordinated Bridge Notes, the other Subordinated Bridge Loan Documents, the Subordinated Exchange Note Indenture, the Subordinated Exchange Notes, the other Subordinated Exchange Note Documents, the Warrant Agreement, the Warrant Escrow Agreement, the Warrants, the Acquisition Agreement, the Assumption Agreement, the MDC Advisory Services Agreement, the Dartford Management Agreement, the Fenway Agreement and the Transition Agreements. "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of any Facility, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. "Requisite Lenders" means Non-Defaulting Lenders having or holding not less than 51% of the sum of the aggregate Term Loan Exposure of all Non-Defaulting Lenders plus the aggregate Revolving Loan Exposure of all Non-Defaulting Lenders. "Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Company now or hereafter outstanding, except a dividend payable solely in shares of that class of stock to the holders of that class, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Holdings or Company now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Holdings or Company now or hereafter outstanding, and (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness. "Revolving Loan Commitment" means the commitment of a Lender to make Revolving Loans to Company pursuant to subsection 2.1A(ii) and "Revolving Loan Commitments" means such commitments of all Lenders in the aggregate. "Revolving Loan Commitment Termination Date" means December 15, 2001. "Revolving Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the termination of the Revolving Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after the termination of the Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations purchased by other Lenders in such Letters of Credit) plus (c) the aggregate amount of all participations purchased by that Lender in any outstanding Letters of Credit or any unreimbursed drawings under any Letters of Credit plus (d) the aggregate amount of all participations purchased by that Lender in any outstanding Swing Line Loans plus (e) in the case of Swing Line Lender, the sum of the aggregate outstanding principal amount of all Swing Line Loans (in each case net of any participations therein purchased by other Lenders). "Revolving Loans" means the Loans made by Lenders to Company pursuant to subsection 2.1A(ii). "Revolving Notes" means (i) the promissory notes of Company issued pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any promissory notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in connection with assignments of the Revolving Loan Commitment and Revolving Loans of any Lender, in each case substantially in the form of Exhibit V annexed hereto, as they may be amended, restated, supplemented or otherwise modified from time to time. "Securities" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended from time to time, and any successor statute. "Security Agreement" means the Security Agreement entered into by and among Company, Holdings, the Subsidiary Guarantors and Administrative Agent dated as of the date hereof and substantially in the form of Exhibit X annexed hereto, as such Security Agreement may be amended, restated, supplemented or otherwise modified from time to time. "Seller" means Conopco, Inc., a New York corporation, doing business as Van den Bergh Foods Company. "Shared Technology License Agreement" means that certain Shared Technology License Agreement dated as of December 31, 1996, by and between Seller and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Solvent" means, with respect to any Person, that as of the date of determination both (i) (a) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (b) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (c) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (ii) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit" means any standby letter of credit or similar instrument issued for the purpose of supporting (i) workers' compensation liabilities of Company or any of its Subsidiaries, (ii) the obligations of third party insurers of Company or any of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring third party insurers, (iii) performance, payment, deposit or surety obligations of Company or any of its Subsidiaries, in any case if required by law or governmental rule or regulation or in accordance with custom and practice in the industry, and (iv) such other obligations of Company and its Subsidiaries as may be reasonably acceptable to Administrative Agent; provided that Standby Letters of Credit may not be issued for the purpose of supporting (a) trade payables or (b) Indebtedness constituting "antecedent debt" (as that term is used in Section 547 of the Bankruptcy Code). "Subordinated Bridge Loan Agreement" means that certain Senior Subordinated Credit Agreement dated as of December 31, 1996 by and between Company, the financial institutions listed therein as lenders and Chase, as agent for the lenders, pursuant to which the Subordinated Bridge Loans are made, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Bridge Loan Documents" means the Subordinated Bridge Notes, the Subordinated Bridge Loan Agreement, the Subordinated Bridge Loan Guaranties and each other document executed in connection with the Subordinated Bridge Loans, as each such document may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted by subsection 7.12B. "Subordinated Bridge Loan Guaranties" means, collectively, each of the guaranties of Company's obligations with respect to the Subordinated Bridge Loans executed by certain Subsidiaries of Company from time to time, in the form of Exhibit B to the Subordinated Bridge Loan Agreement, in each case with such changes thereto when executed as are permitted under subsection 7.12B and as each such guaranty may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Bridge Loans" means the $50,000,000 in initial aggregate principal amount of Indebtedness in respect of "Initial Loans" (as such term is defined in the Subordinated Bridge Loan Agreement) incurred by Company pursuant to the Subordinated Bridge Loan Agreement, and shall include any "Term Loans" (as such term is defined in the Subordinated Bridge Loan Agreement) into which such Initial Loans are converted. "Subordinated Bridge Notes" means the promissory notes of Company issued pursuant to the Subordinated Bridge Loan Agreement and evidencing the Subordinated Bridge Loans, as such notes may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Exchange Note Documents" means the Subordinated Exchange Note Indenture, the Subordinated Exchange Notes and each other document executed in connection with the Subordinated Exchange Notes, as each such document may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Exchange Note Indenture" means the indenture pursuant to which the Subordinated Exchange Notes are issued, in the form delivered to Agents and Lenders on or prior to the Closing Date, with such changes thereto when executed as are permitted under subsection 7.12B and as such indenture may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Exchange Notes" means the Increasing Rate Subordinated Notes due 2006 of Company issued pursuant to the Subordinated Exchange Note Indenture in exchange for all or any portion of the Subordinated Bridge Notes, in the form delivered to Agents and Lenders on or prior to the Closing Date, with such changes thereto when executed as are permitted under subsection 7.12B and as such notes may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12B. "Subordinated Indebtedness" means (i) the Indebtedness of Company under the Subordinated Bridge Loan Documents and the Subordinated Exchange Note Documents, (ii) any Indebtedness permitted under subsection 7.1(vi), (iii) the Indebtedness of Company evidenced by any Permitted Seller Notes, and (iv) any other Indebtedness of Company or any of its Subsidiaries subordinated in right of payment to the Obligations pursuant to documentation containing maturities, amortization schedules, covenants, defaults, remedies, subordination provisions and other material terms in form and substance satisfactory to Administrative Agent and Requisite Lenders. "Subsidiary" means, with respect to any Person, any corporation, partnership, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Subsidiary Guarantor" means any Subsidiary of Company that becomes party to the Subsidiary Guaranty at any time after the Closing Date pursuant to subsection 6.9. "Subsidiary Guaranty" means the Subsidiary Guaranty, substantially in the form of Exhibit VII annexed hereto, executed and delivered by each Subsidiary Guarantor from time to time after the Closing Date pursuant to subsection 6.9, as such Subsidiary Guaranty may be amended, restated, supplemented or otherwise modified from time to time. "Subsidiary Security Agreements" has the meaning assigned to that term in subsection 6.9. "Supplemental Collateral Agent" has the meaning assigned to that term in subsection 9.1B. "Swing Line Lender" means Chase, or any Person serving as a successor Administrative Agent hereunder, in its capacity as Swing Line Lender hereunder. "Swing Line Loan Commitment" means the commitment of Swing Line Lender to make Swing Line Loans to Company pursuant to subsection 2.1A(iii). "Swing Line Loans" means the Loans made by Swing Line Lender pursuant to subsection 2.1A(iii). "Swing Line Note" means (i) the promissory note of Company issued pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note issued by Company to any successor Administrative Agent and Swing Line Lender pursuant to the last sentence of subsection 9.5B, in each case substantially in the form of Exhibit VI annexed hereto, as it may be amended, restated, supplemented or otherwise modified from time to time. "Tax" or "Taxes" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided that "Tax on the overall net income" of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person's principal office (and/or, in the case of a Lender, its relevant Lending Office) is located or in which that Person is deemed to be doing business on all or part of the net income, profits or gains of that Person (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise). "Term Loan Commitment" means the commitment of a Lender to make a Term Loan to Company pursuant to subsection 2.1A(i), and "Term Loan Commitments" means such commitments of all Lenders in the aggregate. "Term Loan Conversion" means the occurrence of the events described in subsection 2.1A(iv) on the Term Loan Conversion Date. "Term Loan Conversion Date" means the date on or prior to the first Anniversary on which Company repays all Indebtedness with respect to the Subordinated Bridge Loans with the proceeds of Indebtedness permitted under subsection 7.1(vi). Notwithstanding anything herein to the contrary, the Term Loan Conversion Date and the Term Loan Conversion may not occur after the first Anniversary. "Term Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the funding of the Term Loans, that Lender's Term Loan Commitment and (ii) after the funding of the Term Loans, the outstanding principal amount of the Term Loan of that Lender. "Term Loans" means the Loans made by Lenders to Company pursuant to subsection 2.1A(i). "Term Notes" means (i) the promissory notes of Company issued pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any promissory notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in connection with assignments of the Term Loan Commitments or Term Loans of any Lenders, in each case substantially in the form of Exhibit IV annexed hereto, as they may be amended, restated, supplemented or otherwise modified from time to time. "Title Company" means one or more title insurance companies reasonably satisfactory to Administrative Agent. "Total Utilization of Revolving Loan Commitments" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing Lender for any amount drawn under any Letter of Credit but not yet so applied) plus (ii) the aggregate principal amount of all outstanding Swing Line Loans plus (iii) the Letter of Credit Usage. "Transaction Costs" means the fees, costs and expenses payable by Company and its Subsidiaries on or before the Closing Date in connection with the transactions contemplated hereby and by the Related Agreements. "Transition Agreements" means, collectively, (i) that certain License Agreement dated as of December 31, 1996, by and between Seller and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A; (ii) the Shared Technology License Agreement; (iii) the Transition Services Agreement; (iv) the Co-Pack Agreement; (v) the Patent License Agreement; and (vi) the Quest Agreements. "Transition Services Agreement" means that certain Transition Services Agreement dated as of December 31, 1996, by and between Seller and Company, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Unfunded Current Liability" means, with respect to any Pension Plan, the amount, if any, by which the actuarial present value of the accumulated plan benefits under such Pension Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by such Pension Plan's actuary in the most recent annual valuation of such Pension Plan. "Warrant Agreement" means that certain Warrant Agreement dated as of December 31, 1996, by and between Holdings and ChaseMellon Shareholder Services L.L.C., pursuant to which the Warrants are issued, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Warrant Escrow Agreement" means that certain Warrant Escrow Agreement dated as of December 31, 1996, by and between Holdings and Chase, as escrow agent, as in effect on the Closing Date and as such agreement may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Warrants" means the warrants issued on the Closing Date by Holdings pursuant to the Warrant Agreement to be sold to the purchasers of securities representing Indebtedness permitted under subsection 7.1(vi), as in effect on the Closing Date and as such warrants may be thereafter amended, restated, supplemented or otherwise modified from time to time to the extent permitted under subsection 7.12A. "Wholly Owned Subsidiary" means, with respect to any Person, a Subsidiary of such Person all of the outstanding capital stock or other ownership interests of which (other than Regulatory Shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement. Except as otherwise expressly provided in this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP (except, with respect to interim financial statements, normal year-end audit adjustments and the absence of explanatory footnotes) as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in subsection 6.1(v)). Calculations in connection with the definitions, covenants and other provisions of this Agreement shall utilize accounting principles and policies in conformity with those used to prepare the financial statements referred to in subsection 5.3A. 1.3 Other Definitional Provisions. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Any of the terms defined in subsection 1.1 may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The words "includes", "including" and similar terms used in any Loan Document shall be construed as if followed by the words "without limitation". SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 2.1 Commitments; Loans. A. Commitments. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Loan Parties set forth herein and in the other Loan Documents, each Lender hereby severally agrees to make the Loans described in subsections 2.1A(i) and 2.1A(ii) and Swing Line Lender hereby agrees to make the Swing Line Loans as described in subsection 2.1A(iii). (i) Term Loans. Each Lender severally agrees to lend to Company on the Closing Date an amount not exceeding its Pro Rata Share of the aggregate amount of the Term Loan Commitments to be used for the purposes identified in subsection 2.5A. The amount of each Lender's Term Loan Commitment is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate amount of the Term Loan Commitments is $15,000,000; provided that the Term Loan Commitments of Lenders shall be adjusted to give effect to any assignments of the Term Loan Commitments pursuant to subsection 10.1B. Each Lender's Term Loan Commitment shall expire immediately and without further action on March 31, 1997 if the Term Loans and the Acquisition Revolving Loans are not made on or before that date. Company may make only one borrowing under the Term Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and subsequently repaid or prepaid may not be reborrowed; provided, however, that the foregoing shall not prevent reborrowing under Revolving Loan Commitments created pursuant to the Term Loan Conversion. (ii) Revolving Loans. Each Lender severally agrees, subject to the limitations set forth below with respect to the maximum amount of Revolving Loans permitted to be outstanding from time to time, to lend to Company from time to time during the period from the Closing Date to but excluding the Revolving Loan Commitment Termination Date an aggregate amount which shall not exceed its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments, to be used for the purposes identified in subsection 2.5B. The original amount of each Lender's Revolving Loan Commitment is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate original amount of the Revolving Loan Commitments is $45,000,000; provided that the Revolving Loan Commitments of Lenders shall be adjusted to give effect to any assignments of the Revolving Loan Commitments pursuant to subsection 10.1B; provided further, that the amount of the Revolving Loan Commitments shall be reduced from time to time by the amount of any reductions thereto made pursuant to subsections 2.4A(ii) and 2.4B; and provided further, that the amount of the Revolving Loan Commitments shall be increased in the event of the Term Loan Conversion. Each Lender's Revolving Loan Commitment shall expire on the Revolving Loan Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Loan Commitments shall be paid in full no later than that date; provided that each Lender's Revolving Loan Commitment shall expire immediately and without further action on March 31, 1997 if the Term Loans and the Acquisition Revolving Loans are not made on or before that date. Amounts borrowed under this subsection 2.1A(ii) may be repaid and reborrowed to but excluding the Revolving Loan Commitment Termination Date. Notwithstanding anything contained herein to the contrary, in no event shall the Total Utilization of Revolving Loan Commitments at any time exceed the Revolving Loan Commitments then in effect. (iii) Swing Line Loans. Swing Line Lender hereby agrees, subject to the limitations set forth below with respect to the maximum aggregate amount of all Swing Line Loans outstanding from time to time, to make a portion of the Revolving Loan Commitments available to Company from time to time during the period from the Closing Date to but excluding the Revolving Loan Commitment Termination Date by making Base Rate Loans as Swing Line Loans to Company in an aggregate amount not to exceed the amount of the Swing Line Loan Commitment, to be used for the purposes identified in subsection 2.5B, notwithstanding the fact that such Swing Line Loans, when aggregated with the sum of Swing Line Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the Letter of Credit Usage then in effect, may exceed Swing Line Lender's Revolving Loan Commitment. The original amount of the Swing Line Loan Commitment is $2,000,000; provided that the amounts of the Swing Line Loan Commitment are subject to reduction as provided in clause (b) of the next paragraph. The Swing Line Loan Commitment shall expire on the Revolving Loan Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans shall be paid in full no later than that date; provided that the Swing Line Loan Commitment shall expire immediately and without further action on March 31, 1997 if the Term Loans and the Acquisition Revolving Loans are not made on or before that date. Amounts borrowed under this subsection 2.1A(iii) may be repaid and reborrowed to but excluding the Revolving Loan Commitment Termination Date. Notwithstanding anything contained herein to the contrary, the Swing Line Loans, and the Swing Line Loan Commitment shall be subject to the following limitations in the amounts indicated: (a) in no event shall the Total Utilization of Revolving Loan Commitments at any time exceed the Revolving Loan Commitments then in effect; (b) any reduction of the Revolving Loan Commitments made pursuant to subsection 2.4B which reduces the aggregate Revolving Loan Commitments to an amount less than the then current sum of the Swing Line Loan Commitment shall result in an automatic corresponding pro rata reduction of the Swing Line Loan Commitment such that the sum thereof equals the amount of the Revolving Loan Commitments, as so reduced, without any further action on the part of Company, Administrative Agent or Swing Line Lender. With respect to any Swing Line Loans which have not been voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may, at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Company), no later than 12:00 Noon (New York time) at least one Business Day in advance of the proposed Funding Date, a notice (which shall be deemed to be a Notice of Borrowing given by Company) requesting Lenders to make Revolving Loans that are Base Rate Loans to Company on such Funding Date in an amount equal to the amount of such Swing Line Loans (the "Refunded Swing Line Loans") outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (i) the proceeds of such Revolving Loans made by Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (ii) on the day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Company, and such portion of the Swing Line Loans deemed to be so paid, shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender's outstanding Revolving Loans to Company and shall be due under the Revolving Note issued by Company to Swing Line Lender. Company hereby authorizes each of Administrative Agent and Swing Line Lender to charge Company's accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent the proceeds of such Revolving Loans made by Lenders, including the Revolving Loan deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by subsection 10.5. If for any reason Revolving Loans are not made pursuant to this subsection 2.1A(iii) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender, each Lender shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day's notice from Swing Line Lender, each Lender shall deliver to Swing Line Lender an amount in equal to its respective participation in the applicable unpaid amount in same day funds at the Funding and Payment Office. In order to evidence such participation each Lender agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance satisfactory to Swing Line Lender. In the event any Lender fails to make available to Swing Line Lender the amount of such Lender's participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by Swing Line Lender for the correction of errors among banks for three Business Days and thereafter at the Base Rate, as applicable. Notwithstanding anything contained herein to the contrary, (i) each Lender's obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender's obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, Company or any other Person for any reason whatsoever; (b) the occurrence or continuation of an Event of Default or a Potential Event of Default; (c) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (d) any breach of this Agreement or any other Loan Document by any party thereto; or (e) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that no Lender shall have any such obligation unless (x) Swing Line Lender believed in good faith that all conditions under Section 4 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made, or (y) such Lender had actual knowledge, by receipt of any notices required to be delivered to Lenders pursuant to subsection 6.1(ix) or otherwise, that any such condition under Section 4 had not been satisfied and such Lender failed to notify Swing Line Lender and Administrative Agent in writing that it had no obligation to make Revolving Loans until such condition was satisfied (any such notice to be effective as of the date of receipt thereof by Swing Line Lender and Administrative Agent), or (z) the satisfaction of any such condition under Section 4 not satisfied had been waived by Requisite Lenders prior to or at the time such Refunded Swing Line Loans or other unpaid Swing Line Loans were made; and (ii) Swing Line Lender shall not be obligated to make any Swing Line Loans if it has elected not to do so after the occurrence and during the continuation of a Potential Event of Default or Event of Default. (iv) Term Loan Conversion. On the Term Loan Conversion Date, without further action by Company, Administrative Agent or Lenders, (a) the Revolving Loan Commitments then in effect shall be increased by $15,000,000, (b) each Lender having an outstanding Term Loan immediately prior to such date shall have a Revolving Loan Commitment and Revolving Loan Exposure equal to the product of (1) such Lender's Pro Rata Share with respect to Term Loans immediately prior to such date multiplied by (2) $15,000,000, (c) all outstanding Term Loans shall become Revolving Loans and all such Revolving Loans, together with all other Revolving Loans, shall be reallocated based on the assumption that Company shall, as of the opening of business on the Term Loan Conversion Date, have repaid all such Loans then outstanding and immediately thereafter reborrowed Revolving Loans in the same respective principal amounts from Lenders in accordance with their respective Pro Rata Shares as in effect immediately after giving effect to clauses (a) and (b) of this subsection, and (d) the Term Notes shall be of no further force and effect. Based on such assumed reallocation, Administrative Agent shall advise each Lender as to the net amount of payments to be received by, or Loans to be advanced by, such Lender on the Term Loan Conversion Date. In the event that the foregoing reallocation of the Loans shall require prepayment of any portion of a Eurodollar Rate Loan of a Lender on a date that is not the last day of an Interest Period applicable to such Loan, Company shall pay compensation to such Lender in accordance with subsection 2.6D. (v) Issuance of Notes Upon Term Loan Conversion. On or as soon as practicable after the Term Loan Conversion Date, (a) each Lender shall deliver any Term Notes and Revolving Notes issued to it hereunder, marked to show their cancellation, to Company, and (b) Company shall execute and deliver to each Lender (or to Administrative Agent for such Lender) a Revolving Note substantially in the form of Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the principal amount of that Lender's new Revolving Loan Commitment and with other appropriate insertions. B. Borrowing Mechanics. Term Loans or Revolving Loans (including any such Loans made as Eurodollar Rate Loans with a particular Interest Period) made on any Funding Date (other than Revolving Loans made pursuant to a request by Swing Line Lender pursuant to subsection 2.1A(iii) for the purpose of repaying any Refunded Swing Line Loans or Revolving Loans made pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender for the amount of a drawing or payment under a Letter of Credit issued by it) shall be in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount. Swing Line Loans made on any Funding Date shall be in an aggregate minimum amount of $250,000 and integral multiples of $100,000 in excess of that amount. Whenever Company desires that Lenders make Term Loans or Revolving Loans it shall deliver to Administrative Agent on behalf of Company a Notice of Borrowing no later than 12:00 Noon (New York time), at least three Business Days in advance of the proposed Funding Date in the case of a Eurodollar Rate Loan, or at least one Business Day in advance of the proposed Funding Date in the case of a Base Rate Loan. Whenever Company desires that Swing Line Lender make a Swing Line Loan, it shall deliver to Administrative Agent a Notice of Borrowing no later than 12:00 Noon (New York time) on the proposed Funding Date. The Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing Line Loans, that such Loans shall be Base Rate Loans, (iv) in the case of any Loans other than Swing Line Loans, whether such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (v) in the case of any Loans requested to be made as Eurodollar Rate Loans, the initial Interest Period requested therefor. Term Loans and Revolving Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of delivering the above-described Notice of Borrowing, Company may give Administrative Agent telephonic notice by the required time of any proposed borrowing under this subsection 2.1B; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Borrowing to Administrative Agent on or before the applicable Funding Date. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to borrow on behalf of Company or for otherwise acting in good faith under this subsection 2.1B, and upon funding of Loans by Lenders in accordance with this Agreement pursuant to any such telephonic notice Company shall have effected Loans hereunder. Company shall notify Administrative Agent prior to the funding of any Loans in the event that any of the matters to which Company is required to certify in the applicable Notice of Borrowing are no longer true and correct as of the applicable Funding Date, and the acceptance by Company of the proceeds of any Loans shall constitute a re-certification by Company, as of the applicable Funding Date, as to the matters to which Company is required to certify in the applicable Notice of Borrowing. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith. C. Disbursement of Funds. All Term Loans and all Revolving Loans under this Agreement shall be made by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender to make the particular type of Loan requested be increased or decreased as a result of a default by any other Lender in that other Lender's obligation to make a Loan requested hereunder. Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent shall notify each Lender or Swing Line Lender, as the case may be, of the proposed borrowing and of the amount of such Lender's Pro Rata Share of the applicable Loans. Each Lender shall make the amount of its Loan available to Administrative Agent not later than 12:00 Noon (New York time) on the applicable Funding Date, and Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 12:00 Noon (New York time) on the applicable Funding Date, in each case in same day funds, at the Funding and Payment Office. Except as provided in subsection 2.1A(iii) or subsection 3.3B with respect to Revolving Loans used to repay Refunded Swing Line Loans or to reimburse any Issuing Lender for the amount of an honored drawing or payment under a Letter of Credit issued by it, upon satisfaction or waiver of the conditions precedent specified in subsections 4.1 (in the case of Loans made on the Closing Date) and 4.2 (in the case of all Loans), Administrative Agent shall make the proceeds of such Loans available to Company on the applicable Funding Date by causing an amount of same day funds equal to the proceeds of all such Loans received by Administrative Agent from Lenders or Swing Line Lender, as the case may be, to be credited to the account of Company at the Funding and Payment Office. Unless Administrative Agent shall have been notified by any Lender prior to the Funding Date for any Loans that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Funding Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Funding Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a corresponding amount on such Funding Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent shall promptly notify Company and Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the rate applicable to such Loan. Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder. D. The Register. (i) Administrative Agent shall maintain, at the address referred to in subsection 10.8, a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the "Register"). The Register shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. (ii) Administrative Agent shall record in the Register the Commitments and the outstanding Loans from time to time of each Lender and each repayment or prepayment in respect of the principal amount of the outstanding Loans of each Lender. Any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect Company's Obligations in respect of the applicable Loans. (iii) Each Lender shall record on its internal records (including, without limitation, the Notes held by such Lender) the amount of each Loan made by it and each payment in respect thereof. Any such recordation shall be prima facie evidence of the amount of such Loans; provided that failure to make any such recordation, or any error in such recordation, shall not affect Company's Obligations in respect of the applicable Loans; and provided, further that in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern, absent manifest error. (iv) Company, Agents and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any Commitment or Loan shall be effective, in each case unless an until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. (v) Company hereby designates Chase, and any financial institution serving as a successor Administrative Agent, to serve as Company's agent solely for purposes of maintaining the Register as provided in this subsection 2.1D, and Company hereby agrees that, to the extent Chase serves in such capacity, Chase and its officers, directors, employees, agents and affiliates shall constitute Indemnitees for all purposes under subsection 10.3. E. Notes. Company shall execute and deliver on the Closing Date (i) to each Lender (or to Administrative Agent for that Lender) (a) a Term Note substantially in the form of Exhibit IV annexed hereto, to evidence that Lender's Term Loans in the principal amount of that Lender's Term Loans and with other appropriate insertions, and (b) a Revolving Note substantially in the form of Exhibit V annexed hereto to evidence that Lender's Revolving Loans, in the principal amount of that Lender's Revolving Loan Commitment and with other appropriate insertions, and (ii) to Swing Line Lender, a Swing Line Note substantially in the form of Exhibit VI annexed hereto to evidence Swing Line Lender's Swing Line Loans, in the principal amount of the Swing Line Loan Commitment and with other appropriate insertions. The Notes and the Obligations evidenced thereby shall be governed by, subject to and benefit from all of the terms and conditions of this Agreement and the other Loan Documents and shall be guarantied and/or secured by the Collateral as provided in the Loan Documents. 2.2 Interest on the Loans. A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions of subsection 2.7, each Swing Line Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate. The applicable basis for determining the rate of interest with respect to any Loan shall be selected by Company initially at the time a Notice of Borrowing is given with respect to such Loan pursuant to subsection 2.1B. The basis for determining the interest rate with respect to any Term Loan or any Revolving Loan may be changed from time to time pursuant to subsection 2.2D. If on any day any Term Loan or Revolving Loan is outstanding with respect to which notice has not been delivered to Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day that Loan shall bear interest determined by reference to the Base Rate. Subject to the provisions of subsections 2.2E and 2.7, the Term Loans and the Revolving Loans shall bear interest through maturity as follows: (i) if a Base Rate Loan, then at the sum of the Base Rate plus the Applicable Base Rate Margin; or (ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate plus the Applicable Eurodollar Rate Margin. Subject to the provisions of subsections 2.2E and 2.7, the Swing Line Loans shall bear interest through maturity at the sum of the Base Rate plus the Applicable Base Rate Margin with respect to Revolving Loans. B. Interest Periods. In connection with each Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case may be, select an interest period (each an "Interest Period") to be applicable to such Loan, which Interest Period shall be, at Company's option, either a one-, two-, threeor six-month period; provided that: (i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the Funding Date in respect of such Loan, in the case of a Loan initially made as a Eurodollar Rate Loan, or on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan; (ii) in the case of immediately successive Interest Periods applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of Conversion/Continuation, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; (iii) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (iii) of this subsection 2.2B, end on the last Business Day of a calendar month; (v) no Interest Period with respect to any portion of the Term Loans shall extend beyond December 15, 2002 and no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Loan Commitment Termination Date; (vi) no Interest Period with respect to any portion of the Term Loans shall extend beyond a date on which Company is required to make a scheduled payment of principal of the Term Loans unless the sum of (a) the aggregate principal amount of Term Loans that are Base Rate Loans plus (b) the aggregate principal amount of Term Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date equals or exceeds the principal amount required to be paid on the Term Loans on such date; (vii) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the date on which a permanent reduction of the Revolving Loan Commitments is scheduled to occur unless the sum of (a) the aggregate principal amount of Revolving Loans that are Base Rate Loans plus (b) the aggregate principal amount of Revolving Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date plus (c) the excess of the Revolving Loan Commitments then in effect over the aggregate principal amount of Revolving Loans then outstanding equals or exceeds the permanent reduction of the Revolving Loan Commitments that is scheduled to occur on such date; (viii) Company may not select an Interest Period of longer than two months prior to the end of the Initial Period; (ix) there shall be no more than ten (10) Interest Periods outstanding at any time; and (x) in the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of Conversion/Continuation, Company shall be deemed to have selected an Interest Period of one month. C. Interest Payments. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity); provided that in the event that any Swing Line Loans, any Revolving Loans or any Term Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i), interest accrued on such Swing Line Loans, Revolving Loans or Term Loans through the date of such prepayment shall be payable on the next succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier, at final maturity). D. Conversion or Continuation. Subject to the provisions of subsection 2.6, Company shall have the option (i) to convert at any time all or any part of its outstanding Term Loans or Revolving Loans equal to $500,000 and integral multiples of $250,000 in excess of that amount from Loans bearing interest at a rate determined by reference to one basis to Loans bearing interest at a rate determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $500,000 and integral multiples of $250,000 in excess of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the expiration date of an Interest Period applicable thereto. Company shall deliver a Notice of Conversion/Continuation to Administrative Agent no later than 12:00 Noon (New York time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan), and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the nature of the proposed conversion/continuation, (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has occurred and is continuing. In lieu of delivering the above-described Notice of Conversion/Continuation, Company may give Administrative Agent telephonic notice by the required time of any proposed conversion/continuation under this subsection 2.2D; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Conversion/Continuation to Administrative Agent on or before the proposed conversion/continuation date. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of Company or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such telephonic notice Company shall have effected a conversion or continuation, as the case may be, hereunder. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith. E. Post-Default Interest. Upon the occurrence and during the continuation of any Event of Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable law, any interest payments thereon not paid when due and any fees and other amounts then due and payable hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code, or other applicable bankruptcy or insolvency laws) payable upon demand at a rate that is 2% per annum in excess of the interest rate otherwise payable under this Agreement with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Revolving Loans bearing interest at a rate determined by reference to the Base Rate); provided that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate equal to 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans that are Term Loans or Revolving Loans, as applicable. Payment or acceptance of the increased rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of any Agent or Lender. F. Computation of Interest. Interest on Loans shall be computed on the basis of a 360-day year and for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. 2.3 Fees. A. Commitment Fees. Company agrees to pay to Administrative Agent, for distribution to each Lender having a Revolving Loan Commitment, in proportion to that Lender's Pro Rata Share of the Revolving Loan Commitments, commitment fees for the period from and including the Closing Date to and excluding the Revolving Loan Commitment Termination Date equal to the average of the daily excess of the Revolving Loan Commitments over the sum of (i) the aggregate principal amount of Revolving Loans outstanding (but not any Swing Line Loans outstanding) plus the Letter of Credit Usage multiplied by (ii) 1/2 of 1% per annum. All such commitment fees shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on March 15, 1997, and on the Revolving Loan Commitment Termination Date. B. Other Fees. Company agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon between Company and the applicable Agents. 2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments; General Provisions Regarding Payments; Application of Proceeds of Collateral and Payments under Guaranties. A. Scheduled Payments of Term Loans and Scheduled Reductions of Revolving Loan Commitments. (i) Scheduled Payments of Term Loans. Company shall make principal payments on the Term Loans in installments on the dates and in the amounts set forth below: =============================================================== SCHEDULED REPAYMENT DATE OF TERM LOANS =============================================================== March 15, 1997 $250,000 June 15, 1997 $250,000 September 15, 1997 $250,000 December 15, 1997 $250,000 =============================================================== SCHEDULED REPAYMENT DATE OF TERM LOANS =============================================================== March 15, 1998 $250,000 June 15, 1998 $250,000 September 15, 1998 $250,000 December 15, 1998 $250,000 --------------------------------------------------------------- March 15, 1999 $250,000 June 15, 1999 $250,000 September 15, 1999 $250,000 December 15, 1999 $250,000 --------------------------------------------------------------- March 15, 2000 $250,000 June 15, 2000 $250,000 September 15, 2000 $250,000 December 15, 2000 $250,000 --------------------------------------------------------------- March 15, 2001 $250,000 June 15, 2001 $250,000 September 15, 2001 $250,000 December 15, 2001 $250,000 --------------------------------------------------------------- March 15, 2002 $2,500,000 June 15, 2002 $2,500,000 September 15, 2002 $2,500,000 December 15, 2002 $2,500,000 =============================================================== ; provided that the scheduled installments of principal of the Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.4C; and provided further, that the Term Loans and all other amounts owed hereunder with respect to the Term Loans shall be paid in full no later than December 15, 2002, and the final installment payable by Company in respect of the Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by Company under this Agreement with respect to the Term Loans. (ii) Scheduled Reductions of Revolving Loan Commitments. Except as set forth in the following proviso, the Revolving Loan Commitments shall be permanently reduced on the dates and in the amounts set forth below: =============================================================== SCHEDULED REDUCTION DATE OF REVOLVING LOAN COMMITMENTS =============================================================== March 15, 1998 $1,250,000 June 15, 1998 $1,250,000 September 15, 1998 $1,250,000 December 15, 1998 $1,250,000 --------------------------------------------------------------- March 15, 1999 $1,875,000 June 15, 1999 $1,875,000 September 15, 1999 $1,875,000 December 15, 1999 $1,875,000 --------------------------------------------------------------- March 15, 2000 $1,875,000 June 15, 2000 $1,875,000 September 15, 2000 $1,875,000 December 15, 2000 $1,875,000 --------------------------------------------------------------- March 15, 2001 $2,500,000 June 15, 2001 $2,500,000 September 15, 2001 $2,500,000 December 15, 2001 $17,500,000 =============================================================== ; provided, however, that if the Term Loan Conversion shall occur, thereafter the Revolving Loan Commitments shall instead be permanently reduced on the dates and in the amounts set forth below: =============================================================== SCHEDULED REDUCTION DATE OF REVOLVING LOAN COMMITMENTS =============================================================== March 15, 1999 $3,750,000 June 15, 1999 $3,750,000 September 15, 1999 $3,750,000 December 15, 1999 $3,750,000 --------------------------------------------------------------- March 15, 2000 $3,750,000 June 15, 2000 $3,750,000 September 15, 2000 $3,750,000 December 15, 2000 $3,750,000 --------------------------------------------------------------- March 15, 2001 $3,750,000 June 15, 2001 $3,750,000 September 15, 2001 $3,750,000 December 15, 2001 $18,750,000 =============================================================== ; and provided further, that the scheduled reductions of the Revolving Loan Commitments set forth above shall be reduced in connection with any voluntary or mandatory reductions of the Revolving Loan Commitments in accordance with subsection 2.4C. B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments. (i) Voluntary Prepayments. Company may, upon written or telephonic notice to Administrative Agent on or prior to 12:00 Noon (New York time) on the date of prepayment, which notice, if telephonic, shall be promptly confirmed in writing, at any time and from time to time prepay, without premium or penalty, any Swing Line Loan on any Business Day in whole or in part in an aggregate minimum amount of $250,000 and integral multiples of $100,000 in excess of that amount. In addition, so long as no Swing Line Loans are then outstanding, Company may, upon not less than one Business Day's prior written or telephonic notice, in the case of Base Rate Loans, and three Business Days' prior written or telephonic notice, in the case of Eurodollar Rate Loans, in each case confirmed in writing to Administrative Agent (which notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time prepay, without premium or penalty, the Loans other than Swing Line Loans on any Business Day in whole or in part in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount; provided, however, that prepayment of a Eurodollar Rate Loan on any day other than the expiration of the Interest Period applicable thereto shall be subject to compliance with subsection 2.6D. Notice of prepayment having been given as aforesaid, the Loans shall become due and payable on the prepayment date specified in such notice and in the aggregate principal amount specified therein. Any voluntary prepayments pursuant to this subsection 2.4B(i) shall be applied as specified in subsection 2.4C. (ii) Voluntary Reductions of Revolving Loan Commitments . Company may, upon not less than three Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Loan Commitments in an amount up to the amount by which the Revolving Loan Commitments exceed the Total Utilization of Revolving Loan Commitments at the time of such proposed termination or reduction; provided that any such partial reduction of the Revolving Loan Commitments shall be in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount. Company's notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Loan Commitments shall be effective on the date specified in such notice and shall reduce the Revolving Loan Commitment of each Lender proportionately to its Pro Rata Share. Any such voluntary reduction of the Revolving Loan Commitments shall be applied as specified in subsection 2.4C. (iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan Commitments. The Loans shall be prepaid and the Revolving Loan Commitments shall be reduced in the manner provided in subsection 2.4C upon the occurrence of the following circumstances: (a) Prepayments and Reductions from Asset Sales. No later than the second Business Day following the date of receipt by Company or any of its Subsidiaries of the Net Cash Proceeds of any Asset Sale (other than any portion of such Net Cash Proceeds that is reinvested (or scheduled for reinvestment) in assets of the general type used in the business of Company and its Subsidiaries within 360 days from the date of receipt of such Net Cash Proceeds), Company shall prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) in an aggregate amount equal to such Net Cash Proceeds; provided, however, that Company may not reinvest (or schedule for reinvestment) Net Cash Proceeds (x) upon the occurrence and during the continuation of an Event of Default and (y) until the earlier of (1) the Term Loan Conversion Date and (2) the first Anniversary. Company shall, no later than 360 days after receipt of any such Net Cash Proceeds that have not theretofore been applied to the Obligations, make an additional prepayment of the Loans (and/or the Revolving Loan Commitments shall be reduced) in the full amount of all such proceeds that have not therefore been so reinvested. Concurrently with any prepayment of the Loans and/or reduction of the Commitments pursuant to this subsection 2.4B(iii)(a), Company shall deliver to Administrative Agent an Officer's Certificate demonstrating the derivation of the Net Cash Proceeds of the correlative Asset Sale from the gross sales price thereof. In the event that Company shall, at any time after receipt of Cash Proceeds of any Asset Sale requiring a prepayment or a reduction of the Revolving Loan Commitments pursuant to this subsection 2.4B(iii)(a), determine that the prepayments and/or reductions of the Revolving Loan Commitments previously made in respect of such Asset Sale were in an aggregate amount less than that required by the terms of this subsection 2.4B(iii)(a), Company shall promptly cause to be made an additional prepayment of the Loans (and/or reduction in the Revolving Loan Commitments) in an amount equal to the amount of any such deficit, and Company shall concurrently therewith deliver to Administrative Agent an Officer's Certificate demonstrating the derivation of the additional Net Cash Proceeds resulting in such deficit. (b) Prepayments and Reductions Due to Issuance of Debt. On or prior to the first Business Day after receipt by Company or any of its Subsidiaries of any proceeds of any Indebtedness (other than the Loans and any other Indebtedness permitted under subsection 7.1(i), (ii), (iii), (iv), (v), (vii) or (viii)), Company shall prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) in an amount equal to the amount of such proceeds; provided, however, that such proceeds from Indebtedness permitted under subsection 7.1(vi) shall not be applied to prepay Loans pursuant to this subsection if and to the extent such proceeds are applied by Company to repay the Indebtedness with respect to the Subordinated Bridge Loans and/or the Subordinated Exchange Notes; and provided further, that payment or acceptance of the amounts provided for in this subsection 2.4B(iii)(b) shall not constitute a waiver of any Event of Default resulting from the incurrence of such Indebtedness or otherwise prejudice any rights or remedies of Agents or Lenders. (c) Prepayments and Reductions Due to Issuance of Equity Securities. On or prior to the first Business Day after receipt by Holdings or Company or any of its Subsidiaries of any Equity Proceeds, Company shall prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) in an amount equal to such Equity Proceeds; provided, however, that such Equity Proceeds shall not be applied to prepay Loans pursuant to this subsection if and to the extent such Equity Proceeds were derived (x) from exercise of the Warrants, (y) directly or indirectly from a sale of Securities to any of the MDC Entities, Dartford, Fenway, the Management Investors and their respective Affiliates, or to employees or directors of Holdings and its Subsidiaries pursuant to any employee stock option or stock purchase plan or other employee benefit plan, and (z) from sales of Securities to management officers and directors after the Closing Date to the extent the consideration paid therefor does not exceed $1,000,000; and provided further, however, that Equity Proceeds from an initial public offering of Holdings Common Stock shall not be applied to prepay Loans pursuant to this subsection if and to the extent such proceeds are applied by Company to repay the Indebtedness with respect to the Subordinated Bridge Loans and/or the Subordinated Exchange Notes or the Indebtedness permitted under subsection 7.1(vi). Holdings shall contribute to Company any Equity Proceeds received by Holdings as are necessary to enable Company to comply with this subsection. (d) Prepayments and Reductions from Insurance and Condemnation Proceeds. No later than the second Business Day following the date of receipt by Company or any of its Subsidiaries of any cash payments under any of the casualty insurance policies covering damage to or loss of property maintained pursuant to subsection 6.4 resulting from damage to or loss of all or any portion of the Collateral or any other tangible asset (net of actual and documented reasonable costs incurred by Company or any of its Subsidiaries in connection with adjustment and settlement thereof, "Insurance Proceeds") or any proceeds resulting from the taking of assets by the power of eminent domain, condemnation or otherwise (net of actual and documented reasonable costs incurred by Company or any of its Subsidiaries in connection with adjustment and settlement thereof, "Condemnation Proceeds") (other than, if no Event of Default shall have occurred and be continuing or shall be caused thereby, any portion of any such proceeds that is reinvested (or scheduled for reinvestment) in assets of the general type used in the business of Company and its Subsidiaries within 360 days from the date of receipt of such proceeds), Company shall prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) in the amount of such proceeds not so reinvested (or scheduled for such reinvestment). Company shall, no later than 360 days after receipt of any such Insurance Proceeds or Condemnation Proceeds that have not theretofore been applied to the Obligations, make an additional prepayment of the Loans (and/or the Revolving Loan Commitments shall be reduced) in the full amount of all such proceeds that have not therefore been reinvested in such assets. (e) Prepayments and Reductions from Consolidated Excess Cash Flow. In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with the Fiscal Year ending in December 1998 (or, if the Term Loan Conversion occurs, December 1999)), Company shall, no later than 100 days after the end of such Fiscal Year, prepay the Loans (and/or the Revolving Loan Commitments shall be reduced) in an aggregate amount equal to 50% of such Consolidated Excess Cash Flow for such Fiscal Year. (f) Prepayments Due to Reductions or Restrictions of Revolving Loan Commitments. Company shall prepay the Swing Line Loans and/or the Revolving Loans from time to time to the extent necessary so that (y) the Total Utilization of Revolving Loan Commitments shall not at any time exceed the Revolving Loan Commitments then in effect, and (z) the aggregate principal amount of all outstanding Swing Line Loans shall not at any time exceed the Swing Line Loan Commitment then in effect. All Swing Line Loans shall be prepaid in full prior to the prepayment of any Revolving Loans pursuant to this subsection 2.4B(iii)(f). C. Application of Prepayments and Unscheduled Reductions of Revolving Loan Commitments. (i) Application of Voluntary Prepayments by Type of Loans. Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied: first to repay outstanding Swing Line Loans to the full extent thereof, second to repay outstanding Revolving Loans to the full extent thereof, and third, to repay outstanding Term Loans to the full extent thereof. (ii) Application of Mandatory Prepayments by Type of Loans. Any amount (the "Applied Amount") required to be applied as a mandatory prepayment of the Loans and/or a reduction of the Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(e) shall be applied first to prepay the Term Loans to the full extent thereof, second, to the extent of any remaining portion of the Applied Amount, to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Loan Commitments by the amount of such prepayment, third, to the extent of any remaining portion of the Applied Amount, to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Loan Commitments by the amount of such prepayment, and fourth, to the extent of any remaining portion of the Applied Amount, to further permanently reduce the Revolving Loan Commitments to the full extent thereof. Notwithstanding the foregoing or anything herein to the contrary, no portion of the proceeds of Indebtedness permitted under subsection 7.1(vi) which are applied to prepay the Loans shall be applied to permanently reduce the Revolving Loan Commitments. (iii) Application of Prepayments of Term Loans to the Scheduled Installments of Principal Thereof. Any prepayments of the Term Loans pursuant to subsection 2.4B(i) or 2.4B(iii) shall be applied to prepay the Term Loans on a pro rata basis in accordance with the outstanding principal amounts thereof. Any mandatory prepayments applied to the Term Loans pursuant to this subsection shall be applied on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) to each scheduled installment of principal of the Term Loans set forth in subsection 2.4A(i) that is unpaid at the time of such prepayment. (iv) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans. Considering Term Loans and Revolving Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to subsection 2.6D. (v) Application of Unscheduled Reductions of Revolving Loan Commitments. Any voluntary or mandatory reduction of the Revolving Loan Commitments pursuant to subsection 2.4B(ii) or 2.4B(iii) shall be applied to reduce the scheduled reductions of the Revolving Loan Commitments set forth in subsection 2.4A(ii) in reverse chronological order. D. Application of Proceeds of Collateral and Payments Under Guaranties. (i) Application of Proceeds of Collateral. Except as provided in subsection 2.4B(iii)(a) with respect to prepayments from Net Cash Proceeds of Asset Sales, all proceeds received by Administrative Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral under any Collateral Document may, in the discretion of Administrative Agent, be held by Administrative Agent as Collateral for, and/or (then or at any time thereafter) applied in full or in part by Administrative Agent against, the applicable Secured Obligations (as defined in such Collateral Document) in the following order of priority: (a) To the payment of all costs and expenses of such sale, collection or other realization, including without limitation reasonable compensation to Administrative Agent and its agents and counsel, and all other reasonable expenses, liabilities and advances made or incurred by Administrative Agent in connection therewith, and all amounts for which Administrative Agent is entitled to indemnification under such Collateral Document and all advances made by Administrative Agent thereunder for the account of the applicable Loan Party, and to the payment of all reasonable costs and expenses paid or incurred by Administrative Agent in connection with the exercise of any right or remedy under such Collateral Document, all in accordance with the terms of this Agreement and such Collateral Document; (b) thereafter, to the extent of any excess such proceeds, to the payment of all other such Secured Obligations for the ratable benefit of the holders thereof; and (c) thereafter, to the extent of any excess such proceeds, to the payment to or upon the order of such Loan Party or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. (ii) Application of Payments Under Guaranties. All payments received by Administrative Agent under any Guaranty shall be applied promptly from time to time by Administrative Agent in the following order of priority: (a) To the payment of the reasonable costs and expenses of any collection or other realization under such Guaranty, including without limitation reasonable compensation to Administrative Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by Administrative Agent in connection therewith, all in accordance with the terms of this Agreement and such Guaranty; (b) thereafter, to the extent of any excess such payments, to the payment of all other Guarantied Obligations (as defined in such Guaranty) for the ratable benefit of the holders thereof; and (c) thereafter, to the extent of any excess such payments, to the payment to Holdings or the applicable Subsidiary Guarantor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. E. General Provisions Regarding Payments. (i) Manner and Time of Payment. All payments by Company of principal, interest, fees and other Obligations hereunder and under the Notes shall be made in same day funds and without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 Noon (New York time) on the date due at the Funding and Payment Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Company on the next succeeding Business Day. Company hereby authorizes Administrative Agent to charge its accounts with such Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose). (ii) Application of Payments to Principal and Interest. Except as provided in subsection 2.2C, all payments in respect of the principal amount of any Loan shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and in any event any payments made in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest before application to principal. (iii) Apportionment of Payments. Aggregate principal and interest payments shall be apportioned among all outstanding Loans to which such payments relate, in each case proportionately to Lenders' respective Pro Rata Shares. Administrative Agent shall promptly distribute to each Lender, at its applicable Lending Office specified on Schedule 2.1 or at such other address as such Lender may request, its Pro Rata Share of all such payments received by Administrative Agent and the commitment fees of such Lender when received by Administrative Agent pursuant to subsection 2.3. Notwithstanding the foregoing provisions of this subsection 2.4E(iii) if, pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter. (iv) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the commitment fees hereunder, as the case may be. (v) Notation of Payment. Each Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), that Lender will make a notation thereon of all Loans evidenced by that Note and all principal payments previously made thereon and of the date to which interest thereon has been paid; provided that the failure to make (or any error in the making of) a notation of any Loan made under such Note shall not limit or otherwise affect the obligations of Company hereunder or under such Note with respect to any Loan or any payments of principal or interest on such Note. 2.5 Use of Proceeds. A. Term Loans. The proceeds of the Term Loans, together with up to $30,000,000 in proceeds of the initial Revolving Loans (the "Acquisition Revolving Loans"), the proceeds of the Subordinated Bridge Loans and the proceeds of the equity capitalization of Company described in subsection 4.1C, shall be applied to (i) finance the Acquisition and (ii) pay Transaction Costs. B. Revolving Loans; Swing Line Loans. The proceeds of the Acquisition Revolving Loans shall be applied by Company as provided in subsection 2.5A. The proceeds of any other Revolving Loans and any Swing Line Loans shall be applied by Company to finance expenditures which are included in the definition of Consolidated Capital Expenditures and for working capital and general corporate purposes, which may include the making of intercompany loans to any of Company's Wholly Owned Subsidiaries, in accordance with subsection 7.1(iv), for their own working capital and general corporate purposes. C. Compliance With Laws. Company hereby undertakes that no portion of the proceeds of any Loans or other extensions of credit under this Agreement shall be used by any Loan Party in any manner which would be illegal under, or which would cause the invalidity or unenforceability (in each case in whole or in part) of any Loan Document under, any applicable law. D. Margin Regulations. Without limiting the generality of subsection 2.5C, no portion of the proceeds of any borrowing under this Agreement shall be used by Company or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. 2.6 Special Provisions Governing Eurodollar Rate Loans. Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: A. Determination of Applicable Interest Rate. As soon as practicable after 11:00 A.M. (New York time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender. B. Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have reasonably determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances arising after the date of this Agreement affecting the London interbank market, adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate Administrative Agent shall on such date give notice (by telecopy or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans, until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist (such notification not to be unreasonably withheld or delayed) and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company. C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have reasonably determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, or would cause such Lender material hardship, as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the London interbank market, then, and in any such event, such Lender shall be an "Affected Lender" and it shall on that day give notice (by telecopy or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans, shall be suspended until such notice shall be withdrawn by the Affected Lender, (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a Notice of Conversion/ Continuation, the Affected Lender shall make such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans, as the case may be (the "Affected Loans"), shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall have the option, subject to the provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by giving notice (by telecopy or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement. D. Compensation For Breakage or Non-Commencement of Interest Periods. Company shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including, without limitation, any interest paid by that Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Borrowing or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Conversion/Continuation or a telephonic request for conversion or continuation, (ii) if any prepayment (including without limitation any prepayment pursuant to subsection 2.4B(i)) or conversion of any of its Eurodollar Rate Loans occurs on a date that is not the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company, or (iv) as a consequence of any other default by Company in the repayment of its Eurodollar Rate Loans when required by the terms of this Agreement. E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of that Lender. F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection 2.7A. G. Eurodollar Rate Loans After Default. After the occurrence of and during the continuation of a Potential Event of Default or an Event of Default, (i) Company may not elect to have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation given by Company with respect to a requested borrowing or conversion/continuation that has not yet occurred shall be deemed to be rescinded by Company. 2.7 Increased Costs; Taxes; Capital Adequacy. A. Compensation for Increased Costs and Taxes. Subject to the provisions of subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the event that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) results in a change in the basis of taxation of such Lender (or its applicable lending office) (other than a change with respect to any Tax on the overall net income of such Lender) with respect to this Agreement or any of its obligations hereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including, without limitation, any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder, or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Eurodollar Rate Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Lender shall promptly notify Company and Administrative Agent thereof and Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender shall reasonably determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement shall be prima facie evidence of such additional amounts. B. Withholding of Taxes. (i) Payments to Be Free and Clear. All sums payable by Company under this Agreement and the other Loan Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from which a payment is made by or on behalf of Company. (ii) Withholding of Taxes. If Company or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by Company to Administrative Agent or any Lender under any of the Loan Documents: (a) Company shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Company becomes aware of it; (b) Company shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on Company) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (c) the sum payable by Company in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (d) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Tax which it is required by clause (b) above to pay, Company shall deliver to Administrative Agent evidence of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided that no such additional amount shall be required to be paid to any Lender under clause (c) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof) or after the date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date of this Agreement or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender. (iii) Evidence of Exemption from U.S. Withholding Tax. (a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent for transmission to Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (1) two original copies of Internal Revenue Service Form 1001 or 4224 (or any successor forms), accurately completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 (or any successor forms) pursuant to clause (1) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8 (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents. (b) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, such Lender shall (1) deliver to Administrative Agent for transmission to Company two new original copies of Internal Revenue Service Form 1001 or 4224 (or any successor forms), or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8 (or any successor form), as the case may be, accurately completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents or (2) immediately notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence. (c) Company shall not be required to pay any additional amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) in respect of deductions or withholdings of United States federal income taxes if such Lender shall have failed to satisfy the requirements of subsection 2.7B(iii)(a) or 2.7B(iii)(b); provided that if such Lender shall have satisfied such requirements on the Closing Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a) or 2.7B(iii)(b). C. Capital Adequacy Adjustment. If any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by the National Association of Insurance Commissioners, any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of the National Association of Insurance Commissioners, any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Commitments or Letters of Credit or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender reasonably determines such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within fifteen Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive and binding upon all parties hereto absent manifest error. D. Substitute Lenders. In the event Company is required under the provisions of this subsection 2.7 to make payments in a material amount to any Lender or in the event any Lender fails to lend to Company in accordance with this Agreement, Company may, so long as no Event of Default or Potential Event of Default shall have occurred and be continuing, elect to terminate such Lender as a party to this Agreement; provided that, concurrently with such termination, (i) Company shall pay that Lender all principal, interest and fees and other amounts (including without limitation amounts, if any, owed under this subsection 2.7) due to be paid to such Lender with respect to all periods through such date of termination, (ii) another financial institution satisfactory to Company and Administrative Agent (or, in the case of a Co-Administrative Agent that is also the Lender to be terminated, its successor Co-Administrative Agent) shall agree, as of such date, to become a Lender for all purposes under this Agreement (whether by assignment or amendment) and to assume all obligations of the Lender to be terminated as of such date, and (iii) all documents and supporting materials necessary, in the judgment of Administrative Agent (or, in the case of a Co-Administrative Agent that is also the Lender to be terminated, its successor Co-Administrative Agent) to evidence the substitution of such Lender shall have been received and approved by Co-Administrative Agents as of such date. 2.8 Obligation of Lenders and Issuing Lenders to Mitigate. Each Lender and Issuing Lender agrees that, as promptly as practicable after the officer of such Lender or Issuing Lender responsible for administering the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender or Issuing Lender to receive payments under subsection 2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal policies of such Lender or Issuing Lender and any applicable legal or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or maintain the Commitments of such Lender or the affected Loans or Letters of Credit of such Lender or Issuing Lender through another lending or letter of credit office of such Lender or Issuing Lender, or (ii) take such other measures as such Lender or Issuing Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be materially reduced and if, as determined by such Lender or Issuing Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments or Loans or Letters of Credit through such other lending or letter of credit office or in accordance with such other measures, as the case may be, would not otherwise materially adversely affect such Commitments or Loans or Letters of Credit or the interests of such Lender or Issuing Lender; provided that such Lender or Issuing Lender will not be obligated to utilize such other lending or letter of credit office pursuant to this subsection 2.8 unless Company agrees to pay all incremental expenses incurred by such Lender or Issuing Lender as a result of utilizing such other lending or letter of credit office. A certificate as to the amount of any such expenses payable by Company pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender or Issuing Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error. SECTION 3. LETTERS OF CREDIT 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein. A. Letters of Credit. In addition to Company requesting that Lenders make Revolving Loans pursuant to subsection 2.1A(ii), and that Swing Line Lender make Swing Line Loans pursuant to subsection 2.1A(iii), Company may request, in accordance with the provisions of this subsection 3.1, from time to time during the period from the Closing Date to but excluding the Revolving Loan Commitment Termination Date, that one or more Lenders issue Letters of Credit for the account of Company for the purposes specified in the definitions of Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Company herein set forth, any one or more Lenders may, but (except as provided in subsection 3.1B(ii)) shall not be obligated to, issue such Letters of Credit in accordance with the provisions of this subsection 3.1; provided that Company shall not request that any Lender issue (and no Lender shall issue): (i) any Letter of Credit if, after giving effect to such issuance, the Total Utilization of Revolving Loan Commitments would exceed the Revolving Loan Commitments then in effect; (ii) any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed $5,000,000; (iii) any Standby Letter of Credit having an expiration date later than the earlier of (a) the Revolving Loan Commitment Termination Date and (b) the date which is one year from the date of issuance of such Standby Letter of Credit; provided that the immediately preceding clause (b) shall not prevent any Issuing Lender from agreeing that a Standby Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each unless such Issuing Lender elects not to extend for any such additional period; provided further that, unless Requisite Lenders otherwise consent, such Issuing Lender shall give notice that it will not extend such Standby Letter of Credit if it has knowledge that an Event of Default has occurred and is continuing on the last day on which such Issuing Lender may give notice to the beneficiary that it will not extend such Standby Letter of Credit; (iv) any Commercial Letter of Credit (a) having an expiration date later than the earlier of (X) 30 days prior to the Revolving Loan Commitment Termination Date and (Y) the date which is 180 days from the date of issuance of such Commercial Letter of Credit or (b) that is otherwise unacceptable to the applicable Issuing Lender in its reasonable discretion; (v) any Letter of Credit denominated in a currency other than Dollars; or (vi) any Letter of Credit during any period when a Lender Default exists, unless each Issuing Lender has entered into arrangements satisfactory to it and Company to eliminate such Issuing Lender's risk with respect to the Defaulting Lender, including by cash collateralizing such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage (after giving effect to the issuance of the proposed Letter of Credit). B. Mechanics of Issuance. (i) Notice of Issuance. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent, at the Funding and Payment Office, a Notice of Issuance of Letter of Credit no later than 12:00 Noon (New York time) at least five Business Days, or such shorter period as may be agreed to by the Issuing Lender in any particular instance, in advance of the proposed date of issuance. The Notice of Issuance of Letter of Credit shall specify (a) the proposed date of issuance (which shall be a Business Day), (b) the face amount of or maximum aggregate liability under, as applicable, the Letter of Credit, (c) the expiration date of the Letter of Credit, (d) the name and address of the beneficiary, and (e) the verbatim text of the proposed Letter of Credit or the proposed terms and conditions thereof, including a precise description of any documents and the verbatim text of any certificates to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of the Letter of Credit, would require the Issuing Lender to make payment under the Letter of Credit; provided that the Issuing Lender, in its reasonable discretion, may require changes in the text of the proposed Letter of Credit or any such documents or certificates; provided further that no Letter of Credit shall require payment against a conforming draft or other request for payment to be made thereunder on the same business day (under the laws of the jurisdiction in which the office of the Issuing Lender to which such draft or other request for payment is required to be presented is located) that such draft or other request for payment is presented if such presentation is made after 10:00 A.M. (in the time zone of such office of the Issuing Lender) on such business day. Company shall notify the applicable Issuing Lender (and Administrative Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance of any Letter of Credit in the event that any of the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit, Company shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit. (ii) Determination of Issuing Lender. Upon receipt by Administrative Agent of a Notice of Issuance of Letter of Credit pursuant to subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the event Administrative Agent elects to issue such Letter of Credit, Administrative Agent shall promptly so notify Company, and such Administrative Agent shall be the Issuing Lender with respect thereto. In the event that Administrative Agent, in its sole discretion, elects not to issue such Letter of Credit, Administrative Agent shall promptly so notify the Company, whereupon Company may request any other Lender to issue such Letter of Credit by delivering to such Lender a copy of the applicable Notice of Issuance of Letter of Credit. Any Lender so requested to issue such Letter of Credit shall promptly notify Company and Administrative Agent whether or not, in its sole discretion, it has elected to issue such Letter of Credit, and any such Lender which so elects to issue such Letter of Credit shall be the Issuing Lender with respect thereto. In the event that all other Lenders shall have declined to issue such Letter of Credit, notwithstanding the prior election of Administrative Agent not to issue such Letter of Credit, Administrative Agent shall be obligated to issue such Letter of Credit and shall be the Issuing Lender with respect thereto, notwithstanding the fact that the sum of the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by Administrative Agent, when aggregated with Administrative Agent's outstanding Revolving Loans and Swing Line Loans, may exceed Administrative Agent's Revolving Loan Commitment then in effect. (iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with subsection 10.6) of the conditions set forth in subsection 4.3, the Issuing Lender shall issue the requested Letter of Credit in accordance with the Issuing Lender's standard operating procedures (any such issuance by Administrative Agent being effected through the Funding and Payment Office), and upon its issuance of such Letter of Credit the Issuing Lender shall promptly notify Administrative Agent and each Lender of such issuance, which notice shall be accompanied by a copy of such Letter of Credit. (iv) Reports to Lenders. Within 30 days after the end of each calendar quarter ending after the Closing Date, so long as any Letter of Credit shall have been outstanding during such calendar quarter, each Issuing Lender shall deliver to Administrative Agent and Administrative Agent shall deliver to each Lender a report setting forth for such calendar quarter the daily maximum amount available to be drawn under the Letters of Credit that were outstanding during such calendar quarter. C. Lenders' Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Lender having a Revolving Loan Commitment shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a participation in such Letter of Credit and any drawings honored or payments made thereunder in an amount equal to such Lender's Pro Rata Share (with respect to the Revolving Loan Commitments) of the maximum amount which is or at any time may become available to be drawn or required to be paid thereunder. 3.2 Letter of Credit Fees. Company agrees to pay the following amounts to each Issuing Lender with respect to Letters of Credit issued by it for the account of Company: (i) with respect to each Letter of Credit, (a) a fronting fee equal to 1/4 of 1% per annum of the daily maximum amount available to be drawn under such Letter of Credit and (b) a Letter of Credit fee equal to the product of (x) the Applicable Eurodollar Rate Margin with respect to Revolving Loans and (y) the daily maximum amount available to be drawn under such Letter of Credit, in each case payable in arrears on and to each March 15, June 15, September 15 and December 15 of each year, commencing on March 15, 1997, and computed on the basis of a 360-day year for the actual number of days elapsed; and (ii) with respect to the issuance, amendment or transfer of each Letter of Credit and each drawing made thereunder (without duplication of the fees payable under clause (i) above), documentary and processing charges in accordance with such Issuing Lender's standard schedule for such charges in effect at the time of such issuance, amendment, transfer or drawing, as the case may be. Promptly upon receipt by such Issuing Lender of any amount described in clause (i)(b) of this subsection 3.2, such Issuing Lender shall distribute to each other Lender its Pro Rata Share of such amount. 3.3 Drawings and Payments and Reimbursement of Amounts Paid Under Letters of Credit. A. Responsibility of Issuing Lender With Respect to Requests For Drawings and Payments. In determining whether to honor any drawing or request for payment under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In the event an Issuing Lender has determined to honor a drawing or request for payment under a Letter of Credit issued by it, such Issuing Lender shall immediately notify Company and Administrative Agent, and Company shall reimburse such Issuing Lender on or before the Business Day immediately following the date on which such drawing is honored or such payment is made (the applicable "Reimbursement Date"), in an amount in same day funds equal to the amount of such drawing; provided that, anything contained in this Agreement to the contrary notwithstanding, (i) unless Company shall have notified Administrative Agent and such Issuing Lender prior to 12:00 Noon (New York time) on the date of such drawing or request for payment that Company intends to reimburse such Issuing Lender for the amount of such honored drawing or payment with funds other than the proceeds of Revolving Loans, Company shall be deemed to have given a timely Notice of Borrowing to Administrative Agent requesting Lenders to make Revolving Loans which are Base Rate Loans, on the applicable Reimbursement Date in an amount equal to the amount of such honored drawing or payment and (ii) subject to satisfaction or waiver of the conditions specified in subsection 4.2B, Lenders shall, on the applicable Reimbursement Date, make Revolving Loans and in the amount of such honored drawing or payment, the proceeds of which shall be applied directly by Administrative Agent to reimburse such Issuing Lender for the amount of such honored drawing or payment; provided further that if for any reason proceeds of Revolving Loans are not received by such Issuing Lender on the applicable Reimbursement Date in an amount equal to the amount of such honored drawing or payment, Company shall reimburse such Issuing Lender, on demand, in an amount in Dollars and in same day funds equal to the excess of the amount of such honored drawing or payment over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set forth in this Agreement, and Company shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this subsection 3.3B. C. Payment by Lenders of Unreimbursed Payments Under Letters of Credit. (i) Payment by Lenders. In the event that Company shall fail for any reason to reimburse any Issuing Lender as provided in subsection 3.3B in an amount equal to the amount of any honored drawing or payment made by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall promptly notify each other Lender of the unreimbursed amount of such honored drawing or payment and of such other Lender's respective participation therein based on such Lender's Pro Rata Share of the Revolving Loan Commitments. Each Lender shall make available to such Issuing Lender an amount equal to its respective participation, in same day funds, at the office of such Issuing Lender specified in such notice, not later than 12:00 Noon (New York time) on the first business day (under the laws of the jurisdiction in which such office of such Issuing Lender is located) after the date notified by such Issuing Lender. In the event that any Lender fails to make available to such Issuing Lender on such business day the amount of such Lender's participation in such Letter of Credit as provided in this subsection 3.3C, such Issuing Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by such Issuing Lender for the correction of errors among banks for three Business Days and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice the right of any Lender to recover from any Issuing Lender any amounts made available by such Lender to such Issuing Lender pursuant to this subsection 3.3C in the event that it is determined by the final judgment of a court of competent jurisdiction that the payment with respect to a Letter of Credit by such Issuing Lender in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of such Issuing Lender. (ii) Distribution to Lenders of Reimbursements Received From Company. In the event any Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of any honored drawing or payment made by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such honored drawing or payment such other Lender's Pro Rata Share of all payments subsequently received by such Issuing Lender from Company in reimbursement of such honored drawing or payment when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. D. Interest on Amounts Paid Under Letters of Credit. (i) Payment of Interest by Company. Company agrees to pay to each Issuing Lender, with respect to drawings honored or payments made under any Letters of Credit issued by it, interest on the amount paid by such Issuing Lender in respect of each such drawing or payment from the date such drawing is honored or payment is made to but excluding the date such amount is reimbursed by Company (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the period from the date such drawing is honored or payment is made to but excluding the applicable Reimbursement Date, the Base Rate plus the Applicable Base Rate Margin with respect to Revolving Loans, and (b) thereafter, a rate which is 2% per annum in excess of the rate of interest described in the foregoing clause (a). Interest payable pursuant to this subsection 3.3D(i) shall be computed on the basis of a 360-day year for the actual number of days elapsed in the period during which it accrues and shall be payable on demand or, if no demand is made, on the date on which the related drawing or payment under a Letter of Credit is reimbursed in full. (ii) Distribution of Interest Payments by Issuing Lender. Promptly upon receipt by any Issuing Lender of any payment of interest pursuant to subsection 3.3D(i), (a) such Issuing Lender shall distribute to each other Lender, out of the interest received by such Issuing Lender in respect of the period from the date of the applicable honored drawing or payment under a Letter of Credit issued by such Issuing Lender to but excluding the date on which such Issuing Lender is reimbursed for the amount of such drawing or payment (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B), the amount that such other Lender would have been entitled to receive in respect of the Letter of Credit fee that would have been payable in respect of such Letter of Credit for such period pursuant to subsection 3.2 if no drawing had been honored or payment had been made under such Letter of Credit, and (b) in the event such Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of such drawing or payment, such Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such drawing or payment such other Lender's Pro Rata Share of any interest received by such Issuing Lender in respect of that portion of such drawing or payment so reimbursed by other Lenders for the period from the date on which such Issuing Lender was so reimbursed by other Lenders to and including the date on which such portion of such drawing or payment is reimbursed by Company. Any such distribution shall be made to a Lender at its Lending Office set forth on Schedule 2.1 or at such other address as such Lender may request. 3.4 Obligations Absolute. The obligation of Company to reimburse each Issuing Lender for drawings honored or payments made under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), any Issuing Lender or other Lender or any other Person or, in the case of a Lender, against Company whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft, demand, certificate or other document presented under any 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; (iv) payment by the applicable Issuing Lender under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (vi) any breach of this Agreement or any other Loan Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Potential Event of Default shall have occurred and be continuing; provided, in each case, that payment by the applicable Issuing Lender under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of such Issuing Lender under the circumstances in question (as determined by a final judgment of a court of competent jurisdiction). 3.5 Indemnification; Nature of Issuing Lender's Duties. A. Indemnification. In addition to amounts payable as provided in subsection 3.6, Company hereby agrees to protect, indemnify, pay and save harmless each Issuing Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which such Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Lender, other than as a result of (a) the gross negligence or willful misconduct of such Issuing Lender as determined by a final judgment of a court of competent jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor by such Issuing Lender of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of such Issuing Lender to honor a drawing or other request for payment under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called "Governmental Acts"). B. Nature of Issuing Lenders' Duties. As between Company and any Issuing Lender, Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by such Issuing Lender by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, such Issuing Lender shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing or payment under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender, including, without limitation, any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender's rights or powers hereunder. In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this subsection 3.5B, any action taken or omitted by any Issuing Lender under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender under any resulting liability to Company. Notwithstanding anything to the contrary contained in this subsection 3.5, Company shall retain any and all rights it may have against any Issuing Lender for any liability arising solely out of the gross negligence or willful misconduct of such Issuing Lender, as determined by a final judgment of a court of competent jurisdiction. 3.6 Increased Costs and Taxes Relating to Letters of Credit. In the event that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by any Issuing Lender or Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) results in any change in the basis of taxation of such Issuing Lender or Lender (or its applicable lending or letter of credit office) (other than a change with respect to any Tax on the overall net income of such Issuing Lender or Lender) with respect to the issuing or maintaining of any Letters of Credit or the purchasing or maintaining of any participations therein or any other obligations under this Section 3, whether directly or by such being imposed on or suffered by any particular Issuing Lender; (ii) imposes, modifies or holds applicable any reserve (including, without limitation, any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement in respect of any Letters of Credit issued by any Issuing Lender or participations therein purchased by any Lender; or (iii) imposes any other condition on or affecting such Issuing Lender or Lender (or its applicable lending or letter of credit office) regarding this Section 3 or any Letter of Credit or any participation therein; and the result of any of the foregoing is to increase the cost to such Issuing Lender or Lender of agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to purchase, purchasing or maintaining any participation therein or to reduce any amount received or receivable by such Issuing Lender or Lender (or its applicable lending or letter of credit office) with respect thereto; then, in any case, Company shall promptly pay to such Issuing Lender or Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (reasonably determined by such Issuing Lender or Lender) as may be necessary to compensate such Issuing Lender or Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Issuing Lender or Lender under this subsection 3.6, which statement shall be prima facie evidence of such additional amounts. SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT The obligations of Lenders to make Loans and the issuance of Letters of Credit hereunder are subject to the satisfaction of the following conditions. 4.1 Conditions to Term Loans and Acquisition Revolving Loans. The obligations of Lenders to make the Term Loans and the Acquisition Revolving Loans are, in addition to the conditions precedent specified in subsection 4.2, subject to prior or concurrent satisfaction of the following conditions: A. MBW LLC, Holdings and Company Documents. (i) On or before the Closing Date, each of Holdings and Company shall deliver or cause to be delivered to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) the following, each, unless otherwise noted, dated the Closing Date: (a) Certified copies of its Certificate of Incorporation, together with a good standing certificate from the Secretary of State of the State of Delaware and each other state in which it is qualified as a foreign corporation to do business, each dated a recent date prior to the Closing Date; (b) Copies of its Bylaws, certified as of the Closing Date by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment; (c) Resolutions of its Board of Directors approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents and Related Agreements to which it is a party, certified as of the Closing Date by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment; (d) Signature and incumbency certificates of its officers executing this Agreement and the other Loan Documents; (e) Executed originals of this Agreement and the other Loan Documents to which it is a party; and (f) Such other documents as Agents may reasonably request. (ii) On or before the Closing Date, MBW LLC shall deliver or cause to be delivered to Administrative Agent the following, each, unless otherwise noted, dated the Closing Date: (a) Certified copies of its Certificate of Formation, together with a good standing certificate from the Secretary of State of the State of Delaware and each other state in which it is qualified as a foreign limited liability company to do business, each dated a recent date prior to the Closing Date; and (b) Copies of the MBW LLC Agreement and any other organizational document in effect with respect to MBW LLC, certified as of the Closing Date by a manager of MBW LLC as being in full force and effect without modification or amendment. B. No Material Adverse Effect. Since September 30, 1996, no Material Adverse Effect (in the opinions of Administrative Agent or Lenders) shall have occurred. C. Corporate and Capital Structure; Capitalization of MBW LLC, Holdings and Company; Management. (i) Corporate Structure. The corporate organizational structure, capital structure and ownership of MBW LLC and Holdings and its Subsidiaries, after giving effect to the Acquisition, shall be as set forth on Schedule 4.1C annexed hereto. MBW LLC shall have no Subsidiaries on the Closing Date other than Holdings and Company. (ii) Capital Structure and Ownership; Capitalization of MBW LLC, Holdings and Company. The capital structure and ownership of MBW LLC, Holdings and Company, both before and after giving effect to the Acquisition, shall be as set forth on Schedule 4.1C annexed hereto. On or before the Closing Date, (a) the MDC Entities, Dartford, Fenway and the Management Investors shall have purchased all of the outstanding membership interests in MBW LLC for cash consideration of not less than $33,800,000 and total consideration of not less than $34,800,000 (it being understood that up to $200,000 of the consideration for the purchase of membership interests in MBW LLC may be paid by management officers and employees after the Closing Date), (b) MBW LLC shall have contributed to Holdings, as common equity, the cash proceeds of such sale of membership interests in MBW LLC, and (c) Holdings shall have contributed to Company, as common equity, the cash proceeds of such equity contribution by MBW LLC. The MDC Entities shall have purchased more than 50% of the membership interests of MBW LLC. Company shall have provided evidence satisfactory to Agents that the proceeds of the equity capitalization of Company described in the immediately preceding sentence have been irrevocably committed, prior to the application of the proceeds of the Term Loans and the Acquisition Revolving Loans, to the payment of a portion of the purchase price for the Business and/or Transaction Costs. On the Closing Date, Holdings shall have issued and placed in escrow pursuant to the Warrant Escrow Agreement Warrants representing 15% of the fully diluted common equity of Holdings as of the Closing Date. (iii) Management. The management structure of Holdings and Company after giving effect to the Acquisition shall be as set forth on Schedule 4.1C annexed hereto. Agents shall have received duly executed copies of, and shall be satisfied with the form and substance of, the Employment Agreements, certified by the corporate secretary of Company as being in full force and effect as of the Closing Date without modification, waiver or amendment. D. Acquisition Agreement. On the Closing Date (i) Agents shall have received executed or conformed copies of the Acquisition Agreement and any amendments thereto and documents executed in connection therewith, (ii) such Acquisition Agreement shall be in full force and effect and, no term or condition thereof shall have been amended, modified or waived after the execution thereof except with the prior written consent of Arranging Agent, (iii) the parties thereto shall not have failed in any material respect to perform any material obligation or covenant required by any such Acquisition Agreement to be performed or complied with by any of them on or before the Closing Date, and (iv) Agents shall have received an Officer's Certificate from Company to the effect set forth in clauses (ii) and (iii). E. Issuance of Subordinated Bridge Notes. On or before the Closing Date, Company shall have issued and sold the Subordinated Bridge Notes in an aggregate principal amount of not less than $50,000,000 and Company shall have delivered to Administrative Agent complete, correct and conformed copies of the Subordinated Bridge Notes, the Subordinated Bridge Loan Agreement, the Subordinated Bridge Loan Guaranties and the other principal Subordinated Bridge Loan Documents, all in form and substance reasonably satisfactory to Administrative Agent. Company shall have provided evidence satisfactory to Agents that the proceeds of Subordinated Bridge Loans have been irrevocably committed, prior to the application of the proceeds of the Term Loans and the Acquisition Revolving Loans, to the payment of a portion of the purchase price of the Business and/or Transaction Costs. F. Related Agreements. Administrative Agent shall have received (i) a fully executed or conformed copy of each Related Agreement and all principal documents executed in connection therewith, and each Related Agreement shall be in full force and effect (except for those Related Agreements not executed on or prior to the Closing Date) and no provision thereof shall have been modified or waived in any respect determined by Agents to be material, in each case without consent of Agents and (ii) an Officer's Certificate from Company to the effect set forth in clause (i), and each such Related Agreement (including without limitation the Transition Agreements) shall be reasonably satisfactory in form and substance to Agents. G. Consummation of Acquisition. (i) All conditions to the Acquisition set forth in the Acquisition Agreement shall have been satisfied or the fulfillment of any such conditions shall have been waived with the consent of Administrative Agent; (ii) Agents shall have received evidence in form and substance satisfactory to Agents that the Acquisition shall become effective in accordance with the terms of the Acquisition Agreement immediately upon the making of the initial Loans; (iii) the aggregate cash consideration paid to Seller in connection with the Acquisition (excluding amounts to be paid after the Closing Date relating to excess Inventory on the Closing Date) shall not exceed $116,000,000; (iv) Transaction Costs shall not exceed $14,000,000, and Agents shall have received evidence satisfactory in form and substance to Agents to such effect: and (v) Agents shall have received an Officer's Certificate of Company to the effect set forth in clauses (i)-(iv) above and stating that Company will proceed to consummate the Acquisition immediately upon the making of the initial Loans. H. Existing Liens; No Other Indebtedness Outstanding. All security interests attaching to any of the assets of the Business created to secure obligations under any Indebtedness of Seller shall have been terminated, and Company shall have delivered to Administrative Agent UCC-3 termination statements or assignments (or comparable forms) and any and all other instruments of release, satisfaction, assignment and/or reconveyance (or evidence of the filing thereof) as may be necessary or advisable to terminate all such security interests and all other security interests in the Collateral. Agents shall have received an Officers' Certificate of Company stating that, after giving effect to the transactions described in this subsection 4.1H, Loan Parties shall have no Indebtedness outstanding other than Indebtedness under the Loan Documents and under the Subordinated Bridge Loan Documents. I. Necessary Consents. Company shall have obtained all consents necessary or advisable in connection with the Acquisition, the transactions contemplated by the Loan Documents and Related Agreements and the continued operation of the business conducted by Company and its Subsidiaries, and each of the foregoing shall be in full force and effect and in form and substance satisfactory to Administrative Agent (except as disclosed to and approved by Administrative Agent). All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Acquisition or the financing thereof, and no action, request for stay, petition for review or rehearing, reconsideration or appeal shall be pending and any time for agency action to set aside its consent on its own motion shall have expired. J. Maximum Utilization of Revolving Loan Commitments On the Closing Date, after giving effect to the Acquisition, the Total Utilization of Revolving Loan Commitments shall not exceed $30,000,000. K. Collateral Access Agreements. Agents shall have received from Company Collateral Access Agreements in form and substance satisfactory to Administrative Agent executed by Seller with respect to any facility of Seller at which equipment of Company is located on the Closing Date. Neither Holdings nor Company shall own any interest in any real property on the Closing Date other than its Leasehold Property interest in its offices in Columbus, Ohio. L. Perfection of Security Interests in Personal Property and Mixed Collateral. Holdings and Company shall have taken or caused to be taken such actions in such a manner so that Administrative Agent has, for the benefit of Agents and Lenders, a valid and perfected First Priority security interest in the entire personal property and mixed Collateral. Such actions shall include, without limitation: (i) the delivery pursuant to the applicable Collateral Documents of (a) certificates (which certificates shall be properly endorsed in blank for transfer or accompanied by irrevocable undated stock powers duly endorsed in blank, all in form and substance satisfactory to Administrative Agent) representing all of the shares of capital stock required to be pledged pursuant to the Collateral Documents, and (b) all promissory notes or other instruments (duly endorsed, where appropriate, in a manner satisfactory to Administrative Agent) evidencing any Collateral; (ii) delivery to Agents of (a) the results of a recent search, by a Person satisfactory to Agents, of all effective Uniform Commercial Code financing statements and fixture filings and all judgment and tax lien filings which may have been made with respect to any personal or mixed property of any Loan Party, together with copies of all such filings disclosed by such search; (iii) the delivery to Administrative Agent of Uniform Commercial Code financing statements and fixture filings executed by the applicable Loan Parties as to all such Collateral granted by such Loan Parties for all jurisdictions as may be necessary or desirable to perfect Administrative Agent's security interest in such Collateral; (iv) the delivery to Administrative Agent of all cover sheets or other documents or instruments required to be filed with the PTO or the United States Copyright Office in order to create or perfect Liens in respect of any IP Collateral or any registered copyrights of Company; and (v) the delivery to Administrative Agent of evidence reasonably satisfactory to Administrative Agent that all other filings (including, without limitation, filings of Uniform Commercial Code termination statements and termination statements with respect to prior Liens on IP Collateral), recordings and other actions that Administrative Agent deems necessary or advisable to establish, preserve and perfect the First Priority Liens granted to Administrative Agent in personal and mixed property shall have been made. M. Solvency Appraisal; Appraisal of Fixed Assets, Trademarks and Tradenames. Administrative Agent shall have received a letter from American Appraisal Associates, Inc. dated the Closing Date and addressed to Administrative Agent and Lenders, in form, scope and substance reasonably satisfactory to Administrative Agent and with appropriate attachments, demonstrating that, after giving effect to the consummation of the Acquisition and the financing transactions contemplated hereby, Holdings and its Subsidiaries are Solvent. Administrative Agent shall have received an appraisal of the fixed assets, trademarks and tradenames acquired by Company in the Acquisition, prepared by American Appraisal Associates, Inc. and dated not earlier than 30 days before the Closing Date, in form and substance reasonably satisfactory to Administrative Agent. N. Transaction Costs. Not less than three days prior to the Closing Date, Company shall have delivered to Administrative Agent and Lenders a schedule, in a form satisfactory to Administrative Agent, setting forth Company's reasonable best estimate of the Transaction Costs (other than amounts payable to Agents and Lenders). O. Opinions of Loan Parties' Counsel. Lenders and their respective counsel shall have received (i) originally executed copies of one or more favorable written opinions of White & Case, counsel for the Loan Parties, and Richards & O'Neil, LLP, counsel for the Loan Parties, each in form and substance reasonably satisfactory to Agents and their counsel, dated as of the Closing Date and setting forth substantially the matters in the opinions designated in Exhibit XIII annexed hereto and as to such other matters as Agents acting on behalf of Lenders may reasonably request, and (ii) evidence satisfactory to Agents that Loan Parties have instructed such counsel to deliver such opinions to Lenders. P. Opinions of Agents' Counsel. Lenders shall have received originally executed copies of one or more favorable written opinions of O'Melveny & Myers LLP, counsel to Agents, dated as of the Closing Date, substantially in the form of Exhibit XIV annexed hereto and as to such other matters as Agents acting on behalf of Lenders may reasonably request. Q. Opinions of Counsel Delivered Under Related Agreements. Agents and their counsel shall have received copies of each of the opinions of counsel (and, if requested by Administrative Agent, any certificates and letters) delivered to the parties in connection with the Acquisition and the making of the Subordinated Bridge Loans, together with, to the extent agreed by such law firm, a letter from each such counsel authorizing Agents and Lenders to rely on such opinion as though it were addressed to them. R. Fees. Company shall have paid to Agents, for distribution (as appropriate) to Agents and Lenders, the fees payable on the Closing Date referred to in subsection 2.3. S. Financial Statements; Pro Forma Statement of Assets. On or before the Closing Date, Lenders shall have received from Company (i) audited financial statements of the Business for the years ending December 31 of 1994 and 1995, consisting of statements of operations for such years, (ii) audited financial statements of the Business as at September 30, 1996, consisting of a statement of operations for the nine-month period ending on such date, (iii) a statement of assets acquired as of September 30, 1996, in reasonable detail, and (iv) a pro forma consolidated statement of assets of Holdings and its Subsidiaries as at September 30, 1996 prepared in accordance with GAAP and reflecting the consummation of the Acquisition, the related financings and the other transactions contemplated by the Loan Documents and the Related Agreements, which pro forma statement of assets shall be in form and substance satisfactory to Lenders and shall be certified by the chief financial officer of Company as (a) prepared based on good faith assumptions and on the best information available to Company as of the date of delivery thereof and (b) fairly presenting on a pro forma basis the financial position of Holdings and Company as at September 30, 1996, as adjusted as described in this clause (iv), assuming that such events had occurred at such date. T. Insurance Appraisal; Evidence of Insurance. Administrative Agent shall have received (i) a copy of the insurance report prepared by Aon Risk Services with respect to Company and its Subsidiaries and such report shall be in form and substance satisfactory to Agents, and (ii) satisfactory certificates of insurance with respect to each of the insurance policies required pursuant to subsection 6.4, and Agents shall be satisfied with the nature and scope of these insurance policies. U. Representations and Warranties; Performance of Agreements. Company shall have delivered to Administrative Agent an Officer's Certificate, in form and substance satisfactory to Administrative Agent, to the effect that the representations and warranties in Section 5 hereof are true and correct in all material respects on and as of the Closing Date to the same extent as though made on and as of that date and that Company shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by them on or before the Closing Date, except as otherwise disclosed to and agreed to in writing by Administrative Agent. V. Completion of Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Agents, acting on behalf of Lenders, and their counsel shall be satisfactory in form and substance to Agents and such counsel, and Agents and such counsel shall have received all such counterpart originals or certified copies of such documents as Agents may reasonably request. 4.2 Conditions to All Loans. The obligations of Lenders to make Loans on each Funding Date are subject to the following further conditions precedent: A. Administrative Agent shall have received on or before that Funding Date, in accordance with the provisions of subsection 2.1B, an originally executed Notice of Borrowing, signed by the chief executive officer, the chief financial officer or the controller of Company or by any executive officer of Company designated by any of the above-described officers on behalf of Company in a writing delivered to Administrative Agent. B. As of that Funding Date: (i) The representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects on and as of that Funding Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; (ii) No event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by such Notice of Borrowing that would constitute an Event of Default or a Potential Event of Default; (iii) Each Loan Party shall have performed in all material respects all agreements and satisfied all conditions which this Agreement and the other Loan Documents provide shall be performed or satisfied by it on or before that Funding Date; (iv) No order, judgment or decree of any court, arbitrator or governmental authority shall purport to enjoin or restrain any Lender from making the Loans to be made by it, on that Funding Date; (v) The making of the Loans requested on such Funding Date shall not violate any law including, without limitation, Regulation G, Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System; and (vi) There shall not be pending or, to the knowledge of Company, threatened, any action, suit, proceeding, governmental investigation or arbitration against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries that has not been disclosed by Company in writing and that is required to be so disclosed pursuant to subsection 5.6 or 6.1(x) prior to the making of the last preceding Loans (or, in the case of the initial Loans, prior to the execution of this Agreement), and there shall have occurred no development not so disclosed in any such action, suit, proceeding, governmental investigation or arbitration so disclosed that, in either event, in the opinion of Administrative Agent or of Requisite Lenders, would be expected to have a Material Adverse Effect; and no injunction or other restraining order shall have been issued and no hearing to cause an injunction or other restraining order to be issued shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder. 4.3 Conditions to Letters of Credit. The issuance of any Letter of Credit hereunder (whether or not the applicable Issuing Lender is obligated to issue such Letter of Credit) is subject to the following conditions precedent: A. On or before the date of issuance of the initial Letter of Credit pursuant to this Agreement, the initial Loans shall have been made. B. On or before the date of issuance of such Letter of Credit, Administrative Agent shall have received, in accordance with the provisions of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of Credit, signed by the chief executive officer, the chief financial officer or the controller of Company or by any executive officer of Company designated by any of the above-described officers on behalf of Company in a writing delivered to Administrative Agent, together with all other information specified in subsection 3.1B(i) and such other documents or information as the applicable Issuing Lender may reasonably require in connection with the issuance of such Letter of Credit. C. On the date of issuance of such Letter of Credit, all conditions precedent described in subsection 4.2B shall be satisfied to the same extent as if the issuance of such Letter of Credit were the making of a Loan and the date of issuance of such Letter of Credit were a Funding Date. SECTION 5. REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Agreement and to make the Loans, to induce Issuing Lender to issue Letters of Credit and to induce other Lenders to purchase participations therein, each of Holdings and Company represents and warrants to each Lender, on the date of this Agreement, on each Funding Date, and on the date of issuance of each Letter of Credit, that the following statements are true and correct: 5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries. A. Organization and Powers. Each Loan Party is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation. Each Loan Party has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents and to carry out the transactions contemplated thereby. Company has all requisite corporate power and authority to issue and pay the Notes. B. Qualification and Good Standing. Each Loan Party is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified, authorized or in good standing has not had and will not have a Material Adverse Effect. C. Conduct of Business. Company and its Subsidiaries are engaged only in the businesses permitted to be engaged in pursuant to subsection 7.12. D. Company and Subsidiaries. All of the Subsidiaries of Holdings as of the Closing Date after giving effect to the Acquisition are identified in Schedule 5.1 annexed hereto. The capital stock of each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto is duly authorized, validly issued, fully paid and nonassessable and none of such capital stock constitutes Margin Stock. Company and each of the Subsidiaries of Holdings identified in Schedule 5.1 annexed hereto are duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation or formation set forth therein, have full corporate power and authority to own their assets and properties and to operate their business as presently owned and conducted and as proposed to be conducted, and are qualified to do business and in good standing in every jurisdiction where their assets are located and wherever necessary to carry out their business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate power and authority has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed hereto correctly sets forth the ownership interest of Company in each of its Subsidiaries identified therein. E. Acquisitions. Each Loan Party shall have, upon consummation thereof, all requisite corporate power and authority to consummate, on the terms set forth in the applicable acquisition agreement and related documents, each Permitted Acquisition consummated by it pursuant to subsection 7.7(vii). Upon consummation of any such Permitted Acquisition, such Permitted Acquisition shall have been duly authorized by all necessary corporate action of such Loan Party. 5.2 Authorization of Borrowing, etc. A. Authorization of Borrowing. The execution, delivery and performance of the Loan Documents and the Related Agreements and the issuance, delivery and payment of the Notes have been duly authorized by all necessary corporate or other action on the part of each of the Loan Parties thereto. B. No Conflict. After giving effect to the consummation of the transactions contemplated hereby to occur on the Closing Date, the execution, delivery and performance by each of the Loan Parties of the Loan Document and the Related Agreements to which they are parties, the issuance, delivery and payment of the Notes and the consummation of the transactions contemplated by the Loan Documents do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to MBW LLC or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws (or other analogous organizational document) of any Loan Party or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on any Loan Party or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of any Loan Party or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of any Loan Party or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or partners or any approval or consent of any Person under any Contractual Obligation of any Loan Party or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date. C. Governmental Consents. The execution, delivery and performance by the Loan Parties of the Loan Documents and Related Agreements to which they are party, the issuance, delivery and payment of the Notes and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body except for such registrations, consents, approvals, notices or other actions which will be made, obtained or taken on or before the Closing Date. D. Binding Obligation. Each of the Loan Documents and the Related Agreements has been duly executed and delivered by each of the Loan Parties party thereto and is the legally valid and binding obligation of each such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. E. Valid Issuance of Holdings Common Stock, Subordinated Bridge Notes, Subordinated Exchange Notes and Warrants. (i) Holdings Common Stock. The Holdings Common Stock to be sold on or before the Closing Date, when issued and delivered, will be duly and validly issued, fully paid and nonassessable. The issuance and sale of such Holdings Common Stock, upon such issuance and sale, will either (a) have been registered or qualified under applicable federal and state securities laws or (b) be exempt therefrom. (ii) Subordinated Bridge Notes and Subordinated Exchange Notes. Company has the corporate power and authority to issue the Subordinated Bridge Notes and the Subordinated Exchange Notes. The Subordinated Bridge Notes and the Subordinated Exchange Notes, when issued and paid for, will be the legally valid and binding obligations of Company, enforceable against Company in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. The subordination provisions of the Subordinated Bridge Loan Agreement, the Subordinated Bridge Notes and the Subordinated Bridge Loan Guaranties will be enforceable against the holders of the Subordinated Bridge Notes, and the subordination provisions of the Subordinated Exchange Note Indenture, the Subordinated Exchange Notes and the other Subordinated Exchange Note Documents will be enforceable against the holders of the Subordinated Exchange Notes, and the Loans and all other monetary Obligations hereunder are and will be within the definition of "Senior Indebtedness" included in such provisions. The Subordinated Bridge Notes and the Subordinated Exchange Notes, when issued and sold, will either (a) have been registered or qualified under applicable federal and state securities laws or (b) be exempt therefrom. (iii) Warrants. The Warrants, when issued and delivered, will be duly and validly issued, fully paid and nonassessable. The issuance and sale of such Warrants, upon such issuance and sale, will either (a) have been registered or qualified under applicable federal and state securities laws or (b) be exempt therefrom. 5.3 Financial Condition; Projections. A. Financial Statements. Company has heretofore delivered to Lenders, at Lenders' request, the following financial statements and information: (i) the audited statements of operations of the Business as at December 31 of 1994 and 1995 for the calendar years then ended, together with the report on such consolidated financial statements of Coopers & Lybrand LLP setting forth in each case in comparative form the corresponding figures for the previous calendar year, and (iii) the audited statement of operations of the Business as at September 30, 1996 for the nine months then ended, together with the corresponding figures for the corresponding period of the previous calendar year. All such statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position of the entities described in such financial statements as at the respective dates thereof and the results of operations of the entities described therein for each of the periods then ended. Neither Company nor the Business has (and will not immediately following the funding of the initial Loans have) any Contingent Obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the most recent financial statements delivered pursuant to subsection 6.1, the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings and its Subsidiaries taken as a whole. B. Projections. On and as of the Closing Date, the financial projections of Company and its Subsidiaries for the period from December 31, 1996 through December 31, 2002 (giving effect to the Acquisition) previously delivered to Lenders (the "Projections") are based on good faith estimates and assumptions made by the management of Company, it being recognized, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results and that the differences may be material. Notwithstanding the foregoing, as of the Closing Date, management of Company believed that the Projections were reasonable and attainable. 5.4 No Material Adverse Change; No Restricted Junior Payments. Since September 30, 1996, no event or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect. Neither Company nor any of its Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Junior Payment or agreed to do so except as permitted by subsection 7.5. 5.5 Title to Properties; Liens; Intellectual Property. A. After giving effect to the transactions contemplated by this Agreement to occur on the Closing Date, Holdings and its Subsidiaries have good, sufficient and legal title to all of their respective properties and assets reflected in the financial statements referred to in subsection 5.3 or in the most recent financial statements delivered pursuant to subsection 6.1, except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under subsection 7.7. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens. B. After giving effect to the Acquisition, Company has acquired, pursuant to the Acquisition Agreement, that which Seller has represented is the ownership of all patents, copyrights (whether registered or unregistered), trademarks (whether registered or unregistered), trade names, trade dress, service marks, assumed names and know-how (such items, together with all applications therefor and all other intellectual property and proprietary rights, whether or not subject to statutory registration or protection, being collectively referred to herein as "Intellectual Property") relating exclusively to, or used exclusively in connection with, the Business which (i) are owned by Seller on the Closing Date and (ii) are necessary, together with the rights licensed to Company under the Shared Technology License Agreement and the Patent License Agreement, for the operation of the Business as conducted on the Closing Date, except as set forth on Schedule 5.5B annexed hereto; provided, however, that such Intellectual Property does not include any rights to the brand name "Country Crock," "Pennant" or "Bakers Source." C. Each Loan Party owns, or is licensed to use, all Intellectual Property necessary for the operation of its business as conducted except for Intellectual Property the failure to own or license which could not reasonably be expected to have a Material Adverse Effect. No claim of which any Loan Party has been given notice has been asserted and is pending by any Person challenging or questioning the use by any Loan Party of any such Intellectual Property the validity or effectiveness of any such Intellectual Property, nor does Holdings or Company know of any valid basis for any such claim, except for such claims that in the aggregate could not reasonably be expected to have a Material Adverse Effect. 5.6 Litigation; Adverse Facts. There is no action, suit, proceeding, arbitration or governmental investigation (whether or not purportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or, to the knowledge of Company, threatened against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries that, either individually or in the aggregate together with all other such actions, proceedings and investigations, has had, or could reasonably be expected to result in, a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries is or has been (i) in violation of any applicable law (including any Pure Food and Drug Laws) that has had, or could reasonably be expected to result in, a Material Adverse Effect or (ii) subject to or in default with respect to any final judgment, writ, injunction, decree, rule or regulation of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that has had, or could reasonably be expected to result in, a Material Adverse Effect. 5.7 Payment of Taxes. Except to the extent permitted by subsection 6.3, all material tax returns and reports of Holdings and its Subsidiaries required to be filed by any of them have been timely filed, and all material taxes, assessments, fees and other governmental charges upon Holdings and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Company does not know of any proposed tax assessment against Holdings or any of its Subsidiaries other than those which are being actively contested by Holdings or such Subsidiary in good faith and by appropriate proceedings and for which reserves or other appropriate provisions, if any, as may be required in conformity with GAAP shall have been made or provided therefor. 5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts. A. Neither Holdings nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, would not have a Material Adverse Effect. B. Neither Holdings nor any of its Subsidiaries is a party to or is otherwise subject to any agreement or instrument or any charter or other internal restriction which has had, or could reasonably be expected (based upon assumptions that are reasonable at the time made) to result in, individually or in the aggregate, a Material Adverse Effect. C. Schedule 5.8 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date. All such Material Contracts are in full force and effect and no defaults currently exist thereunder, except where the failure to be in full force and effect, and except for such defaults which, could not reasonably be expected to have a Material Adverse Effect. 5.9 Governmental Regulation. Neither Holdings nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. 5.10 Securities Activities. Neither Holdings nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. 5.11 Employee Benefit Plans. A. Holdings and each of its ERISA Affiliates are in substantial compliance with all applicable provisions and requirements of ERISA with respect to each Employee Benefit Plan, and have substantially performed all their obligations under each Employee Benefit Plan, except to the extent that any non-compliance with ERISA or any such failure to perform would not result in material liability of Holdings or any of its ERISA Affiliates. B. No ERISA Event has occurred which has resulted or is reasonably likely to result in any material liability to the PBGC or to any other Person. C. Except to the extent required under Section 4980B of the Internal Revenue Code and/or Section 601 of ERISA, neither Holdings nor any of its Subsidiaries maintains or contributes to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employees of Holdings or any of its Subsidiaries, except to the extent that the provision of such benefits would not have a Material Adverse Effect. D. No Pension Plan has an Unfunded Current Liability in an amount that would have a Material Adverse Effect. 5.12 Certain Fees. No broker's or finder's fee or commission will be payable with respect to this Agreement or any of the loan transactions contemplated hereby, and Company hereby indemnifies Lenders against, and agrees that it will hold Lenders harmless from, any claim, demand or liability for any such broker's or finder's fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability. 5.13 Environmental Protection. (i) The operations of Holdings and each of its Subsidiaries (including, without limitation, all operations and conditions at or in the Facilities) comply in all material respects with all Environmental Laws; (ii) Holdings and each of its Subsidiaries have obtained all material Governmental Authorizations under Environmental Laws necessary to their respective operations, and all such Governmental Authorizations are in good standing, and Holdings and each of its Subsidiaries are in compliance with all material terms and conditions of such Governmental Authorizations; (iii) Neither Holdings nor any of its Subsidiaries has received (a) any notice or claim to the effect that it is or may be liable to any Person as a result of or in connection with any Hazardous Materials or (b) any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or comparable state laws, and, to the best knowledge of Company, none of the operations of Holdings or any of its Subsidiaries is the subject of any federal or state investigation relating to or in connection with any Hazardous Materials at any Facility or at any other location; (iv) None of the operations of Holdings or any of its Subsidiaries is subject to any judicial or administrative proceeding alleging the violation of or liability under any Environmental Laws which could reasonably be expected to have a Material Adverse Effect; (v) To the knowledge of Company, neither Holdings nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order or agreement with any governmental authority or private party relating to (a) any Environmental Laws or (b) any Environmental Claims that could reasonably be expected to have a Material Adverse Effect; (vi) Neither Holdings nor any of its Subsidiaries has any material contingent liability in connection with any Release of any Hazardous Materials by Holdings or any of its Subsidiaries; (vii) Neither Holdings nor any of its Subsidiaries nor, to the knowledge of Company, any predecessor of Holdings or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment or Release of Hazardous Materials at any Facility, and none of Holdings' or any of its Subsidiaries' operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent; (viii) To the knowledge of Company, no Hazardous Materials exist on or under any Facility in a manner that has a reasonable possibility of giving rise to an Environmental Claim having a Material Adverse Effect, and neither Holdings nor any of its Subsidiaries has filed any notice or report of a Release of any Hazardous Materials that has a reasonable possibility of giving rise to an Environmental Claim having a Material Adverse Effect; (ix) Neither Holdings nor any of its Subsidiaries nor, to the knowledge of Company, any of their respective predecessors has disposed of any Hazardous Materials in a manner that has a reasonable possibility of giving rise to an Environmental Claim having a Material Adverse Effect; (x) To the knowledge of Company, no underground storage tanks or surface impoundments are on or at any Facility; and (xi) To the knowledge of Company, no Lien in favor of any Person relating to or in connection with any Environmental Claim has been filed or has been attached to any Facility. 5.14 Employee Matters. There is no strike or work stoppage in existence or threatened involving Holdings or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect. 5.15 Solvency. Each Loan Party is, and Company and its Subsidiaries, taken as a whole, are, and, upon the incurrence of any Obligations by any Loan Party on any date on which this representation is made, will be, Solvent. 5.16 Matters Relating to Collateral. A. Creation, Perfection and Priority of Liens. The execution and delivery of the Collateral Documents by Loan Parties, together with (i) the actions taken on or prior to the date hereof pursuant to subsections 4.1L, 6.9 and 6.10 and (ii) the delivery to Administrative Agent of any Pledged Collateral not delivered to Administrative Agent at the time of execution and delivery of the applicable Collateral Document (all of which Pledged Collateral has been so delivered) are effective to create in favor of Administrative Agent for the benefit of Agents and Lenders, as security for the respective Secured Obligations (as defined in the applicable Collateral Document in respect of any Collateral), a valid and perfected First Priority Lien on all of the Collateral, and all filings and other actions necessary or desirable to perfect and maintain the perfection and First Priority status of such Liens have been duly made or taken and remain in full force and effect, other than the filing of any UCC financing statements delivered to Administrative Agent for filing (but not yet filed) and the periodic filing of UCC continuation statements in respect of UCC financing statements filed by or on behalf of Administrative Agent. B. Governmental Authorizations. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge or grant by any Loan Party of the Liens purported to be created in favor of Administrative Agent pursuant to any of the Collateral Documents or (ii) the exercise by Administrative Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to any of the Collateral Documents or created or provided for by applicable law), except for filings or recordings contemplated by subsection 5.16A and except as may be required, in connection with the disposition of any Pledged Collateral, by laws generally affecting the offering and sale of securities. C. Absence of Third-Party Filings. Except such as may have been filed in favor of Administrative Agent as contemplated by subsection 5.16A, (i) no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office and (ii) no effective filing covering all or any part of the IP Collateral is on file in the PTO or the United States Copyright Office. D. Margin Regulations. The pledge of the Pledged Collateral pursuant to the Collateral Documents does not violate Regulation G, Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System. E. Information Regarding Collateral. All information supplied to any Agent by or on behalf of any Loan Party with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all material respects. 5.17 Related Agreements. A. Delivery of Related Agreements. Company has delivered to Agents complete and correct copies of each Related Agreement and of all exhibits and schedules thereto. B. Seller's Warranties. Except to the extent otherwise set forth herein or in the schedules hereto, to Holdings' and Company's knowledge each of the representations and warranties given by Seller to Company in the Acquisition Agreement is true and correct in all material respects as of the date hereof (or as of any earlier date to which such representation and warranty specifically relates) and will be true and correct in all material respects as of the Closing Date (or as of such earlier date, as the case may be), in each case subject to the qualifications set forth in the schedules to the Acquisition Agreement. C. Warranties of Company. Subject to the qualifications and the schedules set forth therein, each of the representations and warranties given by Company to Seller in the Acquisition Agreement is true and correct in all material respects as of the date hereof and will be true and correct in all material respects as of the Closing Date. D. Survival. Notwithstanding anything in the Acquisition Agreement to the contrary, the representations and warranties of Company set forth in subsections 5.17B and 5.17C shall, solely for purposes of this Agreement, survive the Closing Date for the benefit of Agents and Lenders. 5.18 Disclosure. The representations of Holdings and its Subsidiaries contained in the Loan Documents, the Related Agreements and in any other document, certificate or written statement furnished to Lenders by or on behalf of Holdings or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement, when taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact (known to Holdings or the applicable Subsidiary, in the case of any document not furnished by Holdings or such Subsidiary) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Company to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. There is no fact known (or which should upon the reasonable exercise of diligence be known) to Company (other than matters of a general economic nature) that has had, or could reasonably be expected to result in, a Material Adverse Effect and that has not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby. 5.19 Subordination of Seller Notes. The subordination provisions of any Permitted Seller Notes are enforceable against the holders thereof, and the Loans and other monetary Obligations hereunder are and will be within the definition of "Senior Indebtedness" included in such provisions. SECTION 6. AFFIRMATIVE COVENANTS Company covenants and agrees that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Company shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. 6.1 Financial Statements and Other Reports. Company will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Company will deliver to Administrative Agent (and Administrative Agent will, after receipt thereof, deliver to each Lender): (i) Monthly Financials: (a) as soon as available after each fiscal month-end ending after the Closing Date through and including February 1997, case volume and sales reports for each such fiscal month in substantially the form presented to Agents prior to the Closing Date and any monthly reports in the form of Exhibit 1 and Exhibit 2 to the Transition Services Agreement prepared for such month pursuant to the Transition Services Agreement, all in reasonable detail and certified by the chief financial officer of Company as being fairly stated in all material respects, and (b) as soon as available and in any event within 30 days (or 45 days, in the case of April and May of 1997) after each fiscal month-end (other than June, September, December and March) commencing with April 1997, the consolidated and consolidating statements of income (through the "Earnings Before Tax" line) of Company and its Subsidiaries for such fiscal month and for the period from the beginning of the then current Fiscal Year to the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous fiscal year and the corresponding figures from the consolidated plan and financial forecast for the current Fiscal Year delivered pursuant to subsection 6.1(xiii), all in reasonable detail and certified by the chief financial officer of Company as being fairly stated in all material respects, subject to changes resulting from audit and normal year-end adjustments; (ii) Quarterly Financials: as soon as available and in any event within 45 days after the end of each Fiscal Quarter, (a) the consolidated and consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous fiscal year and the corresponding figures from the consolidated plan and financial forecast for the current Fiscal Year delivered pursuant to subsection 6.1(xiii), all in reasonable detail and certified by the chief financial officer of Company that they fairly present, in all material respects, the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments, and (b) a narrative report describing the operations of Company and its Subsidiaries in the form prepared for presentation to senior management for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter; (iii) Year-End Financials: as soon as available and in any event within 90 days after the end of each Fiscal Year, (a) the consolidated and consolidating balance sheets of Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous fiscal year and the corresponding figures from the consolidated plan and financial forecast delivered pursuant to subsection 6.1(xiii) for the Fiscal Year covered by such financial statements, all in reasonable detail and certified by the chief financial officer of Company that they fairly present, in all material respects, the financial condition of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, (b) a narrative report describing the operations of Company and its Subsidiaries in the form prepared for presentation to senior management for such Fiscal Year, and (c) in the case of such consolidated financial statements, a report thereon of independent certified public accountants of recognized national standing selected by Company and reasonably satisfactory to Administrative Agent, which report shall be unqualified as to the ability of Company and its Subsidiaries to continue as a going concern and as to scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iv) Officer's and Compliance Certificates: together with each delivery of financial statements of Company and its Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of Company stating that the signer has reviewed the terms of this Agreement and have made, or caused to be made under their supervision, a review in reasonable detail of the transactions and condition of Company and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of such Officer's Certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action Company has taken, is taking and proposes to take with respect thereto; and (b) a Compliance Certificate demonstrating in reasonable detail compliance during and at the end of the applicable accounting periods with the restrictions contained in Section 7, in each case to the extent compliance with such restrictions is required to be tested during or at the end of the applicable accounting period; (v) Reconciliation Statements: if, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements referred to in subsection 5.3, the consolidated financial statements of Company and its Subsidiaries delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then (a) together with the first delivery of financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following such change, consolidated financial statements of Company and its Subsidiaries for (y) the current Fiscal Year to the effective date of such change and (z) the two full Fiscal Years immediately preceding the Fiscal Year in which such change is made, in each case prepared on a pro forma basis as if such change had been in effect during such periods, and (b) together with each delivery of financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following such change, a written statement of the chief accounting officer or chief financial officer of Company setting forth the differences which would have resulted if such financial statements had been prepared without giving effect to such change; (vi) Accountants' Certification: together with each delivery of consolidated financial statements of Company and its Subsidiaries pursuant to subdivision (iii) above, a written statement by the independent certified public accountants giving the report thereon stating whether, in connection with their audit examination, any condition or event, insofar as such condition or event relates to the covenants set forth in subsection 7.6, that constitutes an Event of Default or Potential Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided that such accountants shall not be liable by reason of any failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of their audit examination; (vii) Accountants' Reports: promptly upon receipt thereof (unless restricted by applicable professional standards), copies of all reports submitted to Company by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of Company and its Subsidiaries made by such accountants, including, without limitation, any comment letter submitted by such accountants to management in connection with their annual audit; (viii) SEC Filings and Press Releases: promptly upon their becoming available, copies of (a) all financial statements, reports, notices and proxy statements sent or made available generally by Company to its security holders, (b) all regular and periodic reports and all registration statements (other than on Form S-8 or a similar form) and prospectuses, if any, filed by Holdings or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, and (c) all press releases and other statements made available generally by Holdings or any of its Subsidiaries to the public concerning material developments in the business of Holdings or any of its Subsidiaries; (ix) Events of Default, etc.: promptly upon any officer of Company obtaining knowledge (a) of any condition or event that constitutes an Event of Default or Potential Event of Default, or becoming aware that any Lender has given any notice (other than to Administrative Agent) or taken any other action with respect to a claimed Event of Default or Potential Event of Default, (b) that any Person has given any notice to Company or any of its Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in subsection 8.2, (c) of any condition or event that would be required to be disclosed in a current report filed by Company with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if Company were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an Officer's Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto; (x) Litigation or Other Proceedings: (a) promptly upon any officer of Company obtaining knowledge of the institution of, or non-frivolous threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries (collectively, "Proceedings") not previously disclosed in writing by Company to Lenders or Administrative Agent any material development in any Proceeding that, in any case: (1) if adversely determined, has a reasonable possibility of giving rise to a Material Adverse Effect; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to Company to enable Lenders and their counsel to evaluate such matters; and (b) within 45 days after the end of each Fiscal Quarter, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, Holdings or any of its Subsidiaries equal to or greater than $250,000 and promptly after request by Administrative Agent such other information as may be reasonably requested by Administrative Agent to enable Administrative Agent and its counsel to evaluate any of such Proceedings; (xi) ERISA Events: promptly upon becoming aware of the occurrence of any ERISA Event that could reasonably be expected to result in a material liability, a written notice specifying the nature thereof, what action Holdings or any of its ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (xii) ERISA Notices: with reasonable promptness, copies of (a) all written notices received by Holdings or any of its ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (b) such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (xiii) Financial Plans: as soon as practicable and in any event no later than 60 days after the beginning of each Fiscal Year, a monthly consolidated and consolidating plan and financial forecast for such Fiscal Year, including, without limitation, (a) forecasted consolidated and consolidating balance sheets and forecasted consolidated and consolidating statements of income and cash flows of Company and its Subsidiaries for such Fiscal Year, together with a pro forma Compliance Certificate for such Fiscal Year and an explanation of the assumptions on which such forecasts are based, and (b) such other information and projections as Administrative Agent may reasonably request; (xiv) Insurance: upon request by Administrative Agent, as soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Holdings and its Subsidiaries and all material insurance coverage planned to be maintained by Holdings and its Subsidiaries in the immediately succeeding Fiscal Year; (xv) Environmental Audits and Reports: as soon as practicable following receipt thereof, copies of all environmental audits and reports, whether prepared by personnel of Company or any of its Subsidiaries or by independent consultants, with respect to significant environmental matters at any Facility or which relate to an Environmental Claim which could result in a Material Adverse Effect; (xvi) Board of Directors: with reasonable promptness, written notice of any change in the Board of Directors of Company; (xvii) New Subsidiaries: promptly upon any Person becoming a Subsidiary of Company, a written notice setting forth with respect to such Person (a) the date on which such Person became a Subsidiary of Company and (b) all of the data required to be set forth in Schedule 5.1 annexed hereto with respect to all Subsidiaries of Company (it being understood that such written notice shall be deemed to supplement Schedule 5.1 annexed hereto for all purposes of this Agreement); (xviii) Historical Financial Statements: as soon as available and in any event no later than 45 days after the Closing Date, (a) unaudited financial statements of the Business for the years ending December 31 of 1992 and 1993, consisting of statements of operations for such years, and (b) unaudited financial statements of the Business as of September 30, 1995, consisting of a statement of operations for the nine-month period ending on such date, all in reasonable detail and certified by the chief financial officer of Company that they fairly present the financial condition of the Business at the dates indicated and the results of its operations for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; and (xix) Other Information: with reasonable promptness, such other information and data with respect to Holdings or any of its Subsidiaries as from time to time may be reasonably requested by Administrative Agent. 6.2 Corporate Existence, etc. Except as permitted under subsection 7.7, Company will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its corporate existence and all rights and franchises material to the business of Holdings and its Subsidiaries (on a consolidated basis). 6.3 Payment of Taxes and Claims; Tax Consolidation. A. Company will, and will cause each of its Subsidiaries to, pay all material taxes and all assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty accrues thereon, and all claims (including, without limitation, claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such charge or claim need be paid if it is being contested in good faith by appropriate proceedings timely instituted and diligently conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. B. Company will not, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Company and its Subsidiaries). 6.4 Maintenance of Properties; Insurance. Company will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Company and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. Company will maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its properties and business and the properties and businesses of its Subsidiaries against loss or damage of the kinds customarily carried or maintained under similar circumstances by corporations of established reputation engaged in similar businesses. Each such policy of casualty insurance covering damage to or loss of property shall name Administrative Agent for the benefit of Agents and Lenders as the loss payee thereunder for all losses, subject to application of proceeds as required by subsection 2.4B(iii)(d), and shall provide for at least 30 days' prior written notice to Administrative Agent of any modification or cancellation of such policy. 6.5 Inspection; Lender Meeting. Company shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by any Agent or Lender to visit and inspect any of the properties of Company or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable advance notice and at such reasonable times during normal business hours and as often as may be reasonably requested. Without in any way limiting the foregoing, Company will, upon the request of Administrative Agent, participate in a meeting of Agents and Lenders once during each Fiscal Year to be held at Company's corporate offices (or such other location as may be agreed to by Company and Administrative Agent) at such time as may be agreed to by Company and Administrative Agent. 6.6 Compliance with Laws, etc. Company shall, and shall cause each of its Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority (including all Pure Food and Drug Laws), noncompliance with which could reasonably be expected to cause a Material Adverse Effect. 6.7 Environmental Disclosure and Inspection. A. Company shall, and shall cause each of its Subsidiaries to, exercise all due diligence in order to comply and cause (i) all tenants under any leases or occupancy agreements affecting any portion of the Facilities and (ii) all other Persons on or occupying such property, to comply with all Environmental Laws. B. Company agrees that Administrative Agent may, from time to time and in its reasonable discretion, retain, at Company's expense, an independent professional consultant to review any report relating to Hazardous Materials prepared by or for Company and to conduct its own investigation of any Facility currently owned, leased, operated or used by Company or any of its Subsidiaries, and Company agrees to use all reasonable efforts to obtain permission for Administrative Agent's professional consultant to conduct its own investigation of any such Facility previously owned, leased, operated or used by Company or any of its Subsidiaries. Company shall use its reasonable efforts to obtain for Administrative Agent and its agents, employees, consultants and contractors the right, upon reasonable notice to Company, to enter into or on to the Facilities currently owned, leased, operated or used by Company or any of its Subsidiaries to perform such tests on such property as are reasonably necessary to conduct such a review and/or investigation. Any such investigation of any Facility shall be conducted, unless otherwise agreed to by Company and Administrative Agent, during normal business hours and, to the extent reasonably practicable, shall be conducted so as not to interfere with the ongoing operations at any such Facility or to cause any damage or loss to any property at such Facility. Company and Administrative Agent hereby acknowledge and agree that any report of any investigation conducted at the request of Administrative Agent pursuant to this subsection 6.7B will be obtained and shall be used by Administrative Agent and Lenders for the purposes of Lenders' internal credit decisions, to monitor and police the Loans and to protect Lenders' security interests, if any, created by the Loan Documents. Administrative Agent agrees to deliver a copy of any such report to Company with the understanding that Company acknowledges and agrees that (i) it will indemnify and hold harmless each Agent and Lender from any costs, losses or liabilities relating to any Loan Party's use of or reliance on such report, (ii) no Agent nor any Lender makes any representation or warranty with respect to such report, and (iii) by delivering such report to Company, no Agent nor any Lender is requiring or recommending the implementation of any suggestions or recommendations contained in such report. C. Company shall promptly advise Administrative Agent in writing and in reasonable detail of (i) any Release of any Hazardous Materials required to be reported to any federal, state, local or foreign governmental or regulatory agency under any applicable Environmental Laws, (ii) any and all written communications with respect to any Environmental Claims that have a reasonable possibility of giving rise to a Material Adverse Effect or with respect to any Release of Hazardous Materials required to be reported to any federal, state or local governmental or regulatory agency, (iii) any remedial action taken by Company or any other Person in response to (x) any Hazardous Materials on, under or about any Facility, the existence of which has a reasonable possibility of resulting in an Environmental Claim having a Material Adverse Effect, or (y) any Environmental Claim that could have a Material Adverse Effect, (iv) Company's discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws, and (v) any request for information from any governmental agency that suggests such agency is investigating whether Company or any of its Subsidiaries may be potentially responsible for a Release of Hazardous Materials. D. Company shall promptly notify Administrative Agent of (i) any proposed acquisition of stock, assets, or property by Company or any of its Subsidiaries that could reasonably be expected to expose Company or any of its Subsidiaries to, or result in, Environmental Claims that could have a Material Adverse Effect or that could reasonably be expected to have a material adverse effect on any Governmental Authorization then held by Company or any of its Subsidiaries and (ii) any proposed action to be taken by Company or any of its Subsidiaries to commence manufacturing, industrial or other similar operations that could reasonably be expected to subject Company or any of its Subsidiaries to additional laws, rules or regulations, including, without limitation, laws, rules and regulations requiring additional environmental permits or licenses. E. Company shall, at its own expense, provide copies of such documents or information as Administrative Agent may reasonably request in relation to any matters disclosed pursuant to this subsection 6.7. 6.8 Company's Remedial Action Regarding Hazardous Materials. Company shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all necessary remedial action in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials on or under any Facility in order to comply with all applicable Environmental Laws and Governmental Authorizations unless the failure to so comply could not reasonably be expected to have a Material Adverse Effect. In the event Company or any of its Subsidiaries takes any remedial action with respect to any Hazardous Materials on or under any Facility, Company or such Subsidiary shall conduct and complete such remedial action in material compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, Company's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or Release of any Hazardous Materials is being contested in good faith by Company or such Subsidiary. 6.9 Execution of Subsidiary Guaranty and Subsidiary Security Agreements by Subsidiaries and Future Subsidiaries. In the event that any Person becomes a Subsidiary of Company after the date hereof, Company will promptly notify Administrative Agent of that fact and cause each such Subsidiary to execute and deliver to Administrative Agent a counterpart of the Subsidiary Guaranty and the Pledge Agreement, the Security Agreement and the Patent and Trademark Security Agreement (collectively, the "Subsidiary Security Agreements"), and to take all such further actions and execute all such further documents and instruments as may be required to grant and perfect in favor of Administrative Agent, for the benefit of Lenders, a First Priority security interest in all of the personal property assets of such Subsidiary described in the Subsidiary Security Agreements. Company shall deliver to Administrative Agent, together with such Loan Documents, (i) certified copies of such Subsidiary's Articles or Certificate of Incorporation (or comparable constituent documents), together, if applicable, with a good standing certificate from the Secretary of State of the jurisdiction of its incorporation, each to be dated a recent date prior to their delivery to Administrative Agent, (ii) a copy, if applicable, of such Subsidiary's Bylaws, certified by its corporate secretary or an assistant corporate secretary as of a recent date prior to their delivery to Administrative Agent, (iii) a certificate executed by the secretary or an assistant secretary of such Subsidiary as to (a) the incumbency and signatures of the officers of such Subsidiary executing the Subsidiary Guaranty and to which such Subsidiary is a party and (b) the fact that the attached resolutions of the Board of Directors of such Subsidiary authorizing the execution, delivery and performance of the Subsidiary Guaranty and the Subsidiary Security Agreements to which such Subsidiary is a party are in full force and effect and have not been modified or rescinded, and (iv) a favorable opinion of counsel to such Subsidiary, in form and substance satisfactory to Administrative Agent and its counsel, as to (a) the due organization and good standing of such Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary of the Subsidiary Guaranty and the Subsidiary Security Agreements to which such Subsidiary is a party, (c) the enforceability of the Subsidiary Guaranty and the Subsidiary Security Agreements to which such Subsidiary is a party against such Subsidiary, and (d) such other matters as Administrative Agent may reasonably request, all of the foregoing to be reasonably satisfactory in form and substance to Administrative Agent and its counsel. 6.10 Conforming Leasehold Interests; Matters Relating to Additional Real Property Collateral. A. Conforming Leasehold Interests. If Company or any of its Subsidiaries acquires any Leasehold Property, Company shall, or shall cause such Subsidiary to, use its best efforts (without requiring Company or such Subsidiary to relinquish any material rights or incur any material obligations or to expend more than a nominal amount of money over and above the reimbursement, if required, of the landlord's out-of-pocket costs, including attorneys fees) to cause such Leasehold Property to be a Conforming Leasehold Interest. B. Additional Mortgages, Etc. From and after the Closing Date, in the event that (i) Company or any Subsidiary Guarantor acquires any fee interest in real property or any Leasehold Property or (ii) at the time any Person becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in real property or any Leasehold Property, in either case excluding any such Real Property Asset the encumbrancing of which requires the consent of any applicable lessor or (in the case of clause (ii) above) then-existing senior lienholder, where Company and its Subsidiaries are unable to obtain such lessor's or senior lienholder's consent (any such non-excluded Real Property Asset described in the foregoing clause (i) or (ii) being a "Mortgaged Property"), Company or such Subsidiary Guarantor shall deliver to Administrative Agent, as soon as practicable after such Person acquires such Mortgaged Property or becomes a Subsidiary Guarantor, as the case may be, the following: (i) Additional Mortgage. A fully executed and notarized Mortgage in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering the interest of such Loan Party in such Mortgaged Property; (ii) Opinions of Counsel. (a) A favorable opinion of counsel to such Loan Party, in form and substance satisfactory to Administrative Agent and its counsel, as to the due authorization, execution and delivery by such Loan Party of such Mortgage and such other matters as Administrative Agent may reasonably request, and (b) if required by Administrative Agent, an opinion of counsel (which counsel shall be reasonably satisfactory to Administrative Agent) in the state in which such Mortgaged Property is located with respect to the enforceability of the form of Mortgage to be recorded in such state and such other matters (including any matters governed by the laws of such state regarding personal property security interests in respect of any Collateral) as Administrative Agent may reasonably request, in each case in form and substance reasonably satisfactory to Administrative Agent; (iii) Landlord Consent and Estoppel; Recorded Leasehold Interest. In the case of a Mortgaged Property consisting of a Leasehold Property, (a) a Landlord Consent and Estoppel and (b) evidence that such Leasehold Property is a Recorded Leasehold Interest; (iv) Title Insurance. (a) If required by Administrative Agent, an ALTA mortgagee title insurance policy or an unconditional commitment therefor (a "Mortgage Policy") issued by the Title Company with respect to such Mortgaged Property, in an amount satisfactory to Administrative Agent, insuring fee simple title to, or a valid leasehold interest in, such Mortgaged Property vested in such Loan Party and assuring Administrative Agent that such Mortgage creates a valid and enforceable First Priority mortgage Lien on such Mortgaged Property, subject only to a standard survey exception, which Mortgage Policy (1) shall include an endorsement for mechanics' liens, for future advances under this Agreement and for any other matters reasonably requested by Administrative Agent and (2) shall provide for affirmative insurance and such reinsurance as Administrative Agent may reasonably request, all of the foregoing in form and substance reasonably satisfactory to Administrative Agent; and (b) evidence satisfactory to Administrative Agent that such Loan Party has (i) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the Mortgage Policy and (ii) paid to the Title Company or to the appropriate governmental authorities all expenses and premiums of the Title Company in connection with the issuance of the Mortgage Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgage in the appropriate real estate records; (v) Title Report. If no Mortgage Policy is required with respect to such Mortgaged Property, a title report issued by the Title Company with respect thereto, dated not more than 30 days prior to the date such Mortgage is to be recorded and satisfactory in form and substance to Administrative Agent; (vi) Copies of Documents Relating to Title Exceptions. Copies of all recorded documents listed as exceptions to title or otherwise referred to in the Mortgage Policy or title report delivered pursuant to clause (v) or (vi) above; (vii) Matters Relating to Flood Hazard Properties. (a) Evidence, which may be in the form of a letter from an insurance broker or a municipal engineer, as to (1) whether such Mortgaged Property is a Flood Hazard Property and (2) if so, whether the community in which such Flood Hazard Property is located is participating in the National Flood Insurance Program, (b) if such Mortgaged Property is a Flood Hazard Property, such Loan Party's written acknowledgement of receipt of written notification from Administrative Agent (1) that such Mortgaged Property is a Flood Hazard Property and (2) as to whether the community in which such Flood Hazard Property is located is participating in the National Flood Insurance Program, and (c) in the event such Mortgaged Property is a Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, evidence that Company has obtained flood insurance in respect of such Flood Hazard Property to the extent required under the applicable regulations of the Board of Governors of the Federal Reserve System; and (viii) Environmental Audit. If required by Administrative Agent, reports and other information, in form, scope and substance satisfactory to Administrative Agent and prepared by environmental consultants satisfactory to Administrative Agent, concerning any environmental hazards or liabilities to which Company or any of its Subsidiaries may be subject with respect to such Mortgaged Property. 6.11 Further Assurances. At any time or from time to time upon the request of Administrative Agent, Company will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent may reasonably request in order to effect fully the purposes of the Loan Documents and to provide for payment of the Obligations in accordance with the terms of this Agreement, the Notes and the other Loan Documents. In furtherance and not in limitation of the foregoing, each of Holdings and Company shall take, and cause each of its Subsidiaries to take, such actions as Administrative Agent may reasonably request from time to time (including, without limitation, the execution and delivery of guaranties, security agreements, pledge agreements, Mortgages, stock powers, financing statements and other documents, the filing or recording of any of the foregoing, title insurance with respect to any of the foregoing that relates to an interest in real property, the delivery of stock certificates and other collateral with respect to which perfection is obtained by possession, and the obtaining of Collateral Access Agreements, in form and substance satisfactory to Administrative Agent, executed by any Person which is party to a co-packing agreement with Company or any of its Subsidiaries under which equipment of Company or its Subsidiaries is maintained at a facility of such Person) to ensure that the Obligations are guarantied by Holdings and Subsidiary Guarantors and are secured by substantially all of the assets of Company and its Subsidiaries and all of the capital stock of Company and Subsidiary Guarantors. In the event that Company or any of its Subsidiaries creates a new Subsidiary, all of the capital stock or partnership interests of such new Subsidiary shall be duly and validly pledged to Administrative Agent for the benefit of Agents and Lenders pursuant to the Collateral Documents, subject to no other Liens. SECTION 7. NEGATIVE COVENANTS Each of Holdings and Company covenants and agrees that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Holdings and Company, as applicable, shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 7. 7.1 Indebtedness. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (i) Company may become and remain liable with respect to the Obligations; (ii) Holdings and its Subsidiaries may become and remain liable with respect to Contingent Obligations permitted by subsection 7.4 and, upon any matured obligations actually arising pursuant thereto, the Indebtedness corresponding to the Contingent Obligations so extinguished (other than any such Indebtedness corresponding to extinguished Contingent Obligations permitted under subsections 7.4(i)(b) and (c)); (iii) Company and its Subsidiaries may become and remain liable with respect to Indebtedness (a) under Capital Leases capitalized on the consolidated balance sheet of Company as liabilities, (b) in respect of sale and lease-back transactions expressly permitted under subsection 7.8 and (c) secured by Liens permitted under subsection 7.2A(iii); provided that the aggregate amount of Indebtedness permitted under this clause (iii) shall not exceed $5,000,000 at any time outstanding; (iv) Company may become and remain liable with respect to Indebtedness to any of its domestic Wholly Owned Subsidiaries, and any domestic Wholly Owned Subsidiary of Company may become and remain liable with respect to Indebtedness to Company or any other domestic Wholly Owned Subsidiary of Company, provided that (a) all such intercompany Indebtedness shall be evidenced by promissory notes, (b) all such intercompany Indebtedness owed by Company to any of its respective Subsidiaries shall be subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of the applicable promissory notes or an intercompany subordination agreement, in each case in form and substance satisfactory to Administrative Agent, and (c) any payment by Company or by any Subsidiary of Company under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any intercompany Indebtedness owed by Company or by such Subsidiary to Company or to any of its Subsidiaries for whose benefit such payment is made; (v) Company may become and remain liable with respect to Indebtedness under the Subordinated Bridge Loan Documents and under the Subordinated Exchange Note Documents; (vi) Company may become and remain liable with respect to Indebtedness the proceeds of which are applied to refinance all or a portion of the Term Loans, the Acquisition Revolving Loans, the Subordinated Bridge Loans and the Subordinated Exchange Notes; provided, that such Indebtedness shall be subordinated in right of payment to the Obligations pursuant to documentation containing maturities, amortization schedules, covenants, defaults, remedies, subordination provisions and other material terms which taken as a whole are no less favorable to Company, its Subsidiaries and Lenders than the corresponding terms of the Subordinated Bridge Loan Documents and the Subordinated Exchange Note Documents, with interest payable thereon in amounts consistent with the then prevailing rate in the market for comparable debt Securities; (vii) Company may become and remain liable with respect to Permitted Seller Notes; provided that the aggregate principal amount of such Permitted Seller Notes issued after the Closing Date shall not exceed $10,000,000; and (viii) Holdings may become and remain liable with respect to Indebtedness to Company in respect of advances permitted under subsection 7.3(vi); provided that (a) the aggregate principal amount of such Indebtedness shall not exceed the amount of such advances, (b) all such Indebtedness shall be evidenced by promissory notes, and (c) any payment by Holdings under the Holdings Guaranty or any other guaranty of the Obligations shall result in a pro tanto reduction of the amount of such Indebtedness owed by Holdings to Company; and (ix) Company and its Subsidiaries may become and remain liable with respect to other Indebtedness in an aggregate principal amount not to exceed at any time outstanding $5,000,000. 7.2 Liens and Related Matters. A. Prohibition on Liens. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement, or other similar notice of any Lien with respect to any such property, asset, income or profits under the Uniform Commercial Code of any state or under any similar recording or notice statute, except: (i) Permitted Encumbrances; (ii) Liens granted pursuant to the Collateral Documents; (iii) Liens securing Indebtedness permitted by subsection 7.1(iii)(c) incurred (a) to finance the acquisition, construction or improvement of any tangible personal property assets, provided that (1) such Liens shall be created within 180 days after the acquisition, construction or improvement of such assets, and (2) the principal amount of Indebtedness secured by any such Liens shall at no time exceed 100%, and the proceeds of such Indebtedness shall be used to provide not less than 80%, of the original purchase price of such asset or the amount expended to construct or improve such asset, as the case may be; or (b) to renew, extend or refinance any Indebtedness described in clause (a), provided that the amount of any such Indebtedness does not exceed the amount of Indebtedness so renewed, extended or refinanced which is unpaid and outstanding immediately prior to such renewal, extension or refinancing; provided, that in the case of clause (a) or (b) such Liens attach solely the assets financed with such Indebtedness; (iv) Liens on any asset securing Indebtedness permitted by Section 7.1(iii)(b); provided that (a) the proceeds of such Indebtedness shall be at least equal to 80% of the fair market value (as determined in good faith by the Board of Directors, or any duly authorized committee thereof, of Company) of such asset and (b) at the time of incurrence of such Indebtedness, no Event of Default shall have occurred and be continuing or would result therefrom; and (v) Other Liens on assets of Company and its Subsidiaries securing Indebtedness in an aggregate amount not to exceed $2,500,000 at any time outstanding. B. Equitable Lien in Favor of Lenders. If Company or any of its Subsidiaries shall create or assume any consensual Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Liens excepted by the provisions of subsection 7.2A, it shall make or cause to be made effective provision whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided that, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not permitted by the provisions of subsection 7.2A. C. No Further Negative Pledges. Except with respect to specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to an Asset Sale, neither Company nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired. D. No Restrictions on Subsidiary Distributions to Company or Other Subsidiaries. Except as provided herein Company will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Subsidiary to (i) pay dividends or make any other distributions on any of such Subsidiary's capital stock owned by Company or any other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or advances to Company or any other Subsidiary of Company, or (iv) transfer any of its property or assets to Company or any other Subsidiary of Company. 7.3 Investments; Joint Ventures. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including any Joint Venture, except: (i) Company and its Subsidiaries may make and own Investments in Cash Equivalents; (ii) Holdings may continue to own the Investments owned by it as of the Closing Date (after giving effect to the Acquisition) in Company; (iii) Company and its Subsidiaries may make intercompany loans to the extent permitted under subsection 7.1(iv); (iv) Company and its Subsidiaries may make Consolidated Capital Expenditures permitted by subsection 7.6D; (v) Company and its Subsidiaries may make and own Investments in connection with a Permitted Acquisition; (vi) Company may make advances to Holdings, in lieu of the payment of cash dividends, to enable Holdings to make the payments contemplated by subsections 7.5(vi)(a) and (b); (vii) Company may make loans and advances to employees and directors of Holdings or Company to purchase limited liability interests of MBW LLC, provided that the aggregate amount of such loans and advances shall not exceed $1,000,000 at any time outstanding; and (viii) Company and its Subsidiaries may make and own other Investments in an aggregate amount not to exceed at any time $2,500,000. 7.4 Contingent Obligations. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, create or become or remain liable with respect to any Contingent Obligation, except: (i) Holdings and Subsidiaries of Company may become and remain liable with respect to Contingent Obligations arising under (a) their respective Guaranties, (b) the Subordinated Bridge Loan Guaranties, and (c) guarantees of Indebtedness under the Subordinated Exchange Note Documents or permitted under subsection 7.1(vi), provided that the obligations of Holdings or such Subsidiaries under guarantees described in this clause (c) shall be subordinated in right of payment to the Obligations pursuant to documentation containing subordination provisions and other material terms no less favorable to Company, its Subsidiaries and Lenders than the corresponding terms of the Subordinated Bridge Loan Guaranties; (ii) Company may become and remain liable with respect to Contingent Obligations in respect of Letters of Credit; (iii) Company may become and remain liable with respect to Contingent Obligations under Interest Rate Agreements entered into with Lenders or Affiliates of Lenders with respect to which the aggregate net amount which Company would be liable to pay to counterparties thereunder in the event all such Interest Rate Agreements were terminated at the time of determination shall not exceed $2,500,000 at any time; (iv) Company and its Subsidiaries may become and remain liable with respect to Contingent Obligations in respect of customary indemnification and purchase price adjustment obligations incurred in the ordinary course of business in connection with Asset Sales or other sales of assets; (v) Company and its Subsidiaries may become and remain liable with respect to Contingent Obligations under guarantees in the ordinary course of business of the obligations of suppliers, landlords, customers, franchisees and licensees of Company and its Subsidiaries in an aggregate amount not to exceed at any time $250,000; (vi) Company and its Subsidiaries may become and remain liable with respect to Contingent Obligations under food product futures arrangements consistent with past practices of the Business and of any business acquired under subsection 7.7(vii) for the supply of food products used in the business of Company and its Subsidiaries; and (vii) Company and its Subsidiaries may become and remain liable with respect to other Contingent Obligations; provided that the maximum aggregate liability, contingent or otherwise, of Company and its Subsidiaries in respect of all such Contingent Obligations shall at no time exceed $250,000. 7.5 Restricted Junior Payments. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Junior Payment; provided that (i) Company may make scheduled interest payments in respect of (a) the Subordinated Bridge Loans in accordance with the terms of the Subordinated Bridge Loan Agreement and (b) the Subordinated Exchange Notes in accordance with the terms thereof and of the Subordinated Exchange Note Indenture; provided, that to the extent the Subordinated Bridge Loan Agreement and the Subordinated Exchange Note Indenture permit Company to pay interest thereon or liquidated damages with respect thereto in like-kind instruments in a principal amount equal to the amount of such interest or liquidated damages, Company shall pay such interest or liquidated damages in such like-kind instruments; (ii) Company may make Restricted Junior Payments to the extent necessary to redeem or defease all or any portion of the Indebtedness under the Subordinated Bridge Loan Documents with proceeds from the issuance of Subordinated Exchange Notes; (iii) Company and/or Holdings, as applicable, may make Restricted Junior Payments to the extent necessary to redeem or defease all or any portion of the Indebtedness under the Subordinated Bridge Loan Documents and the Subordinated Exchange Note Documents with proceeds from Indebtedness permitted under subsection 7.1(vi) and/or an initial public offering of Holdings Common Stock; (iv) Company may make scheduled interest payments in respect of Permitted Seller Notes permitted under subsection 7.1(vii) in accordance with the terms of such Permitted Seller Notes; (v) Company may make regularly scheduled payments of interest in respect of any Subordinated Indebtedness in accordance with the terms of, and only to the extent required by, and subject to the subordination provisions contained in, the indenture or other agreement pursuant to which such Subordinated Indebtedness was issued, as such indenture or other agreement may be amended from time to time to the extent permitted under subsection 7.12B; provided, that to the extent the terms of such Subordinated Indebtedness permit Company to pay interest or liquidated damages on such Subordinated Indebtedness in like-kind instruments in a principal amount equal to the amount of such interest or liquidated damages, Company shall pay such interest or liquidated damages with such like-kind instruments; (vi) Company may make Restricted Junior Payments to Holdings (a) in an aggregate amount not to exceed $250,000 in any Fiscal Year, to the extent necessary to permit MBW LLC and Holdings to pay general administrative costs and expenses, (b) to the extent necessary to permit Holdings to discharge the consolidated tax liabilities of Holdings and its Subsidiaries, and (c) to the extent necessary to permit Holdings or MBW LLC to pay transaction fees to the MDC Entities and/or Dartford and/or Fenway in connection with acquisitions made after the Closing Date in accordance with the terms of the MDC Advisory Services Agreement, the Dartford Management Agreement and the Fenway Agreement, in each case so long as Holdings or MBW LLC applies the amount of any such Restricted Junior Payments for such purposes; (vii) so long as no Event of Default or Potential Event of Default shall have occurred and be continuing or shall be caused thereby, Company and Holdings may make Restricted Junior Payments in an aggregate amount not to exceed $2,000,000 to permit MBW LLC to repurchase limited liability interests in MBW LLC or Holdings to repurchase Holdings Common Stock from officers, directors or employees of MBW LLC or any of its Subsidiaries or from Dartford following termination of employment of any such officer, director or employee by reason of death, disability, retirement or resignation or following other events customarily requiring or permitting such repurchase, in each case so long as MBW LLC or Holdings, as applicable, applies the amount of any such Restricted Junior Payment for such purpose; and (viii) so long as (x) no Event of Default or Potential Event of Default shall have occurred and be continuing or shall be caused thereby, (y) Company shall be in compliance, on a pro forma basis giving effect thereto, with the covenants set forth in subsection 7.6 hereof and (z) the Leverage Ratio (calculated on a pro forma basis giving effect thereto) shall not be greater than 3.50:1.00 (and Company shall have delivered to Administrative Agent an Officer's Certificate (together with supporting information therefor), in form and substance reasonably satisfactory to Administrative Agent, certifying to the effect of clauses (y) and (z)), Company and Holdings may make Restricted Junior Payments to the extent necessary to permit MBW LLC to repurchase limited partnership interests from Dartford upon Dartford's exercise of the Company Repurchase Option (as such term is defined in the MBW LLC Agreement) as such option is in effect as of the Closing Date, in each case so long as MBW LLC applies the amount of such Restricted Junior Payments for such purposes. 7.6 Financial Covenants. A. Minimum Consolidated Cash Interest Coverage Ratio. Holdings and Company shall not permit the Consolidated Cash Interest Coverage Ratio for any four-Fiscal Quarter period ending during any of the test periods set forth in the table below to be less than the correlative ratio for such test period set forth in the table below: =============================================================== MINIMUM CONSOLIDATED TEST PERIOD CASH INTEREST COVERAGE RATIO =============================================================== 1/01/97 - 12/31/97 1.60:1.00 --------------------------------------------------------------- 1/01/98 - 12/31/98 1.75:1.00 --------------------------------------------------------------- 1/01/99 - 12/31/99 1.90:1.00 --------------------------------------------------------------- 1/01/00 - 12/31/00 2.00:1.00 --------------------------------------------------------------- 1/01/01 - 12/31/01 2.25:1.00 --------------------------------------------------------------- 1/01/02 - 12/31/02 2.50:1.00 =============================================================== B. Maximum Leverage Ratio. Holdings and Company shall not permit the ratio of (i) the excess of (a) Consolidated Total Debt as of the last day of any Fiscal Quarter ending during any of the test periods set forth in the table below minus (b) cash on hand of Company to the extent the amount of such cash exceeds $3,500,000 as of such date, to (ii) Consolidated EBITDA for the four-Fiscal Quarter period ending on such date to exceed the correlative ratio for such test period set forth in the table below: =============================================================== MAXIMUM TEST PERIOD LEVERAGE RATIO =============================================================== 1/01/97 - 12/31/97 5.75:1.00 --------------------------------------------------------------- 1/01/98 - 12/31/98 5.25:1.00 --------------------------------------------------------------- 1/01/99 - 12/31/99 5.00:1.00 --------------------------------------------------------------- 1/01/00 - 12/31/00 4.50:1.00 --------------------------------------------------------------- 1/01/01 - 12/31/01 4.00:1.00 --------------------------------------------------------------- 1/01/02 - 12/31/02 4.00:1.00 =============================================================== C. Minimum Fixed Charge Coverage Ratio. Holdings and Company shall not permit the ratio of (i) Consolidated EBITDA for any four-Fiscal Quarter period ending during any of the test periods set forth in the table below to (ii) Consolidated Fixed Charges for such four-Fiscal Quarter period to be less than the correlative ratio for such test period set forth in the table below: =============================================================== MINIMUM TEST PERIOD FIXED CHARGE COVER- AGE RATIO =============================================================== 1/01/97 - 12/31/97 1.25:1.00 --------------------------------------------------------------- 1/01/98 - 12/31/98 1.35:1.00 --------------------------------------------------------------- 1/01/99 - 12/31/99 1.40:1.00 --------------------------------------------------------------- 1/01/00 - 12/31/00 1.50:1.00 --------------------------------------------------------------- 1/01/01 - 12/31/01 1.55:1.00 --------------------------------------------------------------- 1/01/02 - 12/31/02 1.65:1.00 =============================================================== D. Maximum Consolidated Capital Expenditures. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount in excess of the corresponding amount (the "Maximum Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal Year; provided that the Maximum Consolidated Capital Expenditures Amount for any Fiscal Year shall be increased by an amount equal to the excess, if any (but in no event more than 50% of the Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year), of the Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year over the actual amount of Consolidated Capital Expenditures for such previous Fiscal Year: =============================================================== MAXIMUM FISCAL YEAR CONSOLIDATED CAPITAL (OR PORTION THEREOF) EXPENDITURES AMOUNT =============================================================== Fiscal Year ending in $1,000,000 December 1997 --------------------------------------------------------------- Fiscal Year ending in December 1998 $1,000,000 and each Fiscal Year thereafter =============================================================== ; provided, however, that for purposes of this subsection 7.6D, Consolidated Capital Expenditures shall not include expenditures not exceeding $3,000,000 in the aggregate incurred on or prior to June 30, 1998 (i) to relocate Company's assets, (ii) to purchase computers and computer-related equipment and (iii) to pay transition related expenses in connection with the foregoing. E. Certain Calculations. (i) With respect to calculations of Consolidated Fixed Charges, Consolidated EBITDA and Consolidated Cash Interest Expense for any four-Fiscal Quarter period including the Closing Date (each such period being a "Pro Forma Calculation Period"), such calculations shall be made on a pro forma basis assuming, in each case, (a) that the Closing Date, the Acquisition and the related borrowings by Company pursuant to this Agreement and the Subordinated Bridge Loan Agreement occurred on the first day of the applicable Pro Forma Calculation Period; (b) that Consolidated EBITDA and Consolidated Capital Expenditures for the applicable Fiscal Quarters ending prior to the Closing Date are as set forth on Schedule 7.6E annexed hereto; and (c) that, with respect to calculations of Consolidated Cash Interest Expense and each component of Consolidated Fixed Charges other than Consolidated Capital Expenditures (Consolidated Cash Interest Expense and each such component being, individually, a "Fixed Charge Component"), the amount of each such Fixed Charge Component (1) for the Pro Forma Calculation Period ending in March 1997 shall equal the product of the amount of such Fixed Charge Component for the Fiscal Quarter ending in March 1997 multiplied by 4, (2) for the Pro Forma Calculation Period ending in June 1997 shall equal the product of the amount of such Fixed Charge Component for the two-Fiscal Quarter period ending in June 1997 multiplied by 2, and (3) for the Pro Forma Calculation Period ending in September 1997 shall equal the product of the amount of such Fixed Charge Component for the three-Fiscal Quarter period ending in June 1997 multiplied by 4/3; provided, however, that if the Term Loan Conversion occurs, Consolidated Cash Interest Expense for such Pro Forma Calculation Period shall equal the sum of (x) actual Consolidated Cash Interest Expense for the Fiscal Quarter in which the Term Loan Conversion Date occurs and each Fiscal Quarter ending after the Closing Date but prior to the Term Loan Conversion Date plus (y) for each Fiscal Quarter ending during such Pro Forma Calculation Period but prior to the Closing Date, an amount of pro forma interest accrued calculated by assuming that all Indebtedness outstanding immediately after such Term Loan Conversion was borrowed on the first day of such Pro Forma Calculation Period, that all Loans outstanding were Eurodollar Rate Loans, that the applicable interest rate for the Loans was the average effective interest rate on the Loans on the date of determination, and that all other Indebtedness outstanding accrued interest at the interest rates applicable thereto on the date of determination. (ii) With respect to any period during which new Subsidiaries, assets or businesses are acquired pursuant to subsection 7.7(vii), for purposes of determining compliance with the financial covenants set forth in this subsection 7.6, Consolidated EBITDA and Consolidated Interest Expense shall be calculated with respect to such periods and such Subsidiaries, assets or businesses on a pro forma basis (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X promulgated under the Securities Act) using the historical financial statements of all entities or assets so acquired or to be acquired and the consolidated financial statements of Company and its Subsidiaries which shall be reformulated (i) as if such acquisition, and any acquisitions which have been consummated during such period, and any Indebtedness or other liabilities incurred in connection with any such acquisition had been consummated or incurred at the beginning of such period (and assuming that such Indebtedness bears interest during any portion of the applicable measurement period prior to the relevant acquisition at the weighted average of the interest rates applicable to outstanding Loans during such period), and (ii) otherwise in conformity with certain procedures to be agreed upon between Administrative Agent and Company, all such calculations to be in form and substance satisfactory to Administrative Agent. 7.7 Restriction on Fundamental Changes; Asset Sales. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, alter the corporate, capital or legal structure of Holdings or any of its Subsidiaries, create any new Subsidiaries or enter into any transaction of merger or consolidation, or liquidate, windup or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business, property or fixed assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise any part of the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person, except: (i) Company may make the Acquisition on the Closing Date; (ii) any Subsidiary of Company may be merged with or into Company or any wholly owned Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any substantial part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Company or any wholly owned Subsidiary Guarantor; provided that, in the case of such a merger, Company or such wholly owned Subsidiary Guarantor shall be the continuing or surviving corporation; (iii) Company and its Subsidiaries may make Consolidated Capital Expenditures permitted under subsection 7.6D; (iv) Company and its Subsidiaries may acquire inventory, equipment and other assets in the ordinary course of business; (v) Company and its Subsidiaries may sell or otherwise dispose of assets in transactions that do not constitute Asset Sales; provided that the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Company); (vi) Company and its Subsidiaries may make any Asset Sale of assets that have, in the aggregate, a fair market value (determined in good faith by the board of directors of Company) not in excess of 10% of Consolidated EBITDA for the four-Fiscal Quarter period most recently ended prior to such Asset Sale; provided that (x) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Company); (y) not less than 80% of the consideration received shall be cash; and (z) the proceeds of such Asset Sales shall be applied as required by subsection 2.4B(iii)(a); and (vii) At any time and from time to time after Company shall have refinanced all outstanding Indebtedness under the Subordinated Bridge Loan Documents and under the Subordinated Exchange Note Documents with the proceeds of Indebtedness permitted under subsection 7.1(vi), Company or any Subsidiary of Company may make acquisitions of assets and businesses (including acquisitions of the capital stock or other equity interests of another Person), provided that: (a) immediately prior to and after giving effect to any such acquisition, Company and its Subsidiaries shall be in compliance with the provisions of subsection 7.11 hereof; (b) after giving effect to any such acquisition, the sum of (x) the amount of cash on hand of Company plus (y) the amount by which the Revolving Loan Commitments exceed the Total Utilization of Revolving Loan Commitments, shall equal or exceed $7,500,000; (c) (1) Company shall be in compliance, on a pro forma basis giving effect to the proposed acquisition, with the covenants set forth in subsection 7.6 hereof, (2) if any such acquisition is made prior to the first Anniversary, the Leverage Ratio (calculated on a pro forma basis giving effect to the proposed acquisition) shall not be greater than the ratio set forth in subsection 7.6B applicable at the time of such acquisition minus 0.25, (3) Consolidated EBITDA attributable to any assets so acquired, as projected by Company for the twelve-month period immediately following the date of such acquisition, shall not exceed 25% of Consolidated EBITDA for the four-Fiscal Quarter period most recently ended prior to the date of such acquisition, and (4) no Event of Default or Potential Event of Default shall have occurred and be continuing at the time of such acquisition or shall be caused thereby; and Company shall have delivered to Administrative Agent an Officer's Certificate (together with supporting information therefor), in form and substance reasonably satisfactory to Administrative Agent, certifying as to the foregoing; (d) any assets acquired pursuant to such acquisition shall be subject to a First Priority Lien in favor of the Administrative Agent on behalf of Lenders pursuant to the Collateral Documents; and (e) each such acquisition shall be made on a fully consensual basis between Company and its Subsidiaries, on the one hand, and the seller or sellers of such assets or such business, on the other hand. 7.8 Sales and Lease-Backs. Holdings and Company shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (i) which Company or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person (other than Company or any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by Company or any of its Subsidiaries to any Person (other than Company or any of its Subsidiaries) in connection with such lease, except that Company and its Subsidiaries may enter into such sale and lease-back transactions so long as the aggregate sales price under all such transactions in any Fiscal Year does not exceed $2,500,000. 7.9 Transactions with Shareholders and Affiliates. Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of 5% or more of any class of equity Securities of Company or with any Affiliate of Company or of any such holder, on terms that are less favorable to Company or that Subsidiary, as the case may be, than those that might be obtained at the time from Persons who are not such a holder or Affiliate; provided that the foregoing restriction shall not apply to (i) any transaction between Company and any of its Wholly Owned Subsidiaries or between any of its Wholly Owned Subsidiaries, (ii) reasonable and customary fees paid to members of the boards of directors of Holdings and its Subsidiaries, (iii) any payment from Company to Holdings expressly permitted under subsection 7.5, (iv) fees, expenses and other amounts payable to the MDC Entities and Dartford on the Closing Date, (v) the Management Fees, (vi) any employment agreement entered into by Holdings or any of its Subsidiaries in the ordinary course of business, and (vii) any issuance of capital stock of Holdings in connection with employment arrangements, stock options and stock ownership plans of Holdings or any of its Subsidiaries entered into in the ordinary course of business. 7.10 Disposal of Subsidiary Stock. Company shall not: (i) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of any of its Subsidiaries, except as permitted under this Agreement or the Collateral Documents or to qualify directors if required by applicable law; or (ii) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of any of its Subsidiaries (including such Subsidiary), except as permitted under this Agreement or the Collateral Documents or to Company, another Wholly Owned Subsidiary of Company, or to qualify directors if required by applicable law. 7.11 Conduct of Business. Company shall not, and shall not permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by Company and its Subsidiaries on the Closing Date (after giving effect to the Acquisition) and those food businesses which are reasonably related to such businesses, and (ii) such other lines of business as may be consented to by Administrative Agent and Requisite Lenders. 7.12 Amendments or Waivers of Certain Related Agreements; Amendments of Documents Relating to Subordinated Indebtedness; Designation of "Designated Senior Indebtedness"; Preferred Stock. A. Amendments or Waivers of Certain Related Agreements. Neither Holdings nor any of its Subsidiaries will agree to any material amendment to, or waive any of its material rights under, any of the Acquisition Agreement, the Assumption Agreement, the Warrant Agreement, the Warrant Escrow Agreement, the Warrants, the MDC Advisory Services Agreement, the Dartford Management Agreement, the Fenway Agreement or the Transition Agreements after the Closing Date if such amendment or waiver would be adverse to Lenders without in each case obtaining the prior written consent of Requisite Lenders to such amendment or waiver. B. Amendments of Documents Relating to Subordinated Indebtedness. Company shall not, and shall not permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions thereof (or of any guaranty thereof), or change any collateral therefor (other than to release such collateral), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of such Subordinated Indebtedness (or trustee or other representative on their behalf) which would be adverse to Company or Lenders. C. Designation of "Designated Senior Indebtedness". Company shall not designate any Indebtedness as "Designated Senior Indebtedness" (as defined in the Subordinated Bridge Loan Agreement or the Subordinated Exchange Note Indenture, as applicable) for purposes of the Subordinated Bridge Loan Agreement or the Subordinated Exchange Note Indenture, as applicable, without the prior written consent of Requisite Lenders. D. Preferred Stock. Without the prior written approval of Requisite Lenders, neither Holdings nor Company shall amend, restate, supplement or otherwise modify its Certificate of Incorporation if the effect of such amendment, restatement, supplement or modification is to provide for the issuance of any preferred stock of Company or of Holdings or the filing or amendment of any certificate of designation with respect thereto. 7.13 Fiscal Year. Holdings and Company shall not change their Fiscal Year-end from the last Saturday of December. SECTION 8. EVENTS OF DEFAULT IF any of the following conditions or events ("Events of Default") shall occur: 8.1 Failure to Make Payments When Due. Failure by Company to pay any installment of principal of any Loan when due, whether at stated maturity, by acceleration, by notice of prepayment or otherwise; failure by Company to pay when due any amount payable to an Issuing Lender in reimbursement of any drawing honored or payment made under a Letter of Credit; or failure by Company to pay any interest on any Loan or any fee or any other amount due under this Agreement within five days after the date due; or 8.2 Default in Other Agreements. (i) Failure of Company or any of its Subsidiaries to pay when due (a) any principal of or interest on any Indebtedness (other than Indebtedness referred to in subsection 8.1) in an individual principal amount of $500,000 or more or any items of Indebtedness with an aggregate principal amount of $1,000,000 or more or (b) any Contingent Obligation in an individual principal amount of $500,000 or more or any Contingent Obligations with an aggregate principal amount of $1,000,000 or more, in each case beyond the end of any grace period provided therefor; or (ii) breach or default by Company or any of its Subsidiaries with respect to any other material term of (a) any evidence of any Indebtedness in an individual principal amount of $500,000 or more or any items of Indebtedness with an aggregate principal amount of $1,000,000 or more or any Contingent Obligation in an individual principal amount of $500,000 or more or any Contingent Obligations with an aggregate principal amount of $1,000,000 or more or (b) any loan agreement, mortgage, indenture or other agreement relating to such Indebtedness or Contingent Obligation(s), if in any case under this clause (ii) the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise); or 8.3 Breach of Certain Covenants. Failure of Holdings or Company to perform or comply with any term or condition contained in subsection 2.4, 2.5 or 6.2 or Section 7 of this Agreement; or 8.4 Breach of Warranty. Any material representation, warranty, certification or other statement made by MBW LLC or Holdings or any of its Subsidiaries in any Loan Document or in any statement or certificate at any time given by MBW LLC or Holdings or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made; or 8.5 Other Defaults Under Loan Documents. Any Loan Party shall default in the performance of or compliance with any term contained in this Agreement or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 8, and such default shall not have been remedied or waived within 30 days after the earlier of (i) an officer of Company becoming aware of such default or (ii) receipt by Company of notice from any Agent or Lender of such default; or 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court having jurisdiction in the premises shall enter a decree or order for relief in respect of MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries), and any such event described in this clause (ii) shall continue for 60 days unless dismissed, bonded or discharged; or 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. (i) MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) shall make any assignment for the benefit of creditors; or (ii) MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors of MBW LLC, Holdings or Company or any of its Subsidiaries (other than Immaterial Subsidiaries) (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or 8.8 Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $500,000 or (ii) in the aggregate at any time an amount in excess of $1,000,000 (in either case not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Holdings or Company or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any event later than five days prior to the date of any proposed sale thereunder); or 8.9 Dissolution. Any order, judgment or decree shall be entered against Holdings or Company or any of its Subsidiaries decreeing the dissolution or split up of Holdings or Company or that Subsidiary and such order shall remain undischarged or unstayed for a period in excess of 30 days; or 8.10 Employee Benefit Plans. There shall occur one or more ERISA Events which individually or in the aggregate results in a Material Adverse Effect; or there shall exist an Unfunded Current Liability, individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which there is no Unfunded Current Liability), which would have a Material Adverse Effect; or 8.11 Change in Control. (i) Prior to the consummation of any initial public offering of Holdings Common Stock, MBW LLC shall cease to own directly 100% of the outstanding capital stock of Holdings (other than Holdings Common Stock issued to employees or directors of Holdings and its Subsidiaries pursuant to any employee stock option or stock purchase plan or other employee benefit plan or to any Person pursuant to the Warrant Agreement); or (ii) Holdings shall at any time cease to own directly 100% of the outstanding capital stock of Company; or (iii) prior to the consummation of any initial public offering of Holdings Common Stock, (a) the MDC Entities, Dartford and Fenway shall at any time not own, in the aggregate, at least 51% of the combined voting power of Company's voting Securities; or (b) any Person (other than the MDC Entities, Dartford and Fenway), including a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such Person, shall purchase or otherwise acquire, directly or indirectly, beneficial ownership of Securities of Company and, as a result of such purchase or acquisition, any Person (together with its associates and Affiliates), shall directly or indirectly beneficially own in the aggregate Securities representing more than 30% of the combined voting power of Company voting Securities; or (iv) at any time after the consummation of any initial public offering of Holdings Common Stock, (a) the MDC Entities, Dartford and Fenway together shall own, directly or indirectly, in the aggregate, a lesser percentage of the combined voting power of Company voting Securities than any other holder, including a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such holder, of such voting Securities; (b) a majority of the members of the Board of Directors of Company shall not be Continuing Directors; or (c) any Person (other than the MDC Entities, Dartford and Fenway), including a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) which includes such Person, shall purchase or otherwise acquire, directly or indirectly, beneficial ownership of Securities of Company and, as a result of such purchase or acquisition, any Person (together with its associates and Affiliates), shall directly or indirectly beneficially own in the aggregate Securities representing more than 25% of the combined voting power of Company voting Securities; or 8.12 Invalidity of Guaranties. At any time after the execution and delivery thereof, any Guaranty of the Obligations of Company, for any reason other than the satisfaction in full of all Obligations, ceases to be in full force and effect or is declared to be null and void (except with respect to the obligations thereunder of Immaterial Subsidiaries of Company) or any Loan Party (other than Immaterial Subsidiaries of Company) denies in writing that it has any further liability, including, without limitation, with respect to future advances by Lenders, under any Loan Document to which it is a party; or 8.13 Failure of Security. Any Collateral Document shall, at any time, cease to be in full force and effect (other than by reason of a release of Collateral thereunder in accordance with the terms hereof or thereof, the satisfaction in full of the Obligations or any other termination of such Collateral Document in accordance with the terms hereof or thereof) or shall be declared null and void; or the validity or enforceability thereof shall be contested in writing by any Loan Party; or Agent shall not have or shall cease to have a valid security interest in any Collateral purported to be covered thereby, perfected and with the priority required by the relevant Collateral Document, for any reason other than the failure of Agents or any Lender to take any action within its control, subject only to Liens permitted under the applicable Collateral Documents; or 8.14 Failure to Consummate Acquisition. The Acquisition shall not be consummated in accordance with this Agreement and the applicable Related Agreements concurrently with the making of the initial Loans, or the Acquisition shall be unwound, reversed or otherwise rescinded in whole or in part for any reason; or 8.15 Termination or Breach of Certain Transition Agreements. The Co-Pack Agreement or the Flavor Supply Agreement shall terminate for any reason whatsoever or Seller shall fail to perform its obligations under any such agreement and such failure could reasonably be expected to result in a Material Adverse Effect, and, in either case, Company shall not have made arrangements satisfactory to Requisite Lenders for obtaining any services that are required to be provided by Seller to Company under such agreement that are not being so provided as a result of such termination or failure to perform; or 8.16 Conduct of Business By Holdings and MBW LLC. (i) Holdings shall (a) engage in any business other than entering into and performing its obligations under and in accordance with the Loan Documents and Related Agreements to which it is a party and performing the transactions contemplated thereby or permitted thereunder or (b) own any assets other than (1) the capital stock of Company and (2) Cash and Cash Equivalents in an amount not to exceed $50,000 at any one time for the purpose of paying general operating expenses of Holdings; or (ii) MBW LLC shall (a) engage in any business other than entering into and performing its obligations under and in accordance with the MBW LLC Agreement and the Loan Documents to which it is a party or (b) own any assets other than (1) the capital stock of Holdings and (2) Cash and Cash Equivalents in an amount not to exceed $50,000 at any one time for the purpose of paying general operating expenses of MBW LLC; or 8.17 Default Under Subordination Provisions. Company or any guarantor of Subordinated Indebtedness shall fail to comply with the subordination provisions contained in the Subordinated Bridge Loan Agreement, the Subordinated Exchange Note Indenture or any other instrument, indenture or agreement pursuant to which such Subordinated Indebtedness is issued; THEN (i) upon the occurrence of any Event of Default described in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on the Loans, (b) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (whether or not any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letter of Credit) and (c) all other Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by Company, and the obligation of each Lender to make any Loan, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate, and (ii) upon the occurrence and during the continuation of any other Event of Default, Administrative Agent shall, upon the written request of Requisite Lenders, by written notice to Company, declare all or any portion of the amounts described in clauses (a) through (c) above to be, and the same shall forthwith become, immediately due and payable, and the obligation of each Lender to make any Loan, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate; provided that the foregoing shall not affect in any way the obligations of Lenders under subsection 3.3C(i). Any amounts described in clause (b) above, when received by Administrative Agent, shall be held by Administrative Agent pursuant to the terms of the Collateral Account Agreement and shall be applied as therein provided. Notwithstanding anything contained in the second preceding paragraph, if at any time within 60 days after an acceleration of the Loans pursuant to such paragraph Company shall pay all arrears of interest and all payments on account of principal which shall have become due otherwise than as a result of such acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Potential Events of Default (other than non-payment of the principal of and accrued interest on the Loans, in each case which is due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to Company, may at their option rescind and annul such acceleration and its consequences; but such action shall not affect any subsequent Event of Default or Potential Event of Default or impair any right consequent thereon. The provisions of this paragraph are intended merely to bind Lenders to a decision which may be made at the election of Requisite Lenders and are not intended to benefit Company and do not grant Company the right to require Lenders to rescind or annul any acceleration hereunder or preclude Agents or Lenders from exercising any of the rights or remedies available to them under any of the Loan Documents, even if the conditions set forth in this paragraph are met. SECTION 9. AGENTS 9.1 Appointment. A. Chase is hereby appointed Administrative Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. CSI is hereby appointed Arranging Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Arranging Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. Each Agent agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and Company shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Company or any of its Subsidiaries. Upon the conclusion of the Initial Period, all obligations of Arranging Agent hereunder shall terminate. B. Appointment of Supplemental Collateral Agents. It is the purpose of this Agreement and the other Loan Documents that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan Documents, or in case Administrative Agent deems that by reason of any present or future law of any jurisdiction Administrative Agent may not exercise any of the rights, powers or remedies granted herein or in any of the other Loan Documents or take any other action which may be desirable or necessary in connection therewith, it may be necessary that Administrative Agent appoint an additional individual or institution as a separate trustee, co-trustee, collateral agent or collateral co-agent (any such additional individual or institution being referred to herein individually as a "Supplemental Collateral Agent" and collectively as "Supplemental Collateral Agents"). In the event that Administrative Agent appoints a Supplemental Collateral Agent with respect to any Collateral, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to Administrative Agent with respect to such Collateral shall be exercisable by and vest in such Supplemental Collateral Agent to the extent, and only to the extent, necessary to enable such Supplemental Collateral Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Loan Documents and necessary to the exercise or performance thereof by such Supplemental Collateral Agent shall run to and be enforceable by either Administrative Agent or such Supplemental Collateral Agent, and (ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to Administrative Agent shall inure to the benefit of such Supplemental Collateral Agent and all references therein to Administrative Agent shall be deemed to be references to Administrative Agent and/or such Supplemental Collateral Agent, as the context may require. Should any instrument in writing from Company or any other Loan Party be required by any Supplemental Collateral Agent so appointed by Administrative Agent for more fully and certainly vesting in and confirming to him or it such rights, powers, privileges and duties, Company shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by Administrative Agent. In case any Supplemental Collateral Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by law, shall vest in and be exercised by Administrative Agent until the appointment of a new Supplemental Collateral Agent. 9.2 Powers; General Immunity. A. Duties Specified. Each Lender irrevocably authorizes each Agent to take such action on such Lender's behalf and to exercise such powers hereunder and under the other Loan Documents as are specifically delegated to such Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the other Loan Documents, and it may perform such duties by or through its agents or employees. No Agent shall have, by reason of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. B. No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statement or in any financial or other statements, instruments, reports or certificates or any other documents furnished by any Agent to Lenders or by or on behalf of Company and/or its Subsidiaries to any Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Company or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding, Administrative Agent shall have no liability arising from confirmations of the amount of outstanding Loans or the Total Utilization of Revolving Loan Commitments or the component amounts thereof. C. Exculpatory Provisions. Neither any Agent nor any of such Agent's respective officers, directors, employees or agents shall be liable to Lenders for any action taken or omitted by such Agent under or in connection with any of the Loan Documents except to the extent caused by such Agent's gross negligence or willful misconduct. If any Agent shall request instructions from Lenders with respect to any act or action (including the failure to take an action) in connection with this Agreement or any of the other Loan Documents, such Agent shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6). Without prejudice to the generality of the foregoing, (i) such Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Company and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against such Agent as a result of such Agent acting or (where so instructed) refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6). Such Agent shall be entitled to refrain from exercising any power, discretion or authority vested in it under this Agreement or any of the other Loan Documents unless and until it has obtained the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6). D. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless the context clearly otherwise indicates, include such Agent in its individual capacity. Each Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Company or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company and/or its Subsidiaries for services in connection with this Agreement and otherwise without having to account for the same to Lenders. 9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness. Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Company and its Subsidiaries in connection with the making of the Loans and the issuance of Letters of Credit hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or, except as expressly provided elsewhere in this Agreement, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. 9.4 Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by Company, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct. 9.5 Successor Agents and Swing Line Lender. A. Successor Agents. Any Agent may resign at any time by giving 30 days' prior written notice thereof to the other Agents, Lenders and Company, and any Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Company and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, that successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Agent and the retiring or removed Agent shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Agent's resignation or removal hereunder as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. B. Successor Swing Line Lender. Any resignation or removal of Administrative Agent pursuant to subsection 9.5A shall also constitute the resignation or removal of Chase or its successor as Swing Line Lender, and any successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (i) Company shall prepay any outstanding Swing Line Loans made by the retiring or removed Administrative Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender the Swing Line Note held by it to Company for cancellation, and (iii) Company shall issue a new Swing Line Note to the successor Administrative Agent and Swing Line Lender substantially in the form of Exhibit VI annexed hereto, in the principal amount of the Swing Line Loan Commitment then in effect and with other appropriate insertions. 9.6 Collateral Documents. Each Lender and Agent hereby further authorizes Administrative Agent to enter into each Collateral Document as secured party on behalf of and for the benefit of Agents and Lenders and agrees to be bound by the terms of each Collateral Document; provided that Administrative Agent shall not enter into or consent to any amendment, modification, termination or waiver of any provision contained in any Collateral Document without the prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders); provided further, however, that, without further written consent or authorization from Requisite Lenders, Administrative Agent may execute any documents or instruments necessary to effect the release of any asset constituting Collateral from the Lien of the applicable Collateral Document in the event that such asset is sold or otherwise disposed of in a transaction effected in accordance with subsection 7.7. Anything contained in any of the Loan Documents to the contrary notwithstanding, each Lender agrees that no Lender shall have any right individually to realize upon any of the Collateral under any Collateral Document (including, without limitation, through the exercise of a right of set-off against call deposits of such Lender in which any funds on deposit in the Collateral Account may from time to time be invested), it being understood and agreed that all rights and remedies under the Collateral Documents may be exercised solely by Administrative Agent for the benefit of Lenders in accordance with the terms thereof. SECTION 10. MISCELLANEOUS 10.1 Assignments and Participations in Loans, Letters of Credit. A. General. Subject to subsection 10.1B, each Lender shall have the right at any time to (i) sell, assign, transfer or negotiate to any Eligible Assignee, or (ii) sell participations to any Person in, all or any part of its Commitments (together with its Letters of Credit or participations therein made or arising pursuant to its Revolving Loan Commitment) or any Loan or Loans made by it or any other interest herein or in any other Obligations owed to it; provided that no such sale, assignment, transfer or participation shall, without the consent of Company, require Company to file a registration statement with the Securities and Exchange Commission or apply to qualify such sale, assignment, transfer or participation under the securities laws of any state; provided further, that no such sale, assignment or transfer described in clause (i) above shall be effective unless and until an Assignment Agreement effecting such sale, assignment or transfer shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii); provided further, that no such sale, assignment, transfer or participation of any Letter of Credit or any participation therein may be made separately from a sale, assignment, transfer or participation of a corresponding interest in the Revolving Loan Commitment and the Revolving Loans of the Lender effecting such sale, assignment, transfer or participation; and provided further, that anything contained herein to the contrary notwithstanding, the Swing Line Loan Commitment and the Swing Line Loans of Swing Line Lender may not be sold, assigned or transferred as described in clause (i) above to any Person other than a successor Administrative Agent and Swing Line Lender to the extent contemplated by subsection 9.5. Except as otherwise provided in this subsection 10.1, no Lender shall, as between Company and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or any granting of participations in, all or any part of its Commitments or the Loans, the Letters of Credit or participations therein or the other Obligations owed to such Lender. B. Assignments. (i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of Credit, or participation therein or other Obligation may (a) be assigned in any amount to another Lender who is a Non-Defaulting Lender, or to an Affiliate of the assigning Lender or another Lender who, in either such case, is a Non-Defaulting Lender, with the consent of Administrative Agent (which consent shall not be unreasonably withheld) and the giving of notice to Company; provided that, after giving effect to a proposed assignment to another Lender, the assigning Lender shall have an aggregate Commitment of at least $5,000,000 unless the proposed assignment constitutes the aggregate amount of the Commitments, Loans, Letters of Credit, and participations therein and other Obligations of the assigning Lender, or (b) be assigned in an aggregate amount of not less than $5,000,000 (or such lesser amount as shall constitute the aggregate amount of the Commitments, Loans, Letters of Credit, and participations therein and other Obligations of the assigning Lender) to any other Eligible Assignee with the consent of Administrative Agent (which consent shall not be unreasonably withheld) and the giving of notice to Company. To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations with respect to its Commitments, Loans, Letters of Credit, or participations therein or other Obligations or the portion thereof so assigned. The parties to each such assignment shall execute and deliver to Administrative Agent, for its acceptance and recording in the Register, an Assignment Agreement, together with a processing fee of $3,000 payable by the assigning Lender and such certificates, documents or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii) (a). Upon such execution, delivery, acceptance and recordation, from and after the effective date specified in such Assignment Agreement, (y) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination of this Agreement under subsection 10.9B) and be released from its obligations under this Agreement (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto; provided that, anything contained in any of the Loan Documents to the contrary notwithstanding, if such Lender is the Issuing Lender with respect to any outstanding Letters of Credit such Lender shall continue to have all rights and obligations of an Issuing Lender with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder). The Commitments hereunder shall be modified to reflect the Commitments of such assignee and any remaining Commitments of such assigning Lender and, if any such assignment occurs after the issuance of the Notes hereunder, the assigning Lender shall surrender its applicable Notes and, upon such surrender, new Notes shall be issued to the assignee and, if applicable, to the assigning Lender, substantially in the form of Exhibit IV, Exhibit V or Exhibit VI annexed hereto, as the case may be, with appropriate insertions, to reflect the new Commitments and/or outstanding Term Loans of the assignee and the assigning Lender. (ii) Acceptance by Administrative Agent; Recordation in Register. Upon its receipt of an Assignment Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the processing fee referred to in subsection 10.1B(i) and any certificates, documents or other evidence with respect to United States federal income tax withholding matters that such assignee may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii) (a), Administrative Agent shall, if such Assignment Agreement has been completed and is in substantially the form of Exhibit XV hereto and if Administrative Agent have consented to the assignment evidenced thereby (to the extent such consent is required pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of Administrative Agent to such assignment), (b) record the information contained therein in the Register, and (c) give prompt notice thereof to Company. Administrative Agent shall maintain a copy of each Assignment Agreement delivered to and accepted by it as provided in this subsection 10.1B(ii). C. Participations. The holder of any participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except action (i) effecting the extension of the final maturity of the Loan allocated to such participation, (ii) effecting a reduction of the principal amount of or affecting the rate of interest payable on any Loan allocated to such participation, (iii) releasing all or substantially all of the Collateral, or (iv) releasing all of the Guarantors from their obligations under the Guaranties, and all amounts payable by Company hereunder (including, without limitation, amounts payable to such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not sold such participation. Company and each Lender hereby acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5, (a) any participation will give rise to a direct obligation of Company to the participant and (b) the participant shall be considered to be a "Lender". D. Assignments to Federal Reserve Banks. In addition to the assignments and participations permitted under the foregoing provisions of this subsection 10.1, any Lender may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided that (i) no Lender shall, as between Company and such Lender, be relieved of any of its obligations hereunder as a result of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. E. Information. Each Lender may furnish any information concerning Company and its Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants), subject to subsection 10.20. F. Limitation. No assignee, participant or other transferee or any Lender's rights shall be entitled to receive any greater payment under subsection 2.7 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made with Company's prior written consent or at a time when the circumstances giving rise to such greater payment did not exist. G. Representations of Lenders. Each Lender listed on the signature pages hereof hereby represents and warrants (i) that it is an Eligible Assignee described in clause (i) of the definition thereof; (ii) that it has experience and expertise in the making of loans such as the Loans; and (iii) that it will make its Loans for its own account in the ordinary course of its business and without a view to distribution of such Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this subsection 10.1, the disposition of such Loans or any interests therein shall at all times remain within its exclusive control). Each Lender that becomes a party hereto pursuant to an Assignment Agreement shall be deemed to agree that the representations and warranties of such Lender contained in Section 2(c) of such Assignment Agreement are incorporated herein by this reference. 10.2 Expenses. Whether or not the transactions contemplated hereby shall be consummated, Company agrees to pay promptly (i) all the actual and reasonable costs and out of pocket expenses of Administrative Agent in connection with the preparation of the Loan Documents; (ii) all the actual and reasonable costs of furnishing all opinions by counsel for Company (including, without limitation, any opinions requested by Lenders as to any legal matters arising hereunder) and of Company's performance of and compliance with all agreements and conditions on its part to be performed or complied with under this Agreement and the other Loan Documents including, without limitation, with respect to confirming compliance with environmental and insurance requirements; (iii) the reasonable fees, expenses and disbursements of counsel to Agents (including allocated costs of internal counsel) in connection with the negotiation, preparation, execution and administration of the Loan Documents and the Loans and any consents, amendments, waivers or other modifications hereto or thereto and any other documents or matters requested by Company; (iv) all other actual and reasonable costs and expenses incurred by Agents in connection with the negotiation, preparation and execution of the Loan Documents and the transactions contemplated hereby and thereby; and (v) after the occurrence of an Event of Default, all costs and expenses, including reasonable attorneys' fees (including allocated costs of internal counsel) and costs of settlement, incurred by Agents and Lenders in enforcing any Obligations of or in collecting any payments due from Company hereunder or under the other Loan Documents by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 10.3 Indemnity. In addition to the payment of expenses pursuant to subsection 10.2, whether or not the transactions contemplated hereby shall be consummated, Company agrees to defend, indemnify, pay and hold harmless Agents and Lenders, and the officers, directors, trustees, partners, employees, agents, attorneys and affiliates of any of Agents and Lenders (collectively called the "Indemnitees") from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including, without limitation, securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including, without limitation, Lenders' agreement to make the Loans hereunder or the use or intended use of the proceeds of any of the Loans or the issuance of Letters of Credit hereunder or the use or intended use of any of the Letters of Credit) (collectively called the "Indemnified Liabilities"); provided that Company shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent, and only to the extent, of any particular liability, obligation, loss, damage, penalty, claim, cost, expense or disbursement that arose from the gross negligence or willful misconduct of that Indemnitee as determined by a final judgment of a court of competent jurisdiction. To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Company shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. 10.4 Set-Off; Security Interest in Deposit Accounts. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender is hereby authorized by Company at any time or from time to time, without notice to Company or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by that Lender (at any office of that Lender wherever located) to or for the credit or the account of Company against and on account of the obligations and liabilities of Company to that Lender under this Agreement, the Notes, the Letters of Credit and participations therein, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement, the Notes, the Letters of Credit and participations therein or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Company hereby further grants to each Agent and Lender a security interest in all deposits and accounts maintained with such Agent or Lender as security for the Obligations. 10.5 Ratable Sharing. Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms of this Agreement), by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify Administrative Agent and each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy, reorganization or insolvency proceeding of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 10.6 Amendments and Waivers. A. No amendment, modification, termination or waiver of any provision of this Agreement or of the Notes, or consent to any departure by Company or any other Loan Party therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that any such amendment, modification, termination, waiver or consent which: reduces the principal amount of any of the Loans; changes in any manner the definition of "Requisite Lenders" or "Pro Rata Share"; changes in any manner any provision of this Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders; postpones the scheduled final maturity date of any of the Loans; postpones the date or reduces the amount of any scheduled payment (but not prepayment) of principal of any of the Loans; postpones the date or reduces the amount of any scheduled reduction of the Revolving Loan Commitments; postpones the date on which any interest or any fees are payable; decreases the interest rate borne by any of the Loans (other than any waiver of any increase in the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder; increases the maximum duration of Interest Periods permitted hereunder; releases all or substantially all of the Collateral; releases Holdings from its obligations under the Holdings Guaranty or releases all or substantially all of the Subsidiary Guarantors from their obligations under the Subsidiary Guaranty; reduces the amount or postpones the due date of any amount payable in respect of, or extends the required expiration date of, any Letter of Credit; changes the obligations of Lenders relating to the purchase of participations in Letters of Credit in any manner that could be adverse to any Issuing Lender; or changes in any manner the provisions contained in subsection 8.1 or this subsection 10.6; shall be effective only if evidenced by a writing signed by or on behalf of all Lenders to whom are owed Obligations being directly affected by such amendment, modification, termination, waiver or consent. In addition, (i) any amendment, modification, termination or waiver of any of the provisions contained in Section 4 shall be effective only if evidenced by a writing signed by or on behalf of Administrative Agent and Requisite Lenders, (ii) no amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the Lender which is the holder of that Note, (iii) no amendment, modification, termination or waiver of any provision of this Agreement which disproportionately and adversely affects the obligation of any Loan Party to make payments (including without limitation mandatory prepayments) to the holders of the Term Loans or the holders of the Revolving Loans and Revolving Loan Commitments, shall be effective without the written concurrence of the holders of 51% in principal amount of the class (i.e., Term Loans or Revolving Loans and Revolving Loan Commitments each being a "class" of Loans) of Loans so disproportionately and adversely affected; (iv) no increase in the Commitments of any Lender over the amount thereof then in effect shall be effective without the written concurrence of that Lender, it being understood and agreed that in no event shall waivers or modifications of conditions precedent, covenants, Events of Default, Potential Events of Default or of a mandatory prepayment or a reduction of any or all of the Commitments be deemed to constitute an increase of the Commitment of any Lender and that an increase in the available portion of any Commitment of any Lender shall not be deemed to constitute an increase in the Commitment of such Lender, (v) no amendment, modification, termination or waiver of any provision of subsection 2.1A(iii) or any other provision of this Agreement relating to the Swing Line Loan Commitment or the Swing Line Loans shall be effective without the written concurrence of Swing Line Lender, (vi) no amendment, modification, termination or waiver of any provision of Section 3 relating to the rights or obligations of any or all Issuing Lenders shall be effective without the written concurrence of Administrative Agent and each Lender who is an Issuing Lender with respect to any Letter of Credit then outstanding, and (vii) no amendment, modification, termination or waiver of any provision of Section 9 or of any other provision of this Agreement which, by its terms, expressly requires the approval or concurrence of Administrative Agent shall be effective without the written concurrence of Administrative Agent. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Company in any case shall entitle Company to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this subsection 10.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by Company, on Company. B. If, in connection with any proposed change, waiver, discharge or termination to any of the provision of this Agreement as contemplated by the proviso in the first sentence of this subsection 10.6, the consent of Requisite Lenders is obtained but consent of one or more of such other Lenders whose consent is required is not obtained, then Company may, so long as all non-consenting Lenders are so treated, elect to terminate such Lender as a party to this Agreement; provided that, concurrently with such termination, (i) Company shall pay that Lender all principal, interest and fees and other amounts due to be paid to such Lender with respect to all periods through such date of termination, (ii) another financial institution satisfactory to Company and Administrative Agent (or if Administrative Agent is also a Lender to be terminated, the successor Administrative Agent) shall agree, as of such date, to become a Lender for all purposes under this Agreement (whether by assignment or amendment) and to assume all obligations of the Lender to be terminated as of such date, and (iii) all documents and supporting materials necessary, in the judgment of Administrative Agent (or if Administrative Agent is also a Lender to be terminated, the successor Administrative Agent) to evidence the substitution of such Lender shall have been received and approved by Administrative Agent as of such date. 10.7 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 10.8 Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, telexed or sent by United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telecopy or telex, or four Business Days after depositing it in the United States mail, registered or certified, with postage prepaid and properly addressed; provided that notices to Administrative Agent shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or (i) as to Company and Administrative Agent, such other address as shall be designated by such Person in a written notice delivered to the other parties hereto and (ii) as to each other party, such other address as shall be designated by such party in a written notice delivered to Administrative Agent. 10.9 Survival of Representations, Warranties and Agreements. A. All representations, warranties and agreements made herein shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit hereunder. B. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4, 10.4, 10.5 and 10.20 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn or paid thereunder, and the termination of this Agreement. 10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Administrative Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. 10.11 Marshalling; Payments Set Aside. Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of Company or any other party or against or in payment of any or all of the Obligations. To the extent that Company makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.12 Severability. In case any provision in or obligation under this Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.13 Obligations Several; Independent Nature of Lenders' Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitments of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 10.14 Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 10.15 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 10.16 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders (it being understood that Lenders' rights of assignment are subject to subsection 10.1). Neither Holdings' nor Company's rights or obligations hereunder nor any interest therein may be assigned or delegated by Holdings or Company without the prior written consent of all Lenders. 10.17 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS OR COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF HOLDINGS AND COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEX- CLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO HOLDINGS OR COMPANY, AS APPLICABLE, AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.8; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER HOLDINGS OR COMPANY, AS APPLICABLE, IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST HOLDINGS OR COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. 10.18 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP OR OTHER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. 10.19 Confidentiality. Each Lender shall hold all non-public information obtained pursuant to the requirements of this Agreement which has been identified as confidential by Company in accordance with such Lender's customary procedures for handling confidential information of this nature, it being understood and agreed by Company that in any event a Lender may make disclosures reasonably required by any bona fide assignee, transferee or participant in connection with the contemplated assignment or transfer by such Lender of any Loans or any participation therein or as required or requested by any governmental agency or representative thereof or pursuant to legal process or by the National Association of Insurance Commissioners or in connection with the exercise of any remedy under the Loan Documents; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; and provided, further that in no event shall any Lender be obligated or required to return any materials furnished by Company or any of its Subsidiaries. 10.20 Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. COMPANY AND HOLDINGS: MBW FOODS INC. By: /s/ Ray Chung -------------------------------------- Executive Vice President MBW HOLDINGS INC. By: /s/ Ray Chung -------------------------------------- Executive Vice President Notice Address: 445 Hutchinson Avenue Columbus, Ohio 43235 Attention: Chief Financial Officer Facsimile: (415) 982-3023 with a copy to: McCown De Leeuw & Co. 101 East 52nd Street 31st Floor New York, New York 10022 Attention: Tyler T. Zachem Facsimile: (212) 355-6283 (212) 355-6945 S-1 and a copy to: Dartford Partnership L.L.C. 801 Montgomery Street, Suite 400 San Francisco, California 94133 Attention: James B. Ardrey Facsimile: (415) 982-3023 and a copy to: White & Case 1155 Avenue of the Americas New York, New York 10036 Attention: Frank L. Schiff, Esq. Facsimile: (212) 819-7817 S-2 AGENT AND LENDERS: THE CHASE MANHATTAN BANK, individually and as Administrative Agent By: /s/ Karen M. Sharf Vice President Notice Address: 270 Park Avenue, 10th Floor New York, New York 10017 Attention: Karen Sharf Telephone: (212) 270-5659 Facsimile: (212) 270-5120 with a copy to: One Chase Plaza 8th Floor New York, New York 10081 Attention: Janet Belden Loan Servicing Group Telephone: (212) 552-7277 Facsimile: (212) 552-5658 S-3 FLEET NATIONAL BANK By: /s/ John E. Duncan -------------------------------------- Title: Managing Director Notice Address: Fleet National Bank One Federal Street, MAOFD03C Boston, Massachusetts 02211 Attention: James Silva Telephone: (617) 346-4399 Facsimile: (617) 346-4806 With a copy to: Fleet National Bank One Federal Street, MAOFD03C Boston, Massachusetts 02211 Attention: Paul Tarantino Telephone: (617) 346-4401 Facsimile: (617) 346-4806 S-4 THE FIRST NATIONAL BANK OF BOSTON By: /s/ C. Andrew Piculell -------------------------------------- Title: Vice President Notice Address: Bank of Boston Diversified Finance 100 Federal Street, MS 01-08-05 Boston, Massachusetts 02110 Attention: Clifford A. Gaysunas Assistant Vice President Telephone: (617) 434-3051 Facsimile: (617) 434-4929 With a copy to: Bank of Boston Commercial Loan Services 100 Federal Street, MS 01-08-04 Boston, Massachusetts 02110 Attention: Joan Broderick Administrative Officer Telephone: (617) 434-2456 Facsimile: (617) 434-9820 S-5 HELLER FINANCIAL, INC. By: /s/ Robert A. Pierce -------------------------------------- Vice President Notice Address: Heller Financial 500 West Monroe Street Chicago, Illinois 60661 Attention: Robert A. Pierce Telephone: (312) 441-6998 Facsimile: (312) 441-7367 S-6 MARINE MIDLAND BANK By: /s/ Thomas McGann -------------------------------------- Title: Senior Vice President Notice Address: Midland Bank (New York) 140 Broadway, 5th Floor New York, New York 10005-1185 Attention: Russell Thomas Telephone: (212) 658-2729 Facsimile: (212) 658-2586 S-7 PNC BANK, NATIONAL ASSOCIATION By: /s/ Kwan L. Grays -------------------------------------- Title: Assistant Vice President Notice Address: PNC Bank 345 Park Avenue, 29th Floor New York, New York 10154 Attention: Mark Williams Telephone: (212) 409-3724 Facsimile: (212) 409-3737 With a copy to: PNC Bank 345 Park Avenue, 29th Floor New York, New York 10154 Attention: Anna Di Rocco Telephone: (212) 409-3717 Facsimile: (212) 409-3737 S-8 SUNTRUST BANK, ATLANTA By: /s/ Andrew S. McGhee -------------------------------------- Title: Group Vice President By: /s/ Susan Hall -------------------------------------- Title: Vice President Notice Address: Suntrust Bank, Atlanta 25 Park Place, 23rd Floor Atlanta, Georgia 30303 Attention: Dennis H. James, Jr. Telephone: (404) 588-7963 Facsimile: (404) 588-8833 With a copy to: Suntrust Bank, Atlanta 25 Park Place, 23rd Floor Atlanta, Georgia 30303 Attention: Devyonne Aabeel Telephone: (404) 588-7077 Facsimile: (404) 588-8833 S-9 WELLS FARGO BANK, N.A. By: /s/ Kathleen Weiss -------------------------------------- Vice President Notice Address: 555 Montgomery Street, 17th Floor San Francisco, California 94111 Attention: Kathleen Weiss Telephone: (415) 396-1274 Facsimile: (415) 362-5081 S-10 EXHIBIT I [FORM OF NOTICE OF BORROWING] NOTICE OF BORROWING Pursuant to that certain Credit Agreement dated as of December __, 1996, as amended, restated, supplemented or otherwise modified to the date hereof (said Credit Agreement, as so amended, restated, supplemented or otherwise modified, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among MBW Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity, "Administrative Agent"), and Chase Securities Inc., as Arranging Agent, this represents Company's request to borrow as follows: 1. Date of borrowing: ___________________, [199_] [200_] 2. Amount of borrowing: $___________________ 3. Lender(s): |_| a. Lenders, in accordance with their applicable Pro Rata Shares |_| b. Swing Line Lender 4. Type of Loans: |_| a. Term Loans |_| b. Revolving Loans |_| c. Swing Line Loan 5. Interest rate option:(1) |_| a. Base Rate Loan(s) |_| b. Eurodollar Rate Loans with an initial Interest Period of ____________ month(s) The proceeds of such Loans are to be deposited in Company's account at Administrative Agent. The undersigned officer, to the best of his or her knowledge, and Company certify that: - ---------- (1) Term Loans and Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans. Swing Line Loans shall be Base Rate Loans. I-vii (i) The representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; (ii) No event has occurred and is continuing or would result from the consummation of the borrowing contemplated hereby that would constitute an Event of Default or a Potential Event of Default; [and] (iii) Company has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof[; and][.] [(iv) FOR REVOLVING LOANS: The amount of the proposed borrowing will not cause the Total Utilization of Revolving Loan Commitments to exceed the Revolving Loan Commitments.] DATED: ____________________ MBW FOODS INC. By: ______________________________________ Name: Title: I-viii EXHIBIT II [FORM OF NOTICE OF CONVERSION/CONTINUATION] NOTICE OF CONVERSION/CONTINUATION Pursuant to that certain Credit Agreement dated as of December __, 1996, as amended, restated, supplemented or otherwise modified to the date hereof (said Credit Agreement, as so amended, restated, supplemented or otherwise modified, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among MBW Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, this represents Company's request to convert or continue Loans as follows: 1. Date of conversion/continuation: __________________, [199_] [200_] 2. Amount of Loans being converted/continued: $___________________ 3. Type of Loans being converted/continued: |_| a. Term Loans |_| b. Revolving Loans 4. Nature of conversion/continuation: |_| a. Conversion of Base Rate Loans to Eurodollar Rate Loans |_| b. Conversion of Eurodollar Rate Loans to Base Rate Loans |_| c. Continuation of Eurodollar Rate Loans as such 5. If Loans are being continued as or converted to Eurodollar Rate Loans, the duration of the new Interest Period that commences on the conversion/ continuation date: _______________ month(s) II-1 In the case of a conversion to or continuation of Eurodollar Rate Loans, the undersigned officer, to the best of his or her knowledge, and Company certify that no Event of Default or Potential Event of Default has occurred and is continuing under the Credit Agreement. DATED: ____________________ MBW FOODS INC. By: ______________________________________ Name: Title: II-2 EXHIBIT III [FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT] NOTICE OF ISSUANCE OF LETTER OF CREDIT Pursuant to that certain Credit Agreement dated as of December __, 1996, as amended, restated, supplemented or otherwise modified to the date hereof (said Credit Agreement, as so amended, restated, supplemented or otherwise modified, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among MBW Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, this represents Company's request for the issuance of a Letter of Credit by Administrative Agent as follows: 1. Date of issuance of Letter of Credit: ________________, [199_] [200_] 2. Type of Letter of Credit: |_| a. Commercial Letter of Credit |_| b. Standby Letter of Credit 3. Face amount of Letter of Credit: $________________________ 4. Expiration date of Letter of Credit: ________________, [199_] [200_] 5. Name and address of beneficiary: ___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________ 6. Attached hereto is: |_| a. the verbatim text of such proposed Letter of Credit |_| b. a description of the proposed terms and conditions of such Letter of Credit, including a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of such Letter of Credit, would require the Issuing Lender to make payment under such Letter of Credit. III-1 The undersigned officer, to the best of his or her knowledge, and Company certify that: (i) The representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date; (ii) No event has occurred and is continuing or would result from the issuance of the Letter of Credit contemplated hereby that would constitute an Event of Default or a Potential Event of Default; (iii) Company has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof; and (iv) The issuance of the proposed Letter of Credit will not cause (a) the Letter of Credit Usage to exceed $5,000,000 or (b) the Total Utilization of Revolving Loan Commitments to exceed the Revolving Loan Commitments. DATED: ____________________ MBW FOODS INC. By: ______________________________________ Name: Title: III-2 EXHIBIT IV [FORM OF TERM NOTE] MBW FOODS INC. PROMISSORY NOTE DUE DECEMBER 15, 2002 $(1) New York, New York [Closing Date] FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"), promises to pay to(2) ("Payee") or its registered assigns the principal amount of (3) ($[1]) in the installments referred to below. Company also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit Agreement dated as of December __, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity, "Administrative Agent"), and Chase Securities Inc., as Arranging Agent (said Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined). Company shall make principal payments on this Note in consecutive quarterly installments as set forth in the Credit Agreement, commencing on March 15, 1997 and ending on December 15, 2002. Each such installment shall be due on the date specified in the Credit Agreement and in an amount determined in accordance with the provisions thereof; provided that the last such installment shall be in an amount sufficient to repay the entire unpaid principal balance of this Note, together with all accrued and unpaid interest thereon. This Note is one of Company's "Term Notes" in the aggregate principal amount of $15,000,000 and is issued pursuant to and entitled to the benefits of the Credit Agreement, to - ---------- (1) Insert amount of Lender's Term Loan in numbers. (2) Insert Lender's name in capital letters. (3) Insert amount of Lender's Term Loan in words. IV-1 which reference is hereby made for a more complete statement of the terms and conditions under which the Term Loan evidenced hereby was made and is to be repaid. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Funding and Payment Office or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement. Unless and until an Assignment Agreement effecting the assignment or transfer of this Note shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii) of the Credit Agreement, Company and Administrative Agent shall be entitled to deem and treat Payee as the owner and holder of this Note and the Loan evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of Company hereunder with respect to payments of principal of or interest on this Note. Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note. This Note is subject to mandatory prepayment as provided in subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as provided in subsection 2.4B(i) of the Credit Agreement. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. This Note is entitled to the benefits of the Guaranties and is secured pursuant to the Collateral Documents. The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement. This Note is subject to restrictions on transfer or assignment as provided in subsections 10.1 and 10.16 of the Credit Agreement. IV-2 No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of Company, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. Company promises to pay all costs and expenses, including reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement, incurred in the collection and enforcement of this Note. Company and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. IN WITNESS WHEREOF, Company has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above. MBW FOODS INC. By: ______________________________________ Name: Title: IV-3 EXHIBIT V [FORM OF REVOLVING NOTE] MBW FOODS INC. PROMISSORY NOTE DUE DECEMBER 15, 2001 $(1) New York, New York [Closing Date] FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"), promises to pay to the order of(2) ("Payee") or its registered assigns, on or before December 15, 2001, the lesser of (x) (3) ($[1]) and (y) the unpaid principal amount of all advances made by Payee to Company as Revolving Loans under the Credit Agreement referred to below. Company also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit Agreement dated as of December __, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity, "Administrative Agent"), and Chase Securities Inc., as Arranging Agent (said Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined). This Note is one of Company's "Revolving Notes" in the aggregate principal amount of $45,000,000 and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Revolving Loans evidenced hereby were made and are to be repaid. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Funding and Payment Office or at such other place as shall be designated in writing for such purpose in accordance with the - ---------- (1) Insert amount of Lender's Revolving Loan Commitment in numbers. (2) Insert Lender's name in capital letters. (3) Insert amount of Lender's Revolving Loan Commitment in words. V-1 terms of the Credit Agreement. Unless and until an Assignment Agreement effecting the assignment or transfer of this Note shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii) of the Credit Agreement, Company and Administrative Agent shall be entitled to deem and treat Payee as the owner and holder of this Note and the Loans evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligations of Company hereunder with respect to payments of principal of or interest on this Note. Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note. This Note is subject to mandatory prepayment as provided in subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as provided in subsection 2.4B(i) of the Credit Agreement. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. This Note is entitled to the benefits of the Guaranties and is secured pursuant to the Collateral Documents. The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement. This Note is subject to restrictions on transfer or assignment as provided in subsections 10.1 and 10.16 of the Credit Agreement. No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of Company, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. V-2 Company promises to pay all costs and expenses, including reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement, incurred in the collection and enforcement of this Note. Company and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. IN WITNESS WHEREOF, Company has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above. MBW FOODS INC. By: ______________________________________ Name: Title: V-3 TRANSACTIONS ON REVOLVING NOTE Outstanding Type of Amount of Amount of Principal Loan Made Loan Made Principal Paid Balance Notation Date This Date This Date This Date This Date Made By - ---- --------- --------- -------------- ----------- ------- V-4 EXHIBIT VI [FORM OF SWING LINE NOTE] MBW FOODS INC. PROMISSORY NOTE DUE DECEMBER 15, 2001 $2,000,000 New York, New York [Closing Date] FOR VALUE RECEIVED, MBW FOODS INC., a Delaware corporation ("Company"), promises to pay to [NAME OF SWING LINE LENDER] ("Payee") or its registered assigns, on or before December 15, 2001, the lesser of (x) TWO MILLION AND NO DOLLARS ($2,000,000.00) and (y) the unpaid principal amount of all advances made by Payee to Company as Swing Line Loans under the Credit Agreement referred to below. Company also promises to pay interest on the unpaid principal amount hereof, from the date hereof until paid in full, at the rates and at the times which shall be determined in accordance with the provisions of that certain Credit Agreement dated as of December __, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as administrative agent (in such capacity, "Administrative Agent") and Chase Securities Inc., as Arranging Agent (said Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined). This Note is Company's "Swing Line Note" and is issued pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more complete statement of the terms and conditions under which the Swing Line Loans evidenced hereby were made and are to be repaid. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the Funding and Payment Office or at such other place as shall be designated in writing for such purpose in accordance with the terms of the Credit Agreement. Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note. VI-1 This Note is subject to mandatory prepayment as provided in subsection 2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as provided in subsection 2.4B(i) of the Credit Agreement. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this Note, together with all accrued and unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. This Note is entitled to the benefits of the Guaranty and is secured pursuant to the Collateral Documents. The terms of this Note are subject to amendment only in the manner provided in the Credit Agreement. This Note is subject to restrictions on transfer or assignment as provided in subsections 10.1 and 10.16 of the Credit Agreement. No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of Company, which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. Company promises to pay all costs and expenses, including reasonable attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement, incurred in the collection and enforcement of this Note. Company and any endorsers of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. [Remainder of page intentionally left blank] VI-2 IN WITNESS WHEREOF, Company has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above. MBW FOODS INC. By: ______________________________________ Name: Title: VI-3 TRANSACTIONS ON SWING LINE NOTE Outstanding Amount of Amount of Principal Loan Made Principal Paid Balance Notation Date This Date This Date This Date Made By ---- --------- -------------- ----------- -------- VI-4 EXHIBIT VII [FORM OF SUBSIDIARY GUARANTY] SUBSIDIARY GUARANTY This SUBSIDIARY GUARANTY is entered into as of __________, [199__][200__] by THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of MBW Foods Inc., a Delaware corporation ("Company") (each such undersigned Subsidiary a "Guarantor" and collectively, "Guarantors"; provided that after the date hereof, Guarantors shall be deemed to include any Additional Guarantors (as hereinafter defined)), in favor of and for the benefit of THE CHASE MANHATTAN BANK, as administrative agent for and representative of (in such capacity herein called "Guarantied Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below and any Interest Rate Exchangers (as hereinafter defined). RECITALS A. Company has entered into that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement"; capitalized terms defined therein and not otherwise defined herein being used herein as therein defined) with MBW Holdings Inc., a Delaware corporation ("Holdings"), Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent. B. Company may from time to time enter, or may from time to time have entered, into one or more Interest Rate Agreements (collectively, the "Lender Interest Rate Agreements") with or one or more Lenders or their Affiliates (in such capacity, collectively, "Interest Rate Exchangers") in accordance with the terms of the Credit Agreement, and it is desired that the obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof (all such obligations being the "Interest Rate Obligations"), together with all obligations of Company under the Credit Agreement and the other Loan Documents, be guarantied hereunder. C. A portion of the proceeds of the Loans may be advanced to Guarantors and thus the Guarantied Obligations (as hereinafter defined) are being incurred for and will inure to the benefit of Guarantors (which benefits are hereby acknowledged). D. It is a condition precedent to the making of the initial Loans under the Credit Agreement that Company's obligations thereunder be guarantied by Guarantors. VII-1 E. Guarantors are willing irrevocably and unconditionally to guaranty such obligations of Company. NOW, THEREFORE, based upon the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Lenders and Guarantied Party to enter into the Credit Agreement and to make Loans and other extensions of credit thereunder and to induce Interest Rate Exchangers to enter into the Lender Interest Rate Agreements, Guarantors hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. As used in this Guaranty, the following terms shall have the following meanings unless the context otherwise requires: "Beneficiaries" means Guarantied Party, Lenders and any Interest Rate Exchangers. "Guarantied Obligations" has the meaning assigned to that term in subsection 2.1. "Guaranty" means this Subsidiary Guaranty dated as of __________, [199__][200__], as it may be amended, restated, supplemented or otherwise modified from time to time. "payment in full", "paid in full" or any similar term means payment in full of the Guarantied Obligations, including without limitation all principal, interest, costs, fees and expenses (including without limitation legal fees and expenses) of Beneficiaries as required under the Loan Documents and the Lender Interest Rate Agreements. 1.2 Interpretation. (a) References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Guaranty unless otherwise specifically provided. (b) In the event of any conflict or inconsistency between the terms, conditions and provisions of this Guaranty and the terms, conditions and provisions of the Credit Agreement, the terms, conditions and provisions of this Guaranty shall prevail. VII-2 SECTION 2. THE GUARANTY 2.1 Guaranty of the Guarantied Obligations. Subject to the provisions of subsection 2.2(a), Guarantors jointly and severally hereby irrevocably and unconditionally guaranty the due and punctual payment in full of all Guarantied Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in its most comprehensive sense and includes: (a) any and all Obligations of Company and any and all Interest Rate Obligations, in each case now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, and however arising under or in connection with the Credit Agreement and the other Loan Documents and the Lender Interest Rate Agreements, including those arising under successive borrowing transactions under the Credit Agreement which shall either continue the Obligations of Company or from time to time renew them after they have been satisfied and including interest which, but for the filing of a petition in bankruptcy with respect to Company, would have accrued on any Guarantied Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding; and (b) those expenses set forth in subsection 2.8 hereof. 2.2 Limitation on Amount Guarantied; Contribution by Guarantors. (a) Anything contained in this Guaranty to the contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court of competent jurisdiction to be applicable to the obligations of any Guarantor under this Guaranty, the obligations of such Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor (i) in respect of intercompany indebtedness to Company or other affiliates of Company to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder and (ii) under any guaranty of Subordinated Indebtedness which guaranty contains a limitation as to maximum amount similar to that set forth in this subsection 2.2(a), pursuant to which the liability of such Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or VII-3 contribution of such Guarantor pursuant to applicable law or pursuant to the terms of any agreement (including without limitation any such right of contribution under subsection 2.2(b)). (b) Guarantors under this Guaranty and Holdings under the Holdings Guaranty together desire to allocate among themselves (collectively, the "Contributing Guarantors"), in a fair and equitable manner, their obligations arising under this Guaranty and the Holdings Guaranty. Accordingly, in the event any payment or distribution is made on any date by any Guarantor under this Guaranty or Holdings under the Holdings Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined below) as of such date, that Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the amount of such other Contributing Guarantor's Fair Share Shortfall (as defined below) as of such date, with the result that all such contributions will cause each Contributing Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of such date. "Fair Share" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (i) the ratio of (x) the Fair Share Contribution Amount (as defined below) with respect to such Contributing Guarantor to (y) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations guarantied. "Fair Share Shortfall" means, with respect to a Contributing Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Contributing Guarantor over the Aggregate Payments of such Contributing Guarantor. "Fair Share Contribution Amount" means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty or the Holdings Guaranty, as applicable, determined as of such date, in the case of any Guarantor, in accordance with subsection 2.2(a) or, if applicable, a similar provision contained in the Holdings Guaranty; provided that, solely for purposes of calculating the "Fair Share Contribution Amount" with respect to any Contributing Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder or under subsection 2.2 of the Holdings Guaranty shall not be considered as assets or liabilities of such Contributing Guarantor. "Aggregate Payments" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty or the Holdings Guaranty, as applicable (including in respect of this subsection 2.2(b), or subsection 2.2 of the Holdings Guaranty), minus (ii) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this subsection 2.2(b) or subsection 2.2 of the Holdings Guaranty. The amounts payable as contributions hereunder, under subsection 2.2 of the Holdings Guaranty shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this subsection 2.2(b) or subsection 2.2 of the Holdings Guaranty shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder or under the Holdings Guaranty. Holdings is a third party beneficiary to the contribution agreement set forth in this subsection 2.2(b). VII-4 2.3 Payment by Guarantors; Application of Payments. Subject to the provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Company to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)), Guarantors will upon demand pay, or cause to be paid, in cash, to Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including without limitation interest which, but for the filing of a petition in bankruptcy with respect to Company, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding) and all other Guarantied Obligations then owed to Beneficiaries as aforesaid. All such payments shall be applied promptly from time to time by Guarantied Party as provided in subsection 2.4D of the Credit Agreement. 2.4 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. (b) Guarantied Party may enforce this Guaranty upon the occurrence of an Event of Default under the Credit Agreement or the occurrence of an Early Termination Date (as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the form prepared by the International Swap and Derivatives Association Inc. or a similar event under any similar swap agreement) under any Lender Interest Rate Agreement (either such occurrence being an "Event of Default" for purposes of this Guaranty) notwithstanding the existence of any dispute between Company and any Beneficiary with respect to the existence of such Event of Default. (c) The obligations of each Guarantor hereunder are independent of the obligations of Company under the Loan Documents or the Lender Interest Rate Agreements and the obligations of any other guarantor (including any other Guarantor or Holdings) of the obligations of Company under the Loan Documents or the Lender Interest Rate Agreements, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Company VII-5 or any of such other guarantors and whether or not Company is joined in any such action or actions. (d) Payment by any Guarantor of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge any Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if Guarantied Party is awarded a judgment in any suit brought to enforce any Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor's liability hereunder in respect of the Guarantied Obligations. (e) Any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any other obligation of any Person (including any other Guarantor or Holdings) with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent with the Credit Agreement or the applicable Lender Interest Rate Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Company or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it under the Loan Documents or the Lender Interest Rate Agreements. (f) This Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guarantied VII-6 Obligations), including without limitation the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents the Lender Interest Rate Agreements, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to the Holdings Guaranty or any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to events of default) of the Credit Agreement, any of the other Loan Documents, any of the Lender Interest Rate Agreements or any agreement or instrument executed pursuant thereto, or of the Holdings Guaranty or any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of the Credit Agreement or such Loan Document, such Lender Interest Rate Agreement or any agreement relating to the Holdings Guaranty or such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or any of the Lender Interest Rate Agreements or from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Beneficiary's consent to the change, reorganization or termination of the corporate structure or existence of Company or any of its Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guarantied Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Beneficiary in respect of the Guarantied Obligations, including, but not limited to, failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guarantied Obligations. 2.5 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Company, any other guarantor (including any other Guarantor [or Holdings) of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any VII-7 deposit account or credit on the books of any Beneficiary in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company including without limitation any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company from any cause other than payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary's errors or omissions in the administration of the Guarantied Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Credit Agreement, the Lender Interest Rate Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in subsection 2.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. 2.6 Guarantors' Rights of Subrogation, Contribution, Etc. Until the Guarantied Obligations have been paid in full and the Commitments terminated, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Company or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case VII-8 whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including, without limitation, (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Company, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Company, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guarantied Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor or Holdings) of the Guarantied Obligations (including without limitation any such right of contribution under subsection 2.2(b)). Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Company or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Company, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to be credited and applied against the Guarantied Obligations, whether matured or unmatured, in accordance with the terms hereof. 2.7 Subordination of Other Obligations. Any indebtedness of Company or any Guarantor now or hereafter held by any Guarantor (the "Obligee Guarantor") is hereby subordinated in right of payment to the Guarantied Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision of this Guaranty. 2.8 Expenses. Guarantors jointly and severally agree to pay, or cause to be paid, on demand, and to save Beneficiaries harmless against liability for, any and all costs and expenses (including fees and disbursements of counsel and allocated costs of internal counsel) incurred or expended by any Beneficiary in connection with the enforcement of or preservation of any rights under this Guaranty. VII-9 2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guarantied Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guarantied Obligations. 2.10 Authority of Guarantors or Company. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them. 2.11 Financial Condition of Company. Any Loans may be granted to Company or continued from time to time, and any Lender Interest Rate Agreement may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Company at the time of any such grant or continuation or at the time such Lender Interest Rate Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor's assessment, of the financial condition of Company. Each Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Loan Documents and the Lender Interest Rate Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Beneficiary. 2.12 Rights Cumulative. The rights, powers and remedies given to Beneficiaries by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Beneficiaries by virtue of any statute or rule of law or in any of the other Loan Documents, any of the Lender Interest Rate Agreements or any agreement between any Guarantor and any Beneficiary or Beneficiaries or between Company and any Beneficiary or Beneficiaries. Any forbearance or failure to exercise, and any delay by any Beneficiary in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. VII-10 2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty. (a) So long as any Guarantied Obligations remain outstanding, no Guarantor shall, without the prior written consent of Guarantied Party acting pursuant to the instructions of Requisite Obligees (as defined in subsection 3.14), commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against Company. The obligations of Guarantors under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company or by any defense which Company may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of Guarantors and Beneficiaries that the Guarantied Obligations which are guarantied by Guarantors pursuant to this Guaranty should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guarantied Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Guarantied Party, or allow the claim of Guarantied Party in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by Company, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. 2.14 Notice of Events. As soon as any Guarantor obtains knowledge thereof, such Guarantor shall give Guarantied Party written notice of any condition or event which has resulted in a breach of or noncompliance with any term, condition or covenant contained herein. 2.15 Set Off. In addition to any other rights any Beneficiary may have under law or in equity, if any amount shall at any time be due and owing by any Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized at any time or from time to time upon the occurrence and during the continuation of any Event of Default, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (general VII-11 or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness of such Beneficiary owing to such Guarantor and any other property of such Guarantor held by any Beneficiary to or for the credit or the account of such Guarantor against and on account of the Guarantied Obligations and liabilities of such Guarantor to any Beneficiary under this Guaranty. 2.16 Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of any Guarantor or any of its successors in interest under this Guaranty shall be sold or otherwise disposed of (including by merger or consolidation) in an Asset Sale not prohibited by subsection 7.7 of the Credit Agreement or otherwise consented to by Requisite Lenders, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale; provided that, as a condition precedent to such discharge and release, Guarantied Party shall have received evidence satisfactory to it that arrangements satisfactory to it have been made for delivery to Guarantied Party of the applicable Net Cash Proceeds. SECTION 3. MISCELLANEOUS 3.1 Survival of Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the other Loan Documents and the Lender Interest Rate Agreements and any increase in the Commitments under the Credit Agreement. 3.2 Notices. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier and shall be deemed to have been given when delivered in person or by courier service, or upon receipt of telefacsimile or telex (with received answerback) or three Business Days after depositing it in the United States mail with postage pre-paid and properly addressed; provided, notices to Guarantied Party shall not be effective until received. For purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or, as to any party, such other address as shall be designated by such party in a written notice delivered to the other parties hereto. 3.3 Severability. In case any provision in or obligation under this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. VII-12 3.4 Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Guaranty, and no consent to any departure by any Guarantor therefrom, shall in any event be effective without the written concurrence of Guarantied Party and, in the case of any such amendment or modification, each Guarantor against whom enforcement of such amendment or modification is sought. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 3.5 Headings. Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 3.6 Applicable Law; Rules of Construction. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Guaranty mutatis mutandis. 3.7 Successors and Assigns. This Guaranty is a continuing guaranty and shall be binding upon each Guarantor and its respective successors and assigns. This Guaranty shall inure to the benefit of Beneficiaries and their respective successors and assigns. No Guarantor shall assign this Guaranty or any of the rights or obligations of such Guarantor hereunder without the prior written consent of all Lenders. Any Beneficiary may, without notice or consent, assign its interest in this Guaranty in whole or in part. The terms and provisions of this Guaranty shall inure to the benefit of any transferee or assignee of any Loan, and in the event of such transfer or assignment the rights and privileges herein conferred upon such Beneficiary shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. 3.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS GUARANTY, EACH GUARANTOR, FOR VII-13 ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. 3.9 Waiver of Trial by Jury. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each Guarantor and, by its acceptance of the benefits hereof, each Beneficiary (i) acknowledges that this waiver is a material inducement for such Guarantor and Beneficiaries to enter into a business relationship, that such Guarantor and Beneficiaries have already relied on this waiver in entering into this Guaranty or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court. VII-14 3.10 No Other Writing. This writing is intended by Guarantors and Beneficiaries as the final expression of this Guaranty and is also intended as a complete and exclusive statement of the terms of their agreement with respect to the matters covered hereby. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Guaranty. There are no conditions to the full effectiveness of this Guaranty. 3.11 Further Assurances. At any time or from time to time, upon the request of Guarantied Party, Guarantors shall execute and deliver such further documents and do such other acts and things as Guarantied Party may reasonably request in order to effect fully the purposes of this Guaranty. 3.12 Additional Guarantors. The initial Guarantors hereunder shall be such of the Subsidiaries of Company as are signatories hereto on the date hereof. From time to time subsequent to the date hereof, additional Subsidiaries of Company may become parties hereto, as additional Guarantors (each an "Additional Guarantor") by executing a counterpart of this Guaranty. Upon delivery of any such counterpart to Administrative Agent, notice of which is hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as fully a party hereto as if such Additional Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, nor by any election of Administrative Agent not to cause any Subsidiary of Company to become an Additional Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Guarantor hereunder. 3.13 Counterparts; Effectiveness. This Guaranty may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original for all purposes; but all such counterparts together shall constitute but one and the same instrument. This Guaranty shall become effective as to each Guarantor upon the execution of a counterpart hereof by such Guarantor (whether or not a counterpart hereof shall have been executed by any other Guarantor) and receipt by Guarantied Party of written or telephonic notification of such execution and authorization of delivery thereof. 3.14 Guarantied Party as Administrative Agent. (a) Guarantied Party has been appointed to act as Guarantied Party hereunder by Lenders and, by their acceptance of the benefits hereof, Interest Rate Exchangers. Guarantied Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, VII-15 to exercise or refrain from exercising any rights, and to take or refrain from taking any action, solely in accordance with this Guaranty and the Credit Agreement; provided that Guarantied Party shall exercise, or refrain from exercising, any remedies hereunder in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Lender Interest Rate Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Lender Interest Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "Requisite Obligees"). In furtherance of the foregoing provisions of this subsection 3.14, each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to enforce this Guaranty, it being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by Guarantied Party for the benefit of Beneficiaries in accordance with the terms of this subsection 3.14. (b) Guarantied Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Guarantied Party under this Guaranty; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Guarantied Party under this Guaranty; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Guarantied Party under this Guaranty. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Guarantied Party under this Guaranty, and the retiring or removed Guarantied Party under this Guaranty shall promptly (i) transfer to such successor Guarantied Party all sums held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Guarantied Party under this Guaranty, and (ii) take such other actions as may be necessary or appropriate in connection with the assignment to such successor Guarantied Party of the rights created hereunder, whereupon such retiring or removed Guarantied Party shall be discharged from its duties and obligations under this Guaranty. After any retiring or removed Guarantied Party's resignation or removal hereunder as Guarantied Party, the provisions of this Guaranty shall inure to its benefit as to any actions taken or omitted to be taken by it under this Guaranty while it was Guarantied Party hereunder. [Remainder of page intentionally left blank] VII-16 IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first written above. [GUARANTOR] By: ______________________________________ Name: Title: Notice Address for the foregoing Guarantors: ___________________________ ___________________________ ___________________________ Attention: ______________ Facsimile: ______________ with a copy to: McCown De Leeuw & Co. 101 East 52nd Street 31st Floor New York, New York 10022 Attention: Tyler T. Zachem Facsimile: (212) 355-6283 (212) 355-6945 and a copy to: Dartford Partnership L.L.C. 801 Montgomery Street, Suite 400 San Francisco, California 94133 Attention: James B. Ardrey Facsimile: (415) 982-3023 VII-17 and a copy to: White & Case 1155 Avenue of the Americas New York, New York 10036 Attention: Frank L. Schiff, Esq. Facsimile: (212) 819-7817 VII-18 IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of ______________, [199_] [200_]. [NAME OF ADDITIONAL GUARANTOR] By: ______________________________________ Name: Title: Notice Address: ___________________________ ___________________________ ___________________________ ___________________________ VII-19 EXHIBIT VIII [FORM OF HOLDINGS GUARANTY] HOLDINGS GUARANTY This HOLDINGS GUARANTY is entered into as of December __, 1996 by MBW HOLDINGS INC., a Delaware corporation ("Guarantor"), in favor of and for the benefit of THE CHASE MANHATTAN BANK, as agent for and representative of (in such capacity herein called "Guarantied Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below and any Interest Rate Exchangers (as hereinafter defined). RECITALS A. MBW Foods Inc., a Delaware corporation and a wholly-owned subsidiary of Guarantor ("Company"), and Guarantor have entered into that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement"; capitalized terms defined therein and not otherwise defined herein being used herein as therein defined) with Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent. B. Company may from time to time enter into one or more Interest Rate Agreements (collectively, the "Lender Interest Rate Agreements") with or one or more Lenders or their Affiliates (in such capacity, collectively, "Interest Rate Exchangers") in accordance with the terms of the Credit Agreement, and it is desired that the obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof (all such obligations being the "Interest Rate Obligations"), together with all obligations of Company under the Credit Agreement and the other Loan Documents, be guarantied hereunder. C. It is a condition precedent to the making of the initial Loans under the Credit Agreement that Company's obligations thereunder be guarantied by Guarantor. D. Guarantor is willing irrevocably and unconditionally to guaranty such obligations of Company. NOW, THEREFORE, based upon the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce Lenders and Guarantied Party to enter into the Credit Agreement and to make Loans and other extensions of credit thereunder and to induce Interest Rate Exchangers to enter into the Lender Interest Rate Agreements, Guarantor hereby agrees as follows: VIII-1 SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. As used in this Guaranty, the following terms shall have the following meanings unless the context otherwise requires: "Beneficiaries" means Guarantied Party, Lenders and any Interest Rate Exchangers. "Guarantied Obligations" has the meaning assigned to that term in subsection 2.1. "Guaranty" means this Holdings Guaranty dated as of December __, 1996, as it may be amended, restated, supplemented or otherwise modified from time to time. "payment in full", "paid in full" or any similar term means payment in full of the Guarantied Obligations, including without limitation all principal, interest, costs, fees and expenses (including without limitation legal fees and expenses) of Beneficiaries as required under the Loan Documents and the Lender Interest Rate Agreements. 1.2 Interpretation. (a) References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Guaranty unless otherwise specifically provided. (b) In the event of any conflict or inconsistency between the terms, conditions and provisions of this Guaranty and the terms, conditions and provisions of the Credit Agreement, the terms, conditions and provisions of this Guaranty shall prevail. SECTION 2. THE GUARANTY 2.1 Guaranty of the Guarantied Obligations. Guarantor hereby irrevocably and unconditionally guaranties the due and punctual payment in full of all Guarantied Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in its most comprehensive sense and includes: (a) any and all Obligations of Company and any and all Interest Rate Obligations, in each case now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, and however arising under or in connection with the Credit Agreement and the other Loan Documents and the VIII-2 Lender Interest Rate Agreements, including those arising under successive borrowing transactions under the Credit Agreement which shall either continue the Obligations of Company or from time to time renew them after they have been satisfied and including interest which, but for the filing of a petition in bankruptcy with respect to Company, would have accrued on any Guarantied Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding; and (b) those expenses set forth in subsection 2.8 hereof. 2.2 Contribution by Guarantor. Guarantor under this Guaranty and each Subsidiary Guarantor under the Subsidiary Guaranty, together desire to allocate among themselves (collectively, the "Contributing Guarantors"), in a fair and equitable manner, their obligations arising under this Guaranty and the Subsidiary Guaranty. Accordingly, in the event any payment or distribution is made on any date by Guarantor under this Guaranty or a Subsidiary Guarantor under the Subsidiary Guaranty (a "Funding Guarantor") that exceeds its Fair Share (as defined below) as of such date, that Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the amount of such other Contributing Guarantor's Fair Share Shortfall (as defined below) as of such date, with the result that all such contributions will cause each Contributing Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of such date. "Fair Share" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (i) the ratio of (x) the Fair Share Contribution Amount (as defined below) with respect to such Contributing Guarantor to (y) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty and the Subsidiary Guaranty in respect of the obligations guarantied. "Fair Share Shortfall" means, with respect to a Contributing Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Contributing Guarantor over the Aggregate Payments of such Contributing Guarantor. "Fair Share Contribution Amount" means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty or the Subsidiary Guaranty, as applicable, that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law; provided that, solely for purposes of calculating the "Fair Share Contribution Amount" with respect to any Contributing Guarantor for purposes of this subsection 2.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder or under subsection 2.2(b) of the Subsidiary Guaranty shall not be considered as assets or liabilities of such Contributing Guarantor. "Aggregate Payments" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty or the Subsidiary Guaranty, as applicable (including in respect of this subsection 2.2 or subsection 2.2(b) of the Subsidiary Guaranty), minus (ii) the aggregate amount of all payments received on or before VIII-3 such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this subsection 2.2 or subsection 2.2(b) of the Subsidiary Guaranty. The amounts payable as contributions hereunder and under subsection 2.2(b) of the Subsidiary Guaranty shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this subsection 2.2 and subsection 2.2(b) of the Subsidiary Guaranty shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder or under the Subsidiary Guaranty. Each Subsidiary Guarantor is a third party beneficiary to the contribution agreement set forth in this subsection 2.2. 2.3 Payment by Guarantor; Application of Payments. Guarantor hereby agrees, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against Guarantor by virtue hereof, that upon the failure of Company to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)), Guarantor will upon demand pay, or cause to be paid, in cash, to Guarantied Party for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including without limitation interest which, but for the filing of a petition in bankruptcy with respect to Company, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding) and all other Guarantied Obligations then owed to Beneficiaries as aforesaid. All such payments shall be applied promptly from time to time by Guarantied Party as provided in subsection 2.4D of the Credit Agreement. 2.4 Liability of Guarantor Absolute. Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. (b) Guarantied Party may enforce this Guaranty upon the occurrence of an Event of Default under the Credit Agreement or the occurrence of an Early Termination Date (as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the form prepared by the International Swap and Derivatives Association Inc. or a similar event under any similar swap agreement) under any Lender Interest Rate Agreement (either such occurrence being an "Event of VIII-4 Default" for purposes of this Agreement) notwithstanding the existence of any dispute between Company and any Beneficiary with respect to the existence of such Event of Default. (c) The obligations of Guarantor hereunder are independent of the obligations of Company under the Loan Documents or the Lender Interest Rate Agreements and the obligations of any other guarantor (including any Subsidiary Guarantor) of the obligations of Company under the Loan Documents or the Lender Interest Rate Agreements, and a separate action or actions may be brought and prosecuted against Guarantor whether or not any action is brought against Company or any of such other guarantors and whether or not Company is joined in any such action or actions. (d) Guarantor's payment of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if Guarantied Party is awarded a judgment in any suit brought to enforce Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit. (e) Any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties (including the Subsidiary Guaranty) of the Guarantied Obligations, or any other obligation of any Person with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent with the Credit Agreement or the applicable Lender Interest Rate Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Guarantor against VIII-5 Company or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it under the Loan Documents or the Lender Interest Rate Agreements. (f) This Guaranty and the obligations of Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guarantied Obligations), including without limitation the occurrence of any of the following, whether or not Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents or the Lender Interest Rate Agreements, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to the Subsidiary Guaranty or any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including without limitation provisions relating to events of default) of the Credit Agreement, any of the other Loan Documents, any of the Lender Interest Rate Agreements or any agreement or instrument executed pursuant thereto, or of the Subsidiary Guaranty or any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of the Credit Agreement or such Loan Document, such Lender Interest Rate Agreement or any agreement relating to the Subsidiary Guaranty or such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or any of the Lender Interest Rate Agreements or from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Beneficiary's consent to the change, reorganization or termination of the corporate structure or existence of Company or any of its Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guarantied Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Beneficiary in respect of the Guarantied Obligations, including, but not limited to, failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of Guarantor as an obligor in respect of the Guarantied Obligations. VIII-6 2.5 Waivers by Guarantor. Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by Guarantor, to (i) proceed against Company, any other guarantor (including any Subsidiary Guarantor) of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of any Beneficiary in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company including without limitation any defense based on or arising out of the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company from any cause other than payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary's errors or omissions in the administration of the Guarantied Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Credit Agreement, the Lender Interest Rate Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in subsection 2.4 and any right to consent to any thereof; and VIII-7 (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty. 2.6 Guarantor's Rights of Subrogation, Contribution, Etc. Until the Guarantied Obligations have been paid in full and the Commitments terminated, Guarantor hereby waives any claim, right or remedy, direct or indirect, that Guarantor now has or may hereafter have against Company or any of its assets in connection with this Guaranty or the performance by Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including, without limitation, (a) any right of subrogation, reimbursement or indemnification that Guarantor now has or may hereafter have against Company, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Company, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guarantied Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, Guarantor shall withhold exercise of any right of contribution Guarantor may have against any other guarantor of the Guarantied Obligations (including without limitation any such right of contribution under the Subsidiary Guaranty as contemplated by subsection 2.2). Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification Guarantor may have against Company or against any collateral or security, and any rights of contribution Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Company, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to be credited and applied against the Guarantied Obligations, whether matured or unmatured, in accordance with the terms hereof. 2.7 Subordination of Other Obligations. Any indebtedness of Company or any Subsidiary Guarantor now or hereafter held by Guarantor is hereby subordinated in right of payment to the Guarantied Obligations, and any such indebtedness collected or received by Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid over to Guarantied Party for the benefit of Beneficiaries to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of Guarantor under any other provision of this Guaranty. VIII-8 2.8 Expenses. Guarantor agrees to pay, or cause to be paid, on demand, and to save Beneficiaries harmless against liability for, any and all costs and expenses (including fees and disbursements of counsel and allocated costs of internal counsel) incurred or expended by any Beneficiary in connection with the enforcement of or preservation of any rights under this Guaranty. 2.9 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guarantied Obligations shall have been paid in full and the Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guarantied Obligations. 2.10 Authority of Guarantor or Company. It is not necessary for any Beneficiary to inquire into the capacity or powers of Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them. 2.11 Financial Condition of Company. Any Loans may be granted to Company or continued from time to time, and any Lender Interest Rate Agreement may be entered into from time to time, in each case without notice to or authorization from Guarantor regardless of the financial or other condition of Company at the time of any such grant or continuation or at the time such Lender Interest Rate Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with Guarantor its assessment, or Guarantor's assessment, of the financial condition of Company. Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Loan Documents and the Lender Interest Rate Agreements, and Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Beneficiary. 2.12 Rights Cumulative. The rights, powers and remedies given to Beneficiaries by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Beneficiaries by virtue of any statute or rule of law or in any of the other Loan Documents, any of the Lender Interest Rate Agreements or any agreement between Guarantor and any Beneficiary or Beneficiaries or between Company and any Beneficiary or Beneficiaries. Any VIII-9 forbearance or failure to exercise, and any delay by any Beneficiary in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. 2.13 Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty. (a) So long as any Guarantied Obligations remain outstanding, Guarantor shall not, without the prior written consent of Guarantied Party acting pursuant to the instructions of Requisite Obligees (as defined in subsection 3.12), commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against Company. The obligations of Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company or by any defense which Company may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of Guarantor and Beneficiaries that the Guarantied Obligations which are guarantied by Guarantor pursuant to this Guaranty should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guarantied Obligations. Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Guarantied Party, or allow the claim of Guarantied Party in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by Company, the obligations of Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. 2.14 Notice of Events. As soon as Guarantor obtains knowledge thereof, Guarantor shall give Guarantied Party written notice of any condition or event which has resulted in a breach of or noncompliance with any term, condition or covenant contained herein. 2.15 Set Off. VIII-10 In addition to any other rights any Beneficiary may have under law or in equity, if any amount shall at any time be due and owing by Guarantor to any Beneficiary under this Guaranty, such Beneficiary is authorized at any time or from time to time upon the occurrence and during the continuation of any Event of Default, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness of such Beneficiary owing to Guarantor and any other property of Guarantor held by any Beneficiary to or for the credit or the account of Guarantor against and on account of the Guarantied Obligations and liabilities of Guarantor to any Beneficiary under this Guaranty. SECTION 3. MISCELLANEOUS 3.1 Survival of Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the other Loan Documents and the Lender Interest Rate Agreements and any increase in the Commitments under the Credit Agreement. 3.2 Notices. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier and shall be deemed to have been given when delivered in person or by courier service, or upon receipt of telefacsimile or telex (with received answerback) or three Business Days after depositing it in the United States mail with postage pre-paid and properly addressed; provided, notices to Guarantied Party shall not be effective until received. For purposes hereof, the address of each party hereto shall be as provided in subsection 10.8 of the Credit Agreement or as set forth under such party's name on the signature pages hereof or, as to any party, such other address as shall be designated by such party in a written notice delivered to the other parties hereto. 3.3 Severability. In case any provision in or obligation under this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 3.4 Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Guaranty, and no consent to any departure by Guarantor therefrom, shall in any event be effective without the written concurrence of Guarantied Party and, in the case of any such amendment or VIII-11 modification, Guarantor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 3.5 Headings. Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 3.6 Applicable Law; Rules of Construction. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Guaranty mutatis mutandis. 3.7 Successors and Assigns. This Guaranty is a continuing guaranty and shall be binding upon Guarantor and its successors and assigns. This Guaranty shall inure to the benefit of Beneficiaries and their respective successors and assigns. Guarantor shall not assign this Guaranty or any of the rights or obligations of Guarantor hereunder without the prior written consent of all Lenders. Any Beneficiary may, without notice or consent, assign its interest in this Guaranty in whole or in part. The terms and provisions of this Guaranty shall inure to the benefit of any transferee or assignee of any Loan, and in the event of such transfer or assignment the rights and privileges herein conferred upon such Beneficiary shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. 3.8 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO GUARANTOR AT ITS ADDRESS PROVIDED VIII-12 IN ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT BENEFICIARIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. 3.9 Waiver of Trial by Jury. GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH BENEFICIARY EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Guarantor and, by its acceptance of the benefits hereof, each Beneficiary each (i) acknowledges that this waiver is a material inducement for Guarantor and Beneficiaries to enter into a business relationship, that Guarantor and Beneficiaries have already relied on this waiver in entering into this Guaranty or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 3.9 AND EXECUTED BY GUARANTIED PARTY AND GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court. 3.10 No Other Writing. This writing is intended by Guarantor and Beneficiaries as the final expression of this Guaranty and is also intended as a complete and exclusive statement of the terms of their agreement with respect to the matters covered hereby. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Guaranty. There are no conditions to the full effectiveness of this Guaranty. VIII-13 3.11 Further Assurances. At any time or from time to time, upon the request of Guarantied Party, Guarantor shall execute and deliver such further documents and do such other acts and things as Guarantied Party may reasonably request in order to effect fully the purposes of this Guaranty. 3.12 Guarantied Party as Administrative Agent. (a) Guarantied Party has been appointed to act as Guarantied Party hereunder by Lenders and, by their acceptance of the benefits hereof, Interest Rate Exchangers. Guarantied Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action, solely in accordance with this Guaranty and the Credit Agreement; provided that Guarantied Party shall exercise, or refrain from exercising, any remedies hereunder in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Lender Interest Rate Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Lender Interest Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "Requisite Obligees"). In furtherance of the foregoing provisions of this subsection 3.12, each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to enforce this Guaranty, it being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by Guarantied Party for the benefit of Beneficiaries in accordance with the terms of this subsection 3.12. (b) Guarantied Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Guarantied Party under this Guaranty; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Guarantied Party under this Guaranty; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Guarantied Party under this Guaranty. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Guarantied Party under this Guaranty, and the retiring or removed Guarantied Party under this Guaranty shall promptly (i) transfer to such successor Guarantied Party all sums held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Guarantied Party under this Guaranty, and (ii) take such other actions as may be necessary or appropriate in connection with the assignment to such successor Guarantied Party of the rights created hereunder, whereupon such retiring or removed Guarantied Party shall be discharged from its duties and obligations under this Guaranty. After any retiring or removed VIII-14 Guarantied Party's resignation or removal hereunder as Guarantied Party, the provisions of this Guaranty shall inure to its benefit as to any actions taken or omitted to be taken by it under this Guaranty while it was Guarantied Party hereunder. [Remainder of page intentionally left blank] VIII-15 IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first written above. MBW HOLDINGS INC. By: ___________________________________ Name: Title: VIII-16 EXHIBIT IX [FORM OF PLEDGE AGREEMENT] PLEDGE AGREEMENT This PLEDGE AGREEMENT (this "Agreement") is dated as of December __, 1996 and entered into by and among MBW FOODS INC., a Delaware corporation ("Company"), MBW HOLDINGS INC., a Delaware corporation ("Holdings") (each of Company and Holdings being a "Pledgor" and collectively "Pledgors"; provided that after the Closing Date, "Pledgors" shall mean and include Company, Holdings and any Additional Pledgors (as hereinafter defined)), and THE CHASE MANHATTAN BANK, as administrative agent for and representative of (in such capacity herein called "Secured Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below and any Interest Rate Exchangers (as hereinafter defined). PRELIMINARY STATEMENTS A. Pledgors are the legal and beneficial owners of (i) the shares of stock (the "Pledged Shares") described in Part A of Schedule I annexed hereto and issued by the corporations named therein and (ii) the indebtedness (the "Pledged Debt") described in Part B of said Schedule I and issued by the obligors named therein. B. Pursuant to that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Company, Holdings, Lenders, Secured Party, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit Agreement, to extend certain credit facilities to Company. C. Company may from time to time enter, or may from time to time have entered, into one or more Interest Rate Agreement (collectively, the "Lender Interest Rate Agreements") with one or more Lenders or their Affiliates (in such capacity, collectively, "Interest Rate Exchangers") in accordance with the terms of the Credit Agreement, and it is desired that the obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof (all such obligations being the "Interest Rate Obligations"), together with all obligations of Company under the Credit Agreement and the other Loan Documents, be secured hereunder. IX-1 D. Holdings has executed and delivered that certain Holdings Guaranty dated as of December __, 1996 (said Holdings Guaranty, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Holdings Guaranty") in favor of Secured Party for the benefit of Lenders and any Interest Rate Exchangers, pursuant to which Holdings has guarantied the prompt payment and performance when due of all obligations of Company under the Credit Agreement and the other Loan Documents and all obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof. E. Additional Pledgors shall execute and deliver counterparts to that certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Subsidiary Guaranty" and together with the Holdings Guaranty, the "Guaranties") in favor of Secured Party for the benefit of Lenders and any Interest Rate Exchangers, pursuant to which each Additional Pledgor shall guaranty the prompt payment and performance when due of all obligations of Company under the Credit Agreement and all obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof. F. It is a condition precedent to the initial extensions of credit by Lenders under the Credit Agreement that each Pledgor shall have granted the security interests and undertaken the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Lenders to make Loans and other extensions of credit under the Credit Agreement and to induce Interest Rate Exchangers to enter into Lender Interest Rate Agreements, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Pledgor hereby agrees with Secured Party as follows: SECTION 1. Pledge of Security. Each Pledgor hereby pledges and assigns to Secured Party, and hereby grants to Secured Party a security interest in, all of Pledgor's right, title and interest in and to the following (the "Pledged Collateral"): (a) the Pledged Shares owned by such Pledgor and the certificates representing such Pledged Shares and any interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Pledged Shares, and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Pledged Shares; provided, however, that to the extent the issuer of any of the Pledged Shares is a controlled foreign corporation (used hereinafter as such term is defined in Section 957(a) or a successor provision of the Internal Revenue Code of 1986, as IX-2 amended from time to time), such Pledgor shall only be required to pledge Pledged Shares of, certificates representing Pledged Shares of, and such interests pertaining to Pledged Shares of such issuer possessing up to but not exceeding 65% of the voting power of all classes of capital stock entitled to vote of such issuer, and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Pledged Shares; (b) the Pledged Debt owned by such Pledgor and the instruments evidencing such Pledged Debt, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Pledged Debt; (c) all additional shares of, and all securities convertible into and warrants, options and other rights to purchase or otherwise acquire, stock of any issuer of any Pledged Shares from time to time acquired by such Pledgor in any manner (which shares shall be deemed to be part of the Pledged Shares), the certificates or other instruments representing such additional shares, securities, warrants, options or other rights and any interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such additional shares (all such shares, securities, warrants, options, rights, certificates, instruments and interests collectively being "Additional Pledged Shares"), and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Additional Pledged Shares; provided, however, that to the extent that the issuer of any Additional Pledged Shares is a controlled foreign corporation, such Pledgor shall only be required to pledge Additional Pledged Shares of such issuer possessing up to but not exceeding 65% of the voting power of all classes of capital stock entitled to vote of such issuer, and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Additional Pledged Shares; (d) all additional indebtedness from time to time owed to such Pledgor by any obligor on any Pledged Debt and the instruments evidencing such indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness; (e) all shares of, and all securities convertible into and warrants, options and other rights to purchase or otherwise acquire, stock of any Person that, after the date of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary of such Pledgor (which shares shall be deemed to be part of the Pledged Shares), the certificates or other instruments representing such shares, securities, warrants, options or other rights and any interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such shares (all such shares, securities, warrants, options, rights, IX-3 certificates, instruments and interests collectively being "New Pledged Shares"), and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares, securities, warrants, options or other rights; provided, however, that in the event that any such direct Subsidiary is a controlled foreign corporation, such Pledgor shall only be required to pledge New Pledged Shares of such Subsidiary possessing up to but not exceeding 65% of the voting power of all classes of capital stock entitled to vote of such Subsidiary, and all dividends, cash, warrants, rights, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such New Pledged Shares; (f) all indebtedness from time to time owed to such Pledgor by any Person that, after the date of this Agreement, becomes, as a result of such any occurrence, a direct or indirect Subsidiary of such Pledgor, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness; and (g) to the extent not covered by clauses (a) through (f) above, all proceeds of any or all of the foregoing Pledged Collateral. For purposes of this Agreement, the term "proceeds" includes whatever is receivable or received when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to such Pledgor or Secured Party from time to time with respect to any of the Pledged Collateral. SECTION 2. Security for Obligations. This Agreement secures, and the Pledged Collateral pledged and assigned by each Pledgor is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations with respect to such Pledgor. "Secured Obligations" means (a) with respect to Company, all obligations and liabilities of every nature of Company now or hereafter existing under or arising out of or in connection with the Credit Agreement and the other Loan Documents and any Lender Interest Rate Agreements, (b) with respect to Holdings, all obligations and liabilities of every nature of Holdings now or hereafter existing under or arising out of or in connection with the Credit Agreement and the Holdings Guaranty, and IX-4 (c) with respect to each Additional Pledgor, all obligations and liabilities of every nature of Additional Pledgors now or hereafter existing under or arising out of or in connection with the Subsidiary Guaranty, in each case together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Company, would accrue on such obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Lender Interest Rate Agreements, fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Secured Party or any Lender or Interest Rate Exchanger as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Pledgors now or hereafter existing under this Agreement. SECTION 3. Delivery of Pledged Collateral. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Secured Party pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by the appropriate Pledgor's endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Secured Party. Upon the occurrence and during the continuation of an Event of Default (as defined in the Credit Agreement) or the occurrence of an Early Termination Date (as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the form prepared by the International Swap and Derivatives Association Inc. or a similar event under any similar swap agreement) under any Lender Interest Rate Agreement (either such occurrence being an "Event of Default" for purposes of this Agreement), Secured Party shall have the right, without notice to any Pledgor, to transfer to or to register in the name of Secured Party or any of its nominees any or all of the Pledged Collateral, subject only to the revocable rights specified in Section 7(a). In addition, Secured Party shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. SECTION 4. Representations and Warranties. Each Pledgor represents and warrants as of the date it becomes a party hereto as follows: (a) Due Authorization, etc. of Pledged Collateral. All of the Pledged Shares owned by such Pledgor have been duly authorized and validly issued and are fully IX-5 paid and non-assessable. All of the Pledged Debt owned by such Pledgor has been duly authorized, authenticated or issued, and delivered and is the legal, valid and binding obligation of the issuers thereof and is not in default. (b) Description of Pledged Collateral. The Pledged Shares owned by such Pledgor constitute the percentage of the issued and outstanding shares of stock of each issuer thereof set forth on Schedule I annexed hereto, and there are no outstanding warrants, options or other rights to purchase, or other agreements outstanding with respect to, or property that is now or hereafter convertible into, or that requires the issuance or sale of, any Pledged Shares. The Pledged Debt owned by such Pledgor constitutes all of the issued and outstanding intercompany indebtedness evidenced by a promissory note of the respective issuers thereof owing to such Pledgor. (c) Ownership of Pledged Collateral. Such Pledgor is the legal, record and beneficial owner of the Pledged Collateral owned by such Pledgor free and clear of any Lien except for the security interest created by this Agreement. (d) Perfection. The pledge of the Pledged Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Secured Obligations. SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc. Each Pledgor shall: (a) not, except as expressly permitted by the Credit Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral, (ii) create or suffer to exist any Lien upon or with respect to any of the Pledged Collateral, except for the security interest under this Agreement, or (iii) permit any issuer of Pledged Shares to merge or consolidate unless all the outstanding capital stock of the surviving or resulting corporation is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding shares of any other constituent corporation; provided that if the surviving or resulting corporation upon any such merger or consolidation involving an issuer of Pledged Shares which is a controlled foreign corporation is a controlled foreign corporation, then such Pledgor shall only be required to pledge outstanding capital stock of such surviving or resulting corporation possessing up to but not exceeding 65% of the voting power of all classes of capital stock of such issuer entitled to vote; provided further that in the event any Pledgor makes an Asset Sale permitted by the Credit Agreement and the assets subject to such Asset Sale are Pledged Shares, Secured Party shall release the Pledged Shares that are the subject of such Asset Sale to such Pledgor free and clear of the lien and security interest under this Agreement concurrently with the consummation of such Asset Sale; and provided further, that as a condition precedent to such release, Secured Party shall have received evidence IX-6 satisfactory to it that arrangements satisfactory to it have been made for delivery to Secured Party of the Net Cash Proceeds of such Asset Sale in the event and to the extent that all or any portion of such Net Cash Proceeds are required to be applied to prepay the Loans under the Credit Agreement. (b) (i) cause each issuer of Pledged Shares not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to a Pledgor, (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of Pledged Shares, and (iii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all shares of stock of any Person that, after the date of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary of any Pledgor; provided, that notwithstanding anything contained in this clause (b) to the contrary, such Pledgor shall only be required to pledge the outstanding capital stock of a controlled foreign corporation possessing up to but not exceeding 65% of the voting power of all classes of capital stock of such controlled foreign corporation entitled to vote; (c) (i) pledge hereunder, immediately upon their issuance, any and all instruments or other evidences of additional indebtedness from time to time owed to such Pledgor by any obligor on the Pledged Debt, and (ii) pledge hereunder, immediately upon their issuance, any and all instruments or other evidences of indebtedness from time to time owed to such Pledgor by any Person that after the date of this Agreement becomes, as a result of any occurrence, a direct or indirect Subsidiary of any Pledgor; (d) promptly deliver to Secured Party all written notices received by it with respect to the Pledged Collateral; and (e) pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Pledged Collateral, except to the extent the validity thereof is being contested in good faith; provided that such Pledgor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against Pledgor or any of the Pledged Collateral as a result of the failure to make such payment. SECTION 6. Further Assurances; Pledge Amendments. (a) Each Pledgor agrees that from time to time, at the expense of Pledgors, such Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. Without limiting the generality of the foregoing, such Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such IX-7 other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby and (ii) at Secured Party's request, appear in and defend any action or proceeding that may affect such Pledgor's title to or Secured Party's security interest in all or any part of the Pledged Collateral. (b) Each Pledgor further agrees that it will, upon obtaining any additional shares of stock or other securities required to be pledged hereunder as provided in Section 5(b) or (c), promptly (and in any event within five Business Days) deliver to Secured Party a Pledge Amendment, duly executed by such Pledgor, in substantially the form of Schedule II annexed hereto (a "Pledge Amendment"), in respect of the additional Pledged Shares or Pledged Debt to be pledged pursuant to this Agreement. Each Pledgor hereby authorizes Secured Party to attach each Pledge Amendment to this Agreement and agrees that all Pledged Shares or Pledged Debt listed on any such Pledge Amendment delivered to Secured Party shall for all purposes hereunder be considered Pledged Collateral; provided that the failure of a Pledgor to execute a Pledge Amendment with respect to any additional Pledged Shares or Pledged Debt pledged pursuant to this Agreement shall not impair the security interest of Secured Party therein or otherwise adversely affect the rights and remedies of Secured Party hereunder with respect thereto. SECTION 7. Voting Rights; Dividends; Etc. (a) Pledgors' Rights. So long as no Event of Default shall have occurred and be continuing: (i) Pledgors shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; (ii) Pledgors shall be entitled to receive and retain, and to utilize free and clear of the lien of this Agreement, any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that any and all (1) dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (2) dividends and other distributions paid or payable in cash in respect of any Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (3) cash paid, payable or otherwise distributed in respect of principal or in redemption of or in exchange for any Pledged Collateral, IX-8 shall be, and shall forthwith be delivered to Secured Party to hold as, Pledged Collateral and shall, if received by a Pledgor, be received in trust for the benefit of Secured Party, be segregated from the other property or funds of such Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the same form as so received (with all necessary endorsements); and (iii) Secured Party shall promptly execute and deliver (or cause to be executed and delivered) to Pledgors all such proxies, dividend payment orders and other instruments as Pledgors may from time to time reasonably request for the purpose of enabling Pledgors to exercise the voting and other consensual rights which they are entitled to exercise pursuant to paragraph (i) above and to receive the dividends, principal or interest payments which they are authorized to receive and retain pursuant to paragraph (ii) above. (b) Secured Party's Rights. Upon acceleration of the maturity of the Loans in accordance with Section 8 of the Credit Agreement and upon the occurrence and during the continuation of an Event of Default: (i) upon written notice from Secured Party to a Pledgor, all rights of such Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have the sole right to exercise such voting and other consensual rights; (ii) all rights of Pledgors to receive the dividends and interest payments which they would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) shall cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends and interest payments; and (iii) all dividends, principal and interest payments which are received by a Pledgor contrary to the provisions of paragraph (ii) of this Section 7(b) shall be received in trust for the benefit of Secured Party, shall be segregated from other funds of such Pledgor and shall forthwith be paid over to Secured Party as Pledged Collateral in the same form as so received (with any necessary endorsements). (c) Irrevocable Proxy. In order to permit Secured Party to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to Section 7(b)(i) and to receive all dividends and other distributions which it may be entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) each Pledgor shall promptly execute and deliver (or cause to be executed and delivered) to Secured Party all such proxies, dividend payment orders and other instruments as Secured Party may from time to time reasonably request and (ii) without limiting the effect of the immediately preceding clause (i), each Pledgor hereby grants to Secured Party an IRREVOCABLE PROXY to vote the Pledged Shares owned by such Pledgor and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Shares would IX-9 be entitled (including without limitation giving or withholding written consents of shareholders, calling special meetings of shareholders and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Shares on the record books of the issuer thereof) by any other Person (including the issuer of the Pledged Shares or any officer or agent thereof), upon the occurrence of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations. SECTION 8. Secured Party Appointed Attorney-in-Fact. Each Pledgor hereby irrevocably appoints Secured Party as such Pledgor's attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) to file one or more financing or continuation statements, or amendments thereto, relative to all or any part of the Pledged Collateral without the signature of such Pledgor; (b) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Pledged Collateral; (c) to receive, endorse and collect any instruments made payable to such Pledgor representing any dividend, principal or interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same; and (d) to file any claims or take any action or institute any proceedings that Secured Party may deem necessary or desirable for the collection of any of the Pledged Collateral or otherwise to enforce the rights of Secured Party with respect to any of the Pledged Collateral. SECTION 9. Secured Party May Perform. If any Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgors under Section 13(b). IX-10 SECTION 10. Standard of Care. The powers conferred on Secured Party hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Pledged Collateral, it being understood that Secured Party shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, (b) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Pledged Collateral) to preserve rights against any parties with respect to any Pledged Collateral, (c) taking any necessary steps to collect or realize upon the Secured Obligations or any guarantee therefor, or any part thereof, or any of the Pledged Collateral, or (d) initiating any action to protect the Pledged Collateral against the possibility of a decline in market value. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equal to that which Secured Party accords its own property consisting of negotiable securities. SECTION 11. Remedies. (a) If any Event of Default shall have occurred and be continuing, Secured Party may exercise in respect of the Pledged Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether or not the Code applies to the affected Pledged Collateral), and Secured Party may also in its sole discretion, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker's board or at any of Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral. Secured Party or any Lender or Interest Rate Exchanger may be the purchaser of any or all of the Pledged Collateral at any such sale and Secured Party, as agent for and representative of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or Interest Rate Exchanger or Interest Rate Exchangers in its or their respective individual capacities unless Requisite Obligees (as defined in Section 15(a)) shall otherwise agree in writing), shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Pledged Collateral payable by Secured Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each IX-11 Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Pledgor hereby waives any claims against Secured Party arising by reason of the fact that the price at which any Pledged Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Secured Party accepts the first offer received and does not offer such Pledged Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgors shall be jointly and severally liable for the deficiency and the fees of any attorneys employed by Secured Party to collect such deficiency. (b) Each Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, Secured Party may be compelled, with respect to any sale of all or any part of the Pledged Collateral conducted without prior registration or qualification of such Pledged Collateral under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges that any such private sales may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions and, notwithstanding such circumstances, such Pledgor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that Secured Party shall have no obligation to engage in public sales and no obligation to delay the sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. (c) If Secured Party determines to exercise its right to sell any or all of the Pledged Collateral, upon written request, each Pledgor shall and shall cause each issuer of any Pledged Shares owned by such Pledgor to be sold hereunder from time to time to furnish to Secured Party all such information as Secured Party may request in order to determine the number of shares and other instruments included in the Pledged Collateral which may be sold by Secured Party in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. SECTION 12. Application of Proceeds. All proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied as provided in subsection 2.4D of the Credit Agreement. IX-12 SECTION 13. Indemnity and Expenses. (a) Pledgors jointly and severally agree to indemnify Secured Party, each Lender and each Interest Rate Exchanger from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including without limitation enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Secured Party's or such Lender's or Interest Rate Exchanger's gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. (b) Pledgors jointly and severally agree to pay to Secured Party upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Secured Party may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (iii) the exercise or enforcement of any of the rights of Secured Party hereunder, or (iv) the failure by any Pledgor to perform or observe any of the provisions hereof. (c) The obligations of Pledgors in this Section 13 shall survive the termination of this Agreement and the discharge of Pledgors' other obligations under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement and the other Loan Documents. SECTION 14. Continuing Security Interest; Transfer of Loans. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, (b) be binding upon Pledgors and their respective successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), but subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to the applicable Pledgors. Upon any such termination Secured Party will, at Pledgors' expense, execute and deliver to Pledgors such documents as Pledgors shall reasonably request to evidence such termination and Pledgors shall be entitled to the return, upon their request and at their expense, against receipt and without recourse to Secured Party, of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. IX-13 SECTION 15. Secured Party as Administrative Agent. (a) Secured Party has been appointed to act as Secured Party hereunder by Lenders and, by their acceptance of the benefits hereof, Interest Rate Exchangers. Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including without limitation the release or substitution of Pledged Collateral), solely in accordance with this Agreement and the Credit Agreement; provided that Secured Party shall exercise, or refrain from exercising, any remedies provided for in Section 11 in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Lender Interest Rate Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Lender Interest Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "Requisite Obligees"). In furtherance of the foregoing provisions of this Section 15(a), each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Pledged Collateral hereunder, it being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by Secured Party for the benefit of Lenders and Interest Rate Exchangers in accordance with the terms of this Section 15(a). (b) Secured Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Secured Party under this Agreement; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Secured Party under this Agreement; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Secured Party under this Agreement. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all sums, securities and other items of Collateral held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party hereunder. IX-14 SECTION 16. Amendments; Etc. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by any Pledgor therefrom, shall in any event be effective unless the same shall be in writing and signed by Secured Party and, in the case of any such amendment or modification, by Pledgors; provided that any Pledge Amendment in the form of Schedule II annexed hereto or any amendment hereto pursuant to Section 19 shall be effective upon execution by any Pledgor and Pledgors hereby waive any requirement of notice of or consent to any such Pledge Amendment or amendment. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. SECTION 17. Notices. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex (with received answerback), or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Secured Party shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as provided in subsection 10.8 of the Credit Agreement or as set forth under such party's name on the signature pages hereof or such other address as shall be designated by such party in a written notice delivered to the other parties hereto. SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 19. Additional Pledgors. From time to time subsequent to the date hereof, Subsidiaries of Company may become parties hereto, as additional Pledgors (each an "Additional Pledgor"), by executing an acknowledgement to this Agreement substantially in the form of Schedule III annexed hereto. Upon delivery of any such counterpart to Administrative Agent and Secured Party, notice of which is hereby waived by Pledgors, each such Additional Pledgor shall be a Pledgor and shall be as fully a party hereto as if such Additional Pledgor were an original signatory hereto. Each Pledgor expressly agrees that its obligations arising hereunder shall not be affected or diminished IX-15 by the addition or release of any other Pledgor hereunder, nor by any election of Administrative Agent not to cause any Subsidiary of Company to become an Additional Pledgor hereunder. This Agreement shall be fully effective as to any Pledgor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Pledgor hereunder. SECTION 20. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 21. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. SECTION 22. Governing Law; Terms; Rules of Construction. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are used herein as therein defined. The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Agreement mutatis mutandis. SECTION 23. Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. IX-16 BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PLEDGOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PLEDGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 17; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 23 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. SECTION 24. Waiver of Jury Trial. PLEDGORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each Pledgor and Secured Party acknowledge that this waiver is a material inducement for Pledgors and Secured Party to enter into a business relationship, that Pledgors and Secured Party have already relied on this waiver in entering into this Agreement and that each will continue to rely on this waiver in their related future dealings. Each Pledgor and Secured Party further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 24 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. IX-17 SECTION 25. Counterparts. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. [Remainder of page intentionally left blank] IX-18 IN WITNESS WHEREOF, Pledgors and Secured Party have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. MBW FOODS INC. By:______________________________________ Name: Title: MBW HOLDINGS INC. By:______________________________________ Name: Title: IX-19 THE CHASE MANHATTAN BANK, as Secured Party By:______________________________________ Name: Karen Sharf Title: Vice President IX-20 SCHEDULE I TO PLEDGE AGREEMENT Attached to and forming a part of the Pledge Agreement dated as of December __, 1996, by and among the Pledgors referred to therein and The Chase Manhattan Bank, as Secured Party. Part A ================================================================================ Percentage of Stock Number Outstanding Class of Certificate Par of Shares Pledgor Stock Issuer Stock Nos. Value Shares Pledged ================================================================================ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ Part B ================================================================================ Pledgor Debt Issuer Amount of Indebtedness ================================================================================ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ IX-I-I SCHEDULE II TO PLEDGE AGREEMENT [FORM OF PLEDGE AMENDMENT] This Pledge Amendment, dated _______________, [199_] [200_] is delivered pursuant to Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement dated as of December __, 1996, by and among the Pledgors referred to therein and The Chase Manhattan Bank, as Secured Party (the "Pledge Agreement", capitalized terms defined therein being used herein as therein defined), and that the [Pledged Shares] [Pledged Debt] listed on this Pledge Amendment shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and shall become part of the Pledged Collateral and shall secure all Secured Obligations. [NAME OF PLEDGOR] By: ______________________________________ Name: Title: ================================================================================ Percentage of Class of Stock Par Number of Outstanding Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged ================================================================================ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ ===================================================== Amount of Debt Issuer Indebtedness ===================================================== ----------------------------------------------------- ----------------------------------------------------- ===================================================== IX-II-1 SCHEDULE III TO PLEDGE AGREEMENT [FORM OF PLEDGE ACKNOWLEDGEMENT] This Pledge Acknowledgement, dated _______________, [199_] [200_], is delivered pursuant to Section 19 of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Acknowledgement may be attached to the Pledge Agreement dated December __, 1996, by and among the Pledgors referred to therein and The Chase Manhattan Bank, as Secured Party (the "Pledge Agreement", capitalized terms defined therein being used herein as therein defined), that the undersigned by executing and delivering this Acknowledgement hereby becomes a Pledgor under the Pledge Agreement in accordance with Section 19 thereof and agrees to be bound by all of the terms thereof, and that the [Pledged Shares] [Pledged Debt] listed on this Pledge Acknowledgement shall be deemed to be part of the [Pledged Shares] [Pledged Debt] and shall become part of the Pledged Collateral and shall secure all Secured Obligations. [NAME OF ADDITIONAL PLEDGOR] By: ______________________________________ Name: Title: Notice Address: _______________________________ _______________________________ _______________________________ _______________________________ IX-III-1 ================================================================================ Percentage of Class of Stock Par Number of Outstanding Stock Issuer Stock Certificate Nos. Value Shares Shares Pledged ================================================================================ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ ===================================================== Amount of Debt Issuer Indebtedness ===================================================== ----------------------------------------------------- ----------------------------------------------------- ----------------------------------------------------- ===================================================== IX-III-2 EXHIBIT X [FORM OF SECURITY AGREEMENT] SECURITY AGREEMENT This SECURITY AGREEMENT (this "Agreement") is dated as of December __, 1996 and entered into by and among MBW FOODS INC., a Delaware corporation ("Company"), MBW HOLDINGS INC., a Delaware corporation ("Holdings") (each of Company and Holdings being a "Grantor" and collectively "Grantors"; provided that after the Closing Date, "Grantors" shall mean and include Company, Holdings and any Additional Grantors (as hereinafter defined)) and THE CHASE MANHATTAN BANK, as administrative agent for and representative of (in such capacity herein called "Secured Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below and any Interest Rate Exchangers (as hereinafter defined). PRELIMINARY STATEMENTS A. Pursuant to that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined) by and among Company, MBW Holdings Inc., a Delaware corporation, Lenders, Secured Party, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit Agreement, to extend certain credit facilities to Company. B. Company may from time to time enter, or may from time to time have entered, into one or more Interest Rate Agreement (collectively, the "Lender Interest Rate Agreements") with one or more Lenders or their Affiliates (in such capacity, collectively, "Interest Rate Exchangers") in accordance with the terms of the Credit Agreement, and it is desired that the obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof (all such obligations being the "Interest Rate Obligations"), together with all obligations of Company under the Credit Agreement and the other Loan Documents, be secured hereunder. C. Holdings has executed and delivered that certain Holdings Guaranty dated as of December __, 1996 (said Holdings Guaranty, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Holdings Guaranty") in favor of Secured Party for the benefit of Lenders and any Interest Rate Exchangers, pursuant to which Holdings has guarantied the prompt payment and performance when due of all X-1 obligations of Company under the Credit Agreement and the other Loan Documents and all obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof. D. Additional Grantors shall execute and deliver counterparts to that certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and any Interest Rate Exchangers, pursuant to which each Additional Grantor shall guaranty the prompt payment and performance when due of all obligations of Company under the Credit Agreement and the other Loan Documents and all obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof. E. It is a condition precedent to the initial extensions of credit by Lenders under the Credit Agreement that Grantors shall have granted the security interests and undertaken the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Lenders to make Loans and other extensions of credit under the Credit Agreement and to induce Interest Rate Exchangers to enter into the Lender Interest Rate Agreements, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Grantor hereby agrees with Secured Party as follows: SECTION 1. Grant of Security. Each Grantor hereby assigns to Secured Party, and hereby grants to Secured Party a security interest in, all of such Grantor's right, title and interest in and to the following, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located (the "Collateral"): (a) all equipment in all of its forms (including, but not limited to, all machinery, all computers, all data processing, computer or office equipment, all furniture and all trucks and other vehicles), all parts thereof and all accessions thereto (any and all such equipment, parts and accessions being the "Equipment"); (b) all inventory in all of its forms (including, but not limited to, (i) all goods held by such Grantor for sale or lease or to be furnished under contracts of service or so leased or furnished, (ii) all raw materials, work in process, finished goods, samples, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in such Grantor's business, (iii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind, and (iv) all goods which X-2 are returned to or repossessed by such Grantor) and all accessions thereto and products thereof (all such inventory, accessions and products being the "Inventory") and all negotiable and non-negotiable documents of title (including without limitation warehouse receipts, dock receipts and bills of lading) issued by any Person covering any Inventory (any such negotiable document of title being a "Negotiable Document of Title"); (c) all accounts, contract rights, chattel paper, documents, instruments, general intangibles and other rights and obligations of any kind owned by or owing to such Grantor and all rights in, to and under all security agreements, leases and other contracts securing or otherwise relating to any such accounts, contract rights, chattel paper, documents, instruments, general intangibles or other obligations (any and all such accounts, contract rights, chattel paper, documents, instruments, general intangibles and other obligations being the "Accounts", and any and all such security agreements, leases and other contracts being the "Related Contracts"); (d) all agreements to which such Grantor is a party, including without limitation those listed in Schedule 1(d) annexed hereto, as each such agreement may be amended, restated, supplemented or otherwise modified from time to time (said agreements, as so amended, restated, supplemented or otherwise modified, being referred to herein individually as an "Assigned Agreement" and collectively as the "Assigned Agreements"), including, without limitation, (i) all rights of such Grantor to receive moneys due or to become due under or pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii) all claims of such Grantor for damages arising out of any breach of or default under the Assigned Agreements, and (iv) all rights of such Grantor to terminate, amend, supplement, modify or exercise rights or options under the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder; (e) all cash, money, currency and deposit accounts, including without limitation demand, time, savings, passbooks or similar accounts maintained with Lenders or other banks, savings and loan associations or other financial institutions; (f) all trademarks, trademark applications, trade names, trade secrets, trade dress, service marks, business names, patents, patent applications, licenses, copyrights and copyright applications owned by such Grantor, and all goodwill associated with any of the foregoing; (g) to the extent not included in any other paragraph of this Section 1, all other general intangibles (including without limitation unpatented formulas, recipes, manufacturing methods and processes, inventions, discoveries, tax refunds, rights to payment or performance, choses in action and judgments taken on any rights or claims included in the Collateral); X-3 (h) all plant fixtures, business fixtures and other fixtures and storage and office facilities, and all accessions thereto and products thereof; (i) all books, records, ledger cards, files, sales records, sales and promotional data, invoices, product specifications, drawings, advertising materials, customer lists, cost and pricing information, supplier lists, business plans, catalogs, quality control manuals, blueprints, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; and (j) all proceeds, products, rents and profits of or from any and all of the foregoing Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Secured Party is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral. For purposes of this Agreement, the term "proceeds" includes whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. SECTION 2. Security for Obligations. This Agreement secures, and the Collateral assigned by each Grantor is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations with respect to such Grantor. "Secured Obligations" means (a) with respect to Company, all obligations and liabilities of every nature of Company now or hereafter existing under or arising out of or in connection with the Credit Agreement and the other Loan Documents and any Lender Interest Rate Agreement, (b) with respect to Holdings, all obligations and liabilities of every nature of Holdings now or hereafter existing under or arising out of or in connection with the Credit Agreement and the Holdings Guaranty, and (c) with respect to each Additional Grantor, all obligations and liabilities of every nature of Additional Grantors now or hereafter existing under or arising out of or in connection with the Subsidiary Guaranty, X-4 in each case together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Company, would accrue on such obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Lender Interest Rate Agreements, fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Secured Party or any Lender or Interest Rate Exchanger as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Grantors now or hereafter existing under this Agreement. SECTION 3. Grantors Remain Liable. Anything contained herein to the contrary notwithstanding, (a) each Grantor shall remain liable under any contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Secured Party of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) Secured Party shall not have any obligation or liability under any contracts and agreements included in the Collateral by reason of this Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. SECTION 4. Representations and Warranties. Each Grantor represents and warrants as of the date it becomes a party hereto as follows: (a) Ownership of Collateral. Except as expressly permitted by the Credit Agreement and for the security interest created by this Agreement, such Grantor owns the Collateral owned by such Grantor free and clear of any Lien. (b) Locations of Equipment and Inventory. All of the Equipment and Inventory is, as of the date such Grantor has become a party hereto, located at the places specified in Schedule 4(b) annexed hereto. (c) Negotiable Documents of Title. No Negotiable Documents of Title are outstanding with respect to any of the Inventory. X-5 (d) Office Locations. The chief place of business, the chief executive office and the office where such Grantor keeps its records regarding the Accounts and all originals of all chattel paper that evidence Accounts are located at the locations set forth on Schedule 4(d) annexed hereto. (e) Names. No Grantor has in the past done, and no Grantor now does, business under any other name (including any trade-name or fictitious business name) except the names listed in Schedule 4(e) annexed hereto. (f) Delivery of Certain Collateral. All notes and other instruments (excluding checks) comprising any and all items of Collateral have been delivered to Secured Party duly endorsed and accompanied by duly executed instruments of transfer or assignment in blank. (g) Perfection. The security interests in the Collateral granted to Secured Party for the ratable benefit of the Lenders and Interest Rate Exchangers hereunder constitute valid security interests in the Collateral. Upon the filing of UCC financing statements naming each Grantor as "debtor", naming Secured Party as "secured party" and describing the Collateral in the filing offices set forth on Schedule 4(g) annexed hereto, the security interests in the Collateral granted to Secured Party for the ratable benefit of the Lenders and Interest Rate Exchangers will, to the extent a security interest in the Collateral may be perfected by filing UCC financing statements, constitute perfected security interests therein prior to all other Liens. SECTION 5. Further Assurances. (a) Each Grantor agrees that from time to time, at the expense of Grantors, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor will: (i) at the request of Secured Party, mark conspicuously each item of chattel paper included in the Accounts, each Related Contract and, at the request of Secured Party, each of its records pertaining to the Collateral, with a legend, in form and substance satisfactory to Secured Party, indicating that such Collateral is subject to the security interest granted hereby, (ii) at the request of Secured Party, deliver and pledge to Secured Party hereunder all promissory notes and other instruments (including checks) and all original counterparts of chattel paper constituting Collateral, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Secured Party, (iii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby, (iv) promptly after the acquisition by such Grantor of any item of Equipment which is covered by a certificate of X-6 title under a statute of any jurisdiction under the law of which indication of a security interest on such certificate is required as a condition of perfection thereof, execute and file with the registrar of motor vehicles or other appropriate authority in such jurisdiction an application or other document requesting the notation or other indication of the security interest created hereunder on such certificate of title, (v) within 30 days after the end of each calendar year and June 30 of each calendar year, deliver to Secured Party copies of all such applications or other documents filed during such semiannual period and copies of all such certificates of title issued during such semiannual period indicating the security interest created hereunder in the items of Equipment covered thereby, (vi) at any reasonable time, upon request by Secured Party, exhibit the Collateral to and allow inspection of the Collateral by Secured Party, or persons designated by Secured Party, and (vii) at Secured Party's request, appear in and defend any action or proceeding that may affect such Grantor's title to or Secured Party's security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of any Grantor. Each Grantor agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement signed by such Grantor shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions. (c) Each Grantor will furnish to Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may reasonably request, all in reasonable detail. SECTION 6. Certain Covenants of Grantors. Each Grantor shall: (a) not use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (b) notify Secured Party of any change in such Grantor's name, identity or corporate structure within 15 days of such change; (c) give Secured Party 30 days' prior written notice of any change in such Grantor's chief place of business, chief executive office or residence or the office where such Grantor keeps its records regarding the Accounts and all originals of all chattel paper that evidence Accounts; and (d) pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Collateral, except to the extent the validity thereof X-7 is being contested in good faith; provided that such Grantor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against such Grantor or any of the Collateral as a result of the failure to make such payment. SECTION 7. Special Covenants With Respect to Equipment and Inventory. Each Grantor shall: (a) keep the Equipment and Inventory owned by such Grantor at the places therefor specified on Schedule 4(b) annexed hereto or, upon 30 days' prior written notice to Secured Party, at such other places in jurisdictions where all action that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby, or to enable Secured Party to exercise and enforce its rights and remedies hereunder, with respect to such Equipment and Inventory shall have been taken; (b) cause the Equipment owned by such Grantor to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with such Grantor's past practices. Each Grantor shall promptly furnish to Secured Party a statement respecting any material loss or damage to any of the Equipment owned by such Grantor; (c) keep correct and accurate records of Inventory owned by such Grantor, itemizing and describing the kind, type and quantity of such Inventory, such Grantor's cost therefor and (where applicable) the current list prices for such Inventory; (d) if any Inventory is in possession or control of any of such Grantor's agents or processors, if the aggregate book value of all such Inventory exceeds $300,000, and in any event upon the occurrence of an Event of Default (as defined in the Credit Agreement) or the occurrence of an Early Termination Date (as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the form prepared by the International Swap and Derivatives Association Inc. or a similar event under any similar swap agreement) under any Lender Interest Rate Agreement (either such occurrence being an "Event of Default" for purposes of this Agreement), instruct such agent or processor to hold all such Inventory for the account of Secured Party and subject to the instructions of Secured Party. (e) promptly upon the issuance and delivery to such Grantor of any Negotiable Document of Title, deliver such Negotiable Document of Title to Secured Party. X-8 SECTION 8. Insurance. Each Grantor shall, at its own expense, maintain insurance with respect to the Equipment and Inventory in accordance with the terms of the Credit Agreement. SECTION 9. Special Covenants with respect to Accounts and Related Contracts. (a) Each Grantor shall keep its chief place of business and chief executive office and the office where it keeps its records concerning the Accounts and Related Contracts, and all originals of all chattel paper that evidence Accounts, at the location therefor specified in Section 4 or, upon 30 days' prior written notice to Secured Party, at such other location in a jurisdiction where all action that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby, or to enable Secured Party to exercise and enforce its rights and remedies hereunder, with respect to such Accounts and Related Contracts shall have been taken. Each Grantor will hold and preserve such records and chattel paper and will permit representatives of Secured Party at any time during normal business hours to inspect and make abstracts from such records and chattel paper, and each Grantor agrees to render to Secured Party, at Grantor's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. Promptly upon the request of Secured Party, each Grantor shall deliver to Secured Party complete and correct copies of each Related Contract. (b) Each Grantor shall, for not less than 3 years from the date on which such Account arose, maintain (i) complete records of each Account of such Grantor, including records of all payments received, credits granted and merchandise returned, and (ii) all documentation relating thereto. (c) Except as otherwise provided in this subsection (c), each Grantor shall continue to collect, at its own expense, all amounts due or to become due to such Grantor under the Accounts and Related Contracts. In connection with such collections, each Grantor may take (and, at Secured Party's direction, shall take) such action as such Grantor or Secured Party may deem necessary or advisable to enforce collection of amounts due or to become due under the Accounts; provided, however, that Secured Party shall have the right at any time, upon the occurrence and during the continuation of an Event of Default or a Potential Event of Default and upon written notice to such Grantor of its intention to do so, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to Secured Party and to direct such account debtors or obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to Secured Party, to notify each Person maintaining a lockbox or similar arrangement to which account debtors or obligors under any Accounts have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to Secured Party and, upon such notification and at the expense of Grantors, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. After X-9 receipt by such Grantor of the notice from Secured Party referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Accounts and the Related Contracts shall be received in trust for the benefit of Secured Party hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to Secured Party in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 18, and (ii) such Grantor shall not adjust, settle or compromise the amount or payment of any Account, or release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. SECTION 10. Special Provisions With Respect to the Assigned Agreements. (a) Each Grantor shall at its expense: (i) if consistent with sound business practices, perform and observe all terms and provisions of the Assigned Agreements to be performed or observed by it, maintain the Assigned Agreements in full force and effect, enforce the Assigned Agreements in accordance with their terms, and take all such action to such end as may be from time to time requested by Secured Party; and (ii) upon the reasonable request of Secured Party, furnish to Secured Party, promptly upon receipt thereof, copies of all notices, requests and other documents received by such Grantor under or pursuant to the Assigned Agreements, and from time to time (A) furnish to Secured Party such information and reports regarding the Assigned Agreements as Secured Party may reasonably request and (B) upon request of Secured Party make to the parties to such Assigned Agreements such demands and requests for information and reports or for action as such Grantor is entitled to make under the Assigned Agreements. (b) Upon the occurrence and during the continuance of an Event of Default, no Grantor shall: (i) cancel or terminate any of the Assigned Agreements or consent to or accept any cancellation or termination thereof; (ii) amend or otherwise modify the Assigned Agreements or give any consent, waiver or approval thereunder; (iii) waive any default under or breach of the Assigned Agreements; (iv) consent to or permit or accept any prepayment of amounts to become due under or in connection with the Assigned Agreements, except as expressly provided therein; or X-10 (v) take any other action in connection with the Assigned Agreements that would materially impair the value of the interest or rights of such Grantor thereunder or that would materially impair the interest or rights of Secured Party. SECTION 11. Deposit Accounts. Upon the occurrence and during the continuation of an Event of Default, Secured Party may exercise dominion and control over, and refuse to permit further withdrawals (whether of money, securities, instruments or other property) from any deposit accounts maintained with Secured Party constituting part of the Collateral. SECTION 12. License of Patents, Trademarks, Copyrights, etc. Each Grantor hereby assigns, transfers and conveys to Secured Party, effective upon the occurrence of any Event of Default, the nonexclusive right and license to use all trademarks, tradenames, copyrights, patents or technical processes owned or held by such Grantor that are necessary for the use and enjoyment of the Collateral and any other collateral granted by such Grantor as security for the Secured Obligations, together with any goodwill associated therewith, all to the extent necessary to enable Secured Party to use, possess and realize on the Collateral and to enable any successor or assign to enjoy the benefits of the Collateral. This right and license shall inure to the benefit of all successors, assigns and transferees of Secured Party and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is granted free of charge, without requirement that any monetary payment whatsoever be made to such Grantor. SECTION 13. Transfers and Other Liens. No Grantor shall: (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted by the Credit Agreement; or (b) except for the security interest created by this Agreement, create or suffer to exist any Lien upon or with respect to any of the Collateral to secure the indebtedness or other obligations of any Person. SECTION 14. Secured Party Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Secured Party as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, X-11 Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) upon the occurrence and during the continuance of an Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to Secured Party pursuant to Section 8; (b) upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (c) upon the occurrence and during the continuance of an Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clauses (a) and (b) above; (d) upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party with respect to any of the Collateral; (e) to pay or discharge taxes or Liens (other than Liens permitted under this Agreement or the Credit Agreement) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Secured Party in its sole discretion, any such payments made by Secured Party to become obligations of such Grantor to Secured Party, due and payable immediately without demand; (f) upon the occurrence and during the continuance of an Event of Default, to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with Accounts and other documents relating to the Collateral; and (g) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Secured Party were the absolute owner thereof for all purposes, and to do, at Secured Party's option and Grantors' expense, at any time or from time to time, all acts and things that Secured Party deems necessary to protect, preserve or realize upon the Collateral and Secured Party's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. X-12 SECTION 15. Secured Party May Perform. If any Grantor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by such Grantor under Section 19(b). SECTION 16. Standard of Care. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property. SECTION 17. Remedies. If any Event of Default shall have occurred and be continuing, Secured Party may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether or not the Code applies to the affected Collateral), and also may (a) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral as directed by Secured Party and make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to both parties, (b) enter onto the property where any Collateral is located and take possession thereof with or without judicial process, (c) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent Secured Party deems appropriate, (d) take possession of any Grantor's premises or place custodians in exclusive control thereof, remain on such premises and use the same and any of such Grantor's equipment for the purpose of completing any work in process, taking any actions described in the preceding clause (c) and collecting any Secured Obligation, and (e) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable. Secured Party or any Lender or Interest Rate Exchanger may be the purchaser of any or all of the Collateral at any such sale and Secured Party, as agent for and representative of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or Interest Rate Exchanger or Interest Rate Exchangers in its or their respective individual capacities unless Requisite Obligees (as defined in Section 21(a)) shall otherwise agree in writing), shall be entitled, for the purpose of X-13 bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by Secured Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against Secured Party arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be jointly and severally liable for the deficiency and the fees of any attorneys employed by Secured Party to collect such deficiency. SECTION 18. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied as provided in subsection 2.4D of the Credit Agreement. SECTION 19. Indemnity and Expenses. (a) Grantors jointly and severally agree to indemnify Secured Party, each Lender and each Interest Rate Exchanger from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including without limitation enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Secured Party's or such Lender's or Interest Rate Exchanger's gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. (b) Grantors jointly and severally agree to pay to Secured Party upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Secured Party may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or X-14 enforcement of any of the rights of Secured Party hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof. (c) The obligations of Grantors in this Section 19 shall survive the termination of this Agreement and the discharge of Grantors' other obligations under this Agreement, the Lender Interest Rate Agreements, the Credit Agreement and the other Loan Documents. SECTION 20. Continuing Security Interest; Transfer of Loans. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, (b) be binding upon Grantors and their respective successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), but subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantors. Upon any such termination Secured Party will, at Grantors' expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. SECTION 21. Secured Party as Administrative Agent. (a) Secured Party has been appointed to act as Secured Party hereunder by Lenders and, by their acceptance of the benefits hereof, Interest Rate Exchangers. Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including without limitation the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement; provided that Secured Party shall exercise, or refrain from exercising, any remedies provided for in Section 17 in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Lender Interest Rate Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Lender Interest Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "Requisite Obligees"). In furtherance of the foregoing provisions of this Section 21(a), each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it X-15 being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by Secured Party for the benefit of Lenders and Interest Rate Exchangers in accordance with the terms of this Section 21(a). (b) Secured Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Secured Party under this Agreement; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Secured Party under this Agreement; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Secured Party under this Agreement. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all sums, securities and other items of Collateral held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party hereunder. SECTION 22. Additional Grantors. From time to time subsequent to the date hereof, Subsidiaries of Company may become parties hereto as additional Grantors (each an "Additional Grantor") by executing a counterpart of this Agreement and delivering supplements to Schedule 4(b), Schedule 4(d), Schedule 4(e) and Schedule 4(g) in substantially the forms annexed hereto, which supplements shall thereby supplement and amend such Schedules. Upon delivery of any such counterpart to Administrative Agent and Secured Party, notice of which is hereby waived by Grantors, each such Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Administrative Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. X-16 SECTION 23. Amendments; Etc. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Secured Party and, in the case of any such amendment or modification, by Grantors; provided that any amendment hereto pursuant to Section 22 shall be effective upon execution by any Additional Grantor and Grantors hereby waive any requirement of notice of or consent to any such amendment. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. SECTION 24. Notices. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex (with received answerback), or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Secured Party shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as provided in subsection 10.8 of the Credit Agreement or as set forth under such party's name on the signature pages hereof or such other address as shall be designated by such party in a written notice delivered to the other parties hereto. SECTION 25. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 26. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. X-17 SECTION 27. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. SECTION 28. Governing Law; Terms; Rules of Construction. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are used herein as therein defined. The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Agreement mutatis mutandis. SECTION 29. Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES X-18 THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. SECTION 30. Waiver of Jury Trial. GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each Grantor and Secured Party acknowledge that this waiver is a material inducement for Grantors and Secured Party to enter into a business relationship, that Grantors and Secured Party have already relied on this waiver in entering into this Agreement and that each will continue to rely on this waiver in their related future dealings. Each Grantor and Secured Party further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. SECTION 31. Counterparts. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. [Remainder of page intentionally left blank] X-19 IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. MBW FOODS INC. By:___________________________________ Name: Title: MBW HOLDINGS INC. By:___________________________________ Name: Title: X-20 THE CHASE MANHATTAN BANK, as Secured Party By:___________________________________ Name: Karen Sharf Title: Vice President X-21 IN WITNESS WHEREOF, the undersigned Additional Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of __________, [199_] [200_]. [NAME OF ADDITIONAL GRANTOR] By:___________________________________ Name: Title: Notice Address: ________________________________ ________________________________ ________________________________ ________________________________ X-22 SCHEDULE 1(d) TO SECURITY AGREEMENT Assigned Agreements (1) License Agreement dated as of December __, 1996, by and between Conopco, Inc. and MBW Foods Inc. (2) Shared Technology License Agreement dated as of December __, 1996, by and between Conopco, Inc. and MBW Foods Inc. (3) Transition Services Agreement dated as of December __, 1996, by and between Conopco, Inc. and MBW Foods Inc. (4) Co-Pack Agreement dated as of December __, 1996, by and between Conopco, Inc. and MBW Foods Inc. (5) Patent License Agreement dated as of December __, 1996, by and among Conopco, Inc., Unilever PLC and MBW Foods Inc. (6) Flavor Supply Agreement dated as of December __, 1996, by and between MBW Foods Inc. and Quest International Flavors & Food Ingredients Company. (7) Escrow Agreement dated as of December __, 1996, by and among MBW Foods Inc., ______________, as escrow agent, and Quest International Flavors & Food Ingredients Company. X-1(d)-1 SCHEDULE 4(b) TO SECURITY AGREEMENT Locations of Equipment and Inventory Name of Grantor Locations of Equipment and Inventory - --------------- ------------------------------------ X-4(b)-1 SCHEDULE 4(d) TO SECURITY AGREEMENT Office Locations Name of Grantor Office Locations - --------------- ---------------- X-4(d)-1 SCHEDULE 4(e) TO SECURITY AGREEMENT Other Names Name of Grantor Other Names - --------------- ----------- X-4(e)-1 SCHEDULE 4(g) TO SECURITY AGREEMENT Filing Offices -------------- X-4(g)-1 EXHIBIT XI [FORM OF PATENT AND TRADEMARK SECURITY AGREEMENT] PATENT AND TRADEMARK SECURITY AGREEMENT This PATENT AND TRADEMARK SECURITY AGREEMENT (this "Agreement") is dated as of December __, 1996 and entered into by and among MBW FOODS INC., a Delaware corporation ("Company")(Company being referred to herein as a "Grantor"; provided that after the Closing Date, "Grantors" shall mean and include Company and any Additional Grantors (as hereinafter defined)), and THE CHASE MANHATTAN BANK, as administrative agent for and representative of (in such capacity herein called "Secured Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below and any Interest Rate Exchangers (as hereinafter defined). PRELIMINARY STATEMENTS A. Pursuant to that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined) by and among Company, MBW Holdings Inc., a Delaware corporation, Lenders, Secured Party, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit Agreement, to extend certain credit facilities to Company. B. Company may from time to time enter, or may from time to time have entered, into one or more Interest Rate Agreement (collectively, the "Lender Interest Rate Agreements") with one or more Lenders or their Affiliates (in such capacity, collectively, "Interest Rate Exchangers") in accordance with the terms of the Credit Agreement, and it is desired that the obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof (all such obligations being the "Interest Rate Obligations"), together with all obligations of Company under the Credit Agreement and the other Loan Documents, be secured hereunder. C. Additional Grantors shall execute and deliver counterparts to that certain Subsidiary Guaranty (said Subsidiary Guaranty, as it may be amended, restated, supplemented or otherwise modified from time to time, being the "Subsidiary Guaranty") in favor of Secured Party for the benefit of Lenders and any Interest Rate Exchangers, pursuant to which each Additional Grantor shall guaranty the prompt payment and performance when due of all obligations of Company under the Credit Agreement and the other Loan Documents and all XI-1 obligations of Company under the Lender Interest Rate Agreements, including without limitation the obligation of Company to make payments thereunder in the event of early termination thereof. D. Grantors own and use in their business, and will in the future adopt and so use, various intangible assets, including trademarks, service marks, designs, logos, indicia, tradenames, corporate names, company names, business names, fictitious business names, trade styles and/or other source and/or business identifiers and applications pertaining thereto (collectively, the "Trademarks"). E. Secured Party desires Grantors to assign and grant to it a lien on and security interest in all of Grantors' existing and future Trademarks, all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (the "Registrations"), all common law and other rights in and to the Trademarks in the United States and any state thereof and in foreign countries (the "Trademark Rights"), all goodwill of Grantors' business symbolized by the Trademarks and associated therewith, including without limitation the documents and things described in Section 1(b) (the "Associated Goodwill"), and all proceeds of the Trademarks, the Registrations, the Trademark Rights and the Associated Goodwill, and Grantors agree to assign and grant to Secured Party a secured and protected interest in the Trademarks, the Registrations, the Trademark Rights, the Associated Goodwill and all the proceeds thereof as provided herein. F. Pursuant to the Security Agreement, each Grantor has assigned and granted to Secured Party a lien on and security interest in, among other assets, all Grantors' equipment, inventory, accounts and general intangibles relating to the products and services sold or delivered under or in connection with the Trademarks such that, upon the occurrence and during the continuation of an Event of Default (as defined in the Credit Agreement) or the occurrence of an Early Termination Date (as defined in a Master Agreement or an Interest Rate Swap Agreement or Interest Rate and Currency Exchange Agreement in the form prepared by the International Swap and Derivatives Association Inc. or a similar event under any similar swap agreement) under any Lender Interest Rate Agreement (either such occurrence being an "Event of Default" for purposes of this Agreement), Secured Party would be able to exercise its remedies consistent with the Security Agreement, this Agreement and applicable law to foreclose upon Grantors' business and use the Trademarks, the Registrations and the Trademark Rights in conjunction with the continued operation of such business, maintaining substantially the same product and service specifications and quality as maintained by Grantors, and benefit from the Associated Goodwill. G. It is a condition precedent to the initial extensions of credit by Lenders under the Credit Agreement that Grantors shall have assigned and granted the security interests and undertaken the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Lenders to make Loans and other extensions of credit under the Credit Agreement and to induce Interest Rate Exchangers to enter into the Lender Interest Rate Agreements, and for other good and XI-2 valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Grantor hereby agrees with Secured Party as follows: SECTION 1. Assignment and Grant of Security. Each Grantor hereby grants to Secured Party a security interest in all of such Grantor's right, title and interest in and to the following, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located (the "Collateral"): (a) each of the Trademarks and rights and interests in Trademarks which are presently, or in the future may be, owned or held (whether pursuant to a license or otherwise) by such Grantor, in whole or in part (including without limitation the Trademarks specifically identified in Schedule I annexed hereto, as the same may be amended pursuant hereto from time to time), and including all Trademark Rights with respect thereto and all federal, state and foreign Registrations therefor heretofore or hereafter granted or applied for, the right (but not the obligation) to register claims under any state or federal trademark law or regulation or any trademark law or regulation of any foreign country and to apply for, renew and extend the Trademarks, Registrations and Trademark Rights, the right (but not the obligation) to sue or bring opposition or cancellation proceedings in the name of such Grantor or in the name of Secured Party or otherwise for past, present and future infringements of the Trademarks, Registrations or Trademark Rights and all rights (but not obligations) corresponding thereto in the United States and any foreign country, and the Associated Goodwill; it being understood that the rights and interests included herein shall include, without limitation, all rights and interests pursuant to licensing or other contracts in favor of such Grantor pertaining to the Trademarks, Registrations or Trademark Rights presently or in the future owned or used by third parties but, in the case of third parties which are not Affiliates of such Grantor, only to the extent permitted by such licensing or other contracts or otherwise permitted by applicable law and, if not so permitted under any such contracts and applicable law, only with the consent of such third parties; (b) the following documents and things in such Grantor's possession, or subject to such Grantor's right to possession, related to (Y) the production, sale and delivery by such Grantor, or by any Affiliate, licensee or subcontractor of such Grantor, of products or services sold or delivered by or under the authority of such Grantor in connection with the Trademarks, Registrations or Trademark Rights (which products and services shall, for purposes of this Agreement, be deemed to include, without limitation, products and services sold or delivered pursuant to merchandising operations utilizing any Trademarks, Registrations or Trademark Rights); or (Z) any retail or other merchandising operations conducted under the name of or in connection with the Trademarks, Registrations or Trademark Rights by such Grantor or any Affiliate, licensee or subcontractor of such Grantor: XI-3 (i) all lists and ancillary documents that identify and describe any of such Grantor's customers, or those of their Affiliates, licensees or subcontractors, for products sold and services delivered under or in connection with the Trademarks or Trademark Rights, including without limitation any lists and ancillary documents that contain a customer's name and address, the name and address of any of its warehouses, branches or other places of business, the identity of the Person or Persons having the principal responsibility on a customer's behalf for ordering products or services of the kind supplied by such Grantor, or the credit, payment, discount, delivery or other sale terms applicable to such customer, together with information setting forth the total purchases, by brand, product, service, style, size or other criteria, and the patterns of such purchases; (ii) all product and service specification documents and production and quality control manuals used in the manufacture or delivery of products and services sold or delivered under or in connection with the Trademarks or Trademark Rights; (iii) all documents which reveal the name and address of any source of supply, and any terms of purchase and delivery, for any and all materials, components and services used in the production of products and services sold or delivered under or in connection with the Trademarks or Trademark Rights; and (iv) all documents constituting or concerning the then current or proposed advertising and promotion by such Grantor or its Affiliates, licensees or subcontractors of products and services sold or delivered under or in connection with the Trademarks or Trademark Rights including, without limitation, all documents which reveal the media used or to be used and the cost for all such advertising conducted within the described period or planned for such products and services; and (c) all patents and patent applications and rights and interests in patents and patent applications that are presently, or in the future may be, owned, held (whether pursuant to a license or otherwise) or used by such Grantor in whole or in part (including, without limitation, the patents and patent applications listed in Schedule II annexed hereto, as the same may be amended pursuant hereto from time to time), all rights (but not obligations) corresponding thereto (including without limitation the right (but not the obligation) to sue for past, present and future infringements in the name of such Grantor or in the name of Secured Party), and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof (all of the foregoing being collectively referred to as the "Patents"); it being understood that the rights and interests assigned hereby shall include, without limitation, all rights and interests pursuant to licensing or other contracts in favor of such Grantor pertaining to any Patent presently or in the future owned, held or used by third parties but, in the case of third parties which are not Affiliates of such Grantor, only to the extent permitted by such licensing XI-4 or other contracts or otherwise permitted by applicable law and, if not so permitted under any such contracts and applicable law, only with the consent of such third parties; (d) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; and (e) all proceeds, products, rents and profits (including without limitation license royalties and proceeds of infringement suits) of or from any and all of the foregoing Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Secured Party is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral. For purposes of this Agreement, the term "proceeds" includes whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. SECTION 2. Security for Obligations. This Agreement secures, and the Collateral assigned by each Grantor is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations with respect to such Grantor. "Secured Obligations" means (a) with respect to Company, all obligations and liabilities of every nature of Company now or hereafter existing under or arising out of or in connection with the Credit Agreement and the other Loan Documents and any Lender Interest Rate Agreement, and (b) with respect to each Additional Grantor, all obligations and liabilities of every nature of Grantors now or hereafter existing under or arising out of or in connection with the Subsidiary Guaranty, in each case together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Company, would accrue on such obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Lender Interest Rate Agreements, fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, XI-5 created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Secured Party or any Lender or Interest Rate Exchanger as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Grantors now or hereafter existing under this Agreement. SECTION 3. Grantors Remains Liable. Anything contained herein to the contrary notwithstanding, (a) each Grantor shall remain liable under any contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Secured Party of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) Secured Party shall not have any obligation or liability under any contracts and agreements included in the Collateral by reason of this Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. SECTION 4. Representations and Warranties. Each Grantor represents and warrants as of the date it becomes a party hereto as follows: (a) Ownership of Collateral. Except as expressly permitted by the Credit Agreement and for the security interest assigned and created by this Agreement, such Grantor is the legal and beneficial owner of the entire right, title and interest in and to (i) each Material Trademark Property (as defined in subsection 4(b) of this Agreement), free and clear of any Lien other than Liens of mechanics, materialmen, attorneys and other similar liens imposed by laws in the ordinary course of business in connection with the establishment, creation or application for Registration of any Trademarks, Registrations or Trademark Rights for sums not yet delinquent or being contested in good faith (such Liens being referred to herein as "Permitted Trademark Liens"), and (ii) each Material Patent (as defined in subsection 4(b) of this Agreement), free and clear of any Lien other than Liens of mechanics, materialmen, attorneys and other similar liens imposed by law in the ordinary course of business in connection with the establishment, creation or application for any Patent for sums not yet delinquent or being contested in good faith (such Liens being referred to herein as "Permitted Patent Liens"). Except such as may have been filed in favor of Secured Party relating to this Agreement, no effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office, including the United States Patent and Trademark Office. XI-6 (b) Description of Collateral. A true and complete list of all Trademarks, Registrations and Trademark Rights owned or held (whether pursuant to a license or otherwise) by such Grantor, in whole or in part, as of the date such Grantor has entered into this Agreement is set forth in Schedule I annexed hereto. Each Trademark, Registration or Trademark Right designated on Schedule I annexed hereto as a Material Trademark Property, and each other Trademark, Registration or Trademark Right hereafter arising or otherwise owned or held by any Grantor that is material to any of such Grantor's business or operations is referred to herein as a "Material Trademark Property". A true and complete list of all Patents owned or held (whether pursuant to a license or otherwise) by such Grantor, in whole or in part, as of the date such Grantor has entered into this Agreement is set forth in Schedule II annexed hereto. Each Patent designated on Schedule II annexed hereto as a Material Patent and each other Patent hereafter arising or otherwise owned or held by such Grantor that is material to any of such Grantor's business or operations is referred to herein as a "Material Patent". (c) Validity and Enforceability of Collateral. To the knowledge of Grantors, each Material Trademark Property and each Material Patent is valid, subsisting and enforceable. As of the date each Grantor has entered into this Agreement, such Grantor is not aware of any pending or threatened claim by any third party that any Material Trademark Property or any Material Patent is invalid or unenforceable or that the use of any Material Trademark Property or any Material Patent violates the rights of any third person or of any basis for any such claim, and there is no such pending or threatened claim whether arising prior to or after the Closing Date, that could reasonably be expected to have a Material Adverse Effect. (d) Office Locations. The chief place of business, the chief executive office and the office where such Grantor keeps its records regarding the Collateral is at the locations set forth on Schedule III annexed hereto. (e) Names. No Grantor has in the past done, and no Grantor now does, business under any other name (including any tradename or fictitious business name) except under the names listed on Schedule IV annexed hereto. (f) Perfection. The security interests in the Collateral granted to Secured Party for the ratable benefit of the Lenders and Interest Rate Exchangers hereunder constitute valid security interests in the Collateral. Upon the filing of UCC financing statements naming each Grantor as "debtor", naming Secured Party as "secured party" and describing the Collateral in the filing offices set forth on Schedule V annexed hereto and the recording of this Agreement with the United Sates Patent and Trademark Office, the security interests in the Collateral granted to Secured Party for the ratable benefit of the Lenders and Interest Rate Exchangers will, to the extent a security interest in the Collateral may be perfected by filing UCC financing statements and recording this Agreement, constitute valid and perfected security interests therein prior to all other Liens (subject only to Permitted Patent Liens and Permitted Trademark Liens). XI-7 SECTION 5. Further Assurances; New Trademarks, Registrations and Trademark Rights; New Patents and Patent Applications; Certain Inspection Rights. (a) Each Grantor agrees that from time to time, at the expense of Grantors, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest assigned or purported to be assigned or granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor will: (i) at the request of Secured Party, take reasonable steps to indicate that such Collateral is subject to the security interest granted hereby, (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby, (iii) use its best efforts to obtain any necessary consents of third parties to the assignment and perfection of a security interest to Secured Party with respect to any Collateral, and (iv) at Secured Party's request, appear in and defend any action or proceeding that may materially affect such Grantor's title to or Secured Party's security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of any Grantor. Each Grantor agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement signed by such Grantor shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions. (c) Each Grantor hereby authorizes Secured Party to modify this Agreement without obtaining such Grantor's approval of or signature to such modification by (i) amending Schedule I annexed hereto to include reference to any right, title or interest in any existing Trademark, Registration or Trademark Right or any Trademark, Registration or Trademark Right acquired or developed by any Grantor after its execution hereof or to delete any reference to any right, title or interest in any Trademark, Registration or Trademark Right in which no Grantor has or claims any right, title or interest, or (ii) amending Schedule II annexed hereto to include reference to any right, title or interest in any existing Patent or any Patent acquired or developed by any Grantor after its execution hereof or to delete any reference to any right, title or interest in any Patent in which no Grantor has or claims any right, title or interest. (d) Each Grantor will furnish to Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may reasonably request, all in reasonable detail. (e) If any Grantor shall obtain rights to any new Trademarks, Registrations or Trademark Rights, or to any patentable inventions, or become entitled to the benefit of any patent application or patent or any reissue, division, continuation, renewal, extension, or continuation-in-part of any Patent or any improvement in any Patent, the provisions of this XI-8 Agreement shall automatically apply thereto. Each Grantor shall promptly notify Secured Party in writing of any of the foregoing rights or benefits, including, without limitation, rights to any new Trademarks or Trademark Rights, acquired by such Grantor after the date hereof and of any Registrations issued or applications for Registration made after the date hereof, which notice shall state whether such Trademark, Registration or Trademark Right constitutes a Material Trademark Property or whether such Patent constitutes a Material Patent. Within a reasonable time after the filing of an application for Registration for any Trademark, or an application for any Patent the applicable Grantor shall execute, deliver and record in all places where this Agreement is recorded an appropriate Patent and Trademark Security Agreement, substantially in the form hereof, with appropriate insertions, or an amendment to this Agreement, in form and substance satisfactory to Secured Party, pursuant to which such Grantor shall assign and grant a security interest to the extent of its interest in such Registration or Patent as provided herein to Secured Party unless so doing would, in the reasonable judgment of such Grantor, after due inquiry, result in the grant of a Patent or Registration in the name of Secured Party, in which event such Grantor shall give written notice to Secured Party as soon as reasonably practicable and the filing shall instead be undertaken as soon as practicable but in no case later than immediately following the grant of such Patent or Registration. (f) Each Grantor hereby grants to Secured Party and its employees, representatives and agents the right to visit such Grantor's and any of its Affiliate's or subcontractor's plants, facilitates and other places of business that are utilized in connection with the manufacture, production, inspection, storage or sale of products and services sold or delivered under any of the Patents, Trademarks, Registrations or Trademark Rights (or which were so utilized during the prior six month period), and to inspect the quality control and all other records relating thereto upon reasonable notice to such Grantor and as often as my be reasonably requested. SECTION 6. Certain Covenants of Grantors. Each Grantor shall: (a) not use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (b) notify Secured Party of any change in such Grantor's name, identity or corporate structure within 15 days of such change; (c) give Secured Party 30 days' prior written notice of any change in such Grantor's chief place of business or chief executive office or the office where such Grantor keeps its records regarding the Collateral; (d) pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Collateral, except to the extent the validity thereof XI-9 is being contested in good faith; provided that such Grantor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against such Grantor or any of the Collateral as a result of the failure to make such payment; (e) not sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted by the Credit Agreement; (f) except for Permitted Patent Liens and Permitted Trademark Liens and the security interest assigned and created by this Agreement, not create or suffer to exist any Lien upon or with respect to any of the Collateral to secure the indebtedness or other obligations of any Person; (g) diligently keep reasonable records respecting the Collateral assigned by it hereunder and at all times keep at least one complete set of its records concerning substantially all of the Patents, Trademarks, Registrations and Trademark Rights at its chief executive office or principal place of business; (h) not permit the inclusion in any contract to which it becomes a party of any provision that could or might in any way conflict with this Agreement or impair or prevent the assignment and creation of a security interest in any Grantor's rights and interests in any property included within the definitions of any Patents, Trademarks, Registrations, Trademark Rights and Associated Goodwill acquired; (i) use proper statutory notice in connection with its use of each Material Patent and Material Trademark Property to the extent reasonably necessary for the protection of such Material Patent or Material Trademark Property; (j) use consistent standards of quality (which may be consistent with such Grantor's past practices) in the manufacture, sale and delivery of products and services sold or delivered under or in connection with the Trademarks, Registrations and Trademark Rights, including, to the extent applicable, in the operation and maintenance of its retail stores and other merchandising operations; and (k) upon any officer of such Grantor obtaining knowledge thereof, promptly notify Secured Party in writing of any event that may materially and adversely affect the value of the Collateral or any portion thereof, the ability of any Grantor or Secured Party to dispose of the Collateral or any portion thereof, or the rights and remedies of Secured Party in relation thereto, including without limitation the levy of any legal process against the Collateral or any portion thereof. XI-10 SECTION 7. Amounts Payable in Respect of the Collateral. Except as otherwise provided in this Section 7, each Grantor shall continue to collect, at its own expense, all amounts due or to become due to Grantors in respect of the Collateral or any portion thereof. In connection with such collections, each Grantor may take (and, at Secured Party's direction, shall take) such action as such Grantor or Secured Party may deem necessary or advisable to enforce collection of such amounts; provided, however, that Secured Party shall have the right at any time, upon the occurrence and during the continuation of an Event of Default or a Potential Event of Default and upon written notice to such Grantor of its intention to do so, to notify the obligors with respect to any such amounts of the existence of the security interest assigned and created hereby, and to direct such obligors to make payment of all such amounts directly to Secured Party, and, upon such notification and at the expense of Grantors, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. After receipt by such Grantor of the notice from Secured Party referred to in the proviso to the preceding sentence, (i) all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of Secured Party hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to Secured Party in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 14, and (ii) such Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. SECTION 8. Patent or Trademark Applications and Litigation. (a) Each Grantor shall have the duty diligently to prosecute any trademark application relating to any Material Trademark Property that is pending as of the date such Grantor has entered into this Agreement, to make federal application on any existing or future registerable but unregistered Material Trademark Property (whenever it is commercially reasonable in the reasonable judgement of such Grantor to do so), and to file and prosecute opposition and cancellation proceedings, renew Registrations and do any and all acts which are necessary or desirable to preserve and maintain all rights in all Material Trademark Properties. Any expenses incurred in connection therewith shall be borne solely by Grantors. No Grantor shall abandon any Material Trademark Property unless it is commercially reasonable in the judgment of such Grantor to do so. (b) Each Grantor shall have the duty diligently to prosecute any patent application relating to any Material Patent that is pending as of the date such Grantor has entered into this Agreement and to do any and all acts which are necessary or desirable to preserve and maintain all rights in all Material Patents. Any expenses incurred in connection therewith shall be borne solely by Grantors. Each Grantor shall not, as to any patentable invention or Patent that constitutes or could constitute a Material Patent, abandon any pending patent application or any Patent without the prior written consent of Secured Party. XI-11 (c) Except as provided in Section 8(e), each Grantor shall have the right to commence and prosecute in its own name, as real party in interest, for its own benefit and at its own expense, such suits, proceedings or other actions for infringement, unfair competition, dilution or other damage as are in its reasonable business judgment necessary to protect the Collateral. Secured Party shall provide, at Grantor's expense, all reasonable and necessary cooperation in connection with any such suit, proceeding or action including, without limitation, joining as a necessary party. (d) Each Grantor shall promptly, following its becoming aware thereof, notify Secured Party of the institution of, or of any adverse determination in, any proceeding (whether in the United States Patent and Trademark Office or any federal, state, local or foreign court) described in subsection 8(a), 8(b) or 8(c) or regarding such Grantor's claim of ownership in or right to use any of the Trademarks, Registrations or Trademark Rights, its right to register the same, or its right to keep and maintain such Registration. Such Grantor shall provide to Secured Party any information with respect thereto requested by Secured Party. (e) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, Secured Party shall have the right (but not the obligation) to bring suit, in the name of any Grantor, Secured Party or otherwise, to enforce any Patent, Trademark, Registration, Trademark Right and any license thereunder and to enforce its rights hereunder in Associated Goodwill, in which event each Grantor shall, at the request of Secured Party, do any and all lawful acts and execute any and all documents required by Secured Party in aid of such enforcement and each Grantor shall promptly, upon demand, reimburse and indemnify Secured Party as provided in Section 15 in connection with the exercise of its rights under this Section 8. To the extent that Secured Party shall elect not to bring suit to enforce any Patent, Trademark, Registration, Trademark Right or any license thereunder or to enforce its rights hereunder in Associated Goodwill as provided in this Section 8(e), each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Patents, Trademarks, Registrations or Trademark Rights or of Grantors' or Secured Party's rights in Associated Goodwill by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing necessary to prevent such infringement. SECTION 9. Non-Disturbance Agreements, etc. If and to the extent that any Grantor is permitted to license the Collateral, Secured Party shall enter into a non-disturbance agreement or other similar arrangement, at Grantors' request and expense, with such Grantor and any licensee of any Collateral permitted hereunder in form and substance satisfactory to Secured Party pursuant to which (a) Secured Party shall agree not to disturb or interfere with such licensee's rights under its license agreement with such Grantor so long as such licensee is not in default thereunder and (b) such licensee shall acknowledge and agree that the Collateral licensed to it is subject to the security interest assigned and created in favor of Secured Party and the other terms of this Agreement. XI-12 SECTION 10. Secured Party Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Secured Party as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) upon the occurrence and during the continuance of an Event of Default, to endorse such Grantor's name on all applications, documents, papers and instruments necessary for Secured Party in the use or maintenance of the Collateral; (b) upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (c) upon the occurrence and during the continuance of an Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Secured Party with respect to any of the Collateral; (e) to pay or discharge taxes or Liens (other than Liens permitted under this Agreement or the Credit Agreement) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Secured Party in its sole discretion, any such payments made by Secured Party to become obligations of such Grantor to Secured Party, due and payable immediately without demand; and (f) upon the occurrence and during the continuance of an Event of Default, (i) to execute and deliver any of the assignments or documents requested by Secured Party pursuant to Section 13(b), (ii) to grant or issue an exclusive or non-exclusive license to the Collateral or any portion thereof to any Person, and (iii) otherwise generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Secured Party were the absolute owner thereof for all purposes, and to do, at Secured Party's option and Grantors' expense, at any time or from time to time, all acts and things that Secured Party deems necessary to protect, preserve or realize upon the Collateral and Secured Party's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. XI-13 SECTION 11. Secured Party May Perform. If any Grantor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by such Grantor under Section 15. SECTION 12. Standard of Care. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for monies actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property of a similar nature. SECTION 13. Remedies. If any Event of Default shall have occurred and be continuing: (a) Secured Party may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether or not the Code applies to the affected Collateral), and also may (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral as directed by Secured Party and make it available to Secured Party at a place to be designated by Secured Party that is reasonably convenient to both parties, (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process, (iii) prior to the disposition of the Collateral, store the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent Secured Party deems appropriate, (iv) take possession of any Grantor's premises or place custodians in exclusive control thereof, remain on such premises and use the same for the purpose of taking any actions described in the preceding clause (iii) and collecting any Secured Obligation, (v) exercise any and all rights and remedies of Grantors under or in connection with the contracts related to the Collateral or otherwise in respect of the Collateral, including without limitation any and all rights of Grantors to demand or otherwise require payment of any amount under, or performance of any provision of, such contracts, and (vi) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such XI-14 time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable. Secured Party or any Lender or Interest Rate Exchanger may be the purchaser of any or all of the Collateral at any such sale and Secured Party, as agent for and representative of Lenders and Interest Rate Exchangers (but not any Lender or Lenders or Interest Rate Exchanger or Interest Rate Exchangers in its or their respective individual capacities unless Requisite Obligees (as defined in Section 17(a)) shall otherwise agree in writing), shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by Secured Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against Secured Party arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be jointly and severally liable for the deficiency and the fees of any attorneys employed by Secured Party to collect such deficiency. (b) Upon written demand from Secured Party, each Grantor shall execute and deliver to Secured Party an assignment or assignments of the Patents, Trademarks, Registrations, Trademark Rights and the Associated Goodwill and such other documents as are requested by Secured Party. Each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that Secured Party (or any Lender) receives cash proceeds in respect of the sale of, or other realization upon, the Collateral. (c) Within five Business Days after written notice from Secured Party, each Grantor shall make available to Secured Party, to the extent within each applicable Grantor's power and authority, such personnel in such Grantor's employ on the date of such Event of Default as Secured Party may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Patents, Trademarks, Registrations and Trademark Rights, such XI-15 persons to be available to perform their prior functions on Secured Party's behalf and to be compensated by Secured Party at Grantors' expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default. SECTION 14. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied as provided in subsection 2.4D of the Credit Agreement. SECTION 15. Indemnity and Expenses. (a) Grantors jointly and severally agree to indemnify Secured Party, each Lender and each Interest Rate Exchanger from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including without limitation enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Secured Party's or such Lender's or Interest Rate Exchanger's gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. (b) Grantors jointly and severally agree to pay to Secured Party upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Secured Party may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of Secured Party hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof. (c) The obligations of Grantors in this Section 15 shall survive the termination of this Agreement and the discharge of Grantors' other obligations under this Agreement, the Interest Rate Agreements, the Credit Agreement and the other Loan Documents. SECTION 16. Continuing Security Interest; Transfer of Loans. This Agreement shall assign and create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, (b) be binding upon Grantors and their respective successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), but subject to the provisions of subsection 10.1 of the XI-16 Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, the security interest assigned and granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantors. Upon any such termination Secured Party will, at Grantors' expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. SECTION 17. Secured Party as Administrative Agent. (a) Secured Party has been appointed to act as Secured Party hereunder by Lenders and, by their acceptance of the benefits hereof, Interest Rate Exchangers. Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including without limitation the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement; provided that Secured Party shall exercise, or refrain from exercising, any remedies provided for in Section 13 in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Lender Interest Rate Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Lender Interest Rate Agreement) under all Lender Interest Rate Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "Requisite Obligees"). In furtherance of the foregoing provisions of this Section 17(a), each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by Secured Party for the benefit of Lenders and Interest Rate Exchangers in accordance with the terms of this Section 17(a). (b) Secured Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Secured Party under this Agreement; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Secured Party under this Agreement; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Secured Party under this Agreement. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all sums, securities and other items of Collateral held hereunder, together with all records and XI-17 other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party hereunder. SECTION 18. Amendments; Etc. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Secured Party and, in the case of any such amendment or modification, by Grantors; provided that any amendment hereto pursuant to Section 21 or Section 5(c) shall be effective upon execution by any Additional Grantor and Grantors hereby waive any requirement of notice of or consent to any such amendment. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. SECTION 19. Notices. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex (with received answerback), or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Secured Party shall not be effective until received. For the purposes hereof, the address of each party hereto shall be provided in subsection 10.8 of the Credit Agreement or as set forth under such party's name on the signature pages hereof or such other address as shall be designated by such party in a written notice delivered to the other parties hereto. SECTION 20. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. XI-18 SECTION 21. Additional Grantors. From time to time subsequent to the date hereof, Subsidiaries of Company may become parties hereto as additional Grantors (each an "Additional Grantor") by executing an acknowledgement to this Agreement substantially in the form of Schedule VI annexed hereto. Upon delivery of any such acknowledgment to Administrative Agent and Secured Party, notice of which is hereby waived by Grantors, each such Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Administrative Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 22. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 23. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. SECTION 24. Governing Law; Terms; Rules of Construction. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are XI-19 used herein as therein defined. The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Agreement mutatis mutandis. SECTION 25. Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 19; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. SECTION 26. Waiver of Jury Trial. GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each Grantor and Secured Party acknowledge that this waiver is a material inducement for Grantors and Secured Party to enter into a business relationship, that Grantors and Secured Party have already relied on this waiver in entering into this Agreement and that each will continue to rely on this waiver in their related future dealings. Each Grantor and Secured Party further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS XI-20 WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 26 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. SECTION 27. Counterparts. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. [Remainder of page intentionally left blank] XI-21 IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. MBW FOODS INC. By: ________________________________ Name: Title: XI-22 THE CHASE MANHATTAN BANK, as Secured Party By: ________________________________ Name: Karen Sharf Title: Vice President XI-23 SCHEDULE I TO PATENT AND TRADEMARK SECURITY AGREEMENT Registered United States Trademark Registration Registration Owner Description Number Date - ---------- ----------------------- ------------ ------------ XI-I-1 SCHEDULE II TO TO PATENT AND SECURITY AGREEMENT PATENTS ISSUED -------------- Patent No. Issue Date Invention ---------- ---------- --------- PATENTS PENDING --------------- Applicant's Date Application Name Filed No. Invention Inventor ---- ----- ----------- --------- -------- XI-II-1 SCHEDULE III TO PATENT AND TRADEMARK SECURITY AGREEMENT Office Locations ---------------- Name of Grantor Office Location - --------------- --------------- XI-III-1 SCHEDULE IV TO PATENT AND TRADEMARK SECURITY AGREEMENT Other Names ----------- Name of Grantor Other Names - --------------- ----------- XI-IV-1 SCHEDULE V TO PATENT AND TRADEMARK SECURITY AGREEMENT Filing Offices -------------- XI-V-1 SCHEDULE VI TO PATENT AND TRADEMARK SECURITY AGREEMENT [FORM OF ACKNOWLEDGEMENT] This Acknowledgement, dated _______________, [199_] [200_], is delivered pursuant to Section 20 of the Patent and Trademark Security Agreement referred to below. The undersigned hereby agrees that this Acknowledgement may be attached to the Patent and Trademark Security Agreement dated December __, 1996, by and among the Grantors referred to therein and The Chase Manhattan Bank, as Secured Party (the "Patent and Trademark Security Agreement", capitalized terms defined therein being used herein as therein defined), that the undersigned by executing and delivering this Acknowledgement hereby becomes a Grantor under the Patent and Trademark Security Agreement in accordance with Section 20 thereof and agrees to be bound by all of the terms thereof, and that the Patents, Registrations and Trademark Rights described on this Acknowledgement shall be deemed to be part of the and shall become part of the Collateral and shall secure all Secured Obligations. [NAME OF ADDITIONAL GRANTOR] By: ________________________________ Name: Title: Notice Address: __________________________________ __________________________________ __________________________________ __________________________________ Trademark Registrations ----------------------- Registered Trademark Registration Registration Owner Description Number Date Jurisdiction - ---------- ----------- ------------ ------------- ------------ Patents Issued -------------- XI-VI-1 Patent No. Issue Date Invention Inventor ---------- ---------- --------- -------- Patents Pending --------------- Applicant's Name Date Filed Application No. Invention Inventor ---------------- ---------- --------------- --------- -------- XI-VI-2 EXHIBIT XII [FORM OF COMPLIANCE CERTIFICATE] COMPLIANCE CERTIFICATE THE UNDERSIGNED HEREBY CERTIFIES THAT: (1) I am the duly elected [Title] of MBW Foods Inc., a Delaware corporation ("Company"); (2) I have reviewed the terms of that certain Credit Agreement dated as of December __, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, as amended, restated, supplemented or otherwise modified to the date hereof (said Credit Agreement, as so amended, restated, supplemented or otherwise modified, being the "Credit Agreement", the terms defined therein and not otherwise defined in this Certificate (including Attachment No. 1 annexed hereto and made a part hereof) being used in this Certificate as therein defined), and the terms of the other Loan Documents, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of Company and its Subsidiaries during the accounting period covered by the attached financial statements; and (3) The examination described in paragraph (2) above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Potential Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate[, except as set forth below]. [Set forth [below] [in a separate attachment to this Certificate] are all exceptions to paragraph (3) above listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Company has taken, is taking, or proposes to take with respect to each such condition or event: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ _______________________________________________________________________________] XII-1 The foregoing certifications, together with the computations set forth in Attachment No. 1 annexed hereto and made a part hereof and the financial statements delivered with this Certificate in support hereof, are made and delivered this __________ day of _____________, [199_] [200_] pursuant to subsection 6.1(iv) of the Credit Agreement. MBW FOODS INC. By:__________________________________ Name: Title: XII-2 ATTACHMENT NO. 1 TO COMPLIANCE CERTIFICATE This Attachment No. 1 is attached to and made a part of a Compliance Certificate dated as of ____________, [199_][200_] and pertains to the period from ____________, [199_][200_] to ____________, [199_][200_]. Subsection references herein relate to subsections of the Credit Agreement. A. Indebtedness 1. Indebtedness under Capital Leases of the type described in subsection 7.1(iii)(a): $______________ 2. Indebtedness in respect of sale and lease-back transactions expressly permitted under subsection 7.8: $______________ 3. Indebtedness secured by Liens permitted under subsection 7.2A(iii): $______________ 4. Indebtedness of the type described in subsection 7.1(iii) (A.1 + A.2 + A.3): $______________ 5. Maximum Indebtedness permitted under subsection 7.1(iii): $5,000,000 6. Aggregate principal amount of Permitted Seller Notes issued after the Closing Date: $______________ 7. Maximum principal amount permitted under subsection 7.1(ix): $10,000,000 8. Indebtedness of the type described in subsection 7.1(ix): $______________ 9. Maximum Indebtedness permitted under subsection 7.1(viii): $5,000,000 B. Liens 1. Indebtedness secured by Liens described in subsection 7.2A(iii): $______________ XII-A-1 2. Original purchase price (or cost of acquisition, construction or improvement) of assets financed with Indebtedness secured by Liens permitted under subsection 7.2A(iii): $______________ 3. Percentage of purchase price (or cost of acquisition, construction or improvement) financed with Indebtedness secured by Liens permitted under subsection 7.2A(iii) ((B.1)/(B.2)): ______________ 4. Maximum percentage permitted to be financed under subsection 7.2A(iii): 100% 5. Minimum percentage permitted to be financed under subsection 7.2A(iii): 80% 6. Proceeds of Indebtedness permitted by subsection 7.1(iii)(b) incurred during period and secured by Liens on assets: $______________ 7. Fair market value of assets securing Liens described in item B.6: $______________ 8. Percentage of fair market value constituted by proceeds of Indebtedness ((B.6)/(B.7)): ______________ 9. Minimum percentage permitted under subsection 7.2A(iv): 80% 10. Indebtedness secured by Liens described in subsection 7.2A(v): $______________ 11. Maximum Indebtedness permitted to be secured by Liens under subsection 7.2A(v): $2,500,000 C. Investments 1. Investments consisting of advances made during Fiscal Year-to-date to Holdings to make payments contemplated by subsection 7.5(vi)(a): $______________ 2. Maximum permitted under subsection 7.5(vi)(a): $250,000 3. Outstanding amount of loans and advances to employees XII-A-2 and directors of Holdings or Company of the type described in subsection 7.3(vii): $______________ 4. Maximum permitted under subsection 7.3(vii): $1,000,000 5. Investments of the type described in subsection 7.3(viii): $______________ 6. Maximum permitted under subsection 7.3(viii): $2,500,000 D. Contingent Obligations 1. Net amount which Company would be liable to pay to counterparties under Interest Rate Agreements of the type described in subsection 7.4(iii) in the event such Interest Rate Agreements were terminated on the date hereof: $______________ 2. Maximum amount permitted under subsection 7.4(iii): $2,500,000 3. Contingent Obligations under guarantees in the ordinary course of business of the type described in subsection 7.4(v): $______________ 4. Maximum permitted under subsection 7.4(v): $250,000 5. Contingent Obligations of the type described in subsection 7.4(vii): $______________ 6. Maximum permitted under subsection 7.4(vii): $250,000 E. Restricted Junior Payments 1. Restricted Junior Payments made during Fiscal Year-to-date of the type described in subsection 7.5(vi)(a): $______________ 2. Aggregate advances made during Fiscal Year-to-date to Holdings to make payments contemplated by subsection 7.5(vi)(a) (E.1 + C.1): $______________ 3. Maximum permitted under subsection 7.5(vi)(a): $250,000 XII-A-3 4. Restricted Junior Payments made after the Closing Date of the type described in subsection 7.5(vii): $______________ 5. Maximum permitted under subsection 7.5(vii): $2,000,000 F. Minimum Interest Coverage Ratio ([calculated on a pro forma basis for Fiscal Quarters ending prior to the Closing Date] for the four-Fiscal Quarter period ending _____________, [199_] [200_]) 1. Consolidated Net Income: $______________ 2. Consolidated Interest Expense (to the extent deducted in determining Consolidated Net Income): $______________ 3. Depreciation (to the extent deducted in determining Consolidated Net Income): $______________ 4. Depletion (to the extent deducted in determining Consolidated Net Income): $______________ 5. Amortization (to the extent deducted in determining Consolidated Net Income): $______________ 6. Federal, state, local and foreign income taxes (to the extent deducted in determining Consolidated Net Income): $______________ 7. Transaction fees paid to the MDC Entities and/or Dartford in connection with acquisitions made in accordance with the terms of the MDC Advisory Services Agreement and the Dartford Management Agreement (to the extent deducted in determining Consolidated Net Income): $______________ 8. [PERIODS PRIOR TO FIRST ANNIVERSARY ONLY] Non-recurring charges incurred with respect to relocation of Company's assets (to the extent deducted in determining Consolidated Net Income) (if greater than $2,000,000, enter "$2,000,000"): $______________ 9. Other non-cash items reducing Consolidated Net Income (to the extent deducted in determining Consolidated Net Income): $______________ XII-A-4 10. Extraordinary and unusual losses (to the extent deducted in determining Consolidated Net Income): $______________ 11. Non-cash items increasing Consolidated Net Income: $______________ 12. Extraordinary and unusual gains: $______________ 13. Consolidated EBITDA ((F.1 + F.2 + F.3 + F.4 + F.5 + F.6 + F.7 + F.8 + F.9 + F.10) - (F.11 + F.12)): $______________ 14. Consolidated Cash Interest Expense: $______________ 15. Interest Coverage Ratio ((F.13):(F.14)): _____:1.00 16. Minimum Interest Coverage Ratio required under subsection 7.6A: _____:1.00 G. Maximum Leverage Ratio ([calculated on a pro forma basis for Fiscal Quarters ending prior to the Closing Date] as of _____________, [199_] [200_]) 1. Consolidated Total Debt: $______________ 2. Cash on hand of Company minus $3,500,000 (if difference is equal to or less than zero, enter "0"): $______________ 3. Consolidated EBITDA for the four-Fiscal Quarter period ended on the above date (F.13 above): $______________ 4. Leverage Ratio ((G.1 - G.2)/G.3): $______________ 5. Maximum Leverage Ratio permitted under subsection 7.6B: _____:1.00 H. Minimum Fixed Charge Coverage Ratio ([calculated on a pro forma basis for Fiscal Quarters ending prior to the Closing Date] for the four-Fiscal Quarter period ending _____________, [199_] [200_]) 1. Consolidated EBITDA (F.13 above): $______________ 2. Scheduled amortization of Indebtedness of Holdings and its Subsidiaries (as reduced by prepayments previously made), XII-A-5 and discount or premium relating to any such Indebtedness, whether expensed or capitalized: $______________ 3. Consolidated Cash Interest Expense (F.14 above): $______________ 4. Consolidated Capital Expenditures: $______________ 5. Taxes actually paid in cash by Holdings and its Subsidiaries: $______________ 6. Consolidated Fixed Charges (H.2 + H.3 + H.4 + H.5): $______________ 7. Fixed Charge Coverage Ratio ((H.1):(H.6)): _____:1.00 8. Minimum Fixed Charge Coverage Ratio required under subsection 7.6C: _____:1.00 I. Consolidated Capital Expenditures (for the Fiscal Year ending in December [199_] [200_] [to date]) 1. Consolidated Capital Expenditures: $______________ 2. Maximum Consolidated Capital Expenditures Amount permitted under subsection 7.6D (as adjusted (calculations and supporting information therefor attached hereto) in accordance with the provisos to such subsection): $______________ J. Fundamental Changes 1. Aggregate fair market value of assets sold in Asset Sales described in subsection 7.7(vi) during the period commencing _________________, [199_] [200_]: $______________ 2. Consolidated EBITDA (F.13 above): $______________ 3. Maximum Asset Sales permitted under subsection 7.7(vi) (.10 x (J.2)): $______________ 4. Consideration received in Asset Sales described in subsection 7.7(vi) during the period commencing _________________, [199_] [200_]: $______________ XII-A-6 5. Cash consideration received in Asset Sales described in subsection 7.7(vi) during the period commencing _________________, [199_] [200_]: $______________ 6. Minimum cash consideration permitted under subsection 7.7(vi) (.80 x (J.4)): $______________ [K. Consolidated Excess Cash Flow (for the Fiscal Year ending December 31, [199_] [200_]) [ONLY USE FOR FISCAL YEARS [1998] [1999] AND THEREAFTER] 1. Consolidated EBITDA (F.13 above): $______________ 2. Extraordinary and unusual cash gains (to the extent included in item F.12 above): $______________ 3. Consolidated Working Capital Adjustment: $______________ 4. Voluntary and scheduled cash repayments of Consolidated Total Debt (excluding repayments of Revolving Loans except to the extent the Revolving Loan Commitments are permanently reduced): $______________ 5. Consolidated Capital Expenditures (net of any proceeds of related financings with respect to such expenditures): $______________ 6. Expenditures made in connection with any Permitted Acquisition pursuant to subsection 7.7(vii) (net of any proceeds of related financings with respect to such acquisitions), including without limitation transaction fees paid in cash to the MDC Entities and/or Dartford in connection with such acquisitions in accordance with the terms of the MDC Advisory Services Agreement and the Dartford Management Agreement: $______________ 7. Consolidated Interest Expense (F.14 above): $______________ 8. Extraordinary and unusual cash losses (to the extent included in item F.10 above): $______________ XII-A-7 9. Provision for current taxes based on income of Holdings and its Subsidiaries and payable in cash with respect to such period: $______________ 10. Consolidated Excess Cash Flow ((K.1 + K.2 + K.3) - (K.4 + K.5 + K.6 + K.7 + K.8 + K.9)): $______________ 11. Portion of Consolidated Excess Cash Flow required to be prepaid (.50 x (K.10)): $_____________] XII-A-8 EXHIBIT XIII [FORM OF OPINION OF WHITE & CASE] [Closing Date] The Chase Manhattan Bank, as Administrative Agent under the Credit Agreement referred to below, and Chase Securities Inc., as Arranging Agent under the Credit Agreement referred to below 270 Park Avenue New York, New York 10025 and The Lenders Listed on Schedule A Annexed Hereto Re: Credit Agreement dated as of December __, 1996, by and among MBW Foods Inc., MBW Holdings Inc., the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent Ladies and Gentlemen: We have acted as counsel to (i) MBW Foods Inc., a Delaware corporation ("Company"), in connection with that certain Credit Agreement dated as of December __, 1996 (the "Credit Agreement"; capitalized terms used herein without definition have the same meanings as in the Credit Agreement), by and among Company, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, (ii) MBW Holdings Inc., a Delaware corporation ("Holdings"), in connection with the Credit Agreement and that certain Holdings Guaranty dated as of December __, 1996 (the "Holdings Guaranty"), in favor of and for the benefit of Administrative Agent as Guarantied Party thereunder (Company and Holdings are collectively referred to herein as "Loan Parties" and each individually as a "Loan Party"), and (iii) Loan Parties in connection with documents executed in connection with the Credit Agreement and the Holdings Guaranty. This opinion is rendered to you in compliance with subsection 4.1O of the Credit Agreement. In our capacity as such counsel, we have examined originals, or copies identified to our satisfaction as being true copies, of such records, documents or other instruments as in XIII-1 our judgment are necessary or appropriate to enable us to render the opinions expressed below. These records, documents and instruments included the following: (a) The Certificate of Incorporation of each of the Loan Parties, in each case as amended to date; (b) The Bylaws of each of the Loan Parties, in each case as amended to date; (c) All records of proceedings and actions of the respective Boards of Directors of each of the Loan Parties relating to the Credit Agreement and the transactions contemplated thereby; (d) The Credit Agreement; (e) The Term Notes, the Revolving Notes and the Swing Line Note delivered on the Closing Date (collectively, the "Notes"); (f) The Collateral Account Agreement; (g) The Holdings Guaranty; (h) The Pledge Agreement; (i) The Security Agreement; (j) The Patent and Trademark Security Agreement; (k) that certain Grant of Trademark Security Interest dated as of December __, 1996 executed by Company; (l) that certain Grant of Patent Security Interest dated as of December __, 1996 executed by Company; (m) The Subordinated Bridge Notes, the Subordinated Bridge Loan Agreement and the other Subordinated Bridge Loan Documents; [and] [(n) the Asset Purchase Agreement; and] ([o][p]) Copies of Uniform Commercial Code financing statements (the "Financing Statements") to be filed in the filing offices listed for Company and Holdings on Schedule 1 annexed hereto (the "Filing Offices") in the States indicated therein (the "Relevant States"). The documents referenced in items (d) through (l) above are collectively referred to herein as the "Loan Documents". XIII-2 [NOTE: OPINIONS IN RESPECT OF THE SUBORDINATED BRIDGE LOANS AND THE TRANSITION AGREEMENTS MAY BE REQUIRED] In connection with this opinion, we have also examined such other agreements, documents, certificates and other statements of government officials and corporate officers of the Loan Parties and such other papers as we have deemed necessary as a basis for such opinions. In all such examinations, we have assumed the genuineness of all signatures on original and certified documents (other than the signatures of officers of the Loan Parties on the Loan Documents and the Financing Statements), and the conformity to original or certified documents of all documents submitted to us as conformed or photostatic copies. On the basis of the foregoing, and in reliance thereon, and subject to the limitations, qualifications and exceptions set forth below, we are of the opinion that: 12. Each Loan Party is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted. 13. Each Loan Party has all requisite corporate power and authority to execute and deliver the Loan Documents to which it is a party and the Financing Statements in which it is named as Debtor and to perform the Loan Documents to which it is a party and to carry out the transactions contemplated thereby. 14. The execution and delivery of each of the Loan Documents and the Financing Statements and the performance of each of the Loan Documents have been duly authorized by all necessary corporate action on the part of each Loan Party which is a party thereto or which is named therein as a Debtor. Each Loan Document and each Financing Statement has been duly executed and delivered by each Loan Party which is a party thereto or which is named therein as a Debtor, and each Loan Document constitutes the valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally or by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law). 15. None of the execution or delivery by the Loan Parties of the Loan Documents to which it is a party or the Financing Statements in which it is named as a debtor nor the performance by the Loan Parties of the Loan Documents nor the consummation of the transactions contemplated thereby will (i) conflict with, result in a breach or violation of, or constitute a default under, any of the terms, conditions or provisions of (a) the Certificate of Incorporation or Bylaws of any Loan Party, (b) any term of any material agreement or instrument known to us to which any of the Loan Parties is a party or by which any of their respective properties or assets are bound, or (c) any New York State or Federal or Delaware corporation law, statute, rule or regulation (including, without limitation, Regulations G, T, U or X of the Board of Governors of the Federal Reserve System) or any order, writ, judgment, injunction or decree of any New York State or Federal court or other adjudicative body or XIII-3 arbitrator to which Company or any Loan Party or any of their respective assets or properties is subject and of which we are aware, or (ii) result in the creation of any Lien upon any of the properties or assets of any Loan Party under any agreement or order referred to in clause (b) or (c) above (other than Liens created pursuant to the Loan Documents and the Financing Statements). 16. The authorized and outstanding capital stock of each Loan Party is as set forth on Schedule B annexed hereto. Loan Parties indicated on Schedule I annexed to the Pledge Agreement are the record owners of the Pledged Shares (as defined in the Pledge Agreement). Upon delivery to Administrative Agent pursuant to the Pledge Agreement of the certificates representing the Pledged Shares, and assuming (i) continued possession by Administrative Agent (or an agent of Administrative Agent) of the certificates representing the Pledged Shares in the State or New York, (ii) that Administrative Agent has taken delivery of the certificates representing the Pledged Shares in good faith and (iii) that neither Administrative Agent nor any Lender has notice, prior to or on the date of delivery of such Pledged Shares, of an adverse claim within the meaning of the Uniform Commercial Code (the "UCC") as in effect on the date hereof in the State of New York (the "New York UCC"), the execution of the Pledge Agreement by the Loan Parties will create a perfected security interest in favor of Administrative Agent in the Pledged Shares, which security interest has priority over all other liens except as follows: (a) we express no opinion as to any Loan Party's right in or title to the Pledged Shares; (b) priority may be subject to claims or liens in favor of the United States, of any State of the United States or any agency, instrumentality or political subdivision thereof, including, without limitation, (i) liens for the payment of Federal, state or local taxes which are given priority by operation of law, (ii) liens under Title IV of the Employee Retirement Income Security Act of 1974, as amended, and (iii) claims arising under the Federal Priority Statute (31 U.S.C. ss. 3713); (c) we express no opinion as to the security interest of Administrative Agent in proceeds of or distributions on the Pledged Shares; and (d) we express no opinion as to the priority of the security interests in the Pledged Shares as against any lien creditor (as such term in defined in Article 9 of the New York UCC) or any buyer, to the extent that the security interests therein purport to secure any advances or other extensions of credit other than obligations incurred pursuant to existing commitments under the Credit Agreement. 17. Upon delivery to Administrative Agent pursuant to the Pledge Agreement of the instruments representing the Pledged Debt (as defined in the Pledge Agreement), and assuming (i) continued possession by Administrative Agent (or an agent of Administrative Agent) XIII-4 of the instruments representing the Pledged Debt in the State or New York, (ii) that Administrative Agent has taken delivery of the instruments representing the Pledged Debt in good faith and (iii) that neither Administrative Agent nor any Lender has notice, prior to or on the date of delivery of such Pledged Debt, of an adverse claim within the meaning of the New York UCC, the execution of the Pledge Agreement by the Loan Parties will create a perfected security interest in favor of Administrative Agent in the Pledged Debt, which security interest has priority over all other liens except as follows: (a) we express no opinion as to any Loan Party's right in or title to the Pledged Debt; (b) priority may be subject to claims or liens in favor of the United States, of any State of the United States or any agency, instrumentality or political subdivision thereof, including, without limitation, (i) liens for the payment of Federal, state or local taxes which are given priority by operation of law, (ii) liens under Title IV of the Employee Retirement Income Security Act of 1974, as amended, and (iii) claims arising under the Federal Priority Statute (31 U.S.C. ss. 3713); (c) we express no opinion as to the security interest of the Administrative Agent in proceeds of or distributions on the Pledged Debt; and (d) we express no opinion as to the priority of the security interests in the Pledged Debt as against any lien creditor (as such term in defined in Article 9 of the New York UCC) or any buyer, to the extent that the security interests therein purport to secure any advances or other extensions of credit other than obligations incurred pursuant to existing commitments under the Credit Agreement. 18. The Security Agreement creates a valid lien and security interest in favor of Administrative Agent in the Collateral (as defined in the Security Agreement) purported to be covered thereby. The Financing Statements are in appropriate form and upon the filing of such Financing Statements in the applicable Filing Offices, assuming that the representations made by each of the Loan Parties in the Security Agreement with respect to the locations of their respective Collateral (as defined in the Security Agreement) are true and correct, all filings, registrations and recordings necessary or appropriate to create, maintain, preserve, protect and perfect the security interests granted by each Loan Party to Administrative Agent under the Security Agreement in respect of all Collateral (as defined in the Security Agreement) will have been accomplished in accordance with the UCC as in effect on the date hereof in the respective Relevant States and the security interests granted by the Loan Parties to Administrative Agent pursuant to the Security Agreement in and to such Collateral will constitute perfected security interests therein to the extent that such Collateral consists of the type of property in which a security interest may be perfected by filing a financing statement under the UCC as in effect on the date hereof in the Relevant States except as follows: XIII-5 (a) we express no opinion as to the security interest of the Administrative Agent in proceeds of or distributions on the Collateral; (b) in the case of Collateral referred to in this paragraph 9, Article 9 of the UCC requires the filing of continuation statements within the period of six months prior to the expiration of five years from the date of the original filings, in order to maintain the effectiveness of the filings referred to in this paragraph; and (c) in the case of property which becomes Collateral after the date hereof, section 552 of the United States Bankruptcy Code limits the extent to which priority acquired by a debtor after the commencement of a case under the Federal Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case. 19. Upon the filing of the Financing Statements relating to the Collateral under the Patent and Trademark Security Agreement in the office of the Secretary of State of the State of ______________ and the recording of the Grant of Trademark Security Interest in the trademark records of the United States Patent and Trademark Office (the "PTO") and the Grant of Patent Security Interest in the patent records of the PTO, we are aware of no additional actions to be taken in order to create and perfect security interests in favor of Administrative Agent in the Trademarks (as defined in the Patent and Trademark Security Agreement) described on Schedule I annexed to the Patent and Trademark Security Agreement or the Patents (as defined in the Patent and Trademark Security Agreement) described in Schedule II to the Patent and Trademark Security Agreement. However, we express no opinion as to the sufficiency of the foregoing actions to create and perfect security interests in such Patents and Trademarks to the extent federal law is determined to be applicable to the creation and perfection of such security interests. In addition, we express no opinion as to whether federal law or the laws of the State of _____________ govern the validity or perfection of such security interests. 20. Upon receipt by Administrative Agent of any cash representing Collateral under the Collateral Account Agreement and assuming Administrative Agent maintains dominion and control of the Collateral Account in the manner set forth in the Collateral Account Agreement, the Collateral Account Agreement will create in favor of Administrative Agent a perfected security interest in the Collateral Account. 21. The choice of law of the State of New York as the governing law of each of the Loan Documents is a valid choice of law. 22. None of the Loan Parties is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" XIII-6 of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 23. All Obligations under the Credit Agreement are within the definition of "Designated Senior Indebtedness" contained in the subordination provisions of the Subordinated Bridge Loan Documents. 24. No law of the State of New York regulating the maximum rate of interest which may be charged, taken or received applies to the Loans. To the extent that the obligations of any of the Loan Parties may be dependent upon such matters, we have assumed for purposes of this opinion, other than with respect to the Loan Parties, that each additional party to the agreements and contracts referred to herein is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; that each such other party has the requisite corporate or other organizational power and authority to perform its obligations under such agreements and contracts, as applicable; and that such agreements and contracts have been duly authorized, executed and delivered by, and each of them constitutes the legally valid and binding obligation of, such other parties, as applicable, enforceable against such other parties in accordance with their respective terms. Except as expressly covered in this opinion, we are not expressing any opinion as to the effect of compliance by any Lender with any state or federal laws or regulations applicable to the transactions because of the nature of any of its businesses. The opinions contained in paragraphs 3, 6, 7, 8 and 9 are subject to the following additional limitations, qualifications, exceptions and assumptions: (a) We express no opinion as to the enforceability of any indemnification or contribution provisions in the Loan Documents to the extent the rights to indemnification or contribution provided for therein are violative of any law, rule or regulation (including any securities law, rule or regulation) or public policy relating thereto. (b) There may be limitations upon the exercise of remedial or procedural provisions contained in the Loan Documents, but such limitations do not make the rights and remedies provided in or contemplated by the Loan Documents inadequate for the practical realization of the rights and remedies afforded thereby. (c) We express no opinion as the applicability to the Loan Documents of Section 548 of the Bankruptcy Code (11 U.S.C. Section 548) or Article 10 of the New York Debtor and Creditor Law relating to fraudulent transfers and obligations. XIII-7 (d) We wish to point out that the law of the State of New York generally imposes an obligation of good faith and reasonableness in the performance and enforcement of contracts. A copy of this opinion letter may be delivered by any of you to any Eligible Assignee in connection with and at the time of any assignment and delegation by any of you as a Lender to such Eligible Assignee of all or a portion of your Loans and Commitments in accordance with the provisions of the Credit Agreement, and such Eligible Assignee may rely on the opinions expressed above as if this opinion letter were addressed and delivered to such Eligible Assignee on the date hereof. This opinion is rendered only to Arranging Agent, Administrative Agent and Lenders and is solely for their benefit in connection with the above transactions. This opinion may not be relied upon by Arranging Agent, Administrative Agent or Lenders for any other purpose, or quoted to or relied upon by any other person, firm or corporation for any purpose without our prior written consent. The opinions expressed above are limited to questions arising under the Federal law of the United States, the General Corporation Law of the State of Delaware and the law of the State of New York, except that our opinions set forth in paragraph 7 above (to the extent governed by a law other than that of the Federal law of the United States, the General Corporation Law of the State of Delaware or the law of the State of New York) are based upon our review of generally available compilations of law relating to such matters. Very truly yours, XIII-8 SCHEDULE A The Chase Manhattan Bank [INSERT NAMES OF ADDITIONAL LENDERS] XIII-A-1 SCHEDULE B [CAPITALIZATION OF LOAN PARTIES] XIII-B-1 SCHEDULE 1 FILING OFFICES AND RELEVANT STATES XIII-Sched. 1-1 EXHIBIT XIV [FORM OF OPINION OF O'MELVENY & MYERS LLP] [Date] 1 9 9 6 148,999-056 [doc ID] The Chase Manhattan Bank, as Administrative Agent Chase Securities Inc., as Arranging Agent 270 Park Avenue New York, New York 10017 and The Lenders Party to the Credit Agreement Referenced Below Re: Loans to MBW Foods Inc. Ladies and Gentlemen: We have acted as counsel to The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent"), and Chase Securities Inc., as Arranging Agent (in such capacity, the "Arranging Agent"), in connection with the preparation and delivery of a Credit Agreement dated as of December __, 1996 (the "Credit Agreement") among MBW Foods Inc., a Delaware corporation ("Company"), MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as lenders, Arranging Agent and Administrative Agent (collectively, Administrative Agent and Arranging Agent are "Agents") and in connection with the preparation and delivery of certain related documents. We have participated in various conferences with representatives of Company and Agents and conferences and telephone calls with White & Case and Richards & O'Neil, LLP, counsel to Loan Parties, during which the Credit Agreement and related matters have been discussed, and we have also participated in the meeting held on the date hereof (the "Closing") incident to the funding of the initial loans made under the Credit Agreement. We have reviewed the forms of the Credit Agreement and the exhibits thereto, including the forms of the promissory notes annexed thereto (the "Notes"), and the opinions of White & XIV-2 The Chase Manhattan Bank Chase Securities Inc. [date] Page 3 Case and Richards & O'Neil, LLP (collectively, the "Opinions"), and the officers' certificates and other documents delivered at the Closing. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals or copies and the due authority of all persons executing the same, and we have relied as to factual matters on the documents that we have reviewed. Although we have not independently considered all of the matters covered by the Opinions to the extent necessary to enable us to express the conclusions therein stated, we believe that the Credit Agreement and the exhibits thereto are in substantially acceptable legal form and that the Opinions and the officers' certificates and other documents delivered in connection with the execution and delivery of, and as conditions to the making of the initial loans under, the Credit Agreement and the Notes are substantially responsive to the requirements of the Credit Agreement. Respectfully submitted, XIV-3 EXHIBIT XV [FORM OF ASSIGNMENT AGREEMENT] ASSIGNMENT AGREEMENT This ASSIGNMENT AGREEMENT (this "Agreement") is entered into by and between the parties designated as Assignor ("Assignor") and Assignee ("Assignee") above the signatures of such parties on the Schedule of Terms attached hereto and hereby made an integral part hereof (the "Schedule of Terms") and relates to that certain Credit Agreement described in the Schedule of Terms (said Credit Agreement, as amended, restated, supplemented or otherwise modified to the date hereof and as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined). IN CONSIDERATION of the agreements, provisions and covenants herein contained, the parties hereto hereby agree as follows: SECTION 1. Assignment and Assumption. (a) Effective upon the Settlement Date specified in Item 4 of the Schedule of Terms (the "Settlement Date"), Assignor hereby sells and assigns to Assignee, without recourse, representation or warranty (except as expressly set forth herein), and Assignee hereby purchases and assumes from Assignor, that percentage interest in all of Assignor's rights and obligations as a Lender arising under the Credit Agreement and the other Loan Documents with respect to Assignor's Commitments and outstanding Loans, if any, which represents, as of the Settlement Date, the percentage interest specified in Item 3 of the Schedule of Terms of all rights and obligations of Lenders arising under the Credit Agreement and the other Loan Documents with respect to the Commitments and any outstanding Loans (the "Assigned Share"). Without limiting the generality of the foregoing, the parties hereto hereby expressly acknowledge and agree that any assignment of all or any portion of Assignor's rights and obligations relating to Assignor's Revolving Loan Commitment shall include (i) in the event Assignor is an Issuing Lender with respect to any outstanding Letters of Credit (any such Letters of Credit being "Assignor Letters of Credit"), the sale to Assignee of a participation in the Assignor Letters of Credit and any drawings thereunder as contemplated by subsection 3.1C of the Credit Agreement and (ii) the sale to Assignee of a ratable portion of any participations previously purchased by Assignor pursuant to said subsection 3.1C with respect to any Letters of Credit other than the Assignor Letters of Credit. XV-1 (b) In consideration of the assignment described above, Assignee hereby agrees to pay to Assignor, on the Settlement Date, the principal amount of any outstanding Loans included within the Assigned Share, such payment to be made by wire transfer of immediately available funds in accordance with the applicable payment instructions set forth in Item 5 of the Schedule of Terms. (c) Assignor hereby represents and warrants that Item 3 of the Schedule of Terms correctly sets forth the amount of the Commitments, the outstanding Term Loan and the Pro Rata Share corresponding to the Assigned Share. (d) Assignor and Assignee hereby agree that, upon giving effect to the assignment and assumption described above, (i) Assignee shall be a party to the Credit Agreement and shall have all of the rights and obligations under the Loan Documents, and shall be deemed to have made all of the covenants and agreements contained in the Loan Documents, arising out of or otherwise related to the Assigned Share, and (ii) Assignor shall be absolutely released from any of such obligations, covenants and agreements assumed or made by Assignee in respect of the Assigned Share. Assignee hereby acknowledges and agrees that the agreement set forth in this Section 1(d) is expressly made for the benefit of Company, Agents, Assignor and the other Lenders and their respective successors and permitted assigns. (e) Assignor and Assignee hereby acknowledge and confirm their understanding and intent that (i) this Agreement shall effect the assignment by Assignor and the assumption by Assignee of Assignor's rights and obligations with respect to the Assigned Share, (ii) any other assignments by Assignor of a portion of its rights and obligations with respect to the Commitments and any outstanding Loans shall have no effect on the Commitments, the outstanding Term Loan and the Pro Rata Share corresponding to the Assigned Share as set forth in Item 3 of the Schedule of Terms or on the interest of Assignee in any outstanding Revolving Loans corresponding thereto, and (iii) from and after the Settlement Date, Administrative Agent shall make all payments under the Credit Agreement in respect of the Assigned Share (including without limitation all payments of principal and accrued but unpaid interest, commitment fees and letter of credit fees with respect thereto) (1) in the case of any such interest and fees that shall have accrued prior to the Settlement Date, to Assignor, and (2) in all other cases, to Assignee; provided that Assignor and Assignee shall make payments directly to each other to the extent necessary to effect any appropriate adjustments in any amounts distributed to Assignor and/or Assignee by Administrative Agent under the Loan Documents in respect of the Assigned Share in the event that, for any reason whatsoever, the payment of consideration contemplated by Section 1(b) occurs on a date other than the Settlement Date. SECTION 2. Certain Representations, Warranties and Agreements. (a) Assignor represents and warrants that it is the legal and beneficial owner of the Assigned Share, free and clear of any adverse claim. XV-2 (b) Assignor shall not be responsible to Assignee for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of any of the Loan Documents or for any representations, warranties, recitals or statements made therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by Assignor to Assignee or by or on behalf Company or of any other Loan Party to Assignor or Assignee in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Company or any other Person liable for the payment of any Obligations, nor shall Assignor be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Potential Event of Default. (c) Assignee represents and warrants that it is an Eligible Assignee; that it has experience and expertise in the making or purchasing of loans such as the Loans; that it has acquired the Assigned Share for its own account in the ordinary course of its business and without a view to distribution of the Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share or any interests therein shall at all times remain within its exclusive control); and that it has received, reviewed and approved a copy of the Credit Agreement (including all Exhibits and Schedules thereto). (d) Assignee represents and warrants that it has received from Assignor such financial information regarding Company and its Subsidiaries as is available to Assignor and as Assignee has requested, that it has made its own independent investigation of the financial condition and affairs of Company and its Subsidiaries in connection with the assignment evidenced by this Agreement, and that it has made and shall continue to make its own appraisal of the creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Assignee or to provide Assignee with any other credit or other information with respect thereto, whether coming into its possession before the making of the initial Loans or at any time or times thereafter, and Assignor shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Assignee. (e) Each party to this Agreement represents and warrants to the other party hereto that it has full power and authority to enter into this Agreement and to perform its obligations hereunder in accordance with the provisions hereof, that this Agreement has been duly authorized, executed and delivered by such party and that this Agreement constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity. XV-3 SECTION 3. Miscellaneous. (a) Each of Assignor and Assignee hereby agrees from time to time, upon request of the other such party hereto, to take such additional actions and to execute and deliver such additional documents and instruments as such other party may reasonably request to effect the transactions contemplated by, and to carry out the intent of, this Agreement. (b) Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the party (including, if applicable, any party required to evidence its consent to or acceptance of this Agreement) against whom enforcement of such change, waiver, discharge or termination is sought. (c) Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the notice address of each of Assignor and Assignee shall be as set forth on the Schedule of Terms or, as to either such party, such other address as shall be designated by such party in a written notice delivered to the other such party. In addition, the notice address of Assignee set forth on the Schedule of Terms shall serve as the initial notice address of Assignee for purposes of subsection 10.8 of the Credit Agreement. (d) In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. (e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. (f) This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. (g) This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and XV-4 attached to a single counterpart so that all signature pages are physically attached to the same document. (h) This Agreement shall become effective upon the date (the "Effective Date") upon which all of the following conditions are satisfied: (i) the execution of a counterpart hereof by each of Assignor and Assignee, (ii) the giving of notice to Company, (iii) the receipt by Administrative Agent of the processing and recordation fee referred to in subsection 10.1B(i) of the Credit Agreement, (iv) in the event Assignee is a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the Credit Agreement), the delivery by Assignee to Administrative Agent of such forms, certificates or other evidence with respect to United States federal income tax withholding matters as Assignee may be required to deliver to Administrative Agent pursuant to said subsection 2.7B(iii)(a), (v) the execution of a counterpart hereof by Administrative Agent as evidence of its consent hereto to the extent required under subsection 10.1B(i) of the Credit Agreement and by Administrative Agent as evidence of its acceptance hereof in accordance with subsection 10.1B(ii) of the Credit Agreement, (vi) the receipt by Administrative Agent of originals or telefacsimiles of the counterparts described above and authorization of delivery thereof, and (vii) the recordation by Administrative Agent in the Register of the pertinent information regarding the assignment effected hereby in accordance with subsection 10.1B(ii) of the Credit Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized, such execution being made as of the Effective Date in the applicable spaces provided on the Schedule of Terms. XV-5 SCHEDULE OF TERMS 1. Company: MBW FOODS INC., a Delaware corporation 2. Name and Date of Credit Agreement: Credit Agreement dated as of December __, 1996, by and among Company, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent. 3. Amounts: Re: Revolving Re: Term Loans Loans -------------- ------------- (a) Aggregate Commitments of all all Lenders: $_______ $_______ (b) Assigned Share/Pro Rata Share: _____% ______% (c) Amount of Assigned Share of Commitments: $_______ $_______ (d) Amount of Assigned Share of Term Loans: $_______ 4. Settlement Date: ____________, [199_][200_] 5. Payment Instructions: ASSIGNOR: ASSIGNEE: See Annex A See Annex B 6. Notice Addresses: ASSIGNOR: ASSIGNEE: See Annex A See Annex B XV-Schedule-1 7. Signatures: [NAME OF ASSIGNOR], [NAME OF ASSIGNEE], as Assignor as Assignee By: ____________________ By: ____________________ Name: Name: Title: Title: Consented to and accepted in accor- dance with subsections 10.1B(i) and (ii) of the Credit Agreement THE CHASE MANHATTAN BANK, as Administrative Agent By:______________________ Name: Title: XV-Schedule-2 ANNEX A Assignor Payment Instructions: ------------------------------ _______________________________ _______________________________ Attention:_____________________ Reference:_____________________ Assignor Notice Addresses: -------------------------- _______________________________ _______________________________ Attention:_____________________ Reference:_____________________ XV-Schedule Annex A-1 ANNEX B Assignor Payment Instructions: ------------------------------ _______________________________ _______________________________ Attention:_____________________ Reference:_____________________ Assignor Notice Addresses: -------------------------- _______________________________ _______________________________ Attention:_____________________ Reference:_____________________ XV-Schedule Annex B-1 EXHIBIT XVI [FORM OF PERMITTED SELLER NOTE] % NON-NEGOTIABLE SUBORDINATED NOTE [Insert Date] $_________________ MBW FOODS INC., a Delaware corporation (the "Borrower"), hereby promises upon the terms and subject to the provisions hereof to pay to [NAME OF SELLER] (the "Holder"), the principal amount of [ ] Dollars ($ ). This % Non-Negotiable Junior Subordinated Note (the "Note") was issued pursuant to the Purchase Agreement (the "Purchase Agreement") dated as of [__________, [199_] [200_], between the Borrower and the Holder. 1. Definitions. As used herein, the following terms shall have the following meanings: "Indebtedness" means (i) all obligations for borrowed money or for the deferred purchase price of property or services (including, without limitation, all obligations contingent or otherwise in connection with acceptance, letter of credit or similar facilities, (ii) all obligations evidenced by bonds, notes, debentures or other similar instruments or securities, (iii) all indebtedness created or arising under any sale and leaseback arrangement, conditional sale or other title retention agreement with respect to property owned or acquired (whether or not the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all rental obligations under capital leases to the extent not included in clause (iii) above, (v) all guarantees (direct or indirect), all contingent reimbursement obligations under undrawn letters of credit and all other contingent obligations in respect of, or obligations to purchase or otherwise acquire or to assure payment of, indebtedness of others and (vi) indebtedness of others secured by any lien upon property, whether or not assumed, but only to the extent of such property's fair market value. "Person" means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof "Senior Agent" shall mean The Chase Manhattan Bank, N.A., as Administrative Agent for the Lenders under the Senior Credit Agreement, and its successors in such capacity, or if there is then no acting Administrative Agent under the Senior Credit Agreement, financial institutions holding a majority in principal amount of the Senior Debt outstanding thereunder. XVI-1 "Senior Credit Agreement" shall mean the Credit Agreement, dated as of December __, 1996, by and among the Borrower, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, as amended, restated, modified or supplemented from time to time hereafter, together with any credit agreement or similar document from time to time executed by the Borrower to evidence any Refinancing (as defined in the definition of Senior Indebtedness) or successive Refinancings. "Senior Indebtedness" shall mean (i) all Obligations (as defined in the Senior Credit Agreement) (including Contingent Obligations, as defined in the Senior Credit Agreement) now or hereafter incurred pursuant to and in accordance with the terms of the Senior Debt Documents, (ii) any additional Indebtedness incurred under or pursuant to the Senior Credit Agreement and the other Senior Debt Documents whether such Obligations or additional Indebtedness involve principal prepayment charges, interest (including, without limitation, interest accruing after the filing of a petition initiating any proceeding under the Bankruptcy Code, whether or not allowed as a claim in such proceeding) indemnities or reimbursement of fees, expenses or other amounts, and (iii) any indebtedness incurred for the purpose of refinancing, restructuring, extending or renewing (collectively, "Refinancing") the obligations of the Borrower under the Senior Credit Agreement as set forth in clauses (i) and (ii) above. "Senior Debt Documents" shall mean the Senior Credit Agreement and all other documents and instruments delivered or filed in connection with the creation or incurrence of any Senior Indebtedness (including, without limitation, the guaranty agreements executed and delivered by the subsidiaries of the Borrower in respect of the Obligations under the Senior Credit Agreement). "Senior Lenders" shall mean the financial institutions party to the Senior Credit Agreement as "Lenders" from time to time. 2. Payment of Interest. Interest shall accrue on the unpaid principal amount of this Note from the date hereof at the rate of [ ]% per annum [NOT TO EXCEED 12%] (the "Interest Rate"), calculated on the basis of a 365 day year. The Borrower shall pay interest semi-annually in arrears on the fifteenth day of January and July in each year (each, an "Interest Payment Date") commencing on , [199_][200_]. 3. Payment of Principal. (a) Scheduled Payment. Subject to the provisions of Section 4 hereof, on [_____________], [199_][200_] (the "Maturity Date"), the Borrower shall pay to the holder of this Note the entire principal amount of this Note, plus all accrued and unpaid interest hereon which is then unpaid. (b) Optional Prepayments. Subject to the provisions of Section 4 hereof, the Borrower may, at any time and from time to time, without premium or penalty, prepay all or a portion of the unpaid principal amount of this Note, together with unpaid interest accrued since XVI-2 the preceding Interest Payment Date to which interest has been paid on such portion of the principal amount which it is prepaying; provided, that no such prepayment shall be made if such prepayment is then prohibited by the terms of any Senior Indebtedness. A prepayment of less than all of the unpaid principal amount of this Note shall not relieve the Borrower of its obligation to make the scheduled payment on this Note on the Maturity Date. Each partial payment under this Note shall first be credited to accrued and unpaid interest on the principal being prepaid, and the remainder shall be credited to principal. Whenever any payment to be made hereunder shall be due on a date which is not a business day, the payment shall be made on the next succeeding business day and such extension of time shall be included in the computation of interest with respect to such payment 4. Subordination. (a) Agreement to Subordinate. The Borrower and, by its acceptance hereof, each Holder agree that the indebtedness of the Borrower evidenced by this Note, whether for principal, interest on any other amount payable under or in respect hereof and all rights or claims arising out of or associated with such Indebtedness (the "Subordinated Obligations"), shall be junior and subordinate in right of payment to the prior payment in full in cash of all Senior Indebtedness, in accordance with the provisions of this Section 4. Each holder of Senior Indebtedness shall be deemed to have acquired Senior Indebtedness in reliance upon the agreements of the Borrower and the holder of this Note contained in this Section 4. The provisions of this Section 4 shall be reinstated if at any time any payment of any of the Senior Indebtedness is rescinded or must otherwise be returned by any holder of Senior Indebtedness or any representative of such holder upon the insolvency, bankruptcy or reorganization of the Borrower. Any provision of this Note to the contrary notwithstanding (other than the provision contained in Section 6), the Borrower shall not make, and no Holder shall accept, any payment or prepayment of principal, or prepayment of other amounts due thereunder, of any kind whatsoever (including without limitation by distribution of assets, set off, exchange or any other manner) with respect to the Subordinated Obligations at any time when any of the Senior Indebtedness remains outstanding. Holder may receive interest payments in respect of the Subordinated Obligations in accordance with the terms of this Note except to the extent and at the times prohibited or restricted by the provisions of this Section 4. In no event shall the Holder commence any action or proceeding to contest the provisions of this Section 4 or the priority of the Liens (as defined in the Senior Credit Agreement) granted to the holders of the Senior Indebtedness by the Borrower. No Holder shall take, accept or receive any collateral security from the Borrower for the payment of the Subordinated Obligations. (b) Liquidation, Dissolution, Bankruptcy. In the event of any insolvency, bankruptcy, dissolution, winding up, liquidation, arrangement, reorganization, marshalling of assets or liabilities, composition, assignment for the benefit of creditors or other similar proceedings relating to the Borrower, its debts, its property or its operations, whether voluntary or involuntary, including, without limitation the filing of any petition or the taking of any action to commence any of the foregoing (which, in the case of action by a third party, is not dismissed within 60 days) (a "Bankruptcy Event"), all Senior Indebtedness shall first be paid in full in cash or other immediately available funds before Holder shall be entitled to receive or retain any XVI-3 payment or distribution of assets of the Borrower with respect to any Subordinated Obligations. In the event of any such Bankruptcy Event, any payment or distribution of assets to which Holder would be entitled if the Subordinated Obligations were not subordinated to the Senior Indebtedness in accordance with this Section 4, whether in cash, property, securities or otherwise, shall be paid or delivered by the debtor, custodian, trustee or agent or other Person making such payment or distribution, or by the Holder if received by it, directly to the Senior Agent on behalf of the holders of the Senior Indebtedness for application to the payment of the Senior Indebtedness remaining unpaid, to the extent necessary to make payment in full in cash or other immediately available funds of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to or for the holders of the Senior Indebtedness. (c) No Payments with Respect to Subordinated Obligations in Certain Circumstances. (i) In circumstances in which Section 4(b) is not applicable, no payment of any nature (including, without limitation, any distribution of assets) in respect of the Subordinated Obligations (including, without limitation, pursuant to any judgment with respect thereto or on account of the purchase or redemption or other acquisition of Subordinated Obligations, by set off, prepayment exchange or other manner) shall be made by or on behalf of the Borrower if, at the time of such payment: (A) a default in the payment when due (whether at the maturity thereof, or upon acceleration of maturity or otherwise and without giving effect to any applicable grace periods) of all or any portion of the Senior Indebtedness (whether of principal, interest or any other amount with respect thereto) shall have occurred, and such default shall not have been cured or waived in accordance with the terms of the Senior Debt Documents; or (B) subject to the last sentence of this Section 4(c), (x) the Borrower shall have received notice from the Senior Agent of the occurrence of one or more Events of Default (as defined in the Senior Credit Agreement) in respect of the Senior Indebtedness (other than payment defaults described in Section 4(c)(i)(A) above), (y) each such Event of Default shall not have been cured or waived in accordance with the terms of the Senior Debt Documents, and (z) 180 days shall not have elapsed since the date such notice was received. The Borrower may resume payments (and may make any payments missed due to the application of Section 4(c)(i) in respect of the Subordinated Obligations or any judgment with respect thereto: (A) in the case of a default referred to in clause (A) of this Section 4(c)(i), upon a cure or waiver thereof in accordance with the terms of the Senior Debt Documents; or XVI-4 (B) in the case of an Event of Default or Events of Default referred to in clause (B) of this Section 4(c)(i), upon the earlier to occur of (1) the cure or waiver of all such Events of Default in accordance with the terms of the Senior Debt Documents, or (2) the expiration of such period of 180 days. (ii) Following any acceleration of the maturity of any Senior Indebtedness and as long as such acceleration shall continue unrescinded and unannulled, such Senior Indebtedness shall first be paid in full in cash, or provision for such payment shall be made in a manner satisfactory to the holders of the Senior Indebtedness, before any payment is made on account of or applied on the Subordinated Obligations. (iii) The Borrower shall give prompt written notice to the Holder of (i) any default in respect of Senior Obligations referred to in Section 4(c)(i)(A) and (ii) any notice of the type described in Section 4(c)(i)(B) from the Senior Agent. (d) When Distribution Must Be Paid Over. In the event that Holder shall receive any payment or distribution of assets that Holder is not entitled to receive or retain under the provisions of this Note, Holder shall hold any amount so received in trust for the holders of Senior Indebtedness, shall segregate such assets from other assets held by Holder and shall forthwith turn over such payment or distribution (without liability for interest thereon) to the Senior Agent on behalf of the holders of Senior Indebtedness in the form received (with any necessary endorsement) to be applied to Senior Indebtedness. (e) Exercise of Remedies. So long as any Senior Indebtedness is outstanding (including any loans, any letters of credit, any commitments to lend or any lender guarantees), Holder (solely in its capacity as a holder of this Note) shall not exercise any rights or remedies with respect to an Event of Default under this Note, including, without limitation, any action (l) to demand or sue for collection of amounts payable hereunder, (2) to accelerate the principal of this Note, or (3) to commence or join with any other creditor (other than the holder of a majority in principal amount of the Senior Indebtedness) in commencing any proceeding in connection with or premised on the occurrence of a Bankruptcy Event prior to the earlier of: (A) the payment in full in cash or other immediately available funds of all Senior Indebtedness; (B) the initiation of a proceeding (other than a proceeding prohibited by clause (3) of this Section 4(e)) in connection with or premised upon the occurrence of a Bankruptcy Event; (C) the expiration of 180 days immediately following the receipt by the Senior Agent of notice of the occurrence of such Event of Default from the Holder; and (D) the acceleration of the maturity of the Senior Indebtedness; XVI-5 provided, however, that if, with respect to (B) and (D) above, such proceeding or acceleration, respectively, is rescinded, or with respect to (C) above, during such 180-day period such Event of Default has been cured or waived, the prohibition against taking the actions described in this section 4(e) shall automatically be reinstated as of the date of the rescission, cure or waiver, as applicable. In all events, unless an event described in clause (A), (B) or (D) above has occurred and not been rescinded, the Holder shall give thirty (30) days prior written notice to the Senior Agent before taking any action described in this Section 4(e), which notice shall describe with specificity the action that the Holder in good faith intends to take. (f) Acceleration of Payment of Note. If this Note is declared due and payable prior to the Maturity Date, no direct or indirect payment that is due solely by reason of such declaration shall be made, nor shall application be made of any distribution of assets of the Borrower (whether by set off or in any other manner, including, without limitation, from or by way of collateral) to the payment, purchase or other acquisition or retirement of this Note, unless, in either case, (i) all amounts due or to become due on or in respect of the Senior Indebtedness (including with respect to any outstanding letters of credit) shall have been previously paid in full in cash or other immediately available funds or in any other manner satisfactory to all holders of such Senior Indebtedness, (ii) all commitments to lend under Senior Indebtedness shall have been terminated, (iii) all guarantees constituting Senior Indebtedness shall have been terminated and (iv) all lender guarantees constituting Senior Indebtedness shall have been permanently reduced to zero. (g) Proceedings Against Borrower. So long as any Senior Indebtedness is outstanding (including any loans, any commitments to lend or open lender guarantees or any lender guarantees, Holder (solely in its capacity as a holder of this Note) shall not commence any bankruptcy, insolvency, reorganization or other similar proceeding against Borrower. (h) Amending Senior Indebtedness. Any holder of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to Holder (i) modify or amend the terms of the Senior Indebtedness provided that such Senior Indebtedness cannot be extended or renewed past December __, 2001, (ii) sell, exchange, release, fail to perfect a lien on or a security interest in or otherwise in any manner deal with or apply any property pledged or mortgaged to secure, or otherwise securing, Senior Indebtedness, (iii) release any guarantor or any other person liable in any manner for the Senior Indebtedness, (iv) exercise or refrain from exercising any rights against Borrower or any other person, (v) apply any sums by whomever paid or however realized to Senior Indebtedness or (vi) take any other action that might be deemed to impair in any way the rights of the holder of this Note. Any and all of such actions may be taken by the holders of Senior Indebtedness without incurring responsibility to Holder and without impairing or releasing the obligations of Holder to the holders of Senior Indebtedness. (i) Certain Rights in Bankruptcy. Holder hereby irrevocably authorizes and empowers each holder of Senior Indebtedness (and its representative or representatives) to demand, sue for, collect and receive all payments and distributions under the terms of this Note, to file and prove all claims (including claims in bankruptcy) relating to this Note, to exercise any XVI-6 right to vote arising with respect to this Note and any claims hereunder in any bankruptcy, insolvency or similar proceeding and take any and all other actions in the name of Holder (solely in its capacity as a holder of this Note), as such holder of Senior Indebtedness determines to be necessary or appropriate. (j) Subrogation. No payment or distribution to any holder of Senior Indebtedness pursuant to the provisions of this Note shall entitle Holder to exercise any right of subrogation in respect thereof until (i)(w) all Senior Indebtedness shall have been paid in full in cash or other immediately available funds or in any other manner satisfactory to all holders of Senior Indebtedness, (x) all commitments to lend under Senior Indebtedness shall have been terminated, (y) all guarantees constituting Senior Indebtedness shall have been terminated and (z) all lender guarantees constituting Senior Indebtedness shall have been permanently reduced to zero or (ii) all holders of Senior Indebtedness have consented in writing to the taking of such action. (k) Relative Rights. The provisions of this Section 4 are for the benefit of the holders of Senior Indebtedness (and their successors and assigns) and shall be enforceable by them directly against Holder. Holder acknowledges and agrees that any breach of the provisions of this Section 4 will cause irreparable harm for which the payment of monetary damages may be inadequate. For this reason, Holder agrees that, in addition to any remedies at law or equity to which a holder of the Senior Indebtedness may be entitled, a holder of the Senior Indebtedness will be entitled to an injunction or other equitable relief to prevent breaches of the provisions of this Section 4 and/or to compel specific performance of such provisions. The provisions of this Section 4 shall continue to be effective or be reinstated, as the case may be, if at any time any payment of Senior Indebtedness is rescinded or must otherwise be returned by any holder of Senior Indebtedness upon the occurrence of a Bankruptcy Event or otherwise, all as though such payment had not been made. The provisions of this Section 4 are not intended to impair and shall not impair as between Borrower and Holder, the obligation of Borrower, which is absolute and unconditional, to pay Holder all amounts owing under this Note. (l) Reliance on Orders and Decrees. Subject to the provisions of Section 4(d) hereof, upon any payment or distribution of assets of Borrower, whether in cash, property, securities or otherwise, Holder shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to Holder for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 4. XVI-7 5. Events of Default. (a) Definition. The following shall be an "Event of Default" under this Note; (i) the Borrower shall fail to make any payment of interest on this Note when the same shall become due and payable and such failure shall continue for a period of 5 days; (ii) the Borrower shall fail to make any payment of the principal of this Note when the same shall become due and payable, whether on the Maturity Date or otherwise; (iii) (A) the Borrower shall commence any case, proceeding or action (x) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts, or (y) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, (B) the Borrower shall make a general assignment for the benefit of its creditors, (C) there shall be commenced against the Borrower any case, proceeding or other action of a nature referred to in clause (A) above which shall not have been vacated or discharged within 60 days from the commencement thereof, or (iv) a court shall enter a decree or order for relief in any involuntary case under Title 11 of the United States Code, as amended from time to time, or any applicable bankruptcy or similar law now or hereafter in effect, which decree or order is not stayed, vacated, discharged, or bonded pending appeal within 60 days from the entry thereof; or (iv) the acceleration of the maturity of the Senior Indebtedness. (b) Remedies. If an Event of Default shall occur and be continuing, then, subject to the provisions of Section 4, the Holder may, upon written notice to the Borrower, declare all amounts owing under this Note to be immediately due and payable. Subject to the immediately preceding paragraph and to Section 4 above, the Holder shall also have all other rights in respect of this Note following the occurrence and during the continuance of an Event of Default which are available pursuant to applicable law or in equity. [6. Right of Set-Off. Anything in this Note to the contrary notwithstanding, nothing in this Note shall preclude the Borrower from timely exercising such Borrower's right pursuant to Section ______ of the Purchase Agreement to set-off indemnification claims against this Note and/or interest payments under this Note.] 7. No Presentment. The Borrower, for itself and any guarantors hereof, and their successors and assigns, waives presentment, demand, protest and notice thereof or of XVI-8 dishonor, and waives any right to be released by reason of any extension of time or change in the terms of payment. 8. Amendment. So long as any Senior Indebtedness is outstanding (including any commitment under the Senior Agent Documents) the terms of this Note may be amended only with the consent of the Senior Agent. Subject to the foregoing, without the consent of the Senior Agent hereof, this Note may be amended by the Borrower and the Holder to cure any ambiguity, defect or inconsistency that does not affect the subordination provisions hereof or the rights of the Senior Lenders. 9. Cancellation. After all unpaid principal and interest owed on this Note has been paid in full, this Note shall be surrendered to the Borrower for cancellation and shall not be reissued. 10. Transfer Restrictions: Acknowledgment of Security Interest. This Note shall not be transferrable by the Holder hereof without the prior written consent of the Borrower (which consent shall not be unreasonably withheld). The Holder hereby acknowledges, and agrees to, the Borrower's grant of its interest herein to the Lenders under the Credit Agreement, dated as of the date hereof, to collaterally secure the Borrower's obligations under such Credit Agreement. 11. Payment of Expenses. The Borrower agrees to pay all costs and expenses (including reasonable attorneys' fees) reasonably incurred by the Holder after the occurrence and during the continuance of an Event of Default in enforcing any obligations under this Note or in collecting any payments due from Borrower under this Note (including in connection with a bankruptcy or insolvency proceeding with respect to the Borrower). 12. Governing Law. The construction, validity and interpretation of this Note shall be governed by and construed in accordance with the domestic laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. 13. Descriptive Headings. The descriptive headings of this Note are inserted for convenience only, and do not constitute a part of this Note. XVI-9 IN WITNESS WHEREOF, the Borrower has executed and delivered this Note on the date first written above. MBW FOODS INC. By:_____________________________________ Name: Title: Agreed: [NAME OF SELLER] By: ____________________________ Name: Title: XVI-10 EXHIBIT XVII [FORM OF CERTIFICATE RE NON-BANK STATUS] CERTIFICATE RE NON-BANK STATUS Reference is hereby made to that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as amended, restated, supplemented or otherwise modified to the date hereof, being the "Credit Agreement"), by and among MBW Foods Inc., a Delaware corporation, MBW Holdings Inc., a Delaware corporation, the financial institutions listed therein as Lenders ("Lenders"), The Chase Manhattan Bank, as Administrative Agent, and Chase Securities Inc., as Arranging Agent. Pursuant to subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby certifies that it is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code of 1986, as amended. [NAME OF LENDER] By: ________________________________ Name: Title: XVII-1 EXHIBIT XVIII [FORM OF COLLATERAL ACCOUNT AGREEMENT] COLLATERAL ACCOUNT AGREEMENT This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of December __, 1996 and entered into by and between MBW FOODS INC., a Delaware corporation ("Pledgor"), and THE CHASE MANHATTAN BANK, as administrative agent for and representative of (in such capacity herein called "Secured Party") the financial institutions ("Lenders") party to the Credit Agreement referred to below. PRELIMINARY STATEMENTS A. Pursuant to that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as it may hereafter be amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Pledgor, MBW Holdings Inc., a Delaware corporation, Secured Party, as Administrative Agent, and Chase Securities Inc., as Arranging Agent, Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit Agreement, to extend certain credit facilities to Pledgor. B. It is a condition precedent to the initial extensions of credit by Lenders under the Credit Agreement that Pledgor shall have granted the security interests and undertaken the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Lenders to make Loans and issue Letters of Credit under the Credit Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: SECTION 1. Certain Definitions. The following terms used in this Agreement shall have the following meanings: "Collateral" means (i) the Collateral Account, (ii) all amounts on deposit from time to time in the Collateral Account, (iii) all interest, cash, instruments, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Collateral, and (iv) to the extent not covered by clauses (i) through (iii) above, all proceeds of any or all of the foregoing Collateral. XVIII-1 "Collateral Account" means the restricted deposit account established and maintained by Secured Party pursuant to subsection 2(a). "Secured Obligations" means all obligations and liabilities of every nature of Pledgor now or hereafter existing under or arising out of or in connection with the Credit Agreement and the other Loan Documents and all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Pledgor, would accrue on such obligations), reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Secured Party or any Lender as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Pledgor now or hereafter existing under this Agreement. SECTION 2. Establishment and Operation of Collateral Account. (a) Secured Party is hereby authorized to establish and maintain at its office at _____________________________________________, as a blocked account in the name of Secured Party and under the sole dominion and control of Secured Party, a restricted deposit account designated as "MBW Foods Inc. Collateral Account". (b) The Collateral Account shall be operated in accordance with the terms of this Agreement. (c) All amounts at any time held in the Collateral Account shall be beneficially owned by Pledgor but shall be held in the name of Secured Party hereunder, for the benefit of Lenders, as collateral security for the Secured Obligations upon the terms and conditions set forth herein. Pledgor shall have no right to withdraw, transfer or, except as expressly set forth herein, otherwise receive any funds deposited into the Collateral Account. (d) Anything contained herein to the contrary notwithstanding, the Collateral Account shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking or governmental authority, as may now or hereafter be in effect. SECTION 3. Deposits of Cash Collateral. (a) All deposits of funds in the Collateral Account shall be made by wire transfer (or, if applicable, by intra-bank transfer from another account of Pledgor) of immediately available funds, in each case addressed as follows: XVIII-2 Account No.: ABA No.: Reference: Attention: Pledgor shall, promptly after initiating a transfer of funds to the Collateral Account, give notice to Secured Party by telefacsimile of the date, amount and method of delivery of such deposit. (b) If an Event of Default has occurred and is continuing and, in accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to Secured Party an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding under the Credit Agreement, Pledgor shall deliver funds in such an amount for deposit in the Collateral Account in accordance with Section 3(a). Upon any drawing under any outstanding Letter of Credit in respect of which Pledgor has deposited in the Collateral Account any amounts described above, Secured Party shall apply such amounts to reimburse the Issuing Lender for the amount of such drawing. In the event the amount deposited in the Collateral Account pursuant to this Section 3(b) exceeds the maximum amount available to be drawn under all Letters of Credit, Secured Party shall apply such excess amount then on deposit in the Collateral Account in accordance with subsection 2.4D of the Credit Agreement. (c) Pledgor shall, promptly after initiating a transfer of funds to the Collateral Account, give notice to Secured Party by telefacsimile of the date, amount and method of delivery of such deposit. SECTION 4. Pledge of Security for Secured Obligations. Pledgor hereby pledges and assigns to Secured Party, and hereby grants to Secured Party a security interest in, all of Pledgor's right, title and interest in and to the Collateral as collateral security for the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Secured Obligations. SECTION 5. No Investment of Amounts in the Collateral Account; Interest on Amounts in the Collateral Account. (a) Cash held by Secured Party in the Collateral Account shall not be invested by Secured Party but instead shall be maintained as a cash deposit in the Collateral Account pending application thereof as elsewhere provided in this Agreement. (b) To the extent permitted under Regulation Q of the Board of Governors of the Federal Reserve System, any cash held in the Collateral Account shall bear interest at the standard rate paid by Secured Party to its customers for deposits of like amounts and terms. XVIII-3 (c) Subject to Secured Party's rights under Section 12, any interest earned on deposits of cash in the Collateral Account in accordance with subsection 5(b) shall be deposited directly in, and held in the Collateral Account. SECTION 6. Representations and Warranties. Pledgor represents and warrants as follows: (a) Ownership of Collateral. Pledgor is (or at the time of transfer thereof to Secured Party will be) the legal and beneficial owner of the Collateral from time to time transferred by Pledgor to Secured Party, free and clear of any Lien except for the security interest created by this Agreement. (b) Governmental Authorizations. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the grant by Pledgor of the security interest granted hereby, (ii) the execution, delivery or performance of this Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured Party of its rights and remedies hereunder (except as may have been taken by or at the direction of Pledgor). (c) Perfection. The pledge and assignment of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment of the Secured Obligations. (d) Other Information. All information heretofore, herein or hereafter supplied to Secured Party by or on behalf of Pledgor with respect to the Collateral is accurate and complete in all respects. SECTION 7. Further Assurances. Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, Pledgor will: (a) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby and (b) at Secured Party's request, appear in and defend any action or proceeding that may affect Pledgor's beneficial title to or Secured Party's security interest in all or any part of the Collateral. XVIII-4 SECTION 8. Transfers and other Liens. Pledgor agrees that it will not (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral or (b) create or suffer to exist any Lien upon or with respect to any of the Collateral, except for the security interest under this Agreement. SECTION 9. Secured Party Appointed Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation to file one or more financing or continuation statements, or amendments thereto, relative to all or any part of the Collateral without the signature of Pledgor. SECTION 10. Secured Party May Perform. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under subsection 10.2 of the Credit Agreement. SECTION 11. Standard of Care. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Collateral, it being understood that Secured Party shall have no responsibility for (a) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Collateral) to preserve rights against any parties with respect to any Collateral or (b) taking any necessary steps to collect or realize upon the Secured Obligations or any guarantee therefor, or any part thereof, or any of the Collateral. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property of like kind. XVIII-5 SECTION 12. Remedies. (a) If any Event of Default or Potential Event of Default shall have occurred and be continuing, Secured Party may (i) transfer any or all of the Collateral to an account established in Secured Party's name (whether at Secured Party or otherwise) or (ii) otherwise register title to any Collateral in the name of Secured Party or one of its nominees or agents, without reference to any interest of Pledgor. (b) If any Event of Default shall have occurred and be continuing, subject to the provisions of subsection 3(b), Secured Party may exercise in respect of the Collateral, in addition to all other rights and remedies otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code as in effect in any relevant jurisdiction (the "Code") (whether or not the Code applies to the affected Collateral). (c) If the proceeds of any disposition of the Collateral are insufficient to pay all the Secured Obligations, Pledgor shall be liable for the deficiency and the fees of any attorneys employed by Secured Party to collect such deficiency. (d) Anything contained herein to the contrary notwithstanding, any of the Collateral consisting of cash held by Secured Party in the Collateral Account shall be subject to Secured Party's rights of set-off under subsection 10.4 of the Credit Agreement. SECTION 13. Continuing Security Interest; Transfer of Loans. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), but subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination Secured Party shall, at Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination and Pledgor shall be entitled to the return, upon its request and at its expense, against receipt and without recourse to Secured Party, of such of the Collateral as shall not have been otherwise applied pursuant to the terms hereof. XVIII-6 SECTION 14. Secured Party as Administrative Agent. (a) Secured Party has been appointed to act as Secured Party hereunder by Lenders. Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including without limitation the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement. (b) Secured Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice of resignation as Secured Party under this Agreement; removal of Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Secured Party under this Agreement; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Secured Party under this Agreement. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all sums held by Secured Party hereunder (which shall be deposited in a new Collateral Account established and maintained by such successor Secured Party), together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party hereunder. SECTION 15. Amendments; Etc. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by Pledgor therefrom, shall in any event be effective unless the same shall be in writing and signed by Secured Party and, in the case of any such amendment or modification, by Pledgor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. XVIII-7 SECTION 16. Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex (with received answerback), or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Secured Party shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as provided in subsection 10.8 of the Credit Agreement. SECTION 17. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 18. Severability. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 19. Headings. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. SECTION 20. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST XVIII-8 HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are used herein as therein defined. SECTION 21. Counterparts. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. [Remainder of page intentionally left blank] XVIII-9 IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. MBW FOODS INC. By: __________________________ Name: Title: XVIII-10 THE CHASE MANHATTAN BANK, as Secured Party By: __________________________ Name: Karen Sharf Title: Vice President XVIII-11 EXHIBIT XIX [FORM OF COLLATERAL ACCESS AGREEMENT] COLLATERAL ACCESS AGREEMENT RECORDING REQUESTED BY: O'Melveny & Myers LLP AND WHEN RECORDED MAIL TO: O'Melveny & Myers LLP 153 East 53rd Street New York, New York 10022 Attn: Yongjin Im Re: MBW FOODS INC. - -------------------------------------------------------------------------------- Space above this line for recorder's use only REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT This REAL PROPERTY HOLDER'S WAIVER AND CONSENT AGREEMENT (this "Agreement") is dated as of ___________, [199__][200_] and entered into by _________________________, a ____________________ ("Real Property Holder"), to and for the benefit of THE CHASE MANHATTAN BANK, having offices at 270 Park Avenue, New York, New York 10025, as administrative agent (in such capacity, "Administrative Agent") for the financial institutions ("Lenders") which are or may hereafter become parties to the Credit Agreement (as hereinafter defined). R E C I T A L S C. [MBW Foods Inc.][Name of Subsidiary], a [_________] corporation ("Company"), has possession of and occupies all or a portion of the property described on Exhibit A annexed hereto (the "Premises"). D. Company's interest in the Premises [arises under the lease agreement (the "Lease")][is subject to the [mortgage][deed of trust] (the "Mortgage")] more particularly described on Exhibit B annexed hereto, pursuant to which Real Property Holder has rights, upon the terms and conditions set forth therein, to take possession of, and otherwise assert control over, the Premises. XIX-1 E. Administrative Agent, Lenders, and Chase Securities Inc., as Arranging Agent, have entered into that certain Credit Agreement dated as of December __, 1996 (said Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time, being the "Credit Agreement") with [Company] [MBW Foods Inc., a Delaware corporation of which Company is a subsidiary ("Borrower")] and MBW Holdings Inc., a Delaware corporation, and Company has executed [a guaranty,] a security agreement and other collateral documents in relation to the Credit Agreement. F. [Company's guaranty of] the extensions of credit made by Lenders to [Company] [Borrower] under the Credit Agreement will be secured, in part, by all raw materials, work-in-process and finished goods inventory of Company (including all inventory of Company now or hereafter located on the Premises (the "Inventory")) and all equipment, machinery and other goods used in Company's business (including all equipment of Company now or hereafter located on the Premises (the "Equipment" and, together with the Inventory, the "Collateral")). G. Administrative Agent has requested that Real Property Holder execute this Agreement as a condition to the extension of credit to [Company] [Borrower] under the Credit Agreement. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Real Property Holder hereby represents and warrants to, and covenants and agrees with, Administrative Agent as follows: 1. Real Property Holder hereby (a) waives and releases unto Administrative Agent and its successors and assigns any and all rights granted by or under any present or future laws to levy or distraint for rent or any other charges which may be due to Real Property Holder against the Collateral, and any and all other claims, liens and demands of every kind which it now has or may hereafter have against the Collateral, and (b) agrees that any rights it may have in or to the Collateral, no matter how arising (to the extent not effectively waived pursuant to clause (a) of this paragraph 1), shall be second and subordinate to the rights of Administrative Agent in respect thereof. Real Property Holder acknowledges that the Collateral is and will remain personal property and not fixtures even though it may be affixed to or placed on the Premises. 2. Real Property Holder certifies that (a) Real Property Holder is the [landlord under the Lease][beneficiary under the Mortgage], (b) the [Lease][Mortgage] is in full force and effect and has not been amended, modified, or supplemented except as set forth on Exhibit B annexed hereto, (c) there is no defense, offset, claim or counterclaim by or in favor of Real Property Holder against Company under the [Lease][Mortgage] or against the obligations of Real Property Holder under the [Lease][Mortgage], (d) no notice of default has been given under or in connection with the [Lease][Mortgage] which has not been cured, and Real Property Holder has no knowledge of the occurrence of any other default under or in connection with the [Lease][Mortgage], and (e) except as disclosed to Administrative Agent, no portion of the XIX-2 Premises is encumbered in any way by any deed of trust or mortgage lien or ground or superior lease. 3. Real Property Holder consents to the installation or placement of the Collateral on the Premises, and Real Property Holder grants to Administrative Agent a license to enter upon and into the Premises to do any or all of the following with respect to the Collateral: assemble, have appraised, display, remove, maintain, prepare for sale or lease, repair, transfer, or sell (at public or private sale). In entering upon or into the Premises, Administrative Agent hereby agrees to indemnify, defend and hold Real Property Holder harmless from and against any and all claims, judgments, liabilities, costs and expenses incurred by Real Property Holder caused solely by Administrative Agent's entering upon or into the Premises and taking any of the foregoing actions with respect to the Collateral. Such costs shall include any damage to the Premises made by Administrative Agent in severing and/or removing the Collateral therefrom. 4. Real Property Holder agrees that it will not prevent Administrative Agent or its designee from entering upon the Premises at all reasonable times to inspect or remove the Collateral. In the event that Real Property Holder has the right to, and desires to, obtain possession of the Premises [(either through expiration of the Lease or termination thereof due to the default of Company thereunder)] [(through the exercise of its rights under the Mortgage upon a default by Company thereunder)], Real Property Holder will deliver notice (the "Real Property Holder's Notice") to Administrative Agent to that effect. Within the 45 day period after Administrative Agent receives the Real Property Holder's Notice, Administrative Agent shall have the right, but not the obligation, to cause the Collateral to be removed from the Premises. During such 45 day period, Real Property Holder will not remove the Collateral from the Premises nor interfere with Administrative Agent's actions in removing the Collateral from the Premises or Administrative Agent's actions in otherwise enforcing its security interest in the Collateral. Notwithstanding anything to the contrary in this paragraph, Administrative Agent shall at no time have any obligation to remove the Collateral from the Premises. 5. Real Property Holder shall send to Administrative Agent a copy of any notice of default under the [Lease][Mortgage] sent by Real Property Holder to Company. In addition, Real Property Holder shall send to Administrative Agent a copy of any notice received by Real Property Holder of a breach or default under any other lease, mortgage, deed of trust, security agreement or other instrument to which Real Property Holder is a party which may affect Company's rights in, or possession of, the Premises. 6. All notices to Administrative Agent under this Agreement shall be in writing and sent to Administrative Agent at its address set forth on the signature page hereof by telefacsimile, by United States mail, or by overnight delivery service. 7. The provisions of this Agreement shall continue in effect until Real Property Holder shall have received Administrative Agent's written certification that all amounts advanced under the Credit Agreement have been paid in full. XIX-3 8. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and shall be construed and enforced in accordance with, the internal laws of the State of New York, without regard to conflicts of laws principles. XIX-4 IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered as of the day and year first set forth above. [NAME OF REAL PROPERTY HOLDER] By: ________________________________ Name: Title: By its acceptance hereof, as of the day and year first set forth above, Administrative Agent agrees to be bound by the provisions hereof. THE CHASE MANHATTAN BANK, as Administrative Agent By: ________________________________ Name: Karen Sharf Title: Vice President XIX-5 EXHIBIT A TO COLLATERAL ACCESS AGREEMENT ---------------------------------------- LEGAL DESCRIPTION OF PREMISES XIX-A-1 EXHIBIT B TO COLLATERAL ACCESS AGREEMENT ---------------------------------------- DESCRIPTION OF [LEASE] [MORTGAGE]] XIX-B-1 EX-10.5 14 FERRARO EMPLOYMENT AGMT Exhibit 10.5 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of December 31, 1996, by and between MBW FOODS INC. (the "Company"), a Delaware corporation, and THOMAS J. FERRARO (the "Employee"). W I T N E S S E T H: WHEREAS, upon the terms and subject to the conditions of this Agreement, the Company desires to employ the Employee and the Employee desires to accept employment by the Company; NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Employment. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs the Employee and the Employee hereby accepts employment with the Company in the capacities hereinafter set forth. 2. Term of Employment. The term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 1998, unless earlier terminated pursuant to Section 6 below (the "Term"); provided that on each anniversary of the date hereof, the Term of this Agreement shall be automatically extended for an additional 12-month period. 3. Duties; Extent of Services. (a) Duties. During the Term, the Employee shall serve as President of the Company and as a Director of the Company and shall perform the duties, undertake the responsibilities and exercise the authority reasonably required of such an employee of the Company, and shall have such other powers and perform such additional executive duties as may be assigned to him from time to time by the Board of Directors of the Company (the "Board"). The Employee shall report to and carry out the lawful directions of the Board. (b) Extent of Services. Except for illness and permitted vacation periods, during the Term the Employee shall (i) devote his full time and attention during normal business hours to the businesses of the Company and its subsidiaries and Affiliates (as defined herein); (ii) use his best efforts to promote the interests of the Company and its subsidiaries and Affiliates; (iii) discharge such executive and administrative duties not inconsistent with his position as may be assigned to him by the Board; and (iv) serve, without additional compensation, as a director or officer of any subsidiary of the Company if elected as such. 4. Compensation. (a) Base Salary. In consideration of the services rendered by the Employee hereunder and provided that the Employee has substantially performed all of his obligations provided for herein, the Company will pay to the Employee a base salary (the "Base Salary") at the rate of $175,000 per year during the Term. The Base Salary may be increased from time to time in an amount mutually agreed to by the Employee and the Company to reflect the performance of the Employee and additional responsibilities undertaken by the Employee. The Base Salary shall be paid in accordance with the Company's normal payroll practice. (b) Base Bonus. The Company shall pay the Employee a bonus with respect to each fiscal year or portion thereof during the Term in accordance with the following provisions: (i) If the Financial Results of the Company for a fiscal year during the Term are at least 90% but less than 95% of the EBITDA Target for such year, Employee shall be paid an amount equal to 25% of so much of his Base Salary as was paid with respect to such year. (ii) If the Financial Results of the Company for a fiscal year during the Term are at least 95% but less than 100% of the EBITDA Target for such year, Employee shall be paid an amount equal to 37.5% of so much of his Base Salary as was paid with respect to such year. (iii) If the Financial Results of the Company for a fiscal year equal or exceed 100% of the EBITDA Target for such year, Employee shall be paid an amount equal to 50% of so much of his Base Salary as was paid with respect to such year. (c) Supplemental Bonus. In addition to the Base Bonus, if any, to which the Employee may be entitled under clauses (i), (ii) or (iii) of Section 4(b), the Company shall pay the Employee a bonus with respect to such fiscal year or portion thereof during the Term in accordance with the following provisions: (i) If the Financial Results of the Company for a fiscal year during the Term are at least 105%, but less than 110% of the EBITDA Target for -2- such year, Employee shall be paid an amount equal to 5% of so much of his Base Salary as was paid with respect to such year. (ii) If the Financial Results of the Company for a fiscal year during the Term are at least 110%, but less than 115% of the EBITDA Target for such year, Employee shall be paid an amount equal to 10% of so much of his Base Salary as was paid with respect to such year. (iii) If the Financial Results of the Company for a fiscal year during the Term are at least 115% but less than 120% of the EBITDA Target for such year, Employee shall be paid an amount equal to 15% of so much of his Base Salary as was paid with respect to such year. (iv) If the Financial Results of the Company for a fiscal year during the Term equal or exceed 120% of the EBITDA Target for such year, the Employee shall be paid an amount equal to 20% of so much of his Base Salary as was paid with respect to such year. (d) For the purpose of this Agreement (1) the term "EBITDA Target" shall mean the Company's projected earnings before interest, taxes, depreciation and amortization, as contained in the Company's annual budget which is approved by the Board (without reference to any adjustments or revision, upwards or downwards, to such projected earnings which are subsequently approved by the Board as part of any subsequent revision to such annual budget), (2) the term "Financial Results" shall mean the Company's annual financial results reflected in the Company's annual audited financial statements and (3) the Company's 1997 fiscal year shall be deemed to begin as of the date hereof. (e) Any bonus due under Section 4(b) and (c) shall be paid to the Employee within 30 days of the publication of the Company's annual audited financial statements for the relevant year. (f) Employee shall be entitled to receive a bonus (if any) with respect to a fiscal year during the Term pursuant to the terms of Section 4(b) and (c) of this Agreement if the Employee shall be employed by the Company on the last day of such fiscal year. Such entitlement shall not thereafter be affected by the subsequent termination of Employee's employment with the Company pursuant to any provision of Section 6 of this Agreement. 5. Other Employee Benefits. (a) During the Term, the Employee shall be entitled (i) to vacation time in accordance with the Company's policy from time to time in effect; (ii) to participate in all -3- employee insurance and other fringe benefit programs, including, without limitation, life, health, dental and accident insurance plans and long term disability now or hereafter maintained by the Company for senior executive or other salaried personnel for which the Employee is eligible; and (iii) to participate in a pension plan with terms similar to those applicable to executives of the Company. (b) As of the date hereof, MBW Investors LLC has issued to the Employee 30 Class D Units (as such term is defined in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996 (the "LLC Agreement")). These 30 Class D Units are part of an aggregate of 100 Class D Units issued or to be issued to the Employee, C. Gary Willett and other initial members of operating management to be hired after the date hereof. As provided in the LLC Agreement, additional Class D Units may be issued by MBW Investors LLC. During the Term, (i) the Employee shall consult with the Chairman of MBW Investors LLC regarding the amounts of any issuances of Class D Units to any person other than the Employee, C. Gary Willett, the direct reports of the Employee, the Chairman or the Chief Executive Officer of the Company, or the direct reports of such Chairman or Chief Executive Officer; and (ii) the Employee shall be entitled to receive the documents delivered under Section 9.1(b) of the LLC Agreement at the times set forth therein. 6. Termination Provisions. (a) Termination for Cause. The Board may terminate the Employee's employment hereunder for Cause, as hereinafter defined, immediately upon written notice to the Employee. For purposes of this Agreement, "Cause" shall mean (i) embezzlement, theft or other misappropriation of any property of the Company or any Affiliate, (ii) gross or willful misconduct resulting in substantial loss to the Company or any Affiliate or substantial damage to the reputation of the Company or any Affiliate, (iii) any act involving moral turpitude which results in a conviction for a felony involving moral turpitude, fraud or misrepresentation, (iv) gross neglect of his assigned duties to the Company or any Affiliate, (v) gross breach of his fiduciary obligations to the Company or any Affiliate, or (vi) any chemical dependence which materially affects the performance of his duties and responsibilities to the Company or any Affiliate; provided that in the case of the misconduct set forth in clauses (iv) and (vi) above, such misconduct shall continue for a period of 30 days following written notice thereof by the Company to the Employee. During the Term, the Employee shall be entitled to only one such notice and right to cure for any single act or event. If the Employee's employment is terminated for Cause, the Employee shall be entitled to receive only the unpaid portion of the Base Salary then in effect which has accrued to the date of termination, any other payments generally available to departing employees of the Company (such as unused vacation and personal days) and any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of -4- such termination. The Employee shall not be entitled to receive any severance payment with respect to such termination. (b) Termination By Reason of Permanent Disability. If at any time during the Term the Employee has been unable, as a result of physical or mental illness or incapacity, to perform his duties hereunder for a period of four consecutive months or for an aggregate of more than six months in any twelve month period (a "Permanent Disability"), the Employee's employment hereunder may be terminated by the Board upon thirty days' written notice to the Employee. If the Employee's employment is terminated by reason of Permanent Disability, the Employee shall be entitled to receive only the unpaid portion of the Base Salary then in effect which has accrued to the date of termination, plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination, plus an amount equal to six months of Employee's Base Salary. (c) Termination By Reason of Death. The Employee's employment hereunder shall automatically terminate on the date of his death. If the Employee's employment is so terminated by his death, the Company shall pay to the Employee's estate in addition to the unpaid portion of the Base Salary then in effect through date of Employee's death plus an amount equal to six months of Employee's Base Salary, plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of the Employee's death. Such amount shall be paid within thirty days after the date of his death if a personal representative has been appointed by the end of such thirty day period or, if a personal representative has not been appointed by the end of such thirty day period, promptly after a personal representative has been appointed. (d) Termination Without Cause. The Board may terminate the Employee's employment hereunder at any time for any reason without Cause in which case the Employee shall be entitled to receive an amount (the "Severance Amount") equal to the Base Salary the Employee would have been entitled to receive through the end of the then current Term (without giving effect to any future extension pursuant to Section 2 hereof). The Severance Amount shall be in lieu of any other severance payment to which Employee may be otherwise entitled under any other severance plan maintained by the Company. The Severance Amount shall be paid within 30 days of such termination. In addition, the Employee shall be entitled to receive any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination, plus, to the extent the Company achieves the required percentage of the -5- EBITDA Target for the fiscal year in which such termination occurs, a pro rata portion of any Base Bonus under Section 4(b) and of any Supplemental Bonus under Section 4(c) with respect to such fiscal year that Employee would have earned if he had remained employed for the entire fiscal year and not been terminated, based on the actual number of days during such year that Employee was employed by the Company. (e) Termination by Employee. Notwithstanding any other provisions of this Agreement, Employee shall have the right to terminate the employment relationship under this Agreement at any time prior to the expiration of the Term for any of the following reasons: (i) a material breach by the Company of any provision of this Agreement that remains uncorrected for 30 days following written notice of such breach by Employee to the Company or (ii) for any other reason whatsoever, in the sole discretion of the Employee, upon 90 days prior written notice to the Company. If the Employee terminates his employment with the Company pursuant to clause (i) of this Section 6(e), the Employee shall be entitled to receive the Severance Amount plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination. If the Employee terminates his employment with the Company pursuant to clause (ii) of this Section 6(e), the Employee shall be entitled to receive the unpaid portion of the Base Salary then in effect which has accrued to the date of termination plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination. 7. Covenants of the Employee. (a) Non-Competition. Until the later of (x) the first anniversary of the date of the termination of the Employee's employment hereunder and (y) the end of the then current Term in effect on the date of such termination, the Employee shall not, directly or indirectly, be associated with any entity which competes with the Company or any of its Affiliates that are subsidiaries of MBW Investors LLC or for which the Employee renders substantial services and whose primary business is, or personally engage in, the same or similar grocery product line of business of the Company or any of its Affiliates, whether as a director, officer, employee, agent, consultant, partner, owner, independent contractor or otherwise. For the purpose of this Agreement, the term "Affiliate" means, with respect to the Company, any person or entity which, directly or indirectly, controls, is controlled by or under common control with the Company, with "control" to be based on the ownership of 50% or more of the voting securities (or their equivalent) of a particular entity. (b) Non-Solicitation of Employees of the Employer. Until the later of (x) the first anniversary of the date of the termination of the employment of the Employee -6- hereunder and (y) the end of the then current Term in effect on the date of such termination, the Employee shall not, and shall cause each business or entity with which he shall become associated in any capacity not to, solicit for employment or employ any person who is then, or who was at any time after the date four months prior to the date of such termination, employed in a professional or managerial position by the Company, its subsidiaries or Affiliates. (c) Confidentiality. The Employee agrees and acknowledges that the Confidential Information (as hereinafter defined) of the Company and its subsidiaries and affiliates, is valuable, special and unique to their business; that such business depends on such Confidential Information; and that the Company wishes to protect such Confidential Information by keeping it confidential for the use and benefit of the Company and its subsidiaries and Affiliates. Based on the foregoing, the Employee agrees to undertake the following obligations with respect to such Confidential Information: (i) the Employee agrees to keep any and all Confidential Information in trust for the use and benefit of the Company and its subsidiaries and Affiliates; (ii) the Employee agrees that, except as required by applicable law or as authorized in writing by the Board, he will not at any time during or after the termination of his employment hereunder, disclose, directly or indirectly, any Confidential Information of the Company or any of its subsidiaries or Affiliates; (iii) the Employee agrees to take all reasonable steps necessary, or reasonably requested by the Company, to ensure that all Confidential Information is kept confidential for the use and benefit of the Company and its subsidiaries and Affiliates; and (iv) the Employee agrees that, upon termination of his employment hereunder or at any other time the Company may in writing so request, he will promptly deliver to the Company all materials constituting Confidential Information (including all copies thereof) that are in his possession or under his control. The Employee further agrees, that if requested by the Company, to return any Confidential Information pursuant to this subparagraph (iv), he will not make or retain any copy or extract from such materials. For purposes of paragraph (c) of this Section 7, "Confidential Information" means any and all information developed by or for the Company or any of its subsidiaries or Affiliates of which the Employee gains or has acquired knowledge during or prior to the -7- Term by reason of his employment with the Company that is (A) not generally known in any industry in which the Company or any of its subsidiaries or Affiliates is or may become engaged or (B) not publicly available. Confidential Information includes, but is not limited to, any and all information developed by or for the Company or any of its subsidiaries or Affiliates concerning plans, marketing and sales methods, customer lists, materials, processes, business forms, procedures, devices, plans for development of products, services or expansion into new areas or markets, internal operations, and any trade secrets and proprietary information of any type owned by the Company or any of its subsidiaries or Affiliates, together with all written, graphic and other materials relating to all or any part of the same. 8. Successors; Assignment. (a) The Company. The Company may assign any of its rights and obligations hereunder, without the written consent of the Employee, in connection with a merger, consolidation or sale of all or substantially all of the business or assets of the Company. This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns. (b) The Employee. Neither this Agreement nor any right or interest hereunder may be assigned by the Employee, his beneficiaries, or legal representatives without the prior written consent of the Board; provided, however, that nothing in this Section 8 shall preclude (i) the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death, or (ii) the executors, administrators, or other legal representatives of the Employee or his estate from assigning any rights hereunder to distributees, legatees, beneficiaries, testamentary trustees or other legal heirs of the Employee. 9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been given when delivered by hand, mailed by first-class registered or certified mail, postage prepaid and return receipt requested, or delivered by overnight courier addressed as follows: (i) If to the Company: MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, OH 43235 -8- with a copy to: MBW Investors LLC c/o Dartford Partnership, L.L.C. 801 Montgomery Street Suite 400 San Francisco, CA 94133 with a copy to: McCown De Leeuw & Co. 101 East 52nd Street, 31st Floor New York, NY 10022 Attention: Charles Ayres (ii) If to the Employee: 438 Delegate Drive Worthington, OH 43235 or, in each case, at such other address as may from time to time be specified to the other party in a notice similarly given. 10. Governing Law; Jurisdiction. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts executed and to be performed entirely within said State. Any judicial proceeding brought against any of the parties to this Agreement or any dispute arising out of this Agreement or any matter related hereto may be brought in the courts of the State of New York or in the United States District Court for the Southern District of New York, and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts the jurisdiction of said courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the respective parties to this Agreement. 11. Expenses. If a dispute arises out of or related to this Agreement, if either party to the Agreement brings legal action to enforce the terms of the Agreement, the party who prevails in such legal action, whether plaintiff or defendant, in addition to the remedy or relief obtained in such legal action, shall be entitled to recover his or its expenses incurred in such legal action, including without limitation, court costs and attorneys fees. A party shall be deemed to have prevailed in such a legal action if such action is concluded -9- pursuant to a court order or final judgment in favor of such party which is not subject to appeal, a settlement agreement or dismissal of the principal claims. 12. Entire Agreement. This Agreement contains the entire agreement of the parties and their Affiliates relating to the subject matter hereof and supersedes all prior agreements, representations, warranties and understandings, written or oral, with respect thereto. 13. Severability. If any term or provision of this Agreement or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, property or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall remain valid and enforceable to the fullest extent permitted by law. 14. Remedies. (a) Injunctive Relief. The Employee acknowledges and agrees that the covenants and obligations of the Employee contained in subsections (a), (b) and (c) of Section 7 hereof relate to special, unique and extraordinary matters and are reasonable and necessary to protect the legitimate interests of the Company and its subsidiaries and Affiliates and that a breach of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies at law are not available. Therefore the Employee agrees that the Company shall be entitled to an injunction, restraining order, or other equitable relief from any court of competent jurisdiction, restraining the Employee from any such breach. (b) Remedies Cumulative. The Company's rights and remedies under this Section 14 are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 15. Withholding Taxes. The Company may deduct any federal, state or local withholding or other taxes from any payments to be made by the Company hereunder in such amounts which the Company reasonably determine are required to deduct under applicable law. 16. Amendments, Miscellaneous, etc. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which such change, waiver, discharge or termination is sought to be enforced. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the -10- same instrument. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 17. Survival. The covenants set forth in Sections 4(f), 6 and 7 of this Agreement shall survive and shall continue to be binding upon the parties notwithstanding the termination of this Agreement for any reason whatsoever. The covenants set forth in Section 7 of this Agreement shall be deemed and construed as separate agreements independent of any other [The remainder of this page is intentionally left blank] -11- provision of this Agreement. The existence of any claim or cause of action by the Employee against Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Company of any or all covenants. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above. MBW FOODS INC. By:/s/ Ray Chung ---------------------------------------- Title: Executive Vice President /s/ Thomas J. Ferraro ------------------------------------------ - 12 - EX-10.6 15 WILLETT EMPLOYMENT AGMT Exhibit 10.6 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT, dated as of December 31, 1996, by and between MBW FOODS INC. (the "Company"), a Delaware corporation, and C. GARY WILLETT (the "Employee"). W I T N E S S E T H: WHEREAS, upon the terms and subject to the conditions of this Agreement, the Company desires to employ the Employee and the Employee desires to accept employment by the Company; NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Employment. Upon the terms and subject to the conditions of this Agreement, the Company hereby employs the Employee and the Employee hereby accepts employment with the Company in the capacities hereinafter set forth. 2. Term of Employment. The term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 1998, unless earlier terminated pursuant to Section 6 below (the "Term"); provided that on each anniversary of the date hereof, the Term of this Agreement shall be automatically extended for an additional 12-month period. 3. Duties; Extent of Services. (a) Duties. During the Term, the Employee shall serve as Executive Vice President of the Company and shall perform the duties, undertake the responsibilities and exercise the authority reasonably required of such an employee of the Company, and shall have such other powers and perform such additional executive duties as may be assigned to him from time to time by the Board of Directors of the Company (the "Board") or by the President of the Company (so long as such other powers and additional duties assigned by the President are not inconsistent with those assigned by the Board). The Employee shall report to the President. The Employee shall carry out the lawful directions of the Board and the President. (b) Extent of Services. Except for illness and permitted vacation periods, during the Term the Employee shall (i) devote his full time and attention during normal business hours to the businesses of the Company and its subsidiaries and Affiliates (as defined herein); (ii) use his best efforts to promote the interests of the Company and its subsidiaries and Affiliates; (iii) discharge such executive and administrative duties not inconsistent with his position as may be assigned to him by the Board; and (iv) serve, without additional compensation, as a director or officer of any subsidiary of the Company if elected as such. 4. Compensation. (a) Base Salary. In consideration of the services rendered by the Employee hereunder and provided that the Employee has substantially performed all of his obligations provided for herein, the Company will pay to the Employee a base salary (the "Base Salary") at the rate of $140,000 per year during the Term. The Base Salary may be increased from time to time in an amount mutually agreed to by the Employee and the Company to reflect the performance of the Employee and additional responsibilities undertaken by the Employee. The Base Salary shall be paid in accordance with the Company's normal payroll practice. (b) Base Bonus. The Company shall pay the Employee a bonus with respect to each fiscal year or portion thereof during the Term in accordance with the following provisions: (i) If the Financial Results of the Company for a fiscal year during the Term are at least 90% but less than 95% of the EBITDA Target for such year, Employee shall be paid an amount equal to 20% of so much of his Base Salary as was paid with respect to such year. (ii) If the Financial Results of the Company for a fiscal year during the Term are at least 95% but less than 100% of the EBITDA Target for such year, Employee shall be paid an amount equal to 30% of so much of his Base Salary as was paid with respect to such year. (iii) If the Financial Results of the Company for a fiscal year equal or exceed 100% of the EBITDA Target for such year, Employee shall be paid an amount equal to 40% of so much of his Base Salary as was paid with respect to such year. (c) Supplemental Bonus. In addition to the Base Bonus, if any, to which the Employee may be entitled under clauses (i), (ii) or (iii) of Section 4(b), the Company shall pay the Employee a bonus with respect to such fiscal year or portion thereof during the Term in accordance with the following provisions: - 2 - (i) If the Financial Results of the Company for a fiscal year during the Term are at least 105%, but less than 110% of the EBITDA Target for such year, Employee shall be paid an amount equal to 5% of so much of his Base Salary as was paid with respect to such year. (ii) If the Financial Results of the Company for a fiscal year during the Term are at least 110%, but less than 115% of the EBITDA Target for such year, Employee shall be paid an amount equal to 10% of so much of his Base Salary as was paid with respect to such year. (iii) If the Financial Results of the Company for a fiscal year during the Term are at least 115% but less than 120% of the EBITDA Target for such year, Employee shall be paid an amount equal to 15% of so much of his Base Salary as was paid with respect to such year. (iv) If the Financial Results of the Company for a fiscal year during the Term equal or exceed 120% of the EBITDA Target for such year, the Employee shall be paid an amount equal to 20% of so much of his Base Salary as was paid with respect to such year. (d) For the purpose of this Agreement (1) the term "EBITDA Target" shall mean the Company's projected earnings before interest, taxes, depreciation and amortization, as contained in the Company's annual budget which is approved by the Board (without reference to any adjustments or revision, upwards or downwards, to such projected earnings which are subsequently approved by the Board as part of any subsequent revision to such annual budget), (2) the term "Financial Results" shall mean the Company's annual financial results reflected in the Company's annual audited financial statements and (3) the Company's 1997 fiscal year shall be deemed to begin as of the date hereof. (e) Any bonus due under Section 4(b) and (c) shall be paid to the Employee within 30 days of the publication of the Company's annual audited financial statements for the relevant year. (f) Employee shall be entitled to receive a bonus (if any) with respect to a fiscal year during the Term pursuant to the terms of Section 4(b) and (c) of this Agreement if the Employee shall be employed by the Company on the last day of such fiscal year. Such entitlement shall not thereafter be affected by the subsequent termination of Employee's employment with the Company pursuant to any provision of Section 6 of this Agreement. 5. Other Employee Benefits. During the Term, the Employee shall be entitled (i) to vacation time in accordance with the Company's policy from time to time in - 3 - effect; (ii) to participate in all employee insurance and other fringe benefit programs, including, without limitation, life, health, dental and accident insurance plans and long term disability now or hereafter maintained by the Company for senior executive or other salaried personnel for which the Employee is eligible; and (iii) to participate in a pension plan with terms similar to those applicable to executives of the Company. 6. Termination Provisions. (a) Termination for Cause. The Board may terminate the Employee's employment hereunder for Cause, as hereinafter defined, immediately upon written notice to the Employee. For purposes of this Agreement, "Cause" shall mean (i) embezzlement, theft or other misappropriation of any property of the Company or any Affiliate, (ii) gross or willful misconduct resulting in substantial loss to the Company or any Affiliate or substantial damage to the reputation of the Company or any Affiliate, (iii) any act involving moral turpitude which results in a conviction for a felony involving moral turpitude, fraud or misrepresentation, (iv) gross neglect of his assigned duties to the Company or any Affiliate, (v) gross breach of his fiduciary obligations to the Company or any Affiliate, or (vi) any chemical dependence which materially affects the performance of his duties and responsibilities to the Company or any Affiliate; provided that in the case of the misconduct set forth in clauses (iv) and (vi) above, such misconduct shall continue for a period of 30 days following written notice thereof by the Company to the Employee. During the Term, the Employee shall be entitled to only one such notice and right to cure for any single act or event. If the Employee's employment is terminated for Cause, the Employee shall be entitled to receive only the unpaid portion of the Base Salary then in effect which has accrued to the date of termination, any other payments generally available to departing employees of the Company (such as unused vacation and personal days) and any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination. The Employee shall not be entitled to receive any severance payment with respect to such termination. (b) Termination By Reason of Permanent Disability. If at any time during the Term the Employee has been unable, as a result of physical or mental illness or incapacity, to perform his duties hereunder for a period of four consecutive months or for an aggregate of more than six months in any twelve month period (a "Permanent Disability"), the Employee's employment hereunder may be terminated by the Board upon thirty days' written notice to the Employee. If the Employee's employment is terminated by reason of Permanent Disability, the Employee shall be entitled to receive only the unpaid portion of the Base Salary then in effect which has accrued to the date of termination, plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal - 4 - year which has not been paid as of the date of such termination, plus an amount equal to six months of Employee's Base Salary. (c) Termination By Reason of Death. The Employee's employment hereunder shall automatically terminate on the date of his death. If the Employee's employment is so terminated by his death, the Company shall pay to the Employee's estate in addition to the unpaid portion of the Base Salary then in effect through date of Employee's death plus an amount equal to six months of Employee's Base Salary, plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of the Employee's death. Such amount shall be paid within thirty days after the date of his death if a personal representative has been appointed by the end of such thirty day period or, if a personal representative has not been appointed by the end of such thirty day period, promptly after a personal representative has been appointed. (d) Termination Without Cause. The Board may terminate the Employee's employment hereunder at any time for any reason without Cause in which case the Employee shall be entitled to receive an amount (the "Severance Amount") equal to the Base Salary the Employee would have been entitled to receive through the end of the then current Term (without giving effect to any future extension pursuant to Section 2 hereof). The Severance Amount shall be in lieu of any other severance payment to which Employee may be otherwise entitled under any other severance plan maintained by the Company. The Severance Amount shall be paid within 30 days of such termination. In addition, the Employee shall be entitled to receive any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination, plus, to the extent the Company achieves the required percentage of the EBITDA Target for the fiscal year in which such termination occurs, a pro rata portion of any Base Bonus under Section 4(b) and of any Supplemental Bonus under Section 4(c) with respect to such fiscal year that Employee would have earned if he had remained employed for the entire fiscal year and not been terminated, based on the actual number of days during such year that Employee was employed by the Company. (e) Termination by Employee. Notwithstanding any other provisions of this Agreement, Employee shall have the right to terminate the employment relationship under this Agreement at any time prior to the expiration of the Term for any of the following reasons: (i) a material breach by the Company of any provision of this Agreement that remains uncorrected for 30 days following written notice of such breach by Employee to the Company or (ii) for any other reason whatsoever, in the sole discretion of the Employee, upon 90 days prior written notice to the Company. If the Employee terminates his - 5 - employment with the Company pursuant to clause (i) of this Section 6(e), the Employee shall be entitled to receive the Severance Amount plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination. If the Employee terminates his employment with the Company pursuant to clause (ii) of this Section 6(e), the Employee shall be entitled to receive the unpaid portion of the Base Salary then in effect which has accrued to the date of termination plus any other payments generally available to departing employees of the Company (such as unused vacation and personal days), plus any bonus pursuant to Section 4 for the preceding fiscal year which has not been paid as of the date of such termination. 7. Covenants of the Employee. (a) Non-Competition. Until the later of (x) the first anniversary of the date of the termination of the Employee's employment hereunder and (y) the end of the then current Term in effect on the date of such termination, the Employee shall not, directly or indirectly, be associated with any entity which competes with the Company or any of its Affiliates that are subsidiaries of MBW Investors LLC or for which the Employee renders substantial services and whose primary business is, or personally engage in, the same or similar grocery product line of business of the Company or any of its Affiliates, whether as a director, officer, employee, agent, consultant, partner, owner, independent contractor or otherwise. For the purpose of this Agreement, the term "Affiliate" means, with respect to the Company, any person or entity which, directly or indirectly, controls, is controlled by or under common control with the Company, with "control" to be based on the ownership of 50% or more of the voting securities (or their equivalent) of a particular entity. (b) Non-Solicitation of Employees of the Employer. Until the later of (x) the first anniversary of the date of the termination of the employment of the Employee hereunder and (y) the end of the then current Term in effect on the date of such termination, the Employee shall not, and shall cause each business or entity with which he shall become associated in any capacity not to, solicit for employment or employ any person who is then, or who was at any time after the date four months prior to the date of such termination, employed in a professional or managerial position by the Company, its subsidiaries or Affiliates. (c) Confidentiality. The Employee agrees and acknowledges that the Confidential Information (as hereinafter defined) of the Company and its subsidiaries and affiliates, is valuable, special and unique to their business; that such business depends on such Confidential Information; and that the Company wishes to protect such Confidential Information by keeping it confidential for the use and benefit of the Company and its - 6 - subsidiaries and Affiliates. Based on the foregoing, the Employee agrees to undertake the following obligations with respect to such Confidential Information: (i) the Employee agrees to keep any and all Confidential Information in trust for the use and benefit of the Company and its subsidiaries and Affiliates; (ii) the Employee agrees that, except as required by applicable law or as authorized in writing by the Board, he will not at any time during or after the termination of his employment hereunder, disclose, directly or indirectly, any Confidential Information of the Company or any of its subsidiaries or Affiliates; (iii) the Employee agrees to take all reasonable steps necessary, or reasonably requested by the Company, to ensure that all Confidential Information is kept confidential for the use and benefit of the Company and its subsidiaries and Affiliates; and (iv) the Employee agrees that, upon termination of his employment hereunder or at any other time the Company may in writing so request, he will promptly deliver to the Company all materials constituting Confidential Information (including all copies thereof) that are in his possession or under his control. The Employee further agrees, that if requested by the Company, to return any Confidential Information pursuant to this subparagraph (iv), he will not make or retain any copy or extract from such materials. For purposes of paragraph (c) of this Section 7, "Confidential Information" means any and all information developed by or for the Company or any of its subsidiaries or Affiliates of which the Employee gains or has acquired knowledge during or prior to the Term by reason of his employment with the Company that is (A) not generally known in any industry in which the Company or any of its subsidiaries or Affiliates is or may become engaged or (B) not publicly available. Confidential Information includes, but is not limited to, any and all information developed by or for the Company or any of its subsidiaries or Affiliates concerning plans, marketing and sales methods, customer lists, materials, processes, business forms, procedures, devices, plans for development of products, services or expansion into new areas or markets, internal operations, and any trade secrets and proprietary information of any type owned by the Company or any of its subsidiaries or Affiliates, together with all written, graphic and other materials relating to all or any part of the same. - 7 - 8. Successors; Assignment. (a) The Company. The Company may assign any of its rights and obligations hereunder, without the written consent of the Employee, in connection with a merger, consolidation or sale of all or substantially all of the business or assets of the Company. This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns. (b) The Employee. Neither this Agreement nor any right or interest hereunder may be assigned by the Employee, his beneficiaries, or legal representatives without the prior written consent of the Board; provided, however, that nothing in this Section 8 shall preclude (i) the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death, or (ii) the executors, administrators, or other legal representatives of the Employee or his estate from assigning any rights hereunder to distributees, legatees, beneficiaries, testamentary trustees or other legal heirs of the Employee. 9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been given when delivered by hand, mailed by first-class registered or certified mail, postage prepaid and return receipt requested, or delivered by overnight courier addressed as follows: (i) If to the Company: MBW Foods Inc. Community Corporate Center 445 Hutchinson Avenue Columbus, OH 43235 with a copy to: MBW Investors LLC c/o Dartford Partnership, L.L.C. 801 Montgomery Street Suite 400 San Francisco, CA 94133 - 8 - with a copy to: McCown De Leeuw & Co. 101 East 52nd Street, 31st Floor New York, NY 10022 Attention: Charles Ayres (ii) If to the Employee: 1001 Elcliff Drive Westerville, Ohio 43081 or, in each case, at such other address as may from time to time be specified to the other party in a notice similarly given. 10. Governing Law; Jurisdiction. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York applicable to contracts executed and to be performed entirely within said State. Any judicial proceeding brought against any of the parties to this Agreement or any dispute arising out of this Agreement or any matter related hereto may be brought in the courts of the State of New York or in the United States District Court for the Southern District of New York, and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts the jurisdiction of said courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the respective parties to this Agreement. 11. Expenses. If a dispute arises out of or related to this Agreement, if either party to the Agreement brings legal action to enforce the terms of the Agreement, the party who prevails in such legal action, whether plaintiff or defendant, in addition to the remedy or relief obtained in such legal action, shall be entitled to recover his or its expenses incurred in such legal action, including without limitation, court costs and attorneys fees. A party shall be deemed to have prevailed in such a legal action if such action is concluded pursuant to a court order or final judgment in favor of such party which is not subject to appeal, a settlement agreement or dismissal of the principal claims. 12. Entire Agreement. This Agreement contains the entire agreement of the parties and their Affiliates relating to the subject matter hereof and supersedes all prior agreements, representations, warranties and understandings, written or oral, with respect thereto. - 9 - 13. Severability. If any term or provision of this Agreement or the application thereof to any person, property or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons, property or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall remain valid and enforceable to the fullest extent permitted by law. 14. Remedies. (a) Injunctive Relief. The Employee acknowledges and agrees that the covenants and obligations of the Employee contained in subsections (a), (b) and (c) of Section 7 hereof relate to special, unique and extraordinary matters and are reasonable and necessary to protect the legitimate interests of the Company and its subsidiaries and Affiliates and that a breach of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies at law are not available. Therefore the Employee agrees that the Company shall be entitled to an injunction, restraining order, or other equitable relief from any court of competent jurisdiction, restraining the Employee from any such breach. (b) Remedies Cumulative. The Company's rights and remedies under this Section 14 are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. 15. Withholding Taxes. The Company may deduct any federal, state or local withholding or other taxes from any payments to be made by the Company hereunder in such amounts which the Company reasonably determine are required to deduct under applicable law. 16. Amendments, Miscellaneous, etc. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which such change, waiver, discharge or termination is sought to be enforced. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 17. Survival. The covenants set forth in Sections 4(f), 6 and 7 of this Agreement shall survive and shall continue to be binding upon the parties notwithstanding the termination of this Agreement for any reason whatsoever. The covenants set forth in Section 7 of this Agreement shall be deemed and construed as separate agreements independent of any other - 10 - [The remainder of this page is intentionally left blank] - 11 - provision of this Agreement. The existence of any claim or cause of action by the Employee against Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Company of any or all covenants. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above. MBW FOODS INC. By:/s/ Ray Chung ---------------------------------------- Title: Executive Vice President /s/ C. Gary Willett ----------------------------------------- - 12 - EX-10.7 16 CO-PACK AGMT DATED 12/31/96 EXHIBIT 10.7 CO-PACK AGREEMENT dated as of December 31, 1996 (this "Agreement") between Van den Bergh Foods Company, a division of Conopco, Inc., a New York corporation ("Supplier"), and MBW Foods Inc. (f/k/a MBW Acquisition Corp.), a Delaware corporation ("Purchaser"). WHEREAS, Supplier and Purchaser have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Purchase Agreement"), providing for, among other things, the sale by Supplier to Purchaser of the Transferred Assets (as defined in the Purchase Agreement); WHEREAS, Section 5.4 of the Purchase Agreement also provides that Supplier and Purchaser shall enter into a manufacturing and supply agreement pursuant to which Supplier shall supply and Purchaser shall purchase the products listed on Schedule A hereto (the "Products") under the terms and conditions set forth herein; and WHEREAS, the Transferred Assets include certain Equipment used in connection with the Business (each as defined in the Purchase Agreement). NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the parties hereto agree as follows: ARTICLE I Binding Forecasts; Estimated Forecasts; Purchase Orders; Equipment 1.1. Binding Forecasts; Estimated Forecasts. On the date hereof, Purchaser shall provide Supplier with an initial written forecast of Purchaser's projected demand for Products during the three (3) month period beginning January 1, 1997. Thereafter, no later than the 15th day of each month, Purchaser shall supply a written forecast of Purchaser's projected demand during the following three months. The initial month's forecast for such Products (the "Binding Forecast") shall set forth the total quantity of Products that Purchaser shall order for delivery during such month and shall represent a commitment by Purchaser to purchase the amount of Product indicated thereunder. The last two months of each such forecast shall be a nonbinding, good faith estimate of the quantity of Products that Purchaser expects to order for delivery during the second and third months (the "Estimated Forecasts"). The Estimated Forecasts are for planning purposes only and shall not be construed as a firm commitment to Supplier. Supplier shall invoice Purchaser and Purchaser shall thereafter pay for any Product specified in a Binding Forecast but not ordered by Purchaser during the month to which such Binding Forecast relates. 1.2. Purchase Orders. All purchases of Product by Purchaser hereunder shall be pursuant to written purchase orders, which shall be delivered at least 20 days prior to the requested delivery date. A purchase order shall specify the Products ordered, the quantities of each Product ordered and the requested time and manner of delivery, all of which shall be subject to the amount of Products specified in the Binding Forecast and the provisions of Articles II and III. 1.3. Acceptance of Purchase Orders. Supplier may reject any purchase order that specifies a quantity that is inconsistent with the provisions of Article II or that, when added to the other quantities of Products delivered or to be delivered during any month, exceeds the Binding Forecast for such month or that contains a delivery schedule that is inconsistent with the provisions of Article III. 1.4. Removal of Equipment. Following expiration or termination of this Agreement, the Equipment shall be removed from Supplier's applicable facility in accordance with the provisions of the Purchase Agreement. In addition, upon such expiration or termination, Supplier shall immediately account for and return to Purchaser, freight collect, Specifications (as defined in Section 5.1) and co-pack manuals related exclusively to the Products and other confidential processing information owned and/or supplied by Purchaser pursuant to this Agreement. ARTICLE II Quantity; Purchased Inventory 2.1. Quantity. Purchaser shall purchase from Supplier, and Supplier shall, subject to the last sentence of this Section 2.1, sell to Purchaser, all Purchaser's requirements as forecasted and ordered during the term of, and subject to all the other terms of, this Agreement, provided, however, that Supplier shall have no obligation to supply any amount of Product in excess of the amount specified in the Binding Forecast for such month. In addition, no Binding Forecast shall be in excess of the maximum supply limits or below the minimum supply limits for the Products set forth on the attached Schedule B. If, during any period, Purchaser desires to purchase a quantity of Products that exceeds the maximum supply limits on any Binding Forecast, Purchaser shall notify Supplier in writing, and Supplier may, in its sole discretion, accommodate Purchaser, but shall be under no obligation to supply such additional quantities and shall not be responsible for any losses or damages that may be suffered by the Purchaser as a result of such failure to supply the additional Products. If Purchaser wishes to reduce its purchases of Product hereunder to less than all of its requirements, (i) it may do so on 60 days notice to Supplier if the reduction in quantity is substantially the same percentage reduction for each SKU (with pricing thereafter to be in accordance with Schedule C-1) or (ii) if the reduction in quantity is not substantially the same percentage reduction for each SKU, Supplier and Purchaser shall negotiate in good faith the price increase that shall result from such reduction. Until 60 days (or as otherwise mutually agreed by Supplier and Purchaser) after Supplier and Purchaser have reached agreement with respect to the matters described in clause (ii) of the preceding sentence, Purchaser shall continue to purchase all of Purchaser's requirements from Supplier. 2.2. Purchased Materials. Pursuant to the Purchase Agreement, Purchaser has purchased certain raw materials and packaging supplies (the "Purchased Materials"), which shall be used by Supplier to manufacture the Products hereunder. All Purchased Materials shall be used by Supplier to produce the Products on a "first in, first out" basis before Supplier uses any similar raw materials or packaging supplies purchased after the date hereof. Purchaser's cost for the Purchased Materials is the amount set forth in respect thereof on the Closing Date Inventory Statement (as defined in the Purchase Agreement) (the "Purchased Material Cost"). ARTICLE III Delivery; Invoices; Title 3.1. Delivery. Prior to the expiration or termination of the Transition Services Agreement, Supplier shall deliver the Products as set forth in the Transition Services Agreement. Following the expiration or termination of the Transition Services Agreement, Supplier shall make the Products available for shipping by Purchaser's designated carrier, F.O.B., Supplier's Olathe, Kansas facility or Rochester, New York facility, as the case may be, on the date specified in the purchase orders, but, if a purchase order requests delivery less than 20 days after the receipt by Supplier of the purchase order, Supplier shall have 20 days after its receipt of the purchase order to deliver the Products ordered in such purchase order. Supplier shall use commercially reasonable efforts to manufacture and have ready for shipment orders of Products by any earlier requested shipment date, so long as such efforts do not interfere with Supplier's normal operations at Supplier's facilities. 3.2. Invoices; Payment. Following the expiration or termination of the Transition Services Agreement, all orders for Products under this Agreement shall be invoiced at the time of manufacture and any Products specified in a Binding Forecast but not ordered in the related calendar month shall be invoiced on the business day following such month. All invoices hereunder shall be due and payable net thirty (30) days from the invoice date. Any amount not paid when due shall accrue interest at the rate of one and one-half percent (1-1/2%) per month until paid in full. 3.3. Title. Title to, and risk of loss regarding, the Products shall be in and pass to Purchaser upon Supplier's manufacture of the Products. ARTICLE IV Price 4.1. Price. The price for Products sold by Supplier to Purchaser shall be as described on Schedule C and Schedule C-1. ARTICLE V Quality 5.1. Specifications. The specifications for the Products are set forth on Schedule D (the "Specifications") and are the Specifications that were used by Supplier for the manufacture of the Products immediately prior to the Closing Date. Purchaser shall have the right, at its sole option, to modify from time to time the formulations for Products included as part of the Specifications (such modified Products are referred to herein as "Modified Products"); provided such modifications do not require any alterations or additions to the Equipment or process changes and would not interfere with Supplier's other business operations. Purchaser shall bear any additional costs which are required in order to manufacture Products in accordance with such modified formulations. A condition to any such modification shall be that the price for Products with modified formulations shall have been adjusted by mutual agreement of the parties to reflect the increased or decreased cost of manufacture by Supplier. At the request of the Purchaser, Supplier shall furnish to Purchaser records, invoices and other data pertaining to the prices for any such modified Products and/or the costs of Supplier for the manufacture thereof. Supplier shall code each Product as outlined in the Specifications and shall not mix different Product code dates in the same carton and/or case. Supplier shall consider in good faith any other requested changes by Purchaser; provided, however, that Supplier shall not be required to make any such other changes. 5.2. Nonconforming Products. Any Products delivered hereunder that do not conform to the Specifications shall be deemed to be "Nonconforming Products". Purchaser shall notify Supplier of any Nonconforming Products within 10 days after such Products were shipped from Supplier's facility; provided, that the failure to give such notice shall not relieve Supplier of any liability hereunder except to the extent Supplier is actually prejudiced thereby; and provided, further, such notice must be given prior to the expiration of the shelf life of the Nonconforming Product at issue or Supplier shall have no liability in respect thereof. Any such Nonconforming Products shall be returned to Supplier at Supplier's cost, but prior to any such return, Supplier shall have the right to examine and test any Products that Purchaser claims are Nonconforming Products. At Supplier's option, it shall either issue Purchaser a credit for such Nonconforming Products or promptly replace, at Supplier's cost, such Nonconforming Products with Products that meet the Specifications. 5.3. Right To Inspect. During the term hereof, Purchaser shall have the right, at Purchaser's sole cost and expense, during normal business hours and upon reasonable written notice to Supplier, (i) to enter and inspect that portion of Supplier's facility where the Products are manufactured to ensure that the Products comply with the Specifications and to monitor all aspects of production of Products, (ii) to inspect the Equipment and (iii) to audit and inspect the books and records of Supplier's operations at the Supplier's facility to the extent related to the quality control of the manufacture of Product; provided, however, that any inspection pursuant to this Section 5.3 shall not interfere with Supplier's normal operations at such facilities and that such inspections are subject to the execution of confidentiality agreements reasonably satisfactory to Supplier. Supplier will promptly submit to Purchaser copies of all quality assurance reports as required by the Specifications. 5.4. Purchase of Raw Materials and Supplies. (a) Except for the Purchased Materials, Supplier shall purchase all ingredients, raw materials and packaging supplies necessary to produce the Products manufactured hereunder during the term hereof. Supplier shall make such purchases either as the agent of Purchaser or as a principal. (b) During the three months prior to the expiration of this Agreement or following such time as when notice has been given hereunder that either party hereto intends to terminate this Agreement, Supplier and Purchaser shall cooperate to minimize the quantities of ingredients, raw materials and packaging supplies that are held by Supplier for the manufacture of the Products. 5.5. Recall. Purchaser shall provide recall or withdrawal services in a manner which is consistent with the policies and procedures applied in recalling or withdrawing products in other food businesses for which Dartford Partnership provides management services, except that the decision to recall or withdraw the Products will be made in the sole discretion of Purchaser. Purchaser will, however, make all reasonable efforts to discuss the matter with Supplier. 5.6. Quality Control. Supplier agrees that it will not materially change the practices which were observed by Supplier with respect to the manufacture of Product prior to Purchaser's purchase of the Business, including, without limitation, sanitation, pest control, formula control, product evaluation procedures, shelf life, hold procedures, product safety plans and employee training. ARTICLE VI Term and Termination 6.1. Term. (a) This Agreement shall commence on the date hereof and shall continue in effect through the first anniversary of the Closing Date (as defined in the Purchase Agreement). (b) Any extension of this Agreement with respect to the supply of food service pancake mix from Supplier to Purchaser shall be agreed upon, on terms and conditions mutually agreeable to Supplier and Purchaser, at least three months prior to the termination of this Agreement; provided, however, neither party hereto shall be required to extend the term of this Agreement. 6.2. Termination. Notwithstanding the provisions of Section 6.1, this Agreement may be terminated prior to the expiration of the term, upon prior written notice as set forth below: (i) either in its entirety or with respect to one or more Products by mutual agreement of the parties; (ii) by Supplier, if Purchaser fails to pay any amount when due hereunder and such failure continues for a period of five (5) days following written notice thereof (unless the unpaid amount of such invoice is being contested in good faith by Purchaser); (iii) by either party if the other party commits a breach of any provision of this Agreement and such failure continues for a period of thirty (30) days following written notice; (iv) by either party, effective immediately, if the other party files, or has filed against it, a petition for voluntary or involuntary bankruptcy or pursuant to any other insolvency law or the other party makes or seeks to make a general assignment for the benefit of its creditors or applies for or consents to the appointment of a trustee, receiver or custodian for it or a substantial part of its property; or (v) by either party, in the event of a Force Majeure occurrence affecting the other party which continues for more than sixty (60) days. 6.3. Effect of Termination. (a) Upon the termination or expiration of this Agreement, Purchaser shall purchase from Supplier (i) at the price provided in Section 4.1, all existing inventory of Products that have not already been paid for by Purchaser, and (ii) at the price paid by Supplier therefor, all quantities of ingredients, raw materials and packaging supplies, wherever located, excluding Purchased Materials, that are intended to be used in the manufacture of Products at the Supplier's facility. In addition, any Purchased Materials that remain in Supplier's possession shall be returned to Purchaser and Supplier shall pay to Purchaser the portion of the Purchased Material Cost attributable to Purchased Materials used by Supplier to manufacture the Products hereunder. Purchaser shall pay all shipping and delivery charges in respect of the inventories and Purchased Materials acquired under this Section 6.3(a). (b) Upon the termination or expiration of this Agreement, the Supplier shall cease manufacturing the Products. (c) In the event of expiration or termination of this Agreement for any reason, any obligations, claims, damages, losses, liabilities or debts arising prior to such expiration or termination shall survive the expiration or termination hereof for any reason whatsoever. ARTICLE VII Warranties 7.1. Supplier Warranties. Supplier warrants that the Products supplied hereunder shall be manufactured in accordance with and shall comply with the Specifications therefor and shall be manufactured in accordance with all applicable laws or regulations, including, without limitation, the provisions of the Federal Food, Drug and Cosmetics Act, as amended, and will not constitute "adulterated or misbranded goods" within the meaning of such Act; provided, however, that with respect to Modified Products, Supplier only warrants that such Modified Products will have been manufactured in accordance with the formulas and recipes therefor. WITHOUT LIMITING THE FOREGOING WARRANTIES, SUPPLIER MAKES NO OTHER WARRANTIES WITH RESPECT TO THE PRODUCTS INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND SUPPLIER SPECIFICALLY DISCLAIMS ANY SUCH WARRANTIES. 7.2. Purchaser Warranties. Purchaser warrants that (i) any Modified Product manufactured in accordance with its applicable formula will comply with the Specifications for such Modified Product, (ii) the Specifications for Modified Products shall comply with all applicable laws or regulations, including, without limitation, the provisions of the Federal Food Drug and Cosmetics Act, as amended, and (iii) Modified Products manufactured in accordance with the applicable formulas will not constitute "adulterated or misbranded goods" within the meaning of such Act. ARTICLE VIII Limitation of Liability 8.1. Limitation of Liability. Except for Supplier's obligations under Section 9.1(b), the liability of Supplier with respect to the Products delivered hereunder shall be limited solely to the replacement or refund of Nonconforming Products as provided in Section 5.3 and Supplier shall have no other liability whatsoever with respect to the Products or Nonconforming Products. 8.2. No Consequential Damages. Except as may arise pursuant to the indemnification provided for in Article IX, neither party shall be liable for any indirect, special or consequential damages or for lost profits or revenues of any kind resulting from the failure of any Products to meet the Specifications or for any breach of this Agreement. ARTICLE IX Indemnification 9.1. Indemnification. (a) Purchaser shall indemnify, defend and hold Supplier and its affiliates harmless from and against any and all claims, losses, damages, liabilities, deficiencies, obligations, out of pocket costs or expenses, including without limitation reasonable attorneys' fees and expenses and costs and expenses of investigation (collectively "Losses") arising out of or resulting from (i) the sale or distribution of the Products or Modified Products; (ii) actual or alleged personal injury (including illness or death) in connection with or related to the use of the Products or Modified Products (in the case of clauses (i) and (ii), excluding Losses for which Supplier is liable pursuant to Section 9.1(b)) or (iii) breaches of Purchaser's warranties contained in Section 7.2 hereunder. (b) Supplier shall indemnify, defend and hold Purchaser and its affiliates harmless from and against all Losses in respect of actual or alleged personal injury (including illness or death) to the extent resulting from breaches of Supplier's warranties contained in Section 7.1 hereunder. 9.2. Indemnification Procedure for Third Party Claims. If a party entitled to indemnification hereunder (an "Indemnified Party") receives written notice of the commencement of any action or proceeding, the assertion of any claim by a third-party or the imposition of any penalty or assessment for which indemnity may be sought under this Article IX (a "Third Party Claim") and the Indemnified Party intends to seek indemnity pursuant to this Article IX, the Indemnified Party shall promptly provide the party providing indemnification hereunder (the "Indemnifying Party") with written notice of such Third Party Claim. The Indemnifying Party shall be entitled to participate in or, at its option, assume the defense, appeal or settlement of such Third Party Claim, with counsel selected by the Indemnifying Party and approved by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall fully cooperate with the Indemnifying Party in connection therewith. The Indemnified Party shall be entitled at any time to employ separate counsel to represent itself, but if the defense, appeal or settlement of such Third Party Claim has been assumed by the Indemnifying Party with its approved counsel as provided above, any separate counsel employed by the Indemnified Party shall be at the Indemnified Party's expense. The Indemnifying Party shall not settle any Third Party Claim, the defense or settlement of which is controlled by it, without the Indemnified Party's prior written consent. In the event that the Indemnifying Party fails to assume the defense, appeal or settlement of any Third Party Claim within ten (10) days after receipt of notice thereof from the Indemnified Party, the Indemnified Party shall have the right to undertake the defense, appeal or settlement of such Third Party Claim at the expense and for the account of the Indemnifying Party. 9.3. Survival. The indemnification provisions of this Article IX shall survive the expiration or termination of this Agreement for any reason whatsoever. ARTICLE X Other Agreements 10.1. Intellectual Property. The parties hereto understand and acknowledge that nothing contained in this Agreement shall be deemed to give Supplier or any other Person any right, title or interest to Purchaser's trademarks and trade names, or any other trademarks, trade names or other intellectual property of Purchaser and its affiliates, and the same shall at all times remain in Purchaser and its affiliates. Neither Supplier nor any other Person shall have any right to use, adopt or register any of such trademarks or trade names or other intellectual property, except as required to perform the services set forth herein or as authorized in writing by Purchaser. 10.2. Confidentiality. Supplier acknowledges that Purchaser will be providing Supplier with proprietary technical information and know-how, including without limitation the Specifications (including all formulas), all of which information and know-how are closely guarded secrets and assets of Purchaser and its affiliates or customers. Supplier shall hold in confidence all such information and know-how received from Purchaser and shall use such information and know-how only for the purpose of manufacturing Products for Purchaser hereunder. Upon the termination or expiration of this Agreement, Supplier shall return to Purchaser all such information and know-how, together with all copies thereof, and shall retain none for its files. Supplier shall inform its employees of the confidential nature of such information and know-how. Supplier shall be responsible for any breaches of such confidentiality by its employees. 10.3. Ownership of Equipment. The Equipment shall at all times remain the property of Purchaser and such ownership shall be clearly designated. Supplier will perform routine maintenance, at a level and in a manner as historically performed by Supplier, on all Equipment. Purchaser shall be fully responsible for all non-routine or otherwise extraordinary repairs or maintenance, and for any replacement of, or capital improvements to, the Equipment, as needed. Purchaser shall assume the entire risk of loss or damage to the Equipment from any cause whatsoever while the Equipment is in Supplier's control and/or possession. Supplier shall not, at any time prior to return to Purchaser hereunder, remove the Equipment from the Supplier's facility. Supplier shall not use the Equipment for the processing or manufacturing of any product other than Products for sale to Purchaser hereunder. 10.4. Personnel. Supplier shall render the services agreed upon in this Agreement with its own personnel, and Supplier has the necessary and qualified personnel to perform such services. The personnel of Supplier performing any services hereunder shall be the employees of Supplier, and Purchaser shall have no labor relationship with such personnel nor shall Purchaser be liable for wages or collective bargaining liabilities to such employees. ARTICLE XI Miscellaneous 11.1. Notices. Any notice or other communication hereunder shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Supplier: Van den Bergh Foods Company 2200 Cabot Drive Lisle, Illinois 60532 Telecopier: (630) 955-5531 Attn: Arnold Friede with a copy to: Unilever United States, Inc. 390 Park Avenue New York, New York 10022 Telecopier: (212) 688-3411 Attn: General Counsel If to Purchaser: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Telecopier: (415) 982-3023 Attention: Ray Chung Either party may, by notice given in accordance with this Section 11.1, specify a new address for notices under this Agreement. 11.2. Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the interpretation hereof. 11.3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflict of laws. 11.4. Assignment. Neither party may assign its rights and obligations under this Agreement to any third party without the prior written consent of the other party; provided, however, that (i) Supplier may assign its rights and obligations hereunder (A) to any affiliate of Supplier that is capable of performing Supplier's obligations hereunder or (B) to any purchaser of Supplier's business or facility, and (ii) Purchaser may assign its rights and obligations hereunder (A) to any purchaser of all or substantially all of Purchaser's business in respect of the Products, (B) to any of Purchaser's affiliates so long as Purchaser shall remain fully liable for the fulfillment of all such obligations and (C) as security to Purchaser's lenders in respect of the Financing (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Purchaser, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Purchaser shall notify Supplier of such assignment within two business days thereof. 11.5. No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the parties and their successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 11.6. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.7. Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. 11.8. Independent Status. Supplier is an independent contractor engaged by Purchaser for the provision of the Products. Except as provided in Section 5.4, nothing in this Agreement shall constitute Supplier as an employee, agent or general representative of Purchaser. Except as provided in Section 5.4, this Agreement shall not constitute either party as the legal representative or agent of the other nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of or on behalf of, the other party. 11.9. Force Majeure. Except for the payment of money, neither party shall be in default hereunder by reason of any failure or delay in the performance of its obligations hereunder where such failure or delay is due to circumstances or causes beyond such party's reasonable control, such as acts of God, labor disputes, strikes, war, threat of war, riot, intervention by governmental authorities, embargoes, priorities repealed or required by civil authorities, floods, fire, accident, delays in transportation or other occurrences of a similar nature. Any party affected by a "Force Majeure" occurrence shall provide written notice thereof to the other and shall indicate the projected length of such Force Majeure occurrence. 11.10. Jurisdiction; Service of Process. Supplier and Purchaser irrevocably consent and agree that any legal action, suit or proceeding against either of them with respect to their obligations or liabilities under or arising out of or in connection with this Agreement may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York sitting in New York County and each hereby irrevocably accepts and submits to the exclusive jurisdiction of each of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Supplier and Purchaser irrevocably consent and agree that the service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding arising hereunder may be made by mailing a copy thereof by certified or registered mail, postage prepaid, return receipt requested, to the party to be served at the address set forth in Section 11.1 hereof, with such service to be effective upon receipt. 11.11. Amendment; Waivers. This Agreement may be amended only in a writing signed by both parties hereto. Any provision of this Agreement may be waived only in a writing signed by the party to be bound by such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. VAN DEN BERGH FOODS COMPANY, by: /s/ Mart Laius -------------- Name: Mart Laius Title: Authorized Signatory MBW FOODS INC., by: /s/ Ray Chung ------------- Name: Ray Chung Title: Executive Vice President SCHEDULE A LIST OF PRODUCTS ----------------
SKU DESCRIPTION-SYRUP SKU DESCRIPTION-PANCAKE MIXES 397102 1.5 OZ PORTIONS 60650 5 LB. BUTTERMILK PANCAKE 397120 1.0 OZ PORTIONS 60655 5 LB. COMPLETE PANCAKE AND WAFFLE 397160 4/1 ECONOLITE GALLONS 60656 5 LB. EGG PANCAKE 397162 DISPLAY GALLONS COSTCO 60657 5 LB. DELUXE EGG PANCAKE 397170 DISPLAY GALLONS FRENCH 60658 50 LB. PANCAKE & WAFFLE BASE 579129 24 OZ REG 60660 5 LB. GOURMET BELGIAN WAFFLE BASE 529224 24 OZ LITE 60661 5 LB. POTATO PANCAKE 579172 24 OZ CBR 60662 50 LB. EGG PANCAKE 529390 24 OZ LITE .25 OFF 60665 25 LB. BUTTERMILK PANCAKE** 579225 24 OZ REG .25 OFF 579412 12 OZ REG NOTE: **No shipments during the past 12 months. Considered 579169 12 OZ REG 1.69 discontinued by VDB. 529212 12 OZ LITE 529169 12 OZ LITE 1.69 579408 36 OZ REG 529208 36 OZ LITE 529370 36 OZ LITE .35 OFF 579035 36 OZ REG .35 OFF
SCHEDULE B ---------- Supply Limits ------------- Syrup and Mixes --------------- SYRUPS: Minimum Supply Maximum Supply ------------- -------------- 5.0 million pounds 8.0 million pounds The monthly minimum and maximum supply limits are dependent upon product mix being substantially consistent with historical production. If the product mix significantly changes, the minimums and maximums may also change. MIXES: Maximum weekly capacity is 195,000 pounds. Schedule C Syrup and Mix Co-pack Prices COST PER PHYSICAL CASE FOB PLANT
1-3 Months 4-6 Months After 6 Months 103.5% of 106% of 11% of Base Price Base Price Base Price Base Price - --------------------------------------------------------------------------------------------- 397102 1.5 OZ PORTIONS 4.73 4.90 5.01 5.25 - --------------------------------------------------------------------------------------------- 397120 1.0 OZ PORTIONS 7.44 7.70 7.89 8.26 - --------------------------------------------------------------------------------------------- 397160 4/1 ECONOLITE GALLONS 10.44 10.81 11.07 11.59 - --------------------------------------------------------------------------------------------- 397162 DISPLAY GALLONS COSTCO 10.22 10.58 10.83 11.34 - --------------------------------------------------------------------------------------------- 397170 DISPLAY GALLONS FRENCH 10.34 10.70 10.96 11.48 - --------------------------------------------------------------------------------------------- 579129 24 OZ REG 7.38 7.64 7.82 8.19 - --------------------------------------------------------------------------------------------- 529224 24 OZ LITE 6.63 6.86 7.03 7.36 - --------------------------------------------------------------------------------------------- 579172 24 OZ CBR 7.59 7.86 8.05 8.42 - --------------------------------------------------------------------------------------------- 529390 24 OZ LITE .25 OFF 6.66 6.89 7.06 7.39 - --------------------------------------------------------------------------------------------- 579225 24 OZ REG .25 OFF 7.35 7.61 7.79 8.16 - --------------------------------------------------------------------------------------------- 579412 12 OZ REG 4.55 4.71 4.82 5.05 - --------------------------------------------------------------------------------------------- 579169 12 OZ REG 1.69 4.58 4.74 4.85 5.08 - --------------------------------------------------------------------------------------------- 529212 12 OZ LITE 4.55 4.71 4.82 5.05 - --------------------------------------------------------------------------------------------- 529169 12 OZ LITE 1.69 4.26 4.41 4.52 4.73 - --------------------------------------------------------------------------------------------- 579408 36 OZ REG 8.04 8.32 8.52 8.92 - --------------------------------------------------------------------------------------------- 529208 36 OZ LITE 7.34 7.60 7.78 8.15 - --------------------------------------------------------------------------------------------- 529370 36 OZ LITE .35 OFF 7.38 7.64 7.82 8.19 - --------------------------------------------------------------------------------------------- 579035 36 OZ REG .35 OFF 8.05 8.33 8.53 8.94 - --------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------- 60650 5 Lbs. Buttermilk Pancake Mix 11.22 11.61 11.89 12.45 - --------------------------------------------------------------------------------------------- 60655 5 Lbs. Complete Pancake Mix 10.81 11.19 11.46 12.00 - --------------------------------------------------------------------------------------------- 60656 5 Lbs. Egg Pancake Mix 10.57 10.94 11.20 11.73 - --------------------------------------------------------------------------------------------- 60657 5 Lbs. Deluxe Egg Pancake Mix 10.51 10.88 11.14 11.67 - --------------------------------------------------------------------------------------------- 60658 50 Lbs. Pancake & Waffle Mix 11.90 12.32 12.61 13.21 - --------------------------------------------------------------------------------------------- 60660 5 Lbs. Gourmet Belgian Waffle Mix 12.15 12.58 12.88 13.49 - --------------------------------------------------------------------------------------------- *60661 5 Lbs. Potato Pancake Waffle Mix 22.18 22.96 23.51 24.62 - --------------------------------------------------------------------------------------------- 60662 50 Lbs. Egg Pancake Mix 12.69 13.13 13.45 14.09 - ---------------------------------------------------------------------------------------------
*Costs are higher for freeze dried potato flakes and diced onions. - -------------------------------------------------------------------------------- The above prices will be adjusted monthly for purchase price variances (raw materials & packaging) from standard costs. The adjustment for purchase price variances will be invoiced to the Buyer monthly. If the product mix and the number of shifts change from historical past practices, the above prices may increase. - -------------------------------------------------------------------------------- Schedule C - 1 Syrup and Mix Co-pack Prices for changes in production levels COST PER PHYSICAL CASE FOB PLANT - -------------------------------------------------------------------------------- If monthly production volumes are below 5.0 million pounds or exceed 8.0 million pounds (using a historical product mix), then the base price charged to the Buyer will increase as shown below. - --------------------------------------------------------------------------------
--------------------------------------- Change in Production (plus or minus) ------------------------------------------------------------------------------ 5% 10% 15% 20% 25% 40% 60% 80% - --------------------------------------------------------------------------------------------------------------- 397102 1.5 OZ PORTIONS 4.78 4.83 4.88 4.97 5.20 5.68 6.15 6.62 - --------------------------------- 397120 1.0 OZ PORTIONS 7.51 7.59 7.67 7.81 8.18 8.93 9.67 10.42 - --------------------------------- 397160 4/1 ECONOLITE GALLONS 10.54 10.66 10.76 10.97 11.47 12.53 13.57 14.62 - --------------------------------- 397162 DISPLAY GALLONS COSTCO 10.32 10.43 10.54 10.73 11.23 12.26 13.29 14.31 - --------------------------------- 397170 DISPLAY GALLONS FRENCH 10.44 10.55 10.66 10.86 11.36 12.41 13.44 14.48 - --------------------------------- 579129 24 OZ REG 7.45 7.53 7.61 7.75 8.11 8.86 9.59 10.33 - --------------------------------- 529224 24 OZ LITE 6.70 6.77 6.84 6.96 7.29 7.96 8.62 9.28 - --------------------------------- 579172 24 OZ CBR 7.67 7.75 7.83 7.97 8.34 9.11 9.87 10.63 - --------------------------------- 529390 24 OZ LITE .25 OFF 6.73 6.80 6.87 6.99 7.32 7.99 8.66 9.32 - --------------------------------- 579225 24 OZ REG .25 OFF 7.42 7.50 7.58 7.72 8.08 8.82 9.58 10.29 - --------------------------------- 579412 12 OZ REG 4.60 4.64 4.69 4.78 5.00 5.46 5.92 6.37 - --------------------------------- 579169 12 OZ REG 1.69 4.63 4.67 4.72 4.81 5.03 5.50 5.95 6.41 - --------------------------------- 529212 12 OZ LITE 4.60 4.64 4.69 4.78 5.00 5.46 5.92 6.37 - --------------------------------- 529169 12 OZ LITE 1.69 4.30 4.35 4.39 4.47 4.68 5.11 5.54 5.96 - --------------------------------- 579408 36 OZ REG 8.12 8.21 8.29 8.44 8.84 9.65 10.45 11.26 - --------------------------------- 529208 36 OZ LITE 7.41 7.49 7.57 7.71 8.07 8.81 9.54 10.28 - --------------------------------- 529370 36 OZ LITE .35 OFF 7.45 7.53 7.61 7.75 8.11 8.86 9.59 10.33 - --------------------------------- 579035 36 OZ REG .35 OFF 8.13 8.22 8.30 8.45 8.85 9.66 10.47 11.27 - ---------------------------------
SCHEDULE D SYRUP - FINISHED PRODUCT SPECIFICATIONS REGULAR SYRUP LITE SYRUP @ 70F @ 70F ------------- ------------- MIN MAX MIN MAX --- --- --- --- BRIX 67.2 69.5 35 37.3 PH 4.8 5.2 4.2 4.6 VISCOSITY 700 1500 1350 2050 MICRO < 100 < 100 YEAST < 10 < 10 MOLD < 10 < 10 COLIFORM < 10 < 10 TARGET NET GRAMS +/-2% NET WEIGHTS PER BOTTLE MIN MAX - ----------- ---------- --- --- 24 FL OZ REG 951.1 932.1 970.1 24 FL OZ LITE 821.9 805.5 838.3 12 FL OZ REG 475.5 466.0 485.0 12 FL OZ LITE 410.9 402.7 419.1 36 FL OZ REG 1426.6 1398.1 1455.1 36 FL OZ LITE 1232.8 1208.1 1257.5 4 X 1 GALLON 5072.3 4970.9 5173.7 200 X 1 OZ 28.3 27.7 28.9 100 X 1.5 OZ 42.5 41.7 43.4 Note: Same specifications are used for Country Best Recipe. Formula Number 60662 Formula Name: MBW EGG PANCAKE MX. MISCELLANEOUS MIXES Supersedes: Issue Date: 10/07/91 PRODUCT STANDARDS - ----------------- Water Abs. Mix ____________+/-1% Weight 6 9 1/4 oz. +/- 1/4 oz. _____________________ Specific Volume ____________+/- .3 Height 6 3" +/- 1/4" ___________ Crumb Color LT - MED YELLOW Spread 6 25 (degrees) +/- 1/2" __________________ _____________________ Crust Color MEDIUM BROWN Spread/Height _____________________ __________________ Grain & Texture SL. OPEN W/UNIFORM C02 Mix _____________________ GAS HOLES __________________ pH Indicator PURPLE Salt Mix _____________________ __________________ Spec. Gravity __________________ Fat _____________________ Flavor BLAND _____________________ LABORATORY DIRECTIONS _____________________ Mixer Cutter Size _____________________ KITCHEN AID: Mix 500 gm Scoop Size _____________________ ___________________ ___________________ gm Depositor Set. 5 TYPE K _____________________ ___________________ gm Raw Weight (3) 132 gm ________________ Water 625 cc Fry Time _______________ sec. per ___________________ Mix Time 1/2 L.S. 1/2 L min. low Bake Time _______________ min. _______________ SPEED 1. USE WHIP Mix Time _________________ min. med. Fry Temp. ____________ (degrees) F Batter Temp. __________ +/-2(degrees) F Bake Temp. ____________ (degrees) F Batter Temp. _________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 5 min. Pan Size ____________ ______________ ALLOW BATTER TO HYDRATE DEPOSIT 4 PANCAKES ON GRILL SET AT 375 (DEGREES) F. GRILL 1 1/4 MIN EACH SIDE. Formula Number 60651 Formula Name: MBW BUTTERMILK PANCAKE MISCELLANEOUS MIXES Supersedes: Issue Date: 8/1/91 PRODUCT STANDARDS _________________ Water Abs. Mix 125 +/-1% Weight 6 10 oz. +/- 1/4 oz. ___________ _________________ Specific Volume ____________+/- .3 Height 6 2 1/2" +/- 1/4" _______________ Crumb Color Med Yellow Spread 6 25" +/- 1/2" __________________ ____________ Crust Color Med Brown Spread/Height _____________________ __________________ Grain & Texture Open Many Small Gas C0 2 Mix _____________________ Bubbles __________________ pH Indicator Purple Salt Mix _____________________ __________________ Spec. Gravity __________________ Fat _____________________ Flavor Mild Buttermilk _____________________ LABORATORY DIRECTIONS _____________________ Mixer Cutter Size _____________________ Kitchen Aid, Use Whip Mix 500 gm Scoop Size _____________________ ___________________ ___________________ gm Depositor Set. ladle or #5 _____________________ ___________________ gm Raw Weight ________________gm Water 625 cc Fry Time 75 sec. per ___________________ ________________ Mix Time 1/2 L.S. 1/2 min. low Bake Time _______________ min. _______________ Speed I, Using Whip Mix Time _________________ min. med. Fry Temp. 375 (degrees) F ____________ Batter Temp. __________________+/-2"F Bake Temp. ____________ (degrees) F Batter Temp. _________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 5 min. Pan Size ____________ ______________ Allow Batter To Hydrate DEPOSIT 4 PANCAKES ON GRILL SET AT 375 (DEGREES) F. BAKE 1 1/4 MIN. ON EACH SIDE. Formula Number 43872 Formula Name: FS - Potatoe Panck. mx. MISCELLANEOUS MIXES Supersedes: 07/25/89 Issue Date: 05/29/92 PRODUCT STANDARDS _________________ Water Abs. Mix 200 +/-1% Weight 6 _____________________ ___________ Specific Volume ____________+/- .3 Height 6 _____________________ Crumb Color White Spread 6 _____________________ __________________ Crust Color Golden Brown Spread/Height _____________________ __________________ Grain & Texture Course & wet C02 Mix _____________________ __________________ pH Indicator __________________ Salt Mix _____________________ Spec. Gravity __________________ Fat _____________________ Flavor Onion _____________________ LABORATORY DIRECTIONS _____________________ Mixer A-120/12 qt. Bowl & Paddle Cutter Size _____________________ Mix 500 gm Scoop Size #16 __________________ _____________________ __________________ gm Depositor Set._____________________ __________________ gm Raw Weight ______________ gm Water 1000 cc Fry Time 3 Min. per __________________ ______________ Mix Time 1/2 L.S. 1/2 min. low Bake Time _______________ min. _______________ (Kitchen Aid) Mix Time ________________ min. med. Fry Temp. 375 (degrees) F ____________ Batter Temp. 70 +/-2"F Bake Temp. ____________ (degrees) F _____________ Batter Temp. ________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 15 min. Pan Size ____________ _____________ Use small frying pan with 1/8" shortening in bottom. Batter will be thin and bubbly - will thicken as it sits. Formula Number 43942 Formula Name: FS-Gourmet Waffle AS W/Mal MISCELLANEOUS MIXES Supersedes: 02/21/92 Issue Date: 09/10/92 PRODUCT STANDARDS _________________ Water Abs. Mix 106.5 +/-1% Weight 6 _____________________ ___________ Specific Volume ____________+/- .3 Height 6 _____________________ Crumb Color Med Yellow Spread 6 _____________________ __________________ Crust Color Med Dark Brown Spread/Height _____________________ __________________ Grain & Texture Open & Wat C02 Mix 1.30 __________________ _____________________ pH Indicator Purple Salt Mix 2.50 __________________ _____________________ Spec. Gravity 365-375 Fat _____________________ __________________ Flavor Malt Vanilla _____________________ LABORATORY DIRECTIONS _____________________ Mixer Cutter Size _____________________ Mix 850 gm Scoop Size 6 oz ladle __________________ _____________________ +/- 2 sticks butter Depositor Set._____________________ __________________ +/- 6 Large Eggs 300 gm Raw Weight ______________ gm Water 225/680 cc Fry Time ______________ sec. per __________________ Mix Time Hand mix min. low Bake Time Full time-Deep wells iron _______________ _________________________ SEE BELOW Mix Time Wire whip min. med. Fry Temp. ____________ (degrees) F _______________ Batter Temp. ____________ +/-2"F Bake Temp. ____________ (degrees) F Batter Temp. ________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 10 min. Pan Size ____________ _____________ 1. Melt 2 sticks butter with 225 cc water 2. Mix 6 large eggs with 680 cc water in separate bowl with wire whip. 3. Add mix, stir well. 4. Add melted butter with water, stir until blended. 5. Use 6 oz. ladle for scaling each waffle. Formula Number 60658 Formula Name: MBW Pancake and Waffle MISCELLANEOUS MIXES Supersedes: Issue Date: 06/27/91 PRODUCT STANDARDS _________________ Water Abs. Mix ___________+/-1% Weight 6 11 oz +/- 1/4 oz. _________________ Specific Volume ____________+/- .3 Height 6 2 1/2" +/- 1/4" _________________ Crumb Color Lt. Yellow Spread 6 30" +/- 1/2" __________________ _________________ Crust Color Golden Brown Spread/Height _____________________ __________________ Grain & Texture Many Small Holes C02 Mix _____________________ __________________ pH Indicator 5 Purple Salt Mix _____________________ __________________ Spec. Gravity __________________ Fat _____________________ Flavor _____________________ LABORATORY DIRECTIONS _____________________ Mixer Kitchen Aid and Whip Cutter Size _____________________ Mix 500 gm Scoop Size _____________________ __________________ Soy Oil 100 gm Depositor Set. #5 __________________ _____________________ Fresh Eggs 100 gm Raw Weight ______________ gm __________________ Liq Buttermilk 835 cc Fry Time ______________ sec. per _____________ Mix Time 1/2 min. low Bake Time _______________ min. _______________ Mix Time Scrape 1 1/2 min. med. Fry Temp. 375 (degrees) F __________ Speed 4 ___________ Batter Temp. __________ +/-2"F Bake Temp. ____________ (degrees) F Batter Temp. ________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time ___________ min. Pan Size ____________ Bake 1 1/4 Minutes on each side Batter will be a little thin-pancakes have higher center while on grill but collapse once off grill. Formula Number 43902 Formula Name: FS - Deluxe Egg Panck. mx. MISCELLANEOUS MIXES Supersedes: 04/13/92 Issue Date: 09/10/92 PRODUCT STANDARDS _________________ Water Abs. Mix ___________+/-1% Weight 6 9 1/4 oz. +/- 1/4 oz. _____________________ Specific Volume ____________+/- .3 Height 6 3" +/- 1/4" _____________________ Crumb Color Lt Med Yellow Spread 6 25" +/- 1/2" __________________ _____________________ Crust Color Med Brown Spread/Height _____________________ __________________ Grain & Texture SL. Open W/Uniform C02 Mix _____________________ gas holes __________________ pH Indicator Purple Salt Mix _____________________ __________________ Spec. Gravity __________________ Fat _____________________ Flavor Bland _____________________ LABORATORY DIRECTIONS - --------------------- Mixer Kitchen Aid Cutter Size _____________________ Mix 500 gm Scoop Size _____________________ __________________ __________________ gm Depositor Set. #5 Type K _____________________ __________________ gm Raw Weight (3) 132 gm ______________ Water 625 cc Fry Time ______________ sec. per __________________ Mix Time 1/2 L. S. 1/2 min. low Bake Time _______________ min. _______________ Mix Time _______________ min. med. Fry Temp. ____________ (degrees) F Speed I, Use Whip Batter Temp. ____________ +/-2"F Bake Temp. ____________ (degrees) F Batter Temp. _________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 5 min. Pan Size ____________ ____________ Allow batter to hydrate Deposit 4 pancakes on grill set at 375 (degrees) F. Grill 1 1/4 Min each side. Formula Number 43802, 43803 Formula Name: FS - EGG PANCAKE MIX MISCELLANEOUS MIXES Supersedes: 05/21/92 Issue Date: 09/10/92 PRODUCT STANDARDS - ----------------- Water Abs. Mix ___________+/-1% Weight 6 9 1/4 oz. +/- 1/4 oz. _____________________ Specific Volume ____________+/- .3 Height 6 3" +/- 1/4" _____________________ Crumb Color LT.-MED YELLOW Spread 6 25" +/- 1/2" __________________ _____________________ Crust Color MEDIUM BROWN Spread/Height _____________________ __________________ Grain & Texture SL. OPEN W/UNIFORM C02 Mix _____________________ GAS HOLES __________________ pH Indicator PURPLE Salt Mix _____________________ __________________ Spec. Gravity __________________ Fat _____________________ Flavor BLAND _____________________ LABORATORY DIRECTIONS _____________________ Mixer Kitchen Aid Cutter Size _____________________ Mix 500 gm Scoop Size _____________________ __________________ __________________ gm Depositor Set. #5 TYPE K _____________________ __________________ gm Raw Weight (3) 132 gm ______________ Water 625 cc Fry Time ______________ sec. per __________________ Mix Time 1/2 L. S. 1/2 L min. low Bake Time _______________ min. _________________ Mix Time _______________ min. med. Fry Temp. ____________ (degrees) F SPEED 1, USE WHIP Batter Temp. ____________ +/-2"F Bake Temp. ____________ (degrees) F Batter Temp. _________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 5 min. Pan Size ____________ ____________ ALLOW BATTER TO HYDRATE DEPOSIT 4 PANCAKES ON GRILL SET AT 375 (DEGREES) F. GRILL 1 1/4 MIN EACH SIDE. Formula Number 43960 Formula Name: Complete Pancake & Waffle MISCELLANEOUS MIXES Supersedes: 07/30/91 Issue Date: 09/10/92 PRODUCT STANDARDS - ----------------- Water Abs. Mix 125 pancake +/-1% Weight 6 10 oz. +/- 1/4 oz. 100 waffle _____________________ ____________ Specific Volume ____________+/- .3 Height 6 2 1/2" +/- 1/4" _____________________ Crumb Color eggshell Spread 6 25" +/- 1/2" __________________ _____________________ Crust Color Med Brown Spread/Height _____________________ __________________ Grain & Texture Open Gas Bubbles C02 Mix _____________________ __________________ pH Indicator __________________ Salt Mix _____________________ Spec. Gravity __________________ Fat _____________________ Flavor Bland-Buttermilk _____________________ LABORATORY DIRECTIONS _____________________ Mixer A-120/12 qt. Bowl & Paddle Cutter Size _____________________ Mix 500 gm Scoop Size _____________________ __________________ __________________ gm Depositor Set. #5 Type K _____________________ __________________ gm Raw Weight ______________ gm Water 625 For pancake cc Fry Time 75 sec. per 500 For Waffle ______________ __________________ Mix Time 1 Scrape min. low Bake Time _______________ min. _______________ Mix Time 1 min. med. Fry Temp. ____________ (degrees) F _______________ Batter Temp. 71 +/-2"F Bake Temp. 375 (degrees) F _____________ ____________ Batter Temp. _________+/-1 (degrees) C Bake Temp. ____________ (degrees) C Bench Time 5 min. Pan Size ____________ ____________ Waffle: regular preheated waffle iron-3 min. EX-10.8 17 FLAVOR SUPPLY AGMT DATED 12/31/96 EXHIBIT 10.8 FLAVOR SUPPLY AGREEMENT dated as of December 31, 1996 (this "Agreement"), between QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY ("Supplier"), and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a Delaware corporation ("Customer"). Supplier and Customer are referred to collectively in this Agreement as "the Parties". WHEREAS Conopco, Inc. and Customer have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Purchase Agreement"), providing for, among other things, the sale by Conopco, Inc. to Customer of the Transferred Assets (as defined in the Purchase Agreement); and WHEREAS Section 5.4 of the Purchase Agreement also provides that Supplier and Customer shall enter into a flavor supply agreement pursuant to which Supplier shall supply and Customer shall purchase two mixtures (each, a "Mixture" and together the "Mixtures"), as specified on Schedule A hereto, of the flavors listed on Schedule B hereto (the "Flavors") solely for use under the terms and conditions set forth herein; and WHEREAS Section 5.4 of the Purchase Agreement also provides that Supplier and Customer and an escrow agent (the "Escrow Agent") shall enter into an Escrow Agreement (the "Escrow Agreement") pursuant to which the formulations for the Flavors have been placed in escrow. NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the conditions herein set forth, the Parties agree as follows: ARTICLE I Term and Termination 1.1 Term. The term of this Agreement shall be for 12 years from the date hereof; provided, however, that this Agreement may be terminated by either party on the first anniversary of the date hereof, provided that such party gave written notice of the termination to the other party at least 90 days prior to the date of termination, or after such first anniversary, provided that such party gave written notice of the termination to the other party at least 135 days prior to the date of termination. 1.2 Termination. Notwithstanding the provisions of Section 1.1, this Agreement may be terminated prior to the 2 expiration of the term, upon prior written notice as set forth below: (i) by mutual agreement of the Parties; (ii) by Supplier, if there exists a Customer Material Breach (as defined in Section 1.6); (iii) by Customer, if there exists a Supplier Material Breach (as defined in Section 1.6); (iv) by Customer, if there exists a Critical Supply Event (as defined in Section 1.7); or (v) by a party, in the event of a Force Majeure occurrence affecting the other party which continues for more than 180 consecutive days. 1.3 Termination Event. A "Termination Event" shall have occurred if this Agreement is terminated (a) by Customer pursuant to Sections 1.2(iv) or 1.2(v) or (b) by Supplier pursuant to the proviso to Section 1.1. 1.4 Withdrawal Event. A "Withdrawal Event" shall have occurred (a) if this Agreement is terminated pursuant to Section 1.2(i), (b) if this Agreement is terminated by Supplier pursuant to Sections 1.2(ii) or 1.2(v), (c) if there exists a Customer Material Breach in respect of which Supplier could have terminated this Agreement pursuant to Section 1.2(ii) but Supplier has waived such breach and continues to supply the Mixture, (d) if this Agreement is terminated by Customer pursuant to Section 1.2(iii), (e) if Customer delivers notice of termination pursuant to the proviso to Section 1.1, (f) on the twelfth anniversary of the date hereof or (g) if a Change of Control shall have occurred. For purposes of this Agreement, "Change of Control" means any transaction or series of related transactions resulting in any Competitor (A) acquiring beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of (i) so long as Customer has not consummated an initial public offering of its equity securities, 50% or more and (ii) thereafter, 20% or more, of the voting interests entitled to vote in the election of the board of directors (or similar governing body) of Customer or acquiring the power to appoint a majority of such board or (B) merging with Customer. As used herein, "Competitor" means any person or entity which is, or whose Affiliate (as defined in the Purchase Agreement) is, engaged, directly or indirectly, in the business of marketing, selling, manufacturing, developing or distributing margarines, butters or other yellow fats or similar spreads (or any combinations thereof). 3 1.5 Effect of Termination. Upon termination of this Agreement, the undertakings of the Parties set forth herein shall forthwith be and become of no further force and effect; provided, however, that this Section 1.5, Sections 5.1, Section 8.1 and Article VII and rights and remedies for breaches of this Agreement prior to its termination shall survive such termination. Upon termination or expiration of this Agreement, Customer shall purchase from Supplier at the price provided in Article VI all existing inventory of Mixtures (in an amount not to exceed the sum of (a) quantities contained in unfilled purchase orders of Customer and (b) quantities of Mixtures representing one-quarter of the amounts ordered by Customer during the twelve-month period immediately preceding the date of notice of such termination and (c) any additional quantities of Mixtures in excess of those described in clause (b) above manufactured and stored at the request of Customer prior to such termination) and related packaging materials. 1.6 Material Breaches. (a) A "Supplier Material Breach" shall occur if (i) Supplier fails to supply the Mixtures in at least the quantities contained in purchase orders of Customer that comply with Articles II, III and IV and such failure is not cured within 30 days of receipt of notice from Customer to Supplier of such failure or (ii) Supplier breaches its warranty set forth in Section 9.1(a) or Section 9.1(b) hereof and such breach is not remedied within 30 days of receipt of notice from Customer to Supplier of such breach by replacement of the nonconforming Mixture with Mixture that complies with such warranties or (iii) Supplier breaches its warranty set forth in Section 9.1(c) hereof and such breach is not remedied within 30 days of receipt of notice from Customer to Supplier of such breach by replacement of the nonconforming Mixture with either (A) Mixture that complies with such warranty or (B) supply of the individual Flavors comprising the applicable Mixture (in which case all references in this Agreement to such Mixture shall be deemed to be references to the Flavors unless the context shall otherwise require). (b) A "Customer Material Breach" shall occur if (i) Customer fails to pay any invoice delivered pursuant to Section 4.2 within 45 days of the date of such invoice, provided that Supplier shall have notified Customer of such non-payment at least 5 days prior to the end of such period (unless the unpaid amount of such invoice is being contested in good faith by Customer), (ii) in any calendar year, Customer orders less than $100,000 (such amount to be increased on the first day of each succeeding calendar year from the amount in effect on the last day of the preceding calendar year to reflect the average net price increase or decrease during such preceding calendar year) of Mixtures and such failure is not cured within 30 days after the end of 4 such calendar year or (iii) there is a breach of Section 5.1, Section 7.2 or Section 8.1. 1.7 Critical Supply Event. (a) A "Critical Supply Event" shall occur if any of the following shall have occurred and shall have continued without being cured for 90 consecutive days so long as the notices specified in Section 1.7(b) were timely given by Customer in respect thereof: (i) Supplier fails to supply the Mixtures in at least the quantities contained in purchase orders of Customer that comply with Articles II, III and IV and such failure continues without being cured or (ii) Supplier breaches its warranty set forth in Section 9.1(a) or Section 9.1(b) hereof and such breach continues without being cured by replacement of the nonconforming Mixture with Mixture that complies with such warranties or (iii) Supplier breaches its warranty set forth in Section 9.1(c) hereof and such breach continues without being cured by replacement of the nonconforming Mixture with either (A) Mixture that complies with such warranty or (B) supply of the individual Flavors comprising the applicable Mixture (in which case all references in this Agreement to such Mixture shall be deemed to be references to the Flavors unless the context shall otherwise require). (b) If any of the events specified in Section 1.7(a)(i), (ii) or (iii) shall have occurred, Customer shall give notice of the applicable occurrence to Supplier and the Escrow Agent under the Escrow Agreement on the 30th, the 60th and the 85th consecutive day of the applicable 90 consecutive day period. ARTICLE II Binding Forecasts; Estimated Forecasts; Purchase Orders 2.1 Binding Forecasts; Estimated Forecasts. On the date hereof, Customer shall provide Supplier with an initial written forecast of Customer's projected demand for each Mixture during the three month period beginning on the date hereof. Thereafter, no later than the 15th day of each month, Customer shall supply a written forecast of Customer's projected demand during the following three months. The initial month's forecast for Mixtures (the "Binding Forecast") shall set forth the total quantity of each Mixture that Customer shall order for delivery during such month and shall represent a commitment by Customer to purchase the quantity of each Mixture indicated thereunder. The last two months of each such forecast shall be a nonbinding, good faith estimate of the quantity of each Mixture that Customer 5 expects to order for delivery during the second and third months (the "Estimated Forecasts"). The Estimated Forecasts are for planning purposes only and shall not be construed as a firm commitment to Supplier. Supplier shall invoice Customer and Customer shall thereafter pay for any quantity of a Mixture specified in a Binding Forecast but not ordered by Customer during the month to which such Binding Forecast relates. 2.2 Purchase Orders. All purchases of Mixtures by Customer hereunder shall be pursuant to written purchase orders, which shall be delivered at least 20 days prior to the requested delivery date. A purchase order shall specify the quantity of each Mixture ordered and the requested time and manner of delivery, all of which shall be subject to the amount of each Mixture specified in the Binding Forecast and the provisions of Articles III and IV. 2.3 Acceptance of Purchase Orders. Supplier may reject any purchase order (a) that specifies a quantity that is inconsistent with the provisions of Article III or (b) that specifies a quantity less than the minimum order amount set forth on the attached Schedule C or (c) that, when added to the other quantities of the applicable Mixture delivered or to be delivered during any month, exceeds the Binding Forecast for such month or (d) that contains a delivery schedule that is inconsistent with the provisions of Article IV. 2.4 Co-Packers. Supplier and Customer agree that any co-packer designated by Customer in writing may provide the forecasts and purchase orders and other instructions required under this Agreement and Supplier shall be entitled to rely thereon in the same manner as if they had been provided by Customer. ARTICLE III Quantity 3.1 Quantity. Customer shall purchase from Supplier, and Supplier shall sell to Customer, all Customer's requirements during the term of, and subject to all the other terms of, this Agreement; provided, however, that Supplier shall have no obligation to supply any amount of a Mixture in excess of the amount specified in the Binding Forecast for such month. In addition, no Binding Forecast shall be in excess of the maximum supply limit or below the minimum supply limit for such Mixture set forth on the attached Schedule C. If, during any period, Customer desires to purchase a quantity of a Mixture that exceeds the maximum supply limits on any Binding Forecast, Customer shall notify 6 Supplier in writing, and Supplier may, in its sole discretion, accommodate Customer, but shall be under no obligation to supply such additional quantity and shall not be responsible for any losses or damages that may be suffered by the Customer as a result of such failure to supply the additional Mixture. ARTICLE IV Delivery; Invoices; Title 4.1 Delivery. Supplier shall make the Mixtures available for shipping by Customer's designated carrier, F.O.B., Supplier's facility, on the date specified in the purchase orders, but, if a purchase order requests delivery less than 20 days after the receipt by Supplier of the purchase order, Supplier shall have 20 days after its receipt of the purchase order to deliver the Mixtures ordered in such purchase order. Supplier shall use commercially reasonable efforts to manufacture and have ready for shipment orders of Mixtures by any earlier requested shipment date, so long as such efforts do not interfere with Supplier's normal operations at Supplier's facilities. 4.2 Invoices; Payment. All orders for Mixtures under this Agreement shall be invoiced at the time of shipment and any Mixture specified in a Binding Forecast but not ordered in the related calendar month shall be invoiced on the business day following such month. All invoices hereunder shall be due and payable net thirty days from the invoice date. Any amount not paid when due shall accrue interest at the rate of one and one-half percent (1-1/2%) per month until paid in full. Notwithstanding anything herein to the contrary, if on three or more occasions Customer's invoices have become past due, Supplier may, on notice to Customer, require cash on delivery or security satisfactory to Supplier as a condition of delivery. 4.3 Title. Title to, and risk of loss regarding, a Mixture shall be in and pass to Customer upon Supplier's delivery of such Mixture to the carrier, pursuant to Section 4.1. 7 ARTICLE V Exclusive Use; No Development 5.1 Use. Customer shall not use the Mixtures or the Flavors in margarines, butters or other yellow fats or similar spreads (or any combinations thereof). Except as otherwise provided in Section 2.01(b) of the Escrow Agreement if then applicable, Customer shall not provide, assign, sell, license or otherwise transfer to any third party the Mixtures or the Flavors; provided, that Customer may provide the Mixtures to a third party co-packer for the purpose of manufacturing end products incorporating the Mixtures so long as (A) such co-packer is not a Competitor and (B) such co-packer agrees in writing to be bound by the provisions of Section 5.1, Article VII and Section 8.1 (including agreeing that Supplier and Unilever N.V. shall be third party beneficiaries of such agreement), it being agreed that Customer shall be responsible for any breaches of such provisions by such co-packer and any such breach shall be deemed to be a breach by Customer. For avoidance of doubt, the foregoing restriction shall not prevent Customer from selling end products which incorporate the Mixtures or the Flavors. This Section shall survive the termination or expiration of this Agreement, or the rendering of services or sale of Mixtures or Flavors pursuant to this Agreement. 5.2 No Development. For avoidance of doubt, Customer acknowledges and agrees that Supplier shall not have any obligation to undertake research and development activities for Seller in respect of the Mixtures or the Flavors. ARTICLE VI Pricing 6.1 Base Price. The initial price for each Mixture (the "Base Price") will be in proportion to the prices for the component Flavors comprising such Mixture set forth on Schedule D hereto. Supplier represents and warrants to Customer that: (a) The respective prices set forth on Schedule D hereto are the prices at which Supplier provided the respective Flavors to Seller (as defined in the Purchase Agreement) immediately prior to the Closing Date (as defined in the Purchase Agreement); and (b) During the 11-month period ending November 30, 1996, Seller's aggregate purchases of the Flavors comprising the Mixtures were $350,927. 8 6.2 Adjustment of Base Price. (a) The Base Price for each Mixture is subject to upward or downward adjustment at the end of each three-month period during the term of this Agreement, to reflect increases or decreases, if any, in Supplier's direct expenses incurred in manufacturing and supplying Customer with such Mixture pursuant to this Agreement, on a per unit of Mixture sold basis ("Direct Expenses"). (b) At least 30 days prior to the end of the first three-month period of the term of this Agreement, or at least 30 days prior to the expiration of each successive three-month period, as the case may be, Supplier may notify Customer of an increase or decrease in Direct Expenses if during the current three-month period the Direct Expenses increased or decreased from the Direct Expenses for the previous three-month period. Effective at the commencement of the next three-month period following such notice, the price at that time (as previously adjusted pursuant to this Section) would be adjusted by an amount that is equal to the increase or decrease in Supplier's Direct Expenses for such Mixture. With such notice, Supplier will provide Customer with an officer's certificate certifying that any such price adjustment reflects only the increase or decrease in Supplier's Direct Expenses as provided in the immediately preceding sentence. Supplier will keep accurate records and books of account on all Direct Expenses and related information required for the orderly administration of the price adjustment provisions set forth in this Section. ARTICLE VII Confidentiality 7.1 Definitions. "Confidential Information" as used herein shall mean all proprietary and other information not available to the general public and disclosed by Supplier or its representatives to Customer or its officers, employees, directors, shareholders, affiliates, subsidiaries, parents, contractors, agents or other representatives (collectively, "Representatives"), in connection with selling the Mixtures and the Flavors to Customer pursuant to this Agreement, whether orally or in writing, or obtained by inspection of the facilities, documents or other material of the other party. Customer acknowledges that the composition and formulation of, and recipes for, the Mixtures and the Flavors are proprietary information of Supplier and Unilever N.V. and are deemed to be Confidential Information. 7.2 Confidentiality. (a) Except as otherwise provided in Section 2.01(b) of the Escrow Agreement if then applicable and in Section 7.2(h) herein, Customer shall hold 9 Confidential Information in strict confidence and shall not disclose Confidential Information to any third party without the prior written consent of Supplier. (b) Customer shall be bound by the obligations to maintain Confidential Information as confidential, and agrees to cooperate with Supplier in enforcing said obligation in the event of breach by Customer or its Representatives. (c) Customer agrees not to use Confidential Information in any way for its own benefit or for the benefit of others. (d) Customer agrees not to use Confidential Information directly or indirectly against Supplier in the future. (e) Customer agrees not to disclose anything about this Agreement, or the nature of the services performed thereunder, or the existence of any business partnership to any third party without the prior written consent of Supplier, except as required by applicable law or as otherwise required to perform this Agreement. (f) Customer agrees to indemnify and hold Supplier harmless on account of any loss, injury, damage, or claim that may result from breach of this Section 7.2. Further, Customer agrees that damages alone would be inadequate to compensate Supplier for a breach of the covenants of this Section 7.2, and in the event of such breach, the Supplier may obtain equitable relief, including without limitation an injunction, from a court of competent jurisdiction. (g) The obligations of Customer under this Section 7.2 shall survive the termination or expiration of this Agreement or the discontinuance of services or the providing of Flavors pursuant to this agreement. This Section is binding on the Representatives, successors and assigns of Customer. (h) Confidential Information obtained by Customer shall be disclosed to its Representatives only on a "need to know" basis and Customer shall be responsible for any breaches of this Agreement by Customer's Representatives. Nothing contained herein shall prevent Customer from disclosing to third parties or using in any manner information which Customer can in good faith show: (i) Has been published and has become part of the public domain other than by the acts, omissions or fault of Customer or its Representatives; or 10 (ii) Has been furnished or made known to the Customer by third parties (other than those acting on behalf of Supplier) who have provided such information as a matter of legal right without restrictions on its disclosure; or (iii) Was in Customer's possession (as shown by tangible evidence) prior to the date of this Agreement and disclosure thereof by Supplier to Customer; or (iv) Was compelled to be disclosed by lawful order or subpoena, but only after prior notice to Supplier and Supplier has had a reasonable opportunity to take appropriate action to protect such information from disclosure. ARTICLE VIII Covenant Not to Reverse Engineer or Analyze 8.1 Non-analysis. Customer agrees that neither it nor any of its Representatives, successors or assigns, or any third party acting on Customer's behalf, directly or indirectly, will make any attempt to reverse engineer, analyze or discover the composition, recipe or formulation of either Mixture or the Flavors; provided, that Customer may engage in testing solely (i) for purposes of quality control or (ii) as required by applicable law. Customer agrees that it shall be responsible for any breach of this Section by its Representatives. ARTICLE IX Warranties 9.1 Warranties. (a) Supplier warrants that all Mixtures sold pursuant to this Agreement shall meet, in all material respects, the applicable specifications therefor existing immediately prior to the Closing Date. (b) Supplier warrants that all Mixtures sold pursuant to this Agreement shall comply with all applicable laws and regulations, including but not limited to the regulations of the United States Food and Drug Administration. (c) Supplier warrants that supplying the Flavors in the Mixtures as opposed to individually will not adversely affect the integrity or taste of Mrs. Butterworth's syrups as 11 compared to their taste as manufactured by Seller immediately prior to the date hereof. (d) (i) Supplier warrants that at the time of shipment by Supplier the Mixtures shall be fit for the ordinary purposes for which such Mixtures are used. NO OTHER REPRESENTATION OR WARRANTY SHALL BE BINDING UPON SUPPLIER. SUPPLIER MAKES NO OTHER WARRANTIES TO CUSTOMER OR ANY OTHER PERSONS OR PARTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND IN PARTICULAR, BUT NOT BY WAY OF LIMITATION, SUPPLIER MAKES NO WARRANTY OF MERCHANTABILITY AND NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. (ii) Customer assumes all risk and liability with respect to Customer's manufacturing process and the use of the Mixtures in combination with any other ingredients or products. (iii) The liability of Supplier for any breach of this Agreement shall not exceed the purchase price of the applicable Mixture and shall be limited to the repayment of the purchase price for the particular Mixture in question. In no event shall Supplier be liable to Customer or to any other person or party for any incidental or consequential damages of any nature arising out of or because of this Agreement, the use of the Mixtures or the nonconformity of the Mixtures. If notice of any claims by Customer with respect to any Mixture is not given to Supplier within 21 days of the delivery date of such Mixture (provided Customer must properly store the Mixtures), such claims shall be waived and extinguished. ARTICLE X General Provisions 10.1 Notices. Any notice or other communication hereunder shall be in writing and shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the 12 fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: If to Supplier: Quest International Flavors & Food Ingredients Company 5115 Sedge Boulevard Hoffman Estates, IL 60192 Telecopier: (847) 645-7070 Attn: Business Unit Manager ABC&T with a copy to: Unilever United States, Inc. 390 Park Avenue New York, NY 10022 Telecopier: (212) 688-3411 Attn: General Counsel If to Customer: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Telecopier: (415) 982-3023 Attn: Ray Chung Either party may, by notice given in accordance with this Section 10.1, specify a new address for notices under this Agreement. 10.2 Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement and shall not affect the interpretation hereof. 10.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflict of laws. 13 10.4 Assignment. Neither party may assign its rights and obligations under this Agreement to any third party without the prior written consent of the other party; provided, however, that (i) Supplier may assign its rights and obligations hereunder (A) to any affiliate of Supplier that is capable of performing Supplier's obligations hereunder or (B) to any purchaser of Supplier's business or facility, and (ii) Customer may assign its rights and obligations hereunder, in whole but not in part, (A) to any purchaser of all or substantially all of Customer's Mrs. Butterworth's syrup business, (B) to any of Customer's affiliates so long as that in such event Customer shall remain fully liable for the fulfillment of all such obligations and (C) as security to its lenders in respect of the Financing (as defined in the Purchase Agreement) (or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of or acquisitions by Customer, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Customer shall notify Supplier of such assignment within two business days thereof. 10.5 No Third Party Beneficiaries. Except for the provisions of Section 5.1, Article VII and Section 8.1, which are also intended to benefit Unilever N.V., this Agreement shall be binding upon and inure solely to the benefit of the parties and their successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 10.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.7 Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein and such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction. 10.8 Independent Status. Supplier is an independent contractor engaged by Customer for the provision of the Mixtures. Nothing in this Agreement shall constitute Supplier as an employee, agent or general representative of 14 Customer. This Agreement shall not constitute either party as the legal representative or agent of the other nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of or on behalf of, the other party. 10.9 Force Majeure. Except for the payment of money, neither party shall be in default hereunder by reason of any failure or delay in the performance of its obligations hereunder where such failure or delay is due to circumstances or causes beyond such party's reasonable control, such as acts of God, labor disputes, strikes, war, threat of war, riot, intervention by governmental authorities, embargoes, priorities repealed or required by civil authorities, floods, fire, accident, delays in transportation or other occurrences of a similar nature. Any party affected by a "Force Majeure" occurrence shall provide written notice thereof to the other and shall indicate the projected length of such Force Majeure occurrence. 10.10 Jurisdiction; Service of Process. Supplier and Customer irrevocably consent and agree that any legal action, suit or proceeding against either of them with respect to their obligations or liabilities under or arising out of or in connection with this Agreement may be brought in the United States District Court for the Southern District of New York or in the courts of the State of New York sitting in New York County and each hereby irrevocably accepts and submits to the exclusive jurisdiction of each of the aforesaid courts in personam, with respect to any such action, suit or proceeding. Supplier and Customer irrevocably consent and agree that the service of any and all legal process, summons, notices and documents which may be served in any such action, suit or proceeding arising hereunder may be made by mailing a copy thereof by certified or registered mail, postage prepaid, return receipt requested, to the party to be served at the address set forth in Section 11.1 hereof, with such service to be effective upon receipt. 10.11 Amendment; Waivers. This Agreement may be amended only in a writing signed by both parties hereto. Any 15 provision of this Agreement may be waived only in a writing signed by the party to be bound by such waiver. No course of dealing between the parties shall be effective to amend or waive any provision of this Agreement. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written. MBW FOODS INC. by /s/ Ray Chung ---------------------------- Name: Ray Chung Title: Executive Vice President QUEST INTERNATIONAL FLAVORS & FOOD INGREDIENTS COMPANY, by /s/ Nicholas Romano ---------------------------- Name: Nicholas Romano Title: Chief Financial Officer SCHEDULE A Flavor mixtures to be sold for Mrs. Butterworth: Flavor mixture and specifications yet to be finalized (currently working on producing two mixtures containing the components of the three flavors listed on Schedule B). SCHEDULE B Individual flavors currently sold for Mrs. Butterworth: Product Name Product Number ------------ -------------- Maple N&A DY08551 BBC Dairy 11951 Bozan R-K NN18676 SCHEDULE C 1. The minimum monthly supply limit for the mixtures shall be in accordance with Quest's standard pack size for such mixture. In no event shall any individual shipment of the specified mixture be less than the standard pack size for such mixture. 2. The maximum aggregate monthly supply limit for the mixtures shall be 5,000 kilos. SCHEDULE D Prices BBC Dairy.............................................$23.00 per kilogram Bozan.................................................$20.50 per kilogram Maple.........................................................$4.15/pound EX-10.9 18 TRANSITION SERVICES AGMT DATED 12/31/96 EXHIBIT 10.9 EXECUTION VERSION TRANSITION SERVICES AGREEMENT This Transition Services Agreement ("Agreement"), is made as of December 31, 1996, by and between Conopco, Inc., a New York company acting through its division, Van den Bergh Foods Company, ("VDB"), and MBW Foods Inc. (f/k/a MBW Acquisition Corp.), a Delaware corporation ("Buyer"). W I T N E S S E T H: WHEREAS, pursuant to an Asset Purchase Agreement, dated as of December 18, 1996 (the "Purchase Agreement"), between Conopco and Buyer, Conopco has agreed to sell to Buyer the assets of the Business, as defined in the Purchase Agreement; and WHEREAS, it is a condition to Buyer's obligations under the Purchase Agreement that VDB and Buyer enter into this Agreement; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which the parties acknowledge, VDB and Buyer, intending to be bound legally, agree as follows: 1. Definitions. Capitalized terms that are not otherwise defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. 2. Transition Services. During the term of this Agreement as set forth in Section 6 (the "Transition Period"), VDB shall provide, or cause its Affiliates to provide, to Buyer or its designated Affiliates, the services set forth on Annex A, in the manner and at a level of service generally consistent with that provided by VDB, or its Affiliates, to the Business immediately preceding the date of this Agreement, it being acknowledged by Buyer that the Lipton and Van den Bergh Foods divisions of Conopco, Inc. are being merged. 3. Payment. For the services rendered under this Agreement, Buyer will pay VDB fees as set forth in Annex B hereto, reduced for any partial weeks during which Buyer receives such services on a pro rata basis by multiplying the price specified in Annex B by a ratio determined as follows: the numerator of such ratio shall equal the actual number of Business Days during which Buyer receives services during the partial week and the denominator shall equal five. 4. Cash Advances. As an advance for estimated collection of sales during a period, VDB will make cash advances by wire transfer ("Cash Advances") to Buyer, beginning January 31, 1997. The Cash Advances will be $1,000,000 on January 31, 1997, and $500,000 on the 15th and 30th of each subsequent month until the termination of the Transition Services Agreement. 5. Reconciliation and Net Payment. From the Closing Date, at the end of each calendar month of the Transition Period, VDB will prepare a reconciliation (the "Reconciliation"), with supporting documentation as Buyer reasonably requests, of all payments required of VDB and Buyer to each other under this Agreement, including, without limitation, fees and cost reimbursement for services provided by VDB pursuant to this Agreement. From the Reconciliation, a determination of the net payment required, after adjusting for Cash Advances made during that month (the "Net Payment"), for that and the appropriate payee under this Agreement (i.e., to VDB or to Buyer) shall be made by VDB. Any Net Payment from VDB will be due 15 days following the end of each calendar month for which month payment is due. Any Net Payment from Buyer will be on the later of the 15th day following the end of each calendar month and 5 days after receipt by Buyer of the Reconciliation. Within 15 days of delivery of the Reconciliation to Buyer, either party may object to the calculation of the Reconciliation. Unresolved objections shall be resolved pursuant to Section 13 hereof. 6. Term of Agreement. The term of this Agreement shall commence on the Closing Date and shall continue for a period ending on the earlier of 6 months from the Closing Date or as to any services such date on which Buyer specifies, pursuant to Section 7 below, that such services shall terminate; provided, however, that Buyer will to the extent reasonably practicable make a good faith effort to cease using all services under this Agreement by five months from the Closing Date. 7. Partial Termination. Any or all of the services provided by a party under this Agreement are terminable by Buyer on 10 days prior written notice to VDB except as provided in Section I.C on Annex A hereto relating to brokers. Any such termination shall be final as to the services terminated. 8. Assignment. This Agreement shall not be assignable in whole or in part by any party without the prior written consent of the other party, except that Buyer may assign its rights under this Agreement to (A) any purchaser of all or substantially all of Buyer's business in respect of the Products, (B) to any of Buyer's Affiliates so long as that in such event Buyer shall remain fully liable for the fulfillment of all such obligations and (C) as security to Buyer's lenders in respect of the Financing or as collateral security in connection with any other financing so long as the proceeds thereof are used for businesses of, or acquisitions by, Buyer, its successors or subsidiaries, if so requested; provided, however, that in the event of any such assignment of this Agreement, Buyer shall notify Seller of such assignment within two business days thereof. 9. Indemnification. Buyer hereby agrees to indemnify, defend and hold harmless VDB from and against any and all claims, losses, demands, costs, or liabilities, including reasonable attorneys' fees, resulting from or in connection with third party claims arising from VDB's performance of the services hereunder, unless such third party claims - 2 - are due from VDB's gross negligence or willful misconduct in performing the services. Such indemnification shall survive the termination of this Agreement. Promptly upon receipt by VDB of notice of the assertion of any third party claim in respect to which indemnity may be sought against Buyer pursuant to this Section 9, VDB shall notify Buyer in writing thereof; but the omission to so notify Buyer will not relieve Buyer from any liability which it may have to VDB under this Section 9, except to the extent such failure to so notify materially prejudices the ability of Buyer to defend against such action. In defending against the claim, Buyer shall have the right to employ counsel of its own choosing and shall at all times have the power to direct the defense against the claim. VDB shall provide such assistance and cooperation, at Buyer's cost, as Buyer may reasonably request in connection with the defense of any claim with respect to which indemnity may be sought against Buyer pursuant to this Section 9. 10. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its provisions concerning conflicts or choice of law. The parties consent to the nonexclusive jurisdiction of the U.S. Federal Court situated in the Southern District of New York for the resolution of any disputes as to the construction of this Agreement. 11. Force Majeure. Neither party shall be considered in default in the performance of its obligations under this Agreement to the extent that its performance of such obligations is prevented or delayed by any cause beyond its reasonable control, including but not limited to strikes, labor disputes, civil disturbances, rebellion, invasion, epidemic, hostilities, war, embargo, natural disaster, acts of God, fire, sabotage, loss and destruction of property, changes in laws, regulations or orders, other events or situations which the party was unable to prevent or overcome despite the exercise of due diligence. 12. Confidentiality. Any and all information disclosed by one party to the other in connection with the performance of services under this Agreement, whether disclosed in writing, orally or visually, is considered confidential information, unless such information falls within the exceptions set forth below (hereinafter any and all such information shall be collectively referred to as "Confidential Information"). Each party agrees to disclose to the other party only such of its Confidential Information as may be reasonably necessary to provide the services contemplated hereunder. The recipient of Confidential Information agrees that Confidential Information disclosed to it hereunder shall be retained in confidence in the same manner used to protect its own confidential information and shall not be disclosed to others or used for purposes other than pursuant to this Agreement. Confidential Information shall not include any information which, in the form disclosed by the disclosing party, (a) was publicly available at the time of disclosure by the disclosing party; (b) became publicly available after disclosure by the disclosing party through no fault of the recipient; - 3 - (c) was in the recipient's possession prior to disclosure by the disclosing party, as evidenced by the recipient's written record, and was not the subject of an earlier confidential relationship with the disclosing party; or (d) was rightfully acquired by the recipient after disclosure by the disclosing party from a third party who was lawfully in possession of the information and was under no obligation to the disclosing party to maintain its confidentiality. After termination of the Agreement, or at any other time requested by the disclosing party, the recipient shall return or destroy, at the disclosing party's direction, all documents, samples or other materials embodying Confidential Information, and shall retain no copies thereof. 13. Dispute Resolution. VDB and Buyer agree that, in the event that there is a disagreement with regard to unresolved objections to the Reconciliation, senior management of the parties will meet and negotiate in good faith in an attempt to resolve the dispute. In the event that the parties are unable to resolve the dispute within 30 days from the date of written notice of disagreement, either party may submit the dispute to binding arbitration, which shall be conducted as follows: (i) the arbitration panel shall be composed of three arbitrators, one appointed by VDB, one appointed by Buyer and one chosen by the arbitrators appointed by VDB and Buyer; provided, however, the third arbitrator shall be an independent third party knowledgeable in accounting and administration and mutually satisfactory to VDB and Buyer; (ii) the arbitrators, in conducting such arbitration, shall have access to all relevant documents and records of the parties; (iii) the arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "Rules") in effect on the date such arbitration is commenced and shall be final and binding on the parties; and (iv) unless otherwise agreed, all arbitration proceedings shall be conducted in New York, N.Y. In the event a mutually satisfactory third arbitrator is not appointed within 30 days of submission of a dispute to binding arbitration, appointment of the third arbitrator shall be as provided in the Rules; provided, however, that the third arbitrator so appointed shall be an independent third party knowledgeable in accounting and administration. 14. Independent Contractor. At all times during the term hereof, VDB shall be an independent contractor in providing services hereunder with the sole right to supervise, manage, operate, control, and direct the performance of such services and the sole obligation to employ, compensate, and mange its employees and business affairs. Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture, to create the relationships of employee/employer or principal/agent, or otherwise create any liability whatsoever of either party with respect to the indebtedness, liabilities, obligations or actions of the other or any of their employees or agents, or any other person or entity. 15. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become - 4 - effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. 16. Notices. All notices, requests, demands, or other communications to (a) VDB shall be given in accordance with Section 10.2 of the Purchase Agreement with respect to notices to Seller and (b) Buyer shall be given in accordance with Section 10.2 of the Purchase Agreement with respect to notices to Buyer. 17. Modification, Non-Waiver, Severability. Neither this Agreement nor any part of this Agreement may be changed, altered, or amended orally. Any modification must be made by written instrument signed by the parties. Failure by either party to exercise promptly any right granted in this Agreement or to require strict performance of any obligation imposed under this Agreement shall not be deemed a waiver of such rights. If any provision of this Agreement is held ineffective for any reason, the other provisions shall remain effective. IN WITNESS WHEREOF, the parties have caused this Transition Agreement to be executed as of the date first set forth above. CONOPCO, INC. By /s/ Mart Laius ----------------- Name: Mart Laius Title: Vice President MBW FOODS INC. By /s/ Ray Chung ---------------- Name: Ray Chung Title Executive Vice President - 5 - ANNEX A SERVICES TO BE PROVIDED BY VDB I. MARKETING AND SALES TRANSITION A. Sales Support VDB shall provide to Buyer reasonable access to the appropriate sales personnel, to provide sales planning data and any other information that is non-proprietary to VDB and is reasonably required to accomplish a successful transition. Such information shall include, but not be limited to, the following: o a current file of all Mrs. Butterworth's Products, including price lists, specifications, shipping requirements, current customer lists and any exceptions to pricing or shipping requirements from those published prices; o terms of payment and lead times as published to class of trade and any exceptions to those published terms or lead times that may be in practice or committed to; o details of all promotional price programs, inclusive of off-invoice, bill backs, and other funds used for or charged to Mrs. Butterworth's, including accrued funds and their handling by either Mrs. Butterworth's brokers or Seller's personnel; o the ending dates of price programs, inclusive of pre-price, off-invoice, billbacks and/or other financial commitments and any exceptions that may apply to published dates; o Quarterly Sales Plan Binder for all markets and channels inclusive of first and (to the extent available) second quarter of 1997 fiscal year as may have been given to Mrs. Butterworth's brokers for implementation. If not included in the Quarterly Sales Plan Binder, VDB will advise Buyer of any Mrs. Butterworth's Products included in any VDB or Unilever umbrella promotions; - 1 - o all available sales and/or marketing manuals, product information, product files and market files that are related to Mrs. Butterworth's. B. Marketing Services For a maximum of three person days in the aggregate, VDB shall provide reasonable consultation with existing marketing management to help transition consumer and marketing initiatives and marketing research. C. Brokers and Salesforce VDB shall direct its brokers and direct salesforce to continue to take customer orders and to perform sales-related activities including, but not limited to, deduction processing, trade deal payments, and other customer payment-related activities. VDB shall also make, on Buyer's behalf, brokerage payments to be reimbursed by Buyer. As appropriate, VDB's sales personnel shall work with Buyer's brokers to effect an orderly transition of its service. Buyer shall give VDB at least 45 days advance notice of Buyer's intent to discontinue using any of Seller's brokers. Buyer will to the extent reasonably practicable make a good faith effort to cease its use of VDB's salesforce after two months from the Closing Date. II. TRANSACTIONS PROCESSING A. VDB shall provide to Buyer the following services for transactions processing consistent with those currently provided to the Business: o Order entry and customer invoicing services for all channels of distribution, including retail, food service, military, and export. o Credit and Collections Management- VDB shall provide to Buyer cash application, credit memo administration, deduction management, and other accounting and administrative processes related to the accounts receivable/deduction management function necessary to conduct the Business, including collection of accounts receivable for sales invoiced on behalf of Buyer. - 2 - o Order Picking and Loading- VDB shall, on behalf of Buyer, generate the necessary documents and paperwork for filling an order, scheduling the carriers, and loading the order for shipment. o Trade and Consumer Promotions- VDB, on behalf of Buyer, shall make payments relating to trade promotions and consumer promotions, including coupons, for which Buyer is responsible pursuant to Section 1.4 of the Purchase Agreement. o Trade Damage and Product Returns- Any trade damage claim that is submitted to VDB shall be paid by VDB and reimbursed by Buyer, provided, however, that with respect to any such claims that are received during the 60 day period after the Closing Date, VDB shall be responsible for liabilities as described in the Asset Purchase Agreement. Buyer will not make any claims against VDB in connection with its payment of any trade damage claim other than based on VDB's gross negligence. As part of accounts receivable and invoice processing services, VDB will process credit memos for product returns to customers as required. B. Accounting Services o VDB shall provide accounting services to the Buyer to provide necessary information and transaction processing on behalf of the Buyer. The following services shall be provided: 1. Daily sales reporting of units and revenues 2. Monthly reporting of gross and net sales (net sales defined as sales invoiced to customers less cash discounts and allowances and trade damage.) 3. Monthly accounts receivable information regarding balance of open accounts, aged trial balance, and customer deduction activity. 4. Coupon accounting services including monthly reporting of coupon history, redemptions, and related payments. 5. Trade deal accounting services including monthly reporting of deal history, payments, deductions, and adjustments. 6. Monthly finished goods inventory balances by SKU. - 3 - 7. Reasonable transition assistance to help Buyer establish stand-alone activities. o VDB shall provide the monthly reports in a manner similar to what is shown on Exhibit 1, along with supporting documentation, as reasonably requested by Buyer. III. OTHER A. Consumer Response o VDB shall provide consumer response services to Buyer generally consistent with those services currently provided to the Business: B. Information Services o VDB shall provide information services necessary to support the transition services in the Agreement. VDB will also provide reasonable assistance to the Buyer to transition existing data to the Buyer's systems as required. - 4 - ANNEX B SERVICE FEES Service Fee Per Week - ------- ------------ Brand Management (maximum of 3 person days) 0 Sales Management $17,000* Trade Marketing $ 3,000 Customer Relations $ 4,575 (including credit and accounts receivable, order invoicing) Transportation Management $ 900 Information Technology $ 4,000 Finance and Accounting $ 6,225 Military and Export (UMEX) $ 2,000 800 phone number $ 8.00 per contact - ---------- * The charge for Sales Management services will be reduced proportionately based on the number of markets as such services are assumed by Buyer. EXHIBIT 1 Mrs. Butterworth's Statement of Activity Month of ____________ Sales (supported by Sales to Customer Reporting) List Billed SKU CS Price OI Revenue --- -- ----- -- ------- $ $ $ _____ _____ _____ $_____ $_____ $_____ Invoice Receivable (supported by aging, by customer) Balance Beginning of Period $ Billed Revenue Invoices Closed (A) _____ Balance End of Period $_____ Cash Discounts Taken (B) $ Deduction Receivable (supported by aging, by customer) Balance Beginning of Period $ Deductions created (C) Deductions - to reserves - to expense Deductions Repaid (D) _____ Balance End of Period $_____ Mrs. Butterworth's Statement of Activity Month of ____________ Promotional Reserves - Trade (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared __________ Balance End of Period $ ========== Promotional Reserves - Consumer Coupons (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared __________ Balance End of Period $ ========== Promotional Reserves - Other Consumer (supported by tracking by event) Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared __________ Balance End of Period $ ========== Damage Reserve Balance Beginning of Period $ Accruals Authorized Cash Paid Deductions Cleared __________ Balance End of Period $ ========== Mrs. Butterworth's Statement of Activity Month of ____________ Inventory (supported by balance on hand, by SKU) Units ----- Balance Beginning of Period $ Inventory Produced Inventory Purchased Inventory Adjustments** Inventory Sold _____ __________ _____ Ending Inventory $ __________ Customer Delivery Costs (supported by customer invoice, by zone report) $ Broker Commissions (supported by commission ___________ statements $ ___________ ** During the initial month of the transition, inventory adjustments shall reflect a deduction for the finished goods conveyed to Buyer at Closing. EXHIBIT 2 Mrs. Butterworth's Summary of Cash Activity Month of _______________ Due to Due From Buyer Buyer ----------------------- Accounts Receivable Collected, Net (A - B - C + D) $ $ Inventory Produced Inventory Purchased Customer Delivery Costs Broker Commissions Promotional Payments: Trade Consumer Coupons Other Consumer Damages and Unsaleables Service Fee $ __________ __________ Net Due to/from Buyer $ $ ========== ========== EX-10.10 19 SHARED TECHNOLOGY LICENSING AGMT EXHIBIT 10.10 SHARED TECHNOLOGY LICENSE AGREEMENT (the "Agreement"), dated as of December 31, 1996, between CONOPCO, INC., a New York corporation ("Licensor"), and MBW FOODS INC. (f/k/a MBW ACQUISITION CORP.), a Delaware corporation ("Licensee"). WHEREAS Licensor and Licensee have entered into an Asset Purchase Agreement dated as of December 18, 1996 (the "Asset Purchase Agreement"), providing for, among other things, the sale by Licensor of certain of its assets to Licensee; and WHEREAS, pursuant to Section 5.4 of the Asset Purchase Agreement, Licensor and Licensee have agreed to enter into a Shared Technology License Agreement pursuant to which Licensor shall grant certain rights in certain technology owned by Licensor to Licensee on the terms and conditions set forth herein. NOW,THEREFORE, in consideration of the mutual covenants and undertakings contained herein, the parties hereto agree as follows: 1. Interpretation. Capitalized terms used herein and not defined herein shall have the meanings assigned such terms in the Asset Purchase Agreement. 2. License. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a nonexclusive, perpetual and royalty-free right and license to use, in connection with Licensee's operation of the Business, any proprietary and/or confidential trade secrets, know-how, processes and other technology of Licensor used or held for use by Licensor in connection with the Business prior to the Closing Date other than the Transferred Technology (the "Licensed Technology"). Nothing herein shall be construed as creating any joint venture, partnership, or agency relationship between the parties hereto. Neither party hereto may make any commitment, or settle any claim for or on behalf of the other party without such other party's express written consent. 3. Infringements. Licensee shall notify Licensor of any infringement by third persons of the Licensed 2 Technology that may come to Licensee's attention. Licensor shall have the sole right to determine what action, if any, shall be taken to remedy such infringements, which action shall be taken at Licensor's expense. 4. Notices. Any notice or other communication given under this Agreement shall be in writing and either shall be (i) delivered personally; (ii) sent by documented overnight delivery service; (iii) sent by facsimile transmission, provided that a confirmation copy thereof is sent no later than the business day following the day of such transmission by documented overnight delivery service or first class mail, postage prepaid (certified or registered mail, return receipt requested); or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (i) on the date of delivery, if delivered personally; (ii) on the business day after dispatch by documented overnight delivery service, if sent in such manner; (iii) on the date of facsimile transmission, if so transmitted; or (iv) on the fifth business day after sent by first-class mail, postage prepaid, if sent in such manner. Notices or other communications shall be directed to the following addresses: Notices to Licensor: Conopco, Inc. 390 Park Avenue New York, New York 10022 Attention: Company Secretary Notices to Licensee: MBW Foods Inc. c/o Dartford Partnership L.L.C. 801 Montgomery Street; Suite 400 San Francisco, CA 94133 Attention: Ian R. Wilson 5. Assignment. This Agreement may not be assigned in whole or in part by Licensee without the prior written consent of Licensor; provided, however, that Licensee may assign, in whole or in part, its rights and obligations under this Agreement (i) to any party that acquires all or any part of the Business and (ii) as security to its lenders in respect of the Financing (or as collateral security in connection with any other financing 3 so long as the proceeds thereof are used for businesses of or acquisitions by Licensee, its successors or its subsidiaries) if so requested, provided, however, that in the event of any such assignment of this Agreement, Licensee shall notify Licensor of such assignment within two business days thereof. This Agreement may be assigned by Licensor without Licensee's consent. 6. Governing Law. This Agreement shall be governed by the laws of the State of New York, without regard to conflicts of laws principles. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names by their duty authorized representatives. CONOPCO, INC. by /s/ Mart Laius ---------------------------- Name: Mart Laius Title: Vice President MBW FOODS INC. by /s/ Ray Chung ---------------------------- Name: Ray Chung Title: Executive Vice President EX-10.11 20 AMENDED AND RESTATED LLC AGMT & SCHEDULES Exhibit 10.11 AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF MBW INVESTORS LLC This Amended and Restated Limited Liability Company Agreement of MBW Investors LLC (the "Company") is made as of December 31, 1996, among Dartford Partnership L.L.C. and James B. Ardrey, as initial Members of the Company, and the Persons who become Members of the Company in accordance with the provisions hereof and whose names are set forth as Members on Schedule A hereto. WHEREAS, Dartford Partnership L.L.C. and James B. Ardrey have heretofore formed a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. ss.18-101, et seq., as amended from time to time (the "Delaware Act"), by filing a Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware on December 20, 1996, and entering into a Limited Liability Company Agreement of the Company, dated as of December 20, 1996 (the "Original Limited Liability Company Agreement"); and WHEREAS, the Members desire to continue the Company as a limited liability company under the Delaware Act and to amend and restate the Original Limited Liability Company Agreement in its entirety. NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members, intending to be legally bound hereby, amend and restate the Original Limited Liability Company Agreement in its entirety and agree as follows: ARTICLE I DEFINED TERMS Section 1.1 Definitions. Unless the context otherwise requires the terms defined in this Article I shall, for the purposes of this Agreement, have the meanings herein specified. "Additional Members" has the meaning set forth in Section 12.1 hereof. "Additional Units" has the meaning set forth in Section 12.1 hereof. "Admission Event" means the: (a) execution of this Agreement or any other writing evidencing intent to become a Member; and (b) the making of a Capital Contribution. "Affiliate" means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with the specified Person. As used in this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Agreement" means this Amended and Restated Limited Liability Company Agreement, as amended, modified, supplemented or restated from time to time. "Asset Purchase Agreement" means the Asset Purchase Agreement, dated as of December 18, 1996, by and among Conopco, Inc. and the Operating Company. "Assignee" means any Person who is an assignee of a Member's interest in the Company, or part thereof, and who does not become a Member pursuant to Section 13.3 hereof. "Available Cash" means all cash (including the net proceeds from capital transactions and sale of assets not in the ordinary course of business) held and owned by the Company less any reserve for the working capital and other foreseeable future needs of the Company, as determined by the Board in its sole discretion. "Board" means the Board of Member Managers of the Company, with such powers and duties as described in Article VI. "Capital Account" means, for each Member, the sum of Capital Contributions made by such Member pursuant to Section 4.1 hereof and such adjustments made pursuant to Section 4.3 hereof. "Capital Contribution" means, with respect to any Member, the aggregate amount of money and the value of any property (other than money) contributed to the Company pursuant to Section 4.1 hereof with respect to the Units held by such Member. In the case of a Member who acquires an interest in the Company by virtue of an assignment in accordance with the terms of this Agreement, "Capital Contribution" has the meaning set forth in Section 4.3(b) hereof. - 2 - "Cause" means (i) the failure or inability to cure or remedy, within 20 days after written notice from the Board, any willful misconduct in the course of rendering services for or on behalf of the Company; (ii) the commission of any fraudulent act in the course of rendering services for or on behalf of the Company; and (iii) the conviction of a felony by any court having competent jurisdiction. "Certificate" means the Certificate of Formation and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Delaware Act. "Chase Borrowings" means indebtedness incurred by the Operating Company under (i) the Credit Agreement, dated as of the date hereof, by and among the Operating Company, MBW Holdings, the Lenders (as defined therein), and The Chase Manhattan Bank, N.A., as Agent for the Lenders and (ii) the Senior Subordinated Credit Agreement, dated as of the date hereof, between the Operating Company and The Chase Manhattan Bank, as Agent. "Class A Holder" means any Person listed on Schedule A hereto as a holder of Class A Units. "Class A Units" means the outstanding Class A Units, each of which shall have the rights, powers and preferences set forth in Section 4.6 hereof. "Class B Holder" means any Person listed on Schedule A hereto as a holder of Class B Units. "Class B Units" means the outstanding Class B Units, each of which shall have the rights, powers and preferences set forth in Section 4.6 hereof. "Class C Holder" means any Person listed on Schedule A hereto as a holder of Class C Units. "Class C Units" means the outstanding Class C Units, each of which shall have the rights, powers and preferences set forth in Section 4.6 hereof. "Class D Holder" means any person listed on Schedule A hereto as a holder of Class D Units. "Class D Units" means the outstanding Class D Units, each of which shall have the rights, powers and preferences set forth in Section 4.6 hereof. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement. A reference - 3 - to a specific section (ss.) of the Code refers not only to such specific section but also to any corresponding provision of any federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Agreement containing such reference. "Company" means MBW Investors LLC, the limited liability company heretofore formed and continued under and pursuant to the Delaware Act and this Agreement. "Covered Person" means a Member, a Member Manager, an Officer, any Affiliate of a Member, Member Manager or Officer, any officers, directors, shareholders, partners, employees, representatives or agents of a Member, a Member Manager, an Officer or their respective Affiliates, or any employee or agent of the Company or its Affiliates. "Dartford" means Dartford Partnership L.L.C., a Delaware limited liability company. "Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.C. ss.18-101, et seq., as amended from time to time. "Depreciation" means, for each Tax Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Tax Year or other period; provided, however, that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Tax Year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction with respect to such asset for such Tax Year or other period bears to such beginning adjusted tax basis; and provided further, that if the federal income tax depreciation, amortization or other cost recovery deduction for such Tax Year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Member Managers. "Fair Asset Value" means the amount for which any asset could be sold in an arm's length transaction by one who desires to sell, but is not under any urgent requirement to sell, to a buyer who desires to buy, but is under no urgent necessity to buy, when both have a reasonable knowledge of the facts, all as determined by the Board. In determining such Fair Asset Value, furniture, fixtures and equipment shall be valued at cost less depreciation and the reasonably foreseeable prospects (including all tax liabilities and, in particular, tax liabilities upon the sale or other disposition of Company assets) of the business of the Company shall be taken into account. Securities which are listed on a national securities exchange shall be valued at the average last sales price during the immediately preceding 15 days on which such securities are traded on such exchange or, with respect to any of such dates on which no sales occurred, at the mean between the high "bid" and low "asked" prices at the close of business on such date. - 4 - "Fiscal Year" means (i) the calendar year or (ii) any portion of the period described in Clause (i) of this sentence for which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Article VIII hereof. "Fenway" means Fenway Partners Capital Fund, L.P., a Delaware limited partnership. "Gross Asset Value" means, with respect to any asset, such asset's adjusted basis for federal income tax purposes, except as follows: (a) the initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as agreed to by the contributing Member and the Board; (b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective Fair Asset Values, as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company; and (iii) the liquidation of the Company within the meaning of Treasury Regulation ss.1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to Clause (i) and Clause (ii) of this sentence shall be made only if the Board reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (c) the Gross Asset Value of any Company asset distributed to any Member shall be the Fair Asset Value of such asset on the date of distribution, as determined by the distributee Member and the Board. If the Gross Asset Value of an asset has been determined or adjusted pursuant to Paragraph (a) or Paragraph (b) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses. "Liquidating Trustee" has the meaning set forth in Section 15.3 hereof. "Majority Vote" means the written approval of, or the affirmative vote by, Members holding a majority of the Voting Units held by Members. - 5 - "Management Services Agreement" means the Management Services Agreement, dated as of December 31, 1996, between Dartford and the Operating Company, as amended, modified, supplemented and restated from time to time. "MBW Holdings" means MBW Holdings Inc., a Delaware corporation. "McCown De Leeuw" means, collectively, McCown De Leeuw & Co. III, L.P., a California limited partnership, McCown De Leeuw & Co. Offshore (Europe) III, L.P., a Bermuda limited partnership, McCown De Leeuw & Co. III (Asia), L.P., a Bermuda limited partnership, and Gamma Fund LLC, a California limited liability company. "MDC Permitted Transferee" means with respect to McCown De Leeuw, any partnership with the same controlling general partner as McCown De Leeuw and any of the partners of McCown De Leeuw which receive Units upon a distribution to any such partners by McCown De Leeuw. "Member" means any Person named as a member of the Company on Schedule A hereto and includes any Person admitted as an Additional Member or a Substitute Member pursuant to the provisions of this Agreement, and "Members" means two or more of such Persons when acting in their capacities as members of the Company. Except as otherwise provided herein, the Members shall constitute one class or group of members. "Member Managers" means the Members designated in Section 6.1 hereof as the member managers of the Company and shall include successors appointed pursuant to the provisions of this Agreement. A Member Manager shall not be deemed to be a "manager" within the meaning of the Delaware Act. "Non-Public Shareholders" of the Public Company means (i) the Company, if the Public Company is MBW Holdings or the surviving entity of any merger or consolidation of MBW Holdings and the Operating Company, (ii) the Members, if the Public Company is the Company or the surviving entity of any reorganization (including any incorporation of the Company) or any merger or consolidation of the Company and MBW Holdings (or any successor), or (iii) MBW Holdings, if the Public Company is the Operating Company and no merger or consolidation of MBW Holdings and the Operating Company takes place. "Officers" means officers of the Company appointed by the Board pursuant to Article VI hereof. "Outstanding C Units Percentage" means the percentage (with 1.0 equal to 100%) obtained by dividing (x) the number of C Units that are outstanding as of the time a calculation of the Outstanding C Units Percentage is required to be made by (y) 1,300. - 6 - "Outstanding D Units Percentage" means the percentage (with 1.0 equal to 100%) obtained by dividing (x) the number of Vested Class D Units outstanding pursuant to Section 4.6(d) by (y) the aggregate number of outstanding Class D Units. "Operating Company" means MBW Foods Inc., a Delaware corporation. "Permitted Transferees" means the Persons to whom Transfers are permitted to be made under Section 13.2. "Person" includes any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization. "Profits" and "Losses" means, for each Tax Year, an amount equal to the Company's taxable income or loss for such Tax Year, determined in accordance with ss.703(a) of the Code (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to ss.703(a)(1) of the Code), with the following adjustments: (a) any income of the Company exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss; (b) any expenditures of the Company described in ss.705(a)(2)(B) of the Code (or treated as expenditures described in ss.705(a)(2)(B) of the Code pursuant to Treasury Regulation ss.1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss; (c) in the event the Gross Asset Value of any Company asset is adjusted in accordance with Paragraph (b) or Paragraph (c) of the definition of "Gross Asset Value" above, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (d) gain or loss resulting from any disposition of any asset of the Company with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value; and - 7 - (e) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Tax Year or other period, computed in accordance with the definition of "Depreciation" above. "Proportionate Percentage" means, (i) with respect to each Member that elects to exercise its rights under Section 12.2 hereof, a percentage (expressed as a decimal fraction rounded to the nearest one-hundredth) obtained by dividing (x) the number of all Voting Units owned by such electing Member by (y) the aggregate number of Voting Units owned by all Members and (ii) with respect to Section 14.1 hereof a percentage (expressed as a decimal fraction rounded to the nearest one-hundredth) obtained by dividing (x) the number of all Class A Units proposed to be sold by McCown De Leeuw pursuant to the Transfer giving rise to the Tag-Along Period under Section 14.1 hereof by (y) the aggregate number of Class A Units and owned by McCown De Leeuw. "Public Company" means the Operating Company, MBW Holdings, the Company, or any surviving entity of a reorganization, merger or consolidation of one or more of such entities, which intends to effect a Public Offering. "Public Offering" means (i) the sale to the public by the Public Company for its own account of equity securities issued by such Public Company, and/or (ii) the sale to the public by the Non-Public Shareholders pursuant to a Secondary Sale of equity securities issued by the Public Company and held by the Non-Public Shareholders, in either case pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Secondary Sale" means any sale by one or more Non-Public Shareholders of equity securities issued by the Public Company and held by such Non-Public Shareholders (but not originally issued by the Public Company pursuant to a Public Offering), whether such sale is pursuant to a registered public offering under the Securities Act of 1933, as amended, an exemption from the registration requirements thereof, or otherwise. "Subsidiary" with respect to any company means any corporation more than 50% of whose stock (measured by virtue of voting rights) in the aggregate is owned by such company, by one or more Subsidiaries of such company, or by such company and one or more Subsidiaries of such company. The Subsidiaries of the Company on the date hereof are MBW Holdings and the Operating Company. "Substitute Member" means a Person who is admitted to the Company as a Member pursuant to Section 13.3 hereof, and who is named as a Member on Schedule A to this Agreement. - 8 - "Tax Liability Distributions" shall have the meaning given such term in Section 8.2 hereof. "Tax Matters Member" has the meaning set forth in Section 10.1 hereof. "Tax Year" means the 12 month period ending on the last Saturday in December. "Transaction" has the meaning set forth in Section 6.12 hereof. "Transaction Documents" means any and all documents, agreements, certificates or other instruments required to be executed and delivered by or on behalf of the Company in connection with the Chase Borrowings. "Transfer" means (i) as a noun, any transaction (or the consummation of a transaction) which has resulted in a change in the ownership of any Unit, including without limitation, any voluntary or involuntary sale, assignment, transfer, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of, by or with respect to the Member which owns such Unit which has resulted in a transfer of the voting rights or the rights to distribution with respect to such Unit, and (ii) as a verb, to make any transaction described in (i). "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Unit" means any one of the Class A Units, Class B Units, Class C Units or Class D Units. Each Unit represents a limited liability company interest in the Company, with the respective rights, powers and preferences as provided in this Agreement. All issued Units are held by the Members as set forth on the Schedule A hereto. If Additional Units are issued as provided in Article XII, the total number of Units outstanding shall be automatically increased by the number of Additional Units issued. Upon their issuance, all Units shall be owned by the Members holding such Units. "Unrecouped Capital Contribution" means as to any Member or Assignee the amount of such Member's or Assignee's Capital Contribution with respect to Class A Units held by such Member or Assignee minus the aggregate of all distributions previously made to such Member or Assignee pursuant to Section 8.3(i) hereof. "Vested Class D Units" means those Class D Units that have vested in accordance with Schedule C hereto. - 9 - "Voting Units" means, collectively, the Class A Units and the Class B Units which shall vote together as a single class. Section 1.2 Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. ARTICLE II CONTINUATION AND TERM Section 2.1 Continuation. (a) The Members hereby agree to continue the Company as a limited liability company under and pursuant to the provisions of the Delaware Act and agree that the rights, duties and liabilities of the Members and the Member Managers shall be as provided in the Delaware Act, except as otherwise provided herein. (b) Any Person listed on Schedule A hereto that performs an Admission Event, and any Person listed on Schedule A hereto whose authorized representative performs an Admission Event, shall be deemed to have evidenced its intent to become a Member, to have complied with the conditions for becoming a Member as set forth in this Agreement, and to have requested that the records of the Company reflect such admission as a Member, and when the records of the Company are amended to reflect the admission of such Person as a Member, such Person shall be admitted to the Company as a Member. By executing this Agreement, Dartford shall continue as a Member, and James B. Ardrey shall resign as a Member and shall receive the return of his capital contribution without interest or deduction upon the admission of the Persons listed on Schedule A hereto as members of the Company. Upon the resignation of James B. Ardrey as a member of the Company, the Members hereby agree to continue the business of the Company without dissolution. (c) The name and mailing address of each Member shall be listed on the Schedules hereto. The Member Managers shall update any Schedule from time to time as necessary to accurately reflect the information therein. Any amendment or revision to a Schedule made in accordance with this Agreement shall not be deemed an amendment to this Agreement. Any reference in this Agreement to a Schedule shall be deemed to be a reference to such Schedule as amended and in effect from time to time. Section 2.2 Name. The name of the Company heretofore formed and continued hereby is MBW Investors LLC. The business of the Company may also be conducted under any other name or names designated by the Board from time to time. - 10 - Section 2.3 Term. The term of the Company commenced on the date the Certificate was filed in the office of the Secretary of State of the State of Delaware and shall continue until December 31, 2021, unless dissolved before such date in accordance with the provisions of this Agreement. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate. Section 2.4 Registered Agent and Office. The Company's registered agent and office in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. At any time, the Board may designate another registered agent and/or registered office. Section 2.5 Principal Place of Business. The principal place of business of the Company shall be at 801 Montgomery Street, Suite 400, San Francisco, California 94133. Upon 10 days' notice to the Members, the Board may change the location of the Company's principal place of business. ARTICLE III PURPOSE AND POWERS OF THE COMPANY Section 3.1 Purpose. The purpose of the Company is to acquire, hold for investment, sell and dispose of the stock and other securities, directly or indirectly, of any Subsidiary, and to engage in all activities necessary, advisable or incidental thereto, including without limitation engaging in (or causing or permitting any of its Subsidiaries to engage in) any of the transactions identified in Sections 3.2 or 6.12 hereof. Section 3.2 Powers of the Company. (a) Subject to the provisions of Section 3.3, the Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1, including, but not limited to, the power: (i) to conduct its business, carry on its operations and have and exercise the powers granted to a limited liability company by the Delaware Act in any state, territory, district or possession of the United States, or in any foreign country that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company; (ii) to acquire by purchase, lease, contribution of property or otherwise, own, hold, operate, maintain, finance, improve, lease, sell, convey, - 11 - mortgage, transfer or dispose of any real or personal property that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company; (iii) to enter into, perform and carry out contracts of any kind convenient to or incidental to the accomplishment of the purpose of the Company; (iv) to lend money for its proper purpose, to invest and reinvest its funds, to take and hold real and personal property for the payment of funds so loaned or invested; (v) to appoint employees and agents of the Company, and define their duties and fix their compensation; (vi) to indemnify any Person in accordance with the Delaware Act; (vii) to cease its activities and cancel its Certificate; (viii) to negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend, waive, execute, acknowledge or take any other action with respect to any lease, contract or security agreement in respect of any assets of the Company; and (ix) to guaranty the obligations of any Person and to secure any of the same by a mortgage, pledge or other lien on the assets of the Company. (b) The Member Managers and Officers, or any of them, are hereby expressly authorized to enter into and perform on behalf of the Company the Transaction Documents, but such authorization shall not be deemed a restriction on the power of the Member Managers to authorize the Officers to enter into other documents on behalf of the Company to the extent permitted by this Agreement. The Company, Member Managers and the Officers on behalf of the Company, are expressly authorized to enter into and perform the Transaction Documents, and to the extent the Company, Member Managers and the Officers have previously entered into and performed such agreements such actions are ratified, without any further act, vote or approval of any Member notwithstanding any other provision of this Agreement, the Delaware Act or other applicable law. Further, the Members, in their capacity as Members and, as applicable, Member Managers, do hereby approve and adopt the resolutions attached hereto as Annex 1. Section 3.3. Limitations on Actions. Anything in this Agreement to the contrary notwithstanding, the Company shall not hold any investment, incur any indebtedness or - 12 - otherwise take any action that would cause any Member of the Company to realize "unrelated business taxable income" as such term is defined in Section 512 of the Code. ARTICLE IV CAPITAL CONTRIBUTIONS, UNITS, CAPITAL ACCOUNTS AND ADVANCES Section 4.1 Capital Contributions. (a) Each Member has contributed to the capital of the Company the amount of cash set forth opposite the Member's name on Schedule A hereto, and the Company has issued to each Member the number of Units set forth opposite the Member's name on Schedule A hereto; provided, that with respect to the Class D Holders, the number of Class D Units issued to each Class D Holder and the respective capital contributions relating thereto shall be maintained on the books and records of the Company and not set forth on Schedule A hereto. (b) No Member shall be required to make any additional capital contribution to the Company. Section 4.2 Status of Capital Contributions. (a) Except as otherwise provided in this Agreement, the amount of a Member's Capital Contributions may be returned to it, in whole or in part, at any time, but only with the consent of all Members. (b) No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise specifically provided in this Agreement. (c) Except as otherwise provided herein and by applicable state law, the Members shall be liable only to make their Capital Contributions pursuant to Section 4.1 hereof, and no Member or Assignee shall be required to lend any funds to the Company or, after a Member's Capital Contributions has been fully paid pursuant to Section 4.1 hereof, to make any additional capital contributions to the Company. No Member shall have any personal liability for the repayment of any Capital Contribution of any other Member or Assignee. - 13 - Section 4.3 Capital Accounts. (a) An individual Capital Account shall be established and maintained for each Member. The Capital Account of each Member shall be maintained in accordance with the rules of Section 704(b) of the Code and the Treasury Regulations (including Section 1.704-1(b)(2)(iv) thereof) thereunder. Adjustments shall be made to the Capital Accounts for all distributions and allocations as required by the rules of Section 704(b) of the Code and the Treasury Regulations thereunder. In general, a Member's Capital Account shall be increased by (i) the amount of money and the Gross Asset Value of property (net of liabilities secured by such contributed property that the Company is considered to assume or to take subject to under Section 752 of the Code) contributed to the Company by the Member and (ii) allocations to the Member of Profits and decreased by (i) the amount of money distributed to the Member by the Company, (ii) the Gross Asset Value of property distributed to the Member by the Company (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code), and (iii) allocations to the Member of Losses. In the event the Gross Asset Value of Company assets is adjusted under Article I of this Agreement, the Capital Accounts of the Members shall be adjusted to reflect the aggregate net adjustment as if the Company recognized Profits or Losses equal to the amount of such aggregate net adjustment and such Profits or Losses were allocated to the Members pursuant to Sections 8.7 and 8.8 of this Agreement. The foregoing provisions relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be applied in a manner consistent with such Regulations. (b) The original Capital Account established for any Member or Assignee who acquires an interest in the Company by virtue of a Transfer or an assignment that does not cause a termination of the Company within the meaning of Code Section 708(b)(1)(B) and that is in accordance with the terms of this Agreement shall be in the same amount as, and shall replace, the Capital Account of the transferor or assignor of such interest, and, for purposes of this Agreement, such Member or Assignee shall be deemed to have made the Capital Contributions made by the transferor or assignor of such interest (or made by such transferor's or assignor's predecessor in interest) and have received the distributions and been allocated the allocations received by or allocated to the transferor or assignor of such interest (or received by or allocated to such transferor's or assignor's predecessor in interest). If the Company has a Code Section 754 election in effect, the Capital Account will not be adjusted to reflect any adjustment under Code Section 743. To the extent such Member or Assignee acquires less than the entire interest in the Company of the transferor or assignor of the interest so acquired by such Member or Assignee, the original Capital Account of such Member or Assignee and its Capital Contributions shall be in proportion to the interest it acquires, and the Capital Account of the transferor or assignor who retains a partial interest in the Company, and the amount of its Capital Contributions, shall be reduced in proportion to the interest it retains. If a Transfer or assignment of an interest in the Company causes a termination of the Company within the meaning of Code Section 708(b)(1)(B), the income tax consequences of the distribution of the - 14 - property and of the deemed immediate contribution of the property to the new limited liability company (which for all other purposes continues to be the Company) shall be governed by the relevant provisions of Subchapter K of Chapter 1 of the Code and the Regulations promulgated thereunder, and the initial Capital Accounts of the Members and the Assignee in the new limited liability company shall be determined in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv)(d), (e), (f), (g) and (h) under Code Section 704 and thereafter in accordance with this Section 4.3. Section 4.4. Negative Capital Accounts. At no time during the term of the Company or upon dissolution and liquidation thereof shall a Member with a negative balance in his Capital Account have any obligation to the Company or the other Members to restore such negative balance. Section 4.5 Advances. If any Member shall advance any funds to the Company in excess of its Capital Contributions, the amount of such advance shall neither increase its Capital Account nor entitle it to any increase in its share of the distributions of the Company. The amount of any such advance shall be a debt obligation of the Company to such Member and shall be repaid to it by the Company with interest at a rate equal to the lesser of (i) such rate as the Board agrees and (ii) the maximum rate permitted by applicable law, and upon such other terms and conditions as shall be mutually determined by such Member and the Board. Any such advance shall be payable and collectible only out of Company assets, and the other Members shall not be personally obligated to repay any part thereof. No Person who makes any nonrecourse loan to the Company shall have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Company, other than as a creditor. Section 4.6 Units. (a) Distributions. Distributions on Units shall be made in accordance with Article VIII hereof. (b) Voting. Except as otherwise provided in this Agreement, (i) the Members who are Class A Holders shall be entitled to vote on each matter on which the Members shall be entitled to vote at the rate of one vote for each Class A Unit held by such Member; (ii) the Members who are Class B Holders shall be entitled to vote on each matter on which the Members shall be entitled to vote at the rate of one vote for each Class B Unit held by such Member; (iii) except as set forth in Section 15.2(b), the Members who are Class C Holders shall not be entitled to vote their Class C Units on any matter brought before the Members for a vote; and (iv) the Members who are Class D Holders shall not be entitled to vote their Class D Units on any matter brought before Members for a vote. - 15 - (c) Class C Units. The Class C Units shall be subject to repurchase by the Company in accordance with the provisions set forth on Schedule B hereto. Any Class C Units that have not been issued or that have been repurchased shall not be outstanding for purposes of determining the Outstanding C Units Percentage. Class C Units that are repurchased may not be reissued. (d) Class D Units. The Class D Units shall be subject to repurchase by the Company in accordance with the provisions set forth on Schedule C hereto. Any Class D Units that have not been issued or that have been repurchased shall not be outstanding for purposes of determining clause (y) of the Outstanding D Units Percentage. Class D Units that are repurchased may be reissued (subject to Section 12.1(a) hereof). ARTICLE V MEMBERS Section 5.1 Powers of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement. Except as expressly provided in this Agreement, Members shall have no power as Members to bind the Company. Section 5.2 Reimbursements. The Company shall reimburse the Members for all reasonable and necessary out-of-pocket expenses incurred by the Members on behalf of the Company. The Board's sole determination of which expenses may be reimbursed to a Member and the amount of such expenses shall be conclusive. Such reimbursement shall be treated as an expense of the Company that shall be deducted in computing the Profits and shall not be deemed to constitute a distributive share of Profits or a distribution or return of capital to any Member. Section 5.3 Partition. Each Member waives any and all rights that it may have to maintain an action for partition of the Company's property. Section 5.4 Resignations. Other than any resignation by a Member approved by a Majority Vote of the Members and any resignation described in Section 13.3, a Member may not resign from the Company. - 16 - ARTICLE VI BOARD OF MEMBER MANAGERS AND OFFICERS OF THE COMPANY Section 6.1 Designation of Board of Member Managers. The management of the Company's business shall be vested, to the extent provided in this Article VI, in a Board of Member Managers of the Company (the "Board"), consisting of three Member Managers who in the aggregate hold at least 20% of the total interests in the Company. Each Member Manager must be a Member. The Members hereby designate Dartford, Fenway and McCown De Leeuw to serve as the initial Member Managers on the Board, and such Member Managers hereby accept and agree to be bound by the terms and conditions of this Agreement. A Member Manager that is not an individual shall act through any one of its authorized representatives. Dartford designates Ian R. Wilson, Ray Chung and James B. Ardrey as its initial authorized representatives. Fenway designates Peter Lamm and Richard Dresdale as its initial authorized representatives. McCown De Leeuw designates David De Leeuw, Charles Ayres and Tyler Zachem as its initial authorized representatives. By written notice to all other Member Managers, a Member Manager may remove and replace any of its authorized representatives from such position or designate additional persons as authorized representatives of such Member Manager. Section 6.2 Election; Resignation; Removal. (a) Each Member Manager shall serve from the effective date of its designation until the effective date of its resignation or removal. In the event any Member Manager ceases to be a Member Manager of the Company whether by resignation or removal as provided in this Agreement or otherwise, a successor Member Manager shall be elected by a Majority Vote. Such successor Member Manager shall execute an instrument reasonably satisfactory to the Members accepting and agreeing to the terms and conditions of this Agreement. (b) A Member Manager may resign from its position as a Member Manager at any time upon not less than 10 days' prior written notice to all of the Members. (c) No initial Member Manager specified in Section 6.1 hereof shall be removed unless such initial Member Manager or successor Member Manager consents to such removal; provided, that (i) Fenway shall automatically be removed as a Member Manager if Fenway and its Permitted Transferees no longer hold 10% of the outstanding Voting Units or if Fenway breaches its covenant under Section 16.1(b) hereof, and (ii) Dartford shall automatically be removed as a Member Manager if the Management Services Agreement has been terminated in accordance with its terms and Dartford and its Permitted Transferees no longer hold any Units. Any other Member Manager may be removed for Cause by a Majority Vote. Any removal of a Member Manager shall become effective on such date as may be - 17 - specified by the Members voting in favor thereof. Should a Member Manager that is removed continue to be a Member, such Member shall continue to participate in the Company as a Member and shall share in the Profits, Losses and Available Cash in the same ratios, as provided in Article VIII hereof. Section 6.3 Officers. The Board may appoint agents and employees of the Company who are designated as officers of the Company. The officers of the Company shall include a Chairman, one or more Executive Vice Presidents, a Secretary and such other officers with such titles as may be approved by the Board. Ian R. Wilson shall be Chairman until his resignation or removal. James B. Ardrey and Ray Chung shall each be an Executive Vice President until his resignation or removal. Charles Ayres and Tyler Zachem shall each be a Vice President until his resignation or removal. M. Laurie Cummings shall be a Vice President and the Secretary until her resignation or removal. Craigh Leonard and Jonathan M. Peterson shall each be an Assistant Secretary until his resignation or removal. The Board may remove any officer so appointed at any time, with or without Cause, in its absolute discretion. The Chairman and other officers shall be agents of the Company, authorized to execute and deliver documents and take other actions on behalf of the Company, subject to the direction of the Board, and to have such other duties as may be approved by the Board; provided, that the delegation of any such power and authority to the Chairman and other officers shall not limit in any respect the power and authority of the Member Managers to take such actions (or any other action) on behalf of the Company as provided in this Agreement. The Secretary shall record the actions of the Board, certify this Agreement and any related document or instrument, certify resolutions of the Board, incumbency and other matters of the Company, and have such other ministerial duties as may be specified by the Board from time to time. Section 6.4 Board Action. Unless otherwise specified in this Agreement, the Board shall act by majority vote with each Member Manager on the Board having the following number of votes: McCown De Leeuw: two; Fenway: one; and Dartford: one; provided, that (i) so long as McCown De Leeuw holds more than 50% of the then outstanding Voting Units, McCown De Leeuw shall have the right, by taking such action as would be required under the Delaware General Corporation Law for a majority shareholder to act without a meeting, to increase its number of votes to the number of votes that would constitute a majority of the total votes on the Board. Any authorized representative of any Member Manager on the Board shall be permitted to cast all of the votes of such Member Manager. Section 6.5 Meetings. The Board may hold regular meetings without call or notice at such places and at such times as the Board may from time to time determine, provided reasonable notice of the first regular meeting following any such determination is given to Member Managers absent at the meeting fixing regular meetings. When called by the Chairman or by Member Managers holding a majority of votes of the Board, the Board may hold special meetings at such places and times as are designated in the call of the meeting, upon at least - 18 - seven days' notice given by the Secretary or an Assistant Secretary, or by the officer or Member Manager calling the meeting. Section 6.6 Quorum. At any meeting of the Board, the presence of three Member Managers by at least one of their authorized representatives shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of votes, whether or not a quorum is present, and the meeting may be held as adjourned upon reasonable notice. Section 6.7 Action By Consent. Any action of the Board may be taken without a meeting if (i) the Member Managers holding not less than the minimum number of votes that would be required to approve and adopt such action at a meeting consent to the action in writing, signed by an authorized representative of each such Member Manager, (ii) notice of the actions to be approved by such Member Managers is given to all Member Managers in advance and copies of the written consents are so delivered to all Member Managers promptly thereafter, and (iii) the written consents are filed with the records of the meetings of the Board. Such actions by consent shall be treated for all purposes as actions taken at a meeting. Section 6.8 Telephonic Meetings. Member Managers, through their respective authorized representatives, may participate in a meeting of the Board by means of a conference telephone or similar communications equipment provided all Member Managers participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. Section 6.9 Member Managers as Agents. The Member Managers, to the extent of the powers set forth herein, are agents of the Company for the purpose of the Company's business, and the actions of the Member Managers taken in accordance with such powers shall bind the Company. Section 6.10 Powers of the Board; Powers of Officers. (a) The Board's powers on behalf and in respect of the Company, subject to the provisions of this Agreement requiring the approval of the Members, shall be all powers and privileges permitted to be exercised by members that manage the Company under the Delaware Act, including, without limitation, Section 18-402 of the Delaware Act; provided, nothing herein shall supersede, limit or otherwise invalidate any action, authorization or resolution of the Members set forth in this Agreement including, but not limited to those referred to in Section 3.2(b). (b) The Board may delegate any of its powers to the Officers of the Company, or any one of them, except to the extent that this Agreement requires the Board to take an action by voting. - 19 - (c) The Board hereby delegates to the Officers of the Company the respective powers delegated to officers of a corporation under the Delaware General Corporation Law, subject to the powers of a board of directors of a corporation under such Delaware law; provided, that the Board reserves the right to rescind the delegation of any such powers at any time in the sole discretion of the Board. Notwithstanding the foregoing, all decisions as to the hiring and terminating the employment of and the compensation of any officer who reports directly to the Chairman or Chief Executive Officer of the Company shall be subject to the approval of the Board. Section 6.11 Reimbursement. The Company shall reimburse each Member Manager for all reasonable and necessary out-of-pocket expenses incurred by such Member Manager on behalf of the Company according to such terms as shall be approved by the Board. The Board's sole determination of which expenses may be reimbursed to a Member Manager and the amount of such expenses shall be conclusive. Such reimbursement shall be treated as an expense of the Company that shall be deducted in computing Profits and shall not be deemed to constitute a distributive share of Profits or a distribution or return of capital to the Member Manager. Section 6.12 Required Approvals by the Board. Except for transactions between or among the Company and one or more of its Subsidiaries, or between or among the Company's Subsidiaries themselves, without the approval of the Board, the Company shall neither take nor permit any of its Subsidiaries to take any of the following actions (each event hereinafter described being hereafter referred to as a "Transaction") without the approval of the Board: (i) any sale, Transfer, assignment or other disposition by the Company of any interest in a Subsidiary of the Company, or by any Subsidiary of the Company of any interest in any other Subsidiary of the Company; (ii) any consolidation or merger of the Company with or into any other Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act), or any liquidation, dissolution or winding-up of the Company; (iii) (A) any consolidation or merger of any Subsidiary of the Company with or into any business entity (as defined in Section 18-209(a) of the Delaware Act), (B) any sale by any Subsidiary of the Company of all or substantially all of its assets, or (C) any liquidation, dissolution or winding-up of any Subsidiary of the Company; - 20 - (iv) any issuance of any equity securities of any Subsidiary of the Company, or any securities convertible into shares of preferred stock or common stock of any Subsidiary of the Company; (v) any acquisition by the Company or any Subsidiary of the Company of any stock or assets of another entity or of capital assets, in a single transaction or a series of related transactions in any 12-month period, for an aggregate purchase price in excess of $5,000,000; (vi) any incurrence by the Company or any Subsidiary of the Company of funded debt, other than the Chase Borrowings and refinancings thereof to the extent such refinancings do not increase the principal amount permitted to be outstanding under the Chase Borrowings on the date hereof, in excess of $2,500,000; (vii) any removal of Mr. Ian R. Wilson as the Chairman of the Company or any Subsidiary of the Company and the hiring or removal of any successor Chairman or any Chief Executive Officer, President or Executive Vice President of the Company or any Subsidiary; (viii) any election by the Operating Company not to extend, or the termination by the Operating Company of, the Management Services Agreement. (ix) any approval of the annual budget for the Company and its Subsidiaries; and (x) any selection of the firm of independent public accountants that will audit the financial statements of the Company and its Subsidiaries. Without the approval of the Board of Directors of the Operating Company, the Operating Company shall neither take nor permit any of its Subsidiaries to take the following actions (each a "Transaction"): (i) any approval of the annual budget for the Operating Company and its Subsidiaries; (ii) any making of capital expenditures by the Operating Company and its Subsidiaries in an aggregate amount for any fiscal year in excess of $500,000; and - 21 - (iii) the entering into by the Operating Company or any of its Subsidiaries of any co-packing or like arrangement with annual payments in excess of $2,500,000. Section 6.13 Board of Directors of Subsidiaries of the Company. (a) Each Member Manager agrees to take such action as a Member Manager as may be necessary to cause MBW Holdings in its capacity as a stockholder of the Operating Company, to elect the following persons as members of the Board of Directors of the Operating Company: (A) three persons designated by McCown De Leeuw, (B) two persons designated by Fenway; provided, that (1) the number of persons Fenway may designate shall be reduced to one if Fenway and its Permitted Transferees no longer hold at least 15% of the outstanding Voting Units and (2) the number of persons Fenway may designate shall be reduced to zero if Fenway and its Permitted Transferees no longer hold at least 10% of the outstanding Voting Units or if Fenway breaches its covenant under Section 16.1(b) hereof, (C) three persons designated by Dartford; provided, that the number of persons Dartford may designate shall be reduced (1) to one upon the termination of the Management Services Agreement in accordance with its terms, and (2) to zero if Dartford and its Permitted Transferees no longer hold any Units, and (D) Mr. Thomas Ferraro so long as he is serving as the President of the Operating Company. Notwithstanding the foregoing: (i) so long as McCown De Leeuw holds more than 50% of the then outstanding Voting Units, McCown De Leeuw shall have the right, by taking such action as would be required under the Delaware General Corporation Law (including without limitation Section 228 of the Delaware General Corporation Law) for a majority shareholder to act without a meeting, to designate a number of additional persons for election as members of the Board of Directors of the Operating Company which, when added to the three persons previously designated by McCown De Leeuw, would constitute a majority of members of the Board of Directors of the Operating Company, and (ii) unless otherwise directed by all of the Member Managers or as required to comply with clause (B) or clause (C) of Section 6.13(a) or subclause (i) above, the number of directors on the Board of Directors of the Operating Company shall not be less than nine. (b) Each Member Manager agrees to take such action as a Member Manager as may be necessary to cause the Company, in its capacity as a stockholder of MBW Holdings or any other direct Subsidiary of the Company, or to cause any Subsidiary of the Company, in - 22 - its capacity as a stockholder of any other Subsidiary of the Company (other than the Operating Company and its Subsidiaries), to elect the following persons as members of the Board of Directors of MBW Holdings and any other Subsidiary of the Company (other than the Operating Company and its Subsidiaries): (A) three persons designated by McCown De Leeuw, (B) two persons designated by Fenway; provided, that (1) the number of persons Fenway may designate shall be reduced to one if Fenway and its Permitted Transferees no longer hold at least 15% of the outstanding Voting Units and (2) the number of persons Fenway may designate shall be reduced to zero if Fenway and its Permitted Transferees no longer hold at least 10% of the outstanding Voting Units or if Fenway breaches its covenant under Section 16.1(b) hereof, and (C) three persons designated by Dartford; provided, that the number of persons Dartford may designate shall be reduced (1) to one upon the termination of the Management Services Agreement in accordance with its terms, and (2) to zero if Dartford and its Permitted Transferees no longer hold any Units. Notwithstanding the foregoing: (i) so long as McCown De Leeuw holds more than 50% of the then outstanding Voting Units, McCown De Leeuw shall have the right, by taking such action as would be required under the Delaware General Corporation Law (including without limitation Section 228 of the Delaware General Corporation Law) for a majority shareholder to act without a meeting, to designate a number of additional persons for election as members of the Board of Directors of MBW Holdings or such other Subsidiary of the Company which, when added to the three persons previously designated by McCown De Leeuw, would constitute a majority of members of such Board of Directors, and (ii) unless otherwise directed by all of the Member Managers or as required to comply with clause (B) or clause (C) of Section 6.13(b) or subclause (i), the number of directors on the Board of Directors of MBW Holdings or such other Subsidiary of the Company shall not be less than eight. (c) In the event McCown De Leeuw exercises its rights under this Section 6.13, the Member Managers agree to take such actions as may be necessary to cause the election of the additional persons designated by McCown De Leeuw as directors of MBW Holdings, the Operating Company or such other Subsidiary of the Company and to amend the By-Laws of such entity in connection therewith. - 23 - ARTICLE VII AMENDMENTS AND MEETINGS Section 7.1 Amendments. Except as expressly provided in this Agreement, any amendment to this Agreement (including the Schedules hereto) shall be adopted and be effective as an amendment hereto if it is approved by the affirmative vote of Members holding 96% of the outstanding Voting Units. In addition to the foregoing requirement: (i) no amendment of this Section 7.1 or of Article VIII hereof (or the definitions used therein) shall be effective without the written approval of Members holding a majority of any class of Units that would be adversely affected by such proposed amendment; (ii) no amendment of Section 4.6(b) hereof or this Section 7.1(ii) shall be effective without the written approval of Members holding a majority of the Class A Units and Class B Units, respectively; (iii) no amendment of Section 4.6(c) hereof, Schedule B hereto, the third sentence of Section 12.1(a) hereof, Section 15.2(b) hereof or this Section 7.1(iii) shall be effective without the prior written approval of Members holding a majority of the Class C Units; (iv) no amendment of Schedule D hereto or this Section 7.1(iv) shall be effective without the prior written approval of Dartford; (v) no amendment of Section 6.1 or 6.2 regarding the initial Member Managers or this Section 7.1(v) shall be made without the unanimous written consent of such initial Member Managers; and (vi) no amendment of Section 4.6(d), Schedule C hereto or this Section 7.1(vi) shall be effective without the prior written approval of Members holding a majority of the Class D Units. Notwithstanding the foregoing, the officers of the Company may amend Schedule A hereto to reflect new Members or Substitute Members duly admitted in accordance with this Agreement, with such amendment to be effective upon the filing of such amendment with the books and records of the Company. - 24 - Section 7.2 Meetings of the Members. (a) Meetings of the Members may be called by the Board and shall be called by the Board upon the written request of the Chairman or of Members holding 20% of the outstanding Voting Units. The call shall state the location of the meeting and the nature of the business to be transacted. Notice of any such meeting shall be given to all Members not less than 14 days nor more than 50 days prior to the date of such meeting. Members may vote in person or by proxy at such meeting. Whenever a vote, consent or approval of Members is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Members or may be given in accordance with the procedure prescribed in Section 7.2(e) hereof. Except as otherwise expressly provided in this Agreement, a vote by Members holding a majority of the Voting Units shall be required to constitute the act of the Members. (b) For the purpose of determining the Members entitled to vote on, or to vote at, any meeting of the Members or any adjournment thereof, the Board or the Members requesting such meeting may fix, in advance, a date as the record date for any such determination. Such date shall be not more than 50 days nor less than 14 days before any such meeting. (c) Each Member may authorize any Person to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Member or its attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Member executing it. (d) Each meeting of Members shall be conducted by the Board or Members requesting such meeting or by such other Person that the Board or Members requesting such meeting may designate. (e) Except as otherwise provided in this Agreement, any action of the Members may be taken without a meeting if (i) the Members holding not less than the minimum number of Voting Units that would be required to approve and adopt such action at a meeting consent to the action in writing, (ii) written notice (delivered in person or by facsimile) of the actions to be approved by such Members is given to all Members, and - 25 - (iii) the written consents are filed with the records of the meeting of the Members. Such actions by consent shall be treated for all purposes as actions taken at a meeting. ARTICLE VIII DISTRIBUTIONS AND ALLOCATIONS Section 8.1 General Distribution Rules. Except as provided in Section 8.2 hereof, all distributions to Members shall be made at such times and in such amounts as shall be determined by the Board. For purposes of this Article VIII, the term "Member" shall include an Assignee of a Member and their successors and assigns. Section 8.2 Tax Liability Distributions. The Board shall make cash distributions on or prior to April 15th of each Year to the Members in amounts intended to enable the Members (or any Person whose tax liability is determined by reference to the income of a Member) to discharge their United States federal, state and local income tax liabilities arising from the allocations made pursuant to this Article VIII with respect to the Company's operations in the preceding year (a "Tax Liability Distribution"). The amount of any such Tax Liability Distribution shall be equal to 50% of the amount of income and gain allocated to each Member pursuant to this Article VIII; provided, however, if any distributions are made with respect to the year in which the Tax Liability Distribution is being determined pursuant to Sections 8.3(ii) through 8.3(v) hereof, such distributions shall reduce, by the amount of the distribution under the relevant Section, the amount of the Tax Liability Distribution resulting from the allocation of income and gain to such corresponding Section. Section 8.3 Other Distributions. Distributions other than Tax Liability Distributions, including without limitation distributions of Available Cash but not including distributions upon liquidation pursuant to Section 8.4 hereof, shall be made to the Members as follows: (i) First, an amount shall be distributed to the Class A Holders, which amount, when added to all prior distributions made to such Members with respect to the Class A Units under this Section 8.3(i), shall be up to the aggregate Capital Contributions of all Class A Holders at the time such distribution is made. Such distribution shall be allocated among the Class A Holders in proportion to their Capital Contributions. (ii) Next, an amount shall be distributed to the Class B Holders, which amount, when added to all prior distributions made to such Members with respect to the Class B Units under Section 8.2 and this Section 8.3(ii), shall be up to the - 26 - sum of (x) $1,000,000 plus (y) the product of (A) $1,000 multiplied by (B) the number of Class B Units hereafter issued to the Class B Holders. Such distribution shall be allocated among the Class B Holders in accordance with their respective Class B Units. (iii) Next, an amount shall be distributed to each Class A Holder and each Class B Holder, which amount, when added to all prior distributions made to such Member under Section 8.2 with respect to Class A Units or Class B Units, respectively (other than those prior distributions already taken into account in clause (ii) above), and this Section 8.3(iii) shall produce a return of 10% simple interest per annum on (i) in the case of the Class A Holders, the Unrecouped Capital Contributions outstanding from time to time from December 31, 1996 and (ii) in the case of the Class B Holders, the portion of the amount payable pursuant to Section 8.3(ii) which remains undistributed from time to time from December 31, 1996. Distributions to the Class A Holders shall be allocated in proportion to their respective Class A Units. Distributions to the Class B Holders shall be allocated in accordance with their respective Class B Units. To the extent the amount of any proposed distribution under this Section 8.3(iii) is not sufficient to provide a full distribution of the amount required to be distributed to each Class A Holder and Class B Holder by this Section 8.3(iii), the amount of such distribution shall be allocated between the Class A Holders as a group and the Class B Holders as a group based on the respective amounts which each group would have received had the total distribution been made. (iv) Next, an amount shall be distributed to the Class C Holders and the Class D Holders as follows: (A) an amount shall be distributed to the Class C Holders, which amount, when added to all prior distributions made to such Members with respect to the Class C Units under Section 8.2 and this Section 8.3(iv), shall be up to the Outstanding C Units Percentage multiplied by 16.25% of all prior distributions made pursuant to Section 8.3(iii) above, with such distribution to be allocated among the Class C Holders in proportion to the Class C Units then held by each of them, and (B) an amount shall be distributed to the Class D Holders holding Vested Class D Units, which amount, when added to all prior distributions made to such Members with respect to the Vested Class D Units under Section 8.2 and this Section 8.3(iv), shall be up to the Outstanding D Units Percentage multiplied by 8.75% of all prior distributions made pursuant to Section 8.3(iii) above, with such distribution to be allocated among the Class D Holders in proportion to the Vested Class D Units then held by each of them. (v) Next, any balance shall be distributed to the Class A Holders, the Class B Holders, the Class C Holders and the Class D Holders as follows: - 27 - (A) 80% of such balance shall be distributed to the Class A Holders and the Class B Holders, with such distribution to be allocated among the Class A Holders and Class B Holders in accordance with their respective holdings of Class A Units and Class B Units as if the Class A Units and Class B Units were Units of a single class; (B) 13% of such balance (such amount the "13% Balance") shall be distributed among the Class C Holders and the Class A and Class B Holders as follows: (x) an amount equal to the Outstanding C Units Percentage multiplied by the 13% Balance shall be distributed to the Class C Holders to be allocated among the Class C Holders in proportion to the Class C Units then held by each of them and (y) the portion, if any, of the 13% Balance remaining on hand after the distribution described in subclause 8.3(v)(B)(x) above shall be distributed to the Class A and Class B Holders as a group to be allocated among such Class A and Class B Holders in proportion to which their respective holdings of Class A Units and Class B Units as if the Class A Units and Class B Units were Units of a single class; and (C) 7% of such balance (such amount the "7% Balance") shall be distributed among the Company on account of the Class D Units and the Class A, Class B and Class C Holders as follows: (x) an amount equal to the Outstanding D Units Percentage multiplied by the 7% Balance shall be distributed to the Class D Holders holding Vested Class D Units to be allocated among such Class D Holders in proportion to the Vested Class D Units then held by each of them and (y) the portion, if any, of the 7% Balance remaining on hand after the distribution described in subclause 8.3(v)(C)(x) above shall be distributed to the Class A Holders, the Class B Holders and the Class C Holders to be allocated among such Holders in proportion to the aggregate amounts distributed to each of them pursuant to Sections 8.3(v)(A) and (B) hereof. Notwithstanding the foregoing, in the event that distributions have been made under Sections 8.3(i)-(iv) above and are then eligible to be made under Section 8.3(v), and the Outstanding D Units Percentage is increased from the percentage in effect at the time distributions were previously made under Section 8.3(iv) above, additional distributions shall be made under Section 8.3(iv) above to those Class D Holders holding Vested Class D Units to the extent their holdings of such Units increased the Outstanding D Units Percentage, respectively, before any further distributions under Section 8.3(v) are made. Section 8.4 Distribution of Proceeds Upon Liquidation. Upon liquidation of the Company, any distributions shall be made in accordance with the terms and conditions of Article XV hereof and shall be made by the end of the taxable year in which the liquidation occurs, or, if later, within ninety (90) days after the liquidation. Section 8.5 Tax Withholding. All amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to any payment, distribution or allocation to the Company or the Members shall be treated as amounts distributed to the Members pursuant - 28 - to this Article VIII for all purposes of this Agreement. The Board is authorized to withhold from distributions, or with respect to allocations, to the Members and to pay over to any federal, state or local government any amounts required to be so withheld pursuant to the Code or any provision of any other federal, state or local law and shall allocate such amounts to those Members or with respect to which such amounts were withheld. Section 8.6 Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Delaware Act or other applicable law. Section 8.7 Allocation of Profits. Profits of the Company for any Tax Year shall be allocated in the following order and priority: (i) First, among the Members in accordance with and in an amount equal to the cumulative Losses allocated among the Members pursuant to Section 8.8(ii) hereof for all prior periods and not previously taken into account under this clause. (ii) Next, among the Members in accordance with and in an amount equal to the cumulative Losses allocated among the Members pursuant to Section 8.8(i) hereof for all prior periods and not previously taken into account under this clause. (iii) Next, among the Class B Holders in proportion to, and in an amount equal to the excess, if any, of (A) the cumulative cash distributions under Section 8.3(ii) that have previously been made to the Class B Holders and that each Class B Holder would have received under such Section for the then current Tax Year of the Company had an amount of cash at least equal to such Profits been available for such distribution under such Section over (B) the cumulative allocations previously made to the Class B Holders pursuant to this Section 8.7(iii). (iv) Next, among the Class A Holders and the Class B Holders in proportion to and in an amount equal to the excess, if any, of (A) the cumulative cash distributions under Section 8.3(iii) hereof that have previously been made to the Class A Holders and Class B Holders and that each Class A Holder and Class B Holder would have received under Section 8.3(iii) hereof for the then current Tax Year had an amount of cash at least equal to such Profits been available for such distribution under such Section over (B) the cumulative allocations previously made to the Class A Holders and Class B Holders pursuant to this Section 8.7(iv). - 29 - (v) Next, among the Class C Holders and Class D Holders holding Vested Class D Units in proportion to, and in an amount equal to the excess, if any, of (A) the cumulative cash distributions under Section 8.3(iv) that have previously been made to the Class C Holders and such Class D Holders and that each Class C Holder and each such Class D Holder would have received under Section 8.3(iv) hereof for the current Tax Year of the Company had an amount of cash at least equal to such Profits been available for distribution under such Section over (B) the cumulative allocations previously made to the Class C Holders and such Class D Holders pursuant to this Section 8.7(v). (vi) Next, among the Members in proportion to and in an amount equal to the excess, if any, of (A) the cumulative cash distributions under Section 8.3(v) hereof that have previously been made to such Members and that such Member would have received under Section 8.3(v) hereof for the then current Tax Year had an amount of cash at least equal to such Profits been available for such distribution under such Section over (B) the cumulative allocations previously made to the Members pursuant to this Section 8.7(vi). For purposes of determining Profits allocations under this Section 8.7, amounts actually distributed under the relevant paragraph of Section 8.3 shall be increased by the amount of the reduction under such paragraph that was made to reflect the Section 8.2 distribution referred to therein. Section 8.8 Allocation of Losses. Losses of the Company for any Tax Year shall be allocated in the following order and priority: (i) First, to offset any Profits previously allocated under Section 8.7 in the inverse order and priority in which such Profits were allocated; and (ii) Next, in the following order (a) to the Class A Holders to the extent of their Capital Contributions and (b) to the Class A Holders and the Class B Holders in accordance with their respective pro rata portion of Class A Units and Class B Units taken together for this purpose as a single class of Units. Section 8.9. Special Allocations. The following special allocations shall be made in the following order: (i) Qualified Income Offset. Notwithstanding the foregoing, in the event that any Member receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items of Company income and gain (including gross income) shall be specially allocated to each such Member in a manner and amount sufficient to - 30 - eliminate, to the extent required by such Regulations, the negative balance in the Capital Account of the Member described in Section 1.704-1(b)(2)(ii)(d)(3) of the Treasury Regulations as quickly as possible. (ii) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Tax Year, each such Member shall be specially allocated items of Company income and gain in the amount of such deficit Capital Account as quickly as possible, provided that an allocation pursuant to this Section 8.9(ii) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 8 have been made as if Section 8.9(i) and (ii) were not in this Agreement. Section 8.10 Allocation Rules. (a) In the event Members are admitted to the Company pursuant to this Agreement on different dates, the Profits (or Losses) allocated to the Members for each Tax Year during which Members are so admitted shall be allocated among the Members in proportion to the respective Units that each holds from time to time during such Tax Year in accordance with ss.706 of the Code, using any convention permitted by law and selected by the Board. (b) For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be determined on a daily, monthly or other basis, as determined by the Board using any method that is permissible under ss.706 of the Code and the Treasury Regulations thereunder. (c) Except as otherwise provided in this Agreement, all types of Company income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Members in the same proportions as they share Profits and Losses for the Tax Year in question. (d) The Members are aware of the income tax consequences of the allocations made by this Article VIII and hereby agree to be bound by the provisions of this Article VIII in reporting their shares of Company income and loss for income tax purposes. Section 8.11 Tax Allocations of Section 704(c) of the Code. (a) In accordance with ss.704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the - 31 - Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with Section 1.1 hereof). (b) In the event the Gross Asset Value of any Company asset is adjusted pursuant to Paragraph (b) of the definition of "Gross Asset Value" contained in Section 1.1 hereof, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under ss.704(c) of the Code and the Treasury Regulations thereunder. (c) Any elections or other decisions relating to allocations under this Article VIII, including the selection of any allocation method permitted under proposed Treasury Regulation ss.1.704-1(c), shall be made by the Board in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 8.11 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement. ARTICLE IX BOOKS AND RECORDS Section 9.1 Books, Records and Financial Statements. (a) At all times during the continuance of the Company, the Company shall maintain, at its principal place of business, separate books of account for the Company that shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent therewith, in accordance with this Agreement. Such books of account, together with a copy of this Agreement and of the Certificate, shall at all times be maintained at the principal place of business of the Company and shall be open to inspection and examination at reasonable times by each Member and its duly authorized representative for any purpose reasonably related to such Member's interest in the Company. The books of account and the records of the Company shall be examined by and reported upon as of the end of each Fiscal Year by a firm of independent certified public accountants selected by the Board. Any Member shall have the right to have a private audit of the Company books and records conducted at reasonable times and after reasonable advance notice to the Company for any purpose reasonably related to such Member's interest in the Company, but any such private audit shall be at the expense of the Member desiring it, and it shall not be paid for out of Company funds. - 32 - (b) The Board shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company and the following documents shall be transmitted by the Board to each Member holding 5% or more of the outstanding Voting Units at the times hereinafter set forth: (i) as soon as available and in any event within 95 days after the end of each Fiscal Year of the Company, a balance sheet of the Company as of the end of such Fiscal Year and the related statements of income and cash flows of the Company for such Fiscal Year, all reported on by such independent public accountants of nationally recognized standing as the Board shall select; (ii) as soon as available and in any event within 50 days after the end of each of the first three quarters of each Fiscal Year of the Company, a balance sheet of the Company as of the end of such quarter and the related statements of income and cash flows of the Company for such quarter; and (iii) such other financial reports of the Company or any Subsidiary that the Company or any Subsidiary is required to deliver to its senior lender, within 5 days after such financial reports are required to be delivered to such senior lender. (c) All information contained in any statement or other document distributed to any Member pursuant to Section 9.1(b) hereof shall be deemed accurate, binding and conclusive with respect to such Member unless written objection is made thereto by such Member to the Company within 20 business days after the receipt of such statement or other document by such Member. Section 9.2 Accounting Method. The books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner and shall reflect all Company transactions and be appropriate and adequate for the Company's business. Section 9.3 Annual Audit. As soon as practical after the end of each Fiscal Year, but not later than 90 days after such end, the financial statements of the Company shall be audited by the independent certified public accountants referred to in Section 9.1(a) hereof, and such financial statements shall be accompanied by a report of such accountants containing their opinion. The cost of such audits will be an expense of the Company. A copy of the audited financial statements and the accountants' report will be furnished to each Member within 10 business days after their receipt by the Member Manager. - 33 - ARTICLE X TAX Section 10.1 Tax Matters Member. (a) Dartford is hereby designated as the initial "Tax Matters Member" of the Company and as the "Tax Matters Partner" for purposes of ss.6231(a)(7) of the Code and shall have the power to manage and control, on behalf of the Company, any administrative proceeding at the Company level with the Internal Revenue Service relating to the determination of any item of Company income, gain, loss, deduction or credit for federal income tax purposes. The Tax Matters Member shall not take any action or make any decision that materially affects the Company or the Members (including without limitation with respect to income, loss, deduction or credit of the Company) without the prior written consent of Members by Majority Vote. (b) The Tax Matters Member shall, within 10 days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the Company level relating to the determination of any Company item of income, gain, loss, deduction or credit, mail a copy of such notice to each Member. (c) The Members may at any time hereafter designate a new Tax Matters Member by a Majority Vote; provided, however, that only a Member may be designated as the Tax Matters Member of the Company. Section 10.2 Right to Make Section 754 Election. The Board may, in its sole discretion, make or revoke, on behalf of the Company, an election in accordance with ss.754 of the Code, so as to adjust the tax basis of Company property in the case of a distribution of property within the meaning of ss.734 of the Code, and in the case of a transfer of a Company interest within the meaning of ss.743 of the Code. Each of the Members shall, upon request of the Board, supply the information necessary to give effect to such an election. ARTICLE XI LIABILITY, EXCULPATION AND INDEMNIFICATION Section 11.1 Liability. Except as otherwise provided by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Covered Person. - 34 - Section 11.2 Exculpation. (a) No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person's gross negligence or willful misconduct. (b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, Profits, Losses or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid. Section 11.3 Fiduciary Duty. (a) To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person. (b) Unless otherwise expressly provided herein, (i) whenever a conflict of interest exists or arises between Covered Persons, or (ii) whenever this Agreement or any other agreement contemplated herein or therein provides that a Covered Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Company or any Member, the Covered Person shall resolve such conflict of interest, taking such action or providing such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles; provided that the Board shall vote on the adequacy of any such - 35 - resolution of conflict of interest by the Covered Person, making such adjustments to such resolution as the Board in its sole discretion sees fit; and provided further that if such Covered Person is a Member Manager, such Covered Person shall not vote with the Board on the adequacy of such resolution. In the absence of bad faith by the Covered Person, the resolution, action or term so made, taken or provided by the Covered Person shall not constitute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Covered Person at law or in equity or otherwise. (c) Whenever in this Agreement a Covered Person is permitted or required to make a decision (i) in its "discretion" or under a grant of similar authority or latitude, the Covered Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Company or any other Person, or (ii) in its "good faith" or under another express standard, the Covered Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or other applicable law. Section 11.4 Indemnification. To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of gross negligence or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under this Section 11.4 shall be provided out of and to the extent of Company assets only, and no Covered Person shall have any personal liability on account thereof. Section 11.5 Expenses. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding including any claim, demand, action, suit or proceeding with respect to which such Covered Person is alleged to have not met the applicable standard of conduct or is alleged to have committed conduct so that, if true, such Covered Person would not be entitled to indemnification under this Agreement, upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if - 36 - it shall be determined that the Covered Person is not entitled to be indemnified as authorized in Section 11.4 hereof. Section 11.6 Outside Businesses. Except as provided in Section 16.1 hereof, any Member, Member Manager, Officer or Affiliate thereof may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Company or any of its Subsidiaries, and the Company, the Members, the Member Managers and the Officers shall have no rights by virtue of this Agreement in and to such independent ventures or the income or Profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Company, shall not be deemed wrongful or improper. Except as provided in Section 16.1 hereof, no Member, Member Manager, Officer or Affiliate thereof shall be obligated to present any particular investment opportunity to the Company even if such opportunity is of a character that, if presented to the Company, could be taken by the Company, and any Member, Member Manager, Officer or Affiliate thereof shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity. ARTICLE XII ADDITIONAL MEMBERS AND UNITS Section 12.1 Additional Units. (a) If approved by a Majority Vote, the Company is authorized to raise additional capital by offering and selling, or causing to be offered and sold, additional limited liability company interests in the Company ("Additional Units") to any Person in such amounts and on such terms as the Board may determine. With respect to any issuance of Class D Units, or reissuance of Class D Units that are forfeited in accordance with Schedule C hereto, the approval of a Majority Vote of Members shall not be required with respect thereto; provided, that (i) any issuance of Class D Units to Thomas J. Ferraro, C. Gary Willett and the direct reports of Thomas J. Ferraro and any other person that reports to the Chairman or the Chief Executive Officer of the Operating Company and that person's direct reports shall be in such amounts as the Chairman of the Company recommends to the Board subject to the approval of the Board, and (ii) any issuance of Class D Units to any other person shall be in such amounts as the President of the Operating Company and the Chairman of the Company disclose to the Board after consultation with each other. Notwithstanding the foregoing, the Company is not authorized to issue any additional Class C Units unless all of the Class C Holders consent to such issuance in advance thereof. Each Person who subscribes for any of the Additional Units shall be admitted as an additional member of the Company (each, an "Additional Member" and collectively, the "Additional Members") at the time such Person (i) executes this Agreement - 37 - or a counterpart of this Agreement and (ii) is named as a Member on the Schedules hereto. The legal fees and expenses associated with such admission may be borne by the Company. (b) If Additional Units are issued pursuant to this Article XII such Additional Units will be treated for all purposes of this Agreement as Units as of the date of issuance. Section 12.2 Preemptive Rights. In the event that the Company at any time shall propose to issue additional Class A Units or units of any other class of limited liability company interests (other than Class C Units or Class D Units), or any securities convertible into, or exchangeable for, or any rights, warrants or options to purchase, any limited liability company interests in the Company, each Class A Holder and Class B Holder shall have the right to purchase up to such Holder's Proportionate Percentage of such Additional Units or such securities being issued. To the extent any such proposed issuance would result in McCown De Leeuw and its Permitted Transferees not holding in excess of 50% of the outstanding Voting Units, each such Holder who elects to purchase a full Proportionate Percentage of such Additional Units or securities shall also be entitled to elect to purchase additional amounts of such Additional Units or securities up to the amount of such Holder's recalculated Proportionate Percentage of the number of Additional Units which the Holders purchasing less than their full Proportionate Percentages did not purchase. Section 12.3 Allocations. Additional Units shall not be entitled to any retroactive allocation of the Company's income, gains, losses, deductions, credits or other items; provided that, subject to the restrictions of ss.706(d) of the Code, Additional Units shall be entitled to their respective share of the Company's income, gains, losses, deductions, credits and other items arising under contracts entered into before the effective date of the issuance of any Additional Units to the extent that such income, gains, losses, deductions, credits and other items arise after such effective date. To the extent consistent with ss.706(d) of the Code and Treasury Regulations promulgated thereunder, the Company's books may be closed at the time Additional Units are issued (as though the Company's Tax Year had ended) or the Company may credit to the Additional Units pro rata allocations of the Company' income, gains, losses, deductions, credits and items for that portion of the Company's Tax Year after the effective date of the issuance of the Additional Units. ARTICLE XIII ASSIGNABILITY AND SUBSTITUTE MEMBERS Section 13.1 Restrictions on Transfer. (a) No Member shall sell or otherwise Transfer any of its Units (whether now held or hereafter acquired), except in accordance with the terms of this Agreement. Any - 38 - attempted Transfer of any of a Member's Units in violation of the terms of this Agreement will be null, void and of no effect and the proposed transferee shall not be recognized by the Company as the owner or holder of the Units attempted to be Transferred or any rights pertaining thereto (including, without limitation, voting rights and rights to allocations and distributions). (b) Except as otherwise provided in this Agreement, no Transfer of (i) a Class A Unit by a Class A Holder, (ii) a Class B Unit by a Class B Holder, (iii) a Class C Unit by a Class C Holder, or (iv) a Class D Unit by a Class D Holder may be made without the consent of the Board, which may be withheld in its sole discretion. (c) As a condition precedent to the effectiveness of any Transfer of Units to any Person (other than the Company or a Person that is already a Member and has executed this Agreement), the transferee shall execute a counterpart of this Agreement and deliver it to the Company. Section 13.2. Permitted Transfers. The rights and obligations under Section 13.1 of this Agreement will not apply to a Transfer: (a) to a Member's ancestors or descendants or spouse or to a trust, partnership, custodianship or other fiduciary account for his or for their benefit; (b) if the Member is a partnership or limited liability company, to the respective partners in such partnership or Affiliates of such partners or members of such limited liability company; (c) to an Affiliate of the Member, provided, that such Affiliate is not being used as a device to avoid the restrictions on Transfer provided in this Agreement; (d) by McCown De Leeuw to an MDC Permitted Transferee, or by an MDC Permitted Transferee to another MDC Permitted Transferee, provided, that such MDC Permitted Transferee is not being used as a device to avoid the restrictions on Transfer provided in this Agreement; or (e) a Transfer pursuant to Article XIV of this Agreement. Section 13.3 Substitute Members. Any Transfer of Units pursuant to this Article XIII or XIV including, but not limited to a Transfer made pursuant to Section 14.1 hereof, shall, nevertheless, not entitle the transferee to become a Substitute Member or to be entitled to exercise or receive any of the rights, powers or benefits of a Member other than the right to share in such profits and losses, to receive distribution or distributions and to receive such allocation of income, gain, loss, deduction or credit or similar item to which the transferor - 39 - Member would otherwise be entitled, to the extent assigned, unless the transferor Member designates, in a written instrument delivered to the other Members, its transferee to become a Substitute Member and the non-transferring Members holding a majority of the capital and Profits interests of the Company in their sole and absolute discretion, consent to the admission of such transferee as a Member; and provided further, that such transferee shall not become a Substitute Member without having first executed an instrument reasonably satisfactory to the other Members accepting and agreeing to the terms and conditions of this Agreement, including a counterpart signature page to this Agreement, and without having paid to the Company a fee sufficient to cover all reasonable expenses of the Company in connection with such transferee's admission as a Substitute Member. If a Member Transfers all of its interest in the Company and the transferee of such interest is entitled to become a Substitute Member pursuant to this Section 13.3, such transferee shall be admitted to the Company effective immediately prior to the effective date of the Transfer, and, immediately following such admission, the transferor Member shall automatically resign as a Member of the Company. In such event, the Company shall not dissolve if the business of the Company is continued without dissolution in accordance with Section 15.2(e) hereof. Section 13.4 Recognition of Assignment by Company. No Transfer or assignment, or any part thereof, that is in violation of this Article XIII shall be valid or effective, and neither the Company nor the Members shall recognize the same for the purpose of making distributions pursuant to Article VIII hereof with respect to such assigned interest or part thereof. Neither the Company nor the nonassigning Members shall incur any liability as a result of refusing to make any such distributions to the assignee of any such invalid assignment. Section 13.5 Effective Date of Transfer. Any valid Transfer of a Member's interest in the Company, or part thereof, pursuant to the provisions of this Article XIII shall be effective as of the close of business on the last day of the calendar month in which such Transfer occurs. The Company shall, from the effective date of such assignment, thereafter pay all further distributions on account of the Company interest (or part thereof) so assigned, to the transferee of such interest, or part thereof. As between any Member and its transferee, Profits and Losses for the Fiscal Year of the Company in which such Transfer occurs shall be apportioned for federal income tax purposes in accordance with any convention permitted under ss.706(d) of the Code and selected by the Member Manager. Section 13.6 Indemnification. In the case of Transfer or assignment or attempted Transfer or assignment of an interest in the Company that has not received the consents required by this Article XIII, the parties engaging or attempting to engage in such Transfer or assignment shall be liable to indemnify and hold harmless the Company and the other Members from all costs, liabilities and damages that any of such indemnified Persons may incur (including, without limitation, incremental tax liability and lawyers' fees and expenses) as a result of such Transfer - 40 - or assignment or attempted Transfer or assignment and efforts to enforce the indemnity granted hereby. Section 13.7 Repurchase Obligation of the Company. The Company shall repurchase from Dartford and its Permitted Transferees the Class A Units and Class B Units held by Dartford or its Permitted Transferees at the times and on the terms and conditions set forth in Schedule D hereto. ARTICLE XIV TAG-ALONG OPTION AND COME-ALONG OBLIGATION Section 14.1. Tag-Along Option. Subject to Section 13.1(c) hereof, in the event that McCown De Leeuw intends to voluntarily Transfer to another Person (other than to a Permitted Transferee or pursuant to a public offering) (such Person being the "Purchaser") any of its Class A Units, then McCown De Leeuw shall deliver to the Company and each other Member a written notice (the "Tag Notice") stating that it intends to make such a Transfer and setting forth the terms and conditions of such proposed Transfer. During the 30-day period (the "Tag-Along Period") from and after the delivery of such notice to the Company and such other Members, each Member shall have the right to elect to sell to the Purchaser, and the Purchaser shall have the obligation to purchase from such Member, (i) such Member's Proportionate Percentage of the Class A Units being proposed to be sold pursuant to the notice on the terms and conditions set forth in the Tag Notice; and (ii) any Class B Units such Member elects to sell to the Purchaser up to such Member's Proportionate Percentage of the Class B Units at the fair market value of such Class B Units as interpolated based upon the price of the Class A Units set forth in the Tag Notice. In addition, if the proposed Transfer will result in a Change of Control (as defined in Schedule B to this Agreement), each Member shall have the right to elect to sell to the Purchaser, and the Purchaser shall have the obligation to purchase from such Member, any Class C Units and Class D Units such Member elects to sell to the Purchaser up to such Member's Proportionate Percentage of the Class C Units or Class D Units, as the case may be, at the fair market value of such Class C or D Units, as the case may be, as interpolated based on the price of the Class A Units set forth in the Tag Notice, provided that the aggregate price for all such Class C and Class D Units which Members shall have a right to sell pursuant to this Section 14.1 shall not exceed that percentage of the value that the Purchaser would have paid for all Class A and B Units which would have been sold pursuant to this Section 14.1 but for the provisions of this sentence as (x) the fair market value of all Class C and D Units bears to (y) the fair market value of all Units of all classes, in each case as interpolated based on the value of the Class A Units as set forth in the Tag Notice. In the event that the value of the Class C and D Units that Members wish to sell exceeds the value that is permitted to be sold pursuant to the preceding sentence, then any such limitation shall be shared by the Members - 41 - wishing to sell such Class C and D Units based upon the relative values of the respective Class C and D Units they wish to sell. Section 14.2. Come-Along Obligation. If any Person or group of Persons makes an offer to purchase all outstanding Units of the Company from all Members (a "Tender Offer"), then the Members (other than any Members who are Affiliates of the Person making the Tender Offer) who hold 50% or more of the total number of Voting Units held by Members who are not Affiliates of the Persons making the Tender Offer (the "Approving Members") may require all other Members ("Minority Members") to sell their Units pursuant to the Tender Offer. To exercise this right, the Approving Members must deliver a written notice to the Minority Members describing the terms and conditions of the Tender Offer. If such an exercise has been made by the Approving Members, then each Minority Member shall be obligated to sell all of its Units pursuant to the Tender Offer. Any amounts to be received by Members or Assignees in connection with a Transfer of Units under this Section 14.2 shall be allocated in accordance with Section 15.5 hereof. ARTICLE XV DISSOLUTION, LIQUIDATION AND TERMINATION Section 15.1 No Dissolution. The Company shall not be dissolved by the admission of Additional Members or Substitute Members in accordance with the terms of this Agreement. Section 15.2 Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: (a) the expiration of the term of the Company, as provided in Section 2.3 hereof; (b) the written consent of Members holding at least 96% of the outstanding Voting Units and at least 51% of the Class C Units; (c) the sale of all or substantially all of the assets of the Company and the expiration of any indemnity period or escrow or the payment of any deferred payment relating to such sale; (d) immediately prior to the effectiveness of a Public Offering; (e) the death, insanity, bankruptcy, retirement, resignation, expulsion or dissolution of any Member or the occurrence of any other event under the Delaware Act that - 42 - terminates the continued membership of a Member in the Company (other than a resignation described in Sections 5.4 or 13.3 hereof, which resignation shall not cause the Company to be dissolved and the business of the Company shall continue without dissolution) unless, within 90 days after the occurrence of such an event, the remaining Members holding a majority of capital and Profits interests of the Company agree in writing to continue the business of the Company and to the appointment, if necessary or desired, effective as of the date of such event, of one or more Additional Members; or (f) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act. Except as provided in Section 15.2(e), the death, insanity, bankruptcy, retirement, resignation, expulsion or dissolution of a Member shall not cause the Company to be dissolved and upon the occurrence of such an event the Company shall be continued without dissolution. Section 15.3 Notice of Dissolution. Upon the dissolution of the Company, the Person or Persons approved by a Majority Vote to carry out the winding up of the Company (the "Liquidating Trustee") shall promptly notify the Members of such dissolution. Section 15.4 Liquidation. Upon dissolution of the Company, the Liquidating Trustee shall immediately commence to wind up the Company's affairs; provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. The Members shall continue to share Profits and Losses during liquidation in the same proportions, as specified in Article VIII hereof, as before liquidation. Each Member shall be furnished with a statement prepared by the Company's certified public accountants that shall set forth the assets and liabilities of the Company as of the date of dissolution. (a) The proceeds of any liquidation (or of any transaction that is deemed to be a liquidation under Section 15.5 hereof) shall be distributed, as realized, in the following order and priority: (i) first, to creditors of the Company, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof), other than liabilities for distributions to Members; (ii) second, to the Members pursuant to Sections 8.3(i), (ii), (iii) and (iv) in the same priority and after giving effect to all prior distributions; and - 43 - (iii) the balance, to the Members in accordance with their positive Capital Accounts after giving effect to all contributions, distributions and allocations for all periods. For clarification, for the purpose of this Section 15.4(iii) all allocations under Section 8.7(vi) and all distributions under Section 15.4(ii) shall be deemed to have been made prior to the distributions required by this Section 15.4(iii). (b) If the Liquidating Trustee shall determine that it is not feasible to liquidate all of the assets of the Company, then the Liquidating Trustee shall cause the Fair Asset Value of the assets not so liquidated to be determined. Any unrealized appreciation or depreciation with respect to such assets shall be allocated among the Members in accordance with Article VIII as though the property were sold for its Fair Asset Value and distribution of any such assets in kind to a Member shall be considered a distribution of an amount equal to the assets' Fair Asset Value. Such assets, as so appraised, shall be retained or distributed by the Liquidating Trustee as follows: (i) The Liquidating Trustee shall retain assets having a Fair Asset Value equal to the amount by which the net proceeds of liquidated assets are sufficient to satisfy the requirements of paragraph (a)(i) of this Section 15.4. The foregoing notwithstanding, the Liquidating Trustee shall, to the fullest extent permitted by law, have the right to distribute property subject to liens at the value of the Company's equity therein. (ii) The remaining assets (including mortgages and other receivables) shall be distributed to the Members in such proportions as shall be equal to the respective amounts to which each Member is entitled pursuant to Section 15.4(a) hereof giving full effect in the calculation thereof to any previous distributions made pursuant to this Section 15.4. If, in the sole and absolute judgment of the Liquidating Trustee, it shall not be feasible to distribute to each Member an aliquot share of each asset, the Liquidating Trustee may allocate and distribute specific assets to one or more Members as tenants-in-common as the Liquidating Trustee shall determine to be fair and equitable. (c) No Member shall have the right to demand or receive property other than cash upon dissolution and termination of the Company. Section 15.5 Sale Transactions. Any sale of all or substantially all of the Voting Units in a transaction or series of related transactions, including without limitation pursuant to a Tender Offer, shall be deemed to be a liquidation of the Company, and any amounts to be received by Members of Assignees upon the consummation of any such transaction shall be distributed, as realized, in accordance with Section 15.4(a) hereof. - 44 - Section 15.6 Termination. The Company and this Agreement shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for in this Article XV (including without limitation after the sale of Units pursuant to a Tender Offer in accordance with Section 14.2 hereof), and the Certificate shall have been canceled in the manner required by the Delaware Act. Section 15.7 Claims of the Members. The Members and Assignees shall look solely to the Company's assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and Assignees shall have no recourse against any other Member or the Member Managers or Officers. ARTICLE XVI BUSINESS OPPORTUNITIES Section 16.1 Business Opportunities. (a) Subject to Section 16.1(b) hereof, in the event that any Member, directly or indirectly, is presented with a business opportunity relating to the potential acquisition of assets or stock or other equity securities of any "Covered Business" (as defined below), such Member shall be obligated to present such business opportunity to the Board for its consideration. If the Board does not, within 10 days after the presentation of such business opportunity to the Board, authorize the Company to pursue such business opportunity, such Member shall have the right to pursue such business opportunity for its own benefit without any further obligation to the Company or its Members with respect thereto, whether under this Agreement or otherwise. A "Covered Business" shall include any business whose primary business is the production, marketing or sale of dry, shelf-stable grocery food products, not including pet food products and for the avoidance of doubt expressly excluding all frozen food products. (b) With respect to Fenway and its Permitted Transferees only, a "Covered Business" shall be any business whose primary business at the time of its acquisition is or will be the production, marketing or sale of dry, shelf-stable grocery food products with annual revenues of $100,000,000 or less, but shall not include (i) the Aunt Jemima(R) syrup and/or pancake mix business, (ii) a business whose primary business is the production, marketing or sale of ethnic foods (including by way of illustration but not of limitation, Mexican), (iii) a - 45 - business whose revenues are not derived primarily from sales in the United States, and (iv) for the avoidance of doubt any frozen food product. In the event that Fenway, VDK Foods LLC, or an Affiliate of either of them (other than an Affiliate of the Company) acquires the Aunt Jemima(R) syrup and/or pancake mix business, Fenway shall give McCown De Leeuw written notice of such acquisition on or before the effective date thereof. McCown De Leeuw will have a right and option (the "MDC Call Right") during the 30-day period beginning on the effective date of such acquisition to notify Fenway of its intent to purchase all (but not less than all) of the Class A Units then held by Fenway and its Permitted Transferees at a purchase price equal to the fair market value thereof (without discount for lack of marketability or minority interest at the time of purchase by McCown De Leeuw). McCown De Leeuw shall exercise the MDC Call Right by delivering a written notice to Fenway stating such election. Within 10 days after its receipt of such notice, Fenway shall designate not less than three independent nationally-recognized investment banking firms by written notice to McCown De Leeuw. Within 10 days after its receipt of such notice from Fenway, McCown De Leeuw shall select one of the investment banking firms designated by Fenway to make a fair market value determination of the Class A Units being purchased by McCown De Leeuw from Fenway and its Permitted Transferees. Such investment banking firm shall make such fair market value determination within 60 days after such selection by McCown De Leeuw. The closing of McCown De Leeuw's purchase of Class A Units from Fenway and its Permitted Transferees shall take place within 60 days after determination of the fair market value of such Class A Units. Alternatively, McCown De Leeuw and Fenway can agree to a fair market value of the Class A Units being purchased by McCown De Leeuw. ARTICLE XVII REGISTRATION RIGHTS Section 17.1 Registration Rights. In the event the Public Company (or any successor entity into which the Company merges or consolidates) intends to effect a Public Offering, the Class A Holders, the Class B Holders, the Class C Holders and the Class D Holders shall have such registration rights with respect to the Securities of the Public Company distributed to such Holders as set forth on Schedule E hereto. The Members shall have such additional registration rights as set forth on Schedule E hereto. - 46 - ARTICLE XVIII MISCELLANEOUS Section 18.1 Notices. All notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered in person or by an acknowledged overnight delivery service, telecopied or mailed by registered or certified mail, as follows: (a) if given to the Company, in care of the President at the Company's mailing address set forth in Section 2.5 hereof with a copy to the Chairman and the Chief Executive Officer at such address as each such officer shall designate to the Company; (b) if given to the Member Managers, at their mailing addresses set forth on Schedule A attached hereto; or (c) if given to any Member at the address set forth opposite its name on Schedule A attached hereto, or at such other address as such Member may hereafter designate by written notice to the Company. All such notices shall be deemed to have been given when received. Section 18.2 Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. Section 18.3 Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. Section 18.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, legal representatives and assigns. Section 18.5 Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable. All references herein to "Articles," "Sections" and paragraphs shall refer to corresponding provisions of this Agreement unless otherwise indicated. - 47 - Section 18.6 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. Section 18.7 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one instrument. Section 18.8 Integration. This Agreement, together with Schedules A, B, C, D and E and Annex 1 hereto constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. Section 18.9 Governing Law. This Agreement, together with Schedules A, B, C, D and E hereto and Annex 1 and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. [the remainder of this page is intentionally left blank] - 48 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above stated. MEMBERS: DARTFORD PARTNERSHIP L.L.C. By: /s/ Ray Chung ---------------------------------- Name: Ray Chung Title: Member /s/ Thomas J. Ferraro ------------------------------------ THOMAS J. FERRARO /s/ C. Gary Willett ------------------------------------ C. GARY WILLETT BAIN SECURITIES, INC. By: /s/ Gary Wilkinson ---------------------------------- Name: Gary Wilkinson Title: Treasurer SQUAM LAKE INVESTORS II, L.P. By: /s/ Gary Wilkinson ---------------------------------- Name: Gary Wilkinson Title: Treasurer, GPI, Inc. (Managing G.P.) - 49 - McCOWN De LEEUW & CO. III, L.P. By: MDC Management Company III, L.P., its general partner By: /s/ Charles Ayers ------------------------------ Name: Charles Ayers Title: General Partner McCOWN De LEEUW & CO. OFFSHORE (Europe) III, L.P. By: MDC Management Company IIIE, L.P., its general partner By: /s/ Charles Ayers ------------------------------ Name: Charles Ayers Title: General Partner McCOWN De LEEUW & CO. III (Asia), L.P. By: MDC Management Company IIIA, L.P., its general partner By: /s/ Charles Ayers ------------------------------ Name: Charles Ayers Title: General Partner GAMMA FUND LLC By: /s/ Charles Ayers ---------------------------------- Name: Charles Ayers Title: Member - 50 - FENWAY PARTNERS CAPITAL FUND, L.P. By: Fenway Partners, L.P., its general partner By: Fenway Partners Management, Inc., its general partner By: /s/ Andrea Geisser ---------------------------------- Name: Andrea Geisser Title: Managing Director - 51 - ANNEX I To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC Approval of Closing Documents: RESOLVED, that the form, terms and provisions of each of the other documents listed on the Closing List attached hereto as Schedule I (collectively, the "Closing Documents") to be ratified, confirmed, approved, executed and/or delivered by the Company, be, and they hereby are, approved and adopted substantially in the form presented to the Board of Member Managers and ordered filed with the records of the Company. General Authorization: RESOLVED, that the Chairman, President, any Executive Vice President, any Vice President, any Treasurer, any Secretary or any Assistant Secretary (each an "Authorized Officer") of the Company be, and each of them hereby is, authorized and directed, in the name and on behalf of the Company, to execute and deliver the Closing Documents and all other agreements, instruments and documents relating thereto, required thereby or contemplated thereunder, with such amendments thereto and such changes and modifications as to the terms and provisions thereof as the Authorized Officer or Authorized Officers executing and/or delivering the same, in their sole discretion, shall approve or deem to be necessary or appropriate, the execution and/or delivery thereof by such officer or officers to be conclusive evidence of the necessity or appropriateness thereof; and further RESOLVED, that all of the actions of the officers of the Company heretofore or hereafter taken relating to any of the matters referred to in the foregoing documents and the transactions contemplated thereby are hereby confirmed, ratified and approved in all respects; and further RESOLVED, that the performance by the Company of all of its obligations referred to in or contemplated by the foregoing resolutions are hereby authorized and directed. - 52 - SCHEDULE A To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC CAPITAL NUMBER NAME AND MAILING ADDRESS CONTRIBUTION OF UNITS ------------------------ ------------ -------- A. Class A Units McCown De Leeuw & Co. III, L.P. $20,959,875.00 20,959.9 c/o McCown De Leeuw & Co. 3000 Sand Hill Road Building 3, Suite 290 Menlo Park, CA 94025 McCown De Leeuw & Co. Offshore $1,488,000.00 1,488.0 (Europe) III, L.P. c/o McCown De Leeuw & Co. 3000 Sand Hill Road Building 3, Suite 290 Menlo Park, CA 94025 McCown De Leeuw & Co. III (Asia), L.P. $348,750.00 348.7 c/o McCown De Leeuw & Co. 3000 Sand Hill Road Building 3, Suite 290 Menlo Park, CA 94025 Gamma Fund LLC $453,375.00 453.4 c/o McCown De Leeuw & Co. 3000 Sand Hill Road Building 3, Suite 290 Menlo Park, CA 94025 Fenway Partners Capital Fund, L.P. $8,750,000.00 8,750.0 152 West 57th Street New York, NY 10019 Dartford Partnership L.L.C. $1,000,000.00 1,000.0 801 Montgomery Street, Suite 400 San Francisco, CA 94133 - 53 - CAPITAL NUMBER NAME AND MAILING ADDRESS CONTRIBUTION OF UNITS ------------------------ ------------ -------- Bain Securities, Inc. $250,000.00 250.0 Two Copley Place Boston, MA 02116 Squam Lake Investors II, L.P. $250,000.00 250.0 Two Copley Place Boston, MA 02116 Thomas J. Ferraro $200,000.00 200.0 438 Delegate Drive Worthington, OH 43235 C. Gary Willett $100,000.00 100.0 1001 Elcliff Drive Westerville, OH 43081 B. Class B Units Dartford Partnership L.L.C. $500.00 1,000.0 801 Montgomery Street, Suite 400 San Francisco, CA 94133 C. Class C Units Dartford Partnership L.L.C. $650.00 1,300.0 801 Montgomery Street, Suite 400 San Francisco, CA 94133 D. Class D Units Thomas J. Ferraro $ 15.00 30.0 438 Delegate Drive Worthington, OH 43235 C. Gary Willett $ 10.00 20.0 1001 Elcliff Drive Westerville, OH 43081 - 54 - SCHEDULE B To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC CLASS C UNITS (a) Defined Terms. For purposes of this Schedule B (which includes Schedule B-1), capitalized terms used herein but not otherwise defined in the Agreement shall have the meanings set forth in (i) paragraph (f) of this Schedule B or (ii) if not defined in such paragraph (f), in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC. (b) Repurchase Options of Company. Subject to the remaining provisions of this Schedule B, certain of the Class C Units held by the Class C Holder(s) shall be subject to repurchase in accordance with the provisions hereof in the event that a Separation Event occurs prior to the earlier of (x) a Change of Control, (y) the fourth anniversary of the date hereof or (z) the date on which the Company's Sales exceed $400,000,000. In the event that such a Separation Event occurs, the Company shall have the exclusive right and option (the "FMV Repurchase Option") to repurchase a portion of the Class C Units at Fair Market Value and the exclusive right and option (the "NFMV Repurchase Option") to repurchase a portion of the Class C Units at Non-Fair Market Value, in each case as determined in accordance with the matrix attached as Schedule B-1 and subject to the remaining provisions of this Schedule B. In the event a Separation Event does not occur prior to the earlier of a Change of Control, the fourth anniversary of the date hereof or the date on which the Company's Sales exceed $400,000,000, all of the Class C Units shall no longer be subject to repurchase by the Company in accordance with this Schedule B. (c) Procedures. The Company shall have the right to exercise the FMV Repurchase Option and/or the NFMV Repurchase Option by delivering a written notice (a "Company Election Notice") to the Class C Holder(s) within 45 days following the effectiveness of the Separation Event giving rise to such right. The Company Election Notice shall state (i) the number of Class C Units being repurchased pursuant to the FMV Repurchase Option and (ii) the number of Class C Units being repurchased pursuant to the NFMV Repurchase Option. In the event the Company exercises both the FMV Repurchase and the NFMV Repurchase Option, the Company shall consummate its purchase of such Class C Units and pay the purchase price therefor promptly following determination of the Fair Market Value of the Units subject to the FMV Repurchase Option, but no later than the 120th day following receipt by the Class C Holder(s) of the Company Election Notice, subject to extension as provided below (the "Expiration Date"). In the event the Company exercises the NFMV Repurchase Option but not the FMV Repurchase Option, the Company shall consummate its purchase of such Units on or - 55 - before the Expiration Date. At the closing of any such purchase (a "Repurchase Closing"), (i) the Class C Holder(s) shall deliver any documentation reasonably requested by the Company and necessary to transfer such Class C Units to the Company and (ii) the Company shall deliver in cash or otherwise in immediately available funds to the Class C Holder(s) the purchase price being paid by the Company for such Class C Units; provided, that the following events shall each be a condition precedent to a Repurchase Closing to the extent relating to an exercise of the FMV Repurchase Option, but not the NFMV Repurchase Option: (i) the receipt by the Class C Holder(s) of any severance amount due to it pursuant to the Management Services Agreement in connection with the Separation Event that gave rise to such repurchase by the Company and (ii) the receipt by the Class C Holder(s) of any purchase price due to it pursuant to an exercise by Dartford or its Permitted Transferees of the Company Repurchase Obligation (as defined in Schedule D to this Agreement). In the event the Repurchase Closing is not completed by the Expiration Date, the FMV Repurchase Option and the NFMV Repurchase Option shall terminate and be of no further force and effect as of the Expiration Date, and the Class C Holder(s) shall continue to hold the Class C Units. The Expiration Date shall be subject to automatic extension as provided herein. In the event that a distribution by the Operating Company to MBW Holdings or by MBW Holdings to the Company of the amount necessary to pay (i) any severance amount due to the Class C Holder(s) pursuant to the Management Services Agreement, (ii) any purchase price due to Dartford or its Permitted Transferees pursuant to the Company Repurchase Obligation, or (iii) any purchase price payable to the Class C Holder(s) upon exercise of the FMV Repurchase Option or the NFMV Repurchase Option would violate any covenant or otherwise not be permitted under the credit agreement or indenture relating to the Chase Borrowings or senior subordinated indebtedness of the Company or any Subsidiary of the Company, the Expiration Date shall be automatically extended to the seventh day following the date on which the making of such distributions by the Operating Company and MBW Holdings, respectively, would not violate such covenants or agreements. (d) Change of Control. Upon a Change of Control, the FMV Repurchase Option and the NFMV Repurchase Option shall terminate and be of no further force and effect. Payments to each Class C Holder with respect to its Class C Units following a Change of Control shall be made in accordance with the terms and provisions of the Agreement (including without limitation Article VIII thereof). (e) Public Offering. In the event the Public Company intends to consummate a Public Offering: (i) the FMV Repurchase Option and the NFMV Repurchase Option shall terminate and be of no further force and effect, as of the effective date of such Public Offering; - 56 - (ii) the Class C Units shall be valued as if all of the equity securities of the Public Company (including those to be sold pursuant to the Public Offering) were sold at the price per share at which the equity securities of the Public Company are to be sold pursuant to the Public Offering (which price shall be before underwriter's discounts and before expenses) and the aggregate gross proceeds from such hypothetical sale were distributed pursuant to this Agreement in accordance with Article VIII thereof; (iii) immediately prior to the effectiveness of the Public Offering, the Company shall distribute or cause the distribution to the Class C Holder(s) the aggregate number of shares of capital stock of the Public Company equal in value to the value of the Class C Units as determined in accordance with clause (ii) above; and (iv) each Class C Holder shall have the registration rights set forth on Schedule E to this Agreement. (f) Definitions. "Change of Control" means a transaction or series of related transactions (other than by the Company or any Subsidiary thereof with any Subsidiary of the Company) to effect any of the following: (i) a sale, redemption, exchange or other disposition of shares (including by way of merger or consolidation) of the Common Stock of the Operating Company (or any successor thereto), par value $.01 per share, or options or warrants to acquire such Common Stock, after which MBW Holdings holds 50% or less of the number of outstanding shares of such Common Stock on the date of this Agreement; (ii) a sale, redemption, exchange or other disposition of shares (including by way of merger or consolidation) of the Common Stock of MBW Holdings (or any successor thereto), par value $.01 per share, or options or warrants to acquire such Common Stock, after which the Company holds 50% or less of the number of outstanding shares of such Common Stock on the date of this Agreement; (iii) a sale, redemption, exchange or other disposition of Class A Units (including by way of merger or consolidation), or options or warrants to acquire Class A Units, after which the Class A Holders holding Class A Units on the date of this Agreement hold 50% or less of the number of outstanding Class A Units on the date of this Agreement; (iv) a sale of all or substantially all of the assets of the Company, MBW Holdings or the Operating Company; or - 57 - (v) a liquidation, dissolution, or other winding up of the affairs of the Company, whether voluntary or involuntary. "Fair Market Value" means the fair market value of the Class C Units being repurchased by the Company (without discount for lack of marketability or minority interest) at the time of repurchase by the Company, as determined by an independent nationally-recognized investment banking firm selected as follows: (i) Within 10 days after receipt by the Class C Holder(s) of a Company Election Notice with respect to an exercise of the FMV Repurchase Option, the Class C Holder(s) shall designate not less than three independent nationally-recognized investment banking firm by written notice to the Company. (ii) Within 10 days after its receipt of such notice, the Company shall select one of the investment banking firms designated by the Class C Holder(s) to make a Fair Market Value determination of the Class C Units being repurchased. (iii) Such investment banking firm shall make such Fair Market Value determination within 60 days after its selection by the Company. Alternatively, the Board and Dartford can agree to a Fair Market Value for the Class C Units being repurchased pursuant to the FMV Repurchase Option. "Non-Fair Market Value" means $1.00 per Class C Unit being repurchased pursuant to the NFMV Repurchase Option. "Sales" means the annual net sales of the Company and its Subsidiaries; provided, that in the event the Company or any of its Subsidiaries consummates an acquisition of the stock or assets of another entity (including, without limitation, by way of merger or consolidation), enters into a joint venture with another entity, or effects any similar investment or business combination (each an "Acquisition"), the amount of Sales shall be increased as of the closing date of such Acquisition to reflect the additional annual net Sales of the entity or business acquired pursuant to such Acquisition; and, provided, further, that in the event, during the six-month period following the closing date of an Acquisition, the Company or any of its Subsidiaries consummates a sale or divestiture of a material portion of the assets or business acquired pursuant to such Acquisition, the amount of annual net Sales shall be decreased as of the closing date of such sale or divestiture to reflect the annual net Sales of the business or division sold or divested. "Separation Event" means a termination by the Company of the Management Services Agreement pursuant to the terms thereof. - 58 - SCHEDULE B-1
Continuing Number of Number of Number of Class C Number of Class C Class C Units Class C Units Not Units Remaining Units Subject Subject to If NFMV Subject to to FMV or Date of Number of NFMV NFMV Repurchase FMV FMV NFMV Sales Separation Class C Repurchase Repurchase Option Fully Repurchase Repurchase Repurchase Threshold(1) Event Units Option(2) Option Exercised Option(3) Option Option Prior to 1st 1,300 50.0% 650 650 50.0% 325 325 Anniversary 1st to 2nd 1,300 37.5% 487.5 812.5 25/50%(4) 203/406 609/406 A-$200M 2nd to 3rd 1,300 25.0% 325 975 25.0% 243.75 731.25 B-$300M 3rd to 4th 1,300 12.5% 162.5 1,137.5 12.5% 142.2 995.3 C-$400M After 4th 1,300 0 0 1,300 0.0% 0 1,300
- ---------- (1) If Sales of the Company reach a Sales Threshold level, the vesting schedule accelerates to that level. For example, if Sales reach $325,000,000 as of June 30, 1998, the percentage of outstanding Class C Units subject to the NFMV Repurchase Option would be 12.5% instead of 37.5%. That percentage would remain at 12.5% until the earlier of (x) the 4th anniversary of the date hereof and (y) the date on which the Company's Sales reach $400,000,000, at which time no Class C Units would be subject to the NFMV Repurchase Option. Notwithstanding the foregoing, if Sales reached $325,000,000 as of June 30, 1998 because of an Acquisition that closed on such date and a division acquired pursuant to that Acquisition with Sales of $75,000,000 was sold on October 31, 1998, the vesting schedule would revert to Sales Threshold A. (2) The NFMV Repurchase Option may be exercised up to the percentage of outstanding Class C Units listed in this column at the relevant time. (3) The FMV Repurchase Option may be exercised up to the percentage of those Class C Units that are outstanding but not subject to the NFMV Repurchase Option as listed in this column at the relevant time. (4) 50% if Sales Threshold A has not been achieved; 25% otherwise. - 59 - SCHEDULE C To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC CLASS D UNITS (a) Defined Terms. For purposes of this Schedule C capitalized terms used herein but not otherwise defined in the Agreement shall have the meanings set forth in (i) paragraph (f) of this Schedule C or (ii) if not defined in such paragraph (f), in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC. (b) Vesting. Subject to the remaining provisions of this Schedule C, a Class D Holder shall become vested in Class D Units as follows: (i) Thomas J. Ferraro and C. Gary Willett shall each be vested in 50% of the Class D Units issued to him on the date of this Agreement. On each of December 31, 1997 and December 31, 1998, respectively, unless earlier terminated by the Operating Company in accordance with the terms of his Employment Agreement with the Operating Company, Messrs. Ferraro and Willett shall each be vested in an additional 25% of the Class D Units issued to him on the date of this Agreement. (ii) For any Class D Units issued to a Class D Holder (other than Thomas J. Ferraro and C. Gary Willett) on the date of this Agreement or on or before March 31, 1997, such Class D Holder shall become vested in the following portion of such Class D Units on the following dates: Date of Vesting Percentage That Vests --------------- --------------------- December 31, 1997 25% December 31, 1998 25% December 31, 1999 25% December 31, 2000 25% (iii) For any Class D Units issued to a Class D Holder after March 31, 1997, such Class Holder shall become vested in such Class D Units on the following dates: Date of Vesting Percentage that Vests --------------- --------------------- first anniversary of date of issuance 25% second anniversary of date of issuance 25% third anniversary of date of issuance 25% fourth anniversary of date of issuance 25% - 60 - (iv) On the effective date of a Change of Control (as defined below), all outstanding Class D Units that have not vested prior to the effective date of such Change of Control shall become Vested Class D Units as of the effectiveness of such Change of Control. Notwithstanding the foregoing, a Class D Holder and his Permitted Transferees shall not become vested in Class D Units on the future dates specified above in clauses (i), (ii) and (iii) unless such Class D Holder has remained in the continuous employ of the Company (or any Subsidiary) from the date of issuance of such Class D Units up to and including the date such portion of such Class D Units may become vested in accordance with this Schedule C. (c) Forfeiture; Repurchase. Class D Units held by a Class D Holder or his Permitted Transferees shall be subject to forfeiture to the Company or repurchase by the Company as provided below: (i) In the event a Class D Holder's employment by the Company and/or a Subsidiary of the Company terminates because of discharge or termination by the Company or its Subsidiary with Cause (as defined below), then (A) all unvested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be automatically forfeited to the Company without the payment of any consideration to the Class D Holder or his Permitted Transferees by the Company, and (B) all Vested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be subject to repurchase by the Company at a repurchase price equal to the lesser of (x) $1.00 per Vested Class D Unit being repurchased and (y) the fair market value thereof as determined by the Board in good faith. (ii) In the event a Class D Holder's employment by the Company and/or a Subsidiary of the Company terminates because of death or Permanent Disability (as defined below) of the Class D Holder, then (A) all unvested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be automatically forfeited to the Company without the payment of any consideration to the Class D Holder or his Permitted Transferees (or his estate) by the Company and (B) such Class D Holder or his Permitted Transferees (or his estate) shall continue to hold all Vested Class D Units held at the time of such termination. (iii) In the event a Class D Holder's employment by the Company and/or a Subsidiary of the Company terminates (1) because of discharge or termination by the Company or its Subsidiary without Cause or (2) with respect to any Class D Holder which is a party to a written employment agreement with the Company or a Subsidiary of the Company which provides such Holder with an express right to terminate such agreement for material breach by the Company or such Subsidiary, because of termination by the Class D Holder of such employment for such material breach, then (A) all unvested Class D Units held by such Class D - 61 - Holder or his Permitted Transferees at the time of such termination shall be automatically forfeited to the Company without the payment of any consideration to the Class D Holder or his Permitted Transferees by the Company; (B) up to 50% of the Vested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be subject to repurchase by the Company at a purchase price equal to the fair market value thereof (without discount for lack of marketability and minority interest) at the date of repurchase as determined by the Board in good faith; and (C) the remaining 50% of the Vested Class D Units held by such Class D Holder or his Permitted Transferees shall continue to be held and not be subject to repurchase by the Company. (iv) In the event a Class D Holder's employment by the Company and/or a Subsidiary of the Company terminates because of resignation by the Class D Holder from the Company or its Subsidiary (other than in connection with a termination by such Class D Holder referenced in subclause (2) of clause (iii) above), then (A) all unvested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be automatically forfeited to the Company without the payment of any consideration to the Class D Holder or his Permitted Transferees by the Company, and (B) up to 100% of the Vested Class D Units held by such Class D Holder or his Permitted Transferees at the time of such termination shall be subject to repurchase by the Company at a repurchase price equal to the fair market value thereof (without discount for lack of marketability and minority interest) at the date of repurchase as determined by the Board in good faith. (d) Procedures. To exercise any right to repurchase Class D Units pursuant to this Schedule C, the Company shall deliver a written notice (an "Election Notice") to the Class D Holder whose Class D Units are being repurchased within 45 days following the event giving rise to such right. The Election Notice shall state (i) the number of Class D Units being repurchased and (ii) the repurchase price therefor. Such repurchase shall be consummated within 60 days following delivery by the Company of such Election Notice. At the closing of any such purchase, (A) such Class D Holder shall deliver any documentation reasonably requested by the Company and necessary to Transfer such Class D Units to the Company and (B) the Company shall deliver in cash or otherwise in immediately available funds to such Class D Holder the purchase price being paid by the Company for such Class D Units. (e) Public Offering. In the event the Public Company intends to consummate a Public Offering: (i) subject to clause (vi) below, immediately prior to the effective date of the Public Offering, all outstanding Class D Units that have not vested prior to such effective date shall become Vested Class D Units; - 62 - (ii) subject to clause (vi) below, the Company's right to repurchase Vested Class D Units in accordance with this Schedule C shall terminate and be of no further force and effect, as of the effective date of such Public Offering; (iii) the Vested Class D Units shall be valued as if all of the equity securities of the Public Company (including those to be sold pursuant to the Public Offering) were sold at the price per share at which the equity securities of the Public Company are to be sold pursuant to the Public Offering (which price shall be before underwriter's discounts and before expenses) and the aggregate gross proceeds from such hypothetical sale were distributed pursuant to this Agreement in accordance with Article VIII thereof; (iv) subject to clause (vi) below, immediately prior to the effectiveness of the Public Offering, the Company shall distribute or cause the distribution to the Class D Holder(s) the aggregate number of shares of capital stock of the Public Company equal in value to the value of the Vested Class D Units as determined in accordance with clause (iii) above; (v) each Class D Holder shall have the registration rights set forth on Schedule E to this Agreement; and (vi) with respect to shares of capital stock of the Public Company distributed to Class D Holders on account of Class D Units issued after December 31, 1997 to Class D Holders who were not issued other Class D Units on or before December 31, 1997 but that had not vested prior to the effective date of the Public Offering ("Restricted Class D Units"), the following provisions shall apply: A. Shares of capital stock of the Public Company distributed to Class D Holders on account of Restricted Class D Units shall, as of the effective date of the Public Offering, be "Unvested Shares" for purposes of this clause (vi). B. Unvested Shares shall vest and become "Vested Shares" for purposes of this clause (vi) on the same dates and in the same percentages that the underlying Restricted Class D Units would have become Vested Class D Units pursuant to clause (iii) of paragraph (b) above if no Public Offering had occurred; provided, that the Board at its option shall have the right to accelerate the vesting of such Unvested Shares. For example, assume a Class D Holder that was not previously issued Class D Units was issued 8 Class D Units on January 1, 1998, and the effective date of the Public Offering was January 2, 1999. All of such Class D Holder's 8 Class D Units would be Vested Class D Units - 63 - immediately prior to the effective date of the Public Offering, but 6 of those 8 Units would be Restricted Class D Units. If 100 shares of capital stock were issued to the Class D Holder on account of the 8 Class D Units, 75 of such shares would be Unvested Shares distributed on account of the 6 Restricted Class D Units. 25 of those 75 Unvested Shares will become Vested Shares on each of January 1, 2000, January 1, 2001, and January 1, 2002, respectively. C. Unvested Shares shall be subject to forfeiture or repurchase on the same terms as set forth in paragraph (c) above. Unvested Shares shall be treated as unvested Class D Units are treated under such paragraph (c). The Public Company shall be treated as the Company is treated under such paragraph (c). Vested Shares shall no longer be subject to forfeiture to the Public Company or repurchase by the Public Company. With respect to any grant of Class D Units after December 31, 1997 to a Class D Holder who was issued other Class D Units on or before such date, (A) a percentage of the Class D Units granted after December 31, 1997 shall be Vested Class D Units as of the date of grant thereof, with such percentage to be equal to the percentage of Class D Units issued to such Class D Holder prior to December 31, 1997 that are Vested Class D Units as of the date of grant of Class D Units after December 31, 1997; and (B) the remaining Class D Units granted after December 31, 1997 shall become Vested Class D Units at the same time and in the same proportions as the Class D Units issued to such Class D Holder prior to December 31, 1997 but that are not Vested Class D Units as of the date of grant of Class D Units after December 31, 1997. (a) Definitions. "Cause" means (i) embezzlement, theft or other misappropriation of any property of the Company or any Affiliate, (ii) gross or willful misconduct resulting in substantial loss to the Company or any Affiliate or substantial damage to the reputation of the Company or any Affiliate, (iii) any act involving moral turpitude which results in a conviction for a felony involving moral turpitude, fraud or misrepresentation, (iv) gross neglect of his assigned duties to the Company or any Affiliate, (v) gross breach of his fiduciary obligations to the Company or any Affiliate, or (vi) any chemical dependence which materially affects the performance of his duties and responsibilities to the Company or any Affiliate; provided that in the case of the misconduct set forth in clauses (iv) and (vi) above, such misconduct shall continue for a period of 30 days following written notice thereof by the Company to the Holder. - 64 - "Change of Control" means a transaction or series of related transactions (other than by the Company or any Subsidiary thereof with any Subsidiary of the Company) to effect any of the following: (i) a sale, redemption, exchange or other disposition of shares (including by way of merger or consolidation) of the Common Stock of the Operating Company (or any successor thereto), par value $.01 per share, or options or warrants to acquire such Common Stock, after which MBW Holdings holds 50% or less of the number of outstanding shares of such Common Stock on the date of this Agreement; (ii) a sale, redemption, exchange or other disposition of shares (including by way of merger or consolidation) of the Common Stock of MBW Holdings (or any successor thereto), par value $.01 per share, or options or warrants to acquire such Common Stock, after which the Company holds 50% or less of the number of outstanding shares of such Common Stock on the date of this Agreement; (iii) a sale, redemption, exchange or other disposition of Class A Units (including by way of merger or consolidation), or options or warrants to acquire Class A Units, after which the Class A Holders holding Class A Units on the date of this Agreement hold 50% or less of the number of outstanding Class A Units on the date of this Agreement; (iv) a sale of all or substantially all of the assets of the Company, MBW Holdings or the Operating Company; or (v) a liquidation, dissolution, or other winding up of the affairs of the Company, whether voluntary or involuntary. "Permanent Disability" means, as a result of physical or mental illness or incapacity, the Holder has been unable to perform his duties to the Company and/or a Subsidiary of the Company for a period of four consecutive months or for an aggregate of more than six months in any 12-month period. - 65 - SCHEDULE D To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC COMPANY REPURCHASE OBLIGATION (a) For purposes of this Schedule D, capitalized terms used herein but not otherwise defined herein shall have the meanings given such terms in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996. (b) In the event that a Separation Event (as defined in Schedule B to the Agreement) occurs prior to the second anniversary of the date hereof and prior to the Company having at least $200,000,000 of Sales (as defined in and determined in accordance with Schedule B to this Agreement), Dartford and its Permitted Transferees shall have the exclusive right and option during the 30-day period beginning on the effective date of the Separation Event to require the Company to purchase (the "Company Repurchase Obligation") all (but not less than all) of the Class A Units and Class B Units then held by Dartford and its Permitted Transferees at a purchase price equal to the Fair Market Value thereof (as defined below). Dartford shall exercise such right by delivering a written notice (a "Dartford Election Notice") to the Board stating such election. In the event that Dartford exercises such right, the Company shall consummate its purchase of such Units and pay the purchase price therefor promptly following determination of the Fair Market Value thereof, but no later than the 90th day following the Company's receipt of the Dartford Election Notice, subject to extension as provided below. At the closing of such purchase (i) Dartford shall deliver to the Company any documentation reasonably requested by the Company and necessary to transfer such Units to the Company and (ii) the Company shall deliver in immediately available funds to Dartford the purchase price being paid by the Company therefor. The date by which the Company must consummate its purchase of Class A Units and Class B Units pursuant to the Company Repurchase Obligation shall be subject to automatic extension as provided herein. In the event that a distribution by the Operating Company to MBW Holdings or by MBW Holdings to the Company of the amount necessary to pay any purchase price due to Dartford or its Permitted Transferees pursuant to the Company Repurchase Obligation would violate any covenant or otherwise not be permitted under the credit agreement or indenture relating to the Chase Borrowings or the senior subordinated indebtedness of the Company or any Subsidiary of the Company, the date by which the Company must consummate its purchase of Units pursuant to the Company Repurchase Obligation shall be automatically extended to the seventh day following the date on which the making of such distributions by the Operating Company and MBW Holdings, respectively, would not violate such covenants or agreements. - 66 - (c) "Fair Market Value" of Dartford's Class A Units and Class B Units means the fair market value thereof (without discount for lack of marketability or minority interest) at the time of repurchase by the Company, as determined by an independent nationally-recognized investment banking firm selected as follows: (i) Within 10 days following its delivery of a Dartford Election Notice to the Company, Dartford shall designate not less than three independent nationally-recognized investment banking firms by written notice to the Company. (ii) Within 10 days after its receipt of such notice from Dartford, the Company shall select one of the investment banking firms designated by Dartford to make a Fair Market Value determination of the Class A Units and Class B Units that are subject to the Company Repurchase Obligation. (iii) Such investment banking firm shall make such Fair Market Value determination within 60 days after its selection by the Company. Alternatively, the Board and Dartford can agree to a Fair Market Value of the Class A Units and Class B Units being purchased by the Company. - 67 - SCHEDULE E To the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC REGISTRATION RIGHTS 1. REGISTRATION RIGHTS. The Company will perform and comply, and cause each of its Subsidiaries to perform and comply, with such of the following provisions as are applicable to it. Each holder of Units will perform and comply with such of the following provisions as are applicable to such holder. Unless this Schedule E otherwise requires, the term the "Company" shall include Subsidiaries of the Company, as applicable. Capitalized terms used herein but not otherwise defined herein shall have the meanings given such terms in the Amended and Restated Limited Liability Company Agreement of MBW Investors LLC, dated as of December 31, 1996 (the "LLC Agreement"). 1.1. Demand and Piggyback Registration Rights. 1.1.1. Registration on Request. Any one or more of the following (such Persons being the "Initiating Investor Holders"). (i) one or more holders of Voting Units representing at least fifty percent (50%) of the total amount of Voting Units then outstanding, or (ii) after the second anniversary of the closing of an initial Public Offering of the Company, if Fenway has not exercised its right in clause (iii) below, Fenway, or (iii) after December 31, 2001, if the Company has not previously closed an initial Public Offering, Fenway, may, by notice to the Company specifying the intended method or methods of disposition, request that the Company effect the registration under the Securities Act of 1933, as amended (the "Securities Act"), for a Public Offering of all or a specified part of the Units held by such Initiating Investor Holders (the "Registrable Investor Securities"). Promptly after receipt of such notice, the Company will give notice of such requested registration to all other holders of Units (other than, in the case of the initial Public Offering, of the Company, the Class D Units) (such Units, collectively with the Registrable Investor Securities, the "Registrable Securities"). The Company will then use its commercially reasonable efforts to effect the registration under the - 68 - Securities Act of the Registrable Investor Securities which the Company has been requested to register by such Initiating Investor Holders together with all other Registrable Securities which the issuer has been requested to register pursuant to Section 1.1.2 by other holders of Registrable Securities by notice delivered to the Company within twenty (20) days after the giving of such notice by the Company (which request shall specify the intended method of disposition of such Registrable Securities), all to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities which the Company has been so requested to register; provided, however, that the Company shall not be obligated to take any action to effect any such registration pursuant to this Section 1.1.1: (a) If the Company has previously effected four (4) registrations of Registrable Securities under this Section 1.1.1; provided, however, that no registrations of Registrable Securities which either (i) shall not have become and remained effective in accordance with the provisions of this Section 1, or (ii) shall not have enabled the Initiating Investor Holders and the holders of Registrable Securities joining therein to include in such registration at least 90% of the Registrable Securities which they desired to include, shall be included in the calculation of the numbers of registrations contemplated by this clause (a); (b) Within 180 days immediately following the effective date of any registration statement pertaining to an underwritten public offering of securities of the Company for its own account (other than a registration on Form S-4 pursuant to Rule 145 of the Securities Act (a "Rule 145 Transaction"), or a registration relating solely to employee benefit plans); (c) (i) On Form S-3 (or any successor form), if the Company has previously effected two or more registrations of Registrable Securities under this Section 1.1.1 on Form S-3 (or any such successor forms) or (ii) on any form other than Form S-3 (or any successor form), if the Company has previously effected two or more registrations of Registrable Securities under this Section 1.1.1 on any such other forms; provided, however, that no registrations of Registrable Securities which shall not have become and remained effective in accordance with - 69 - the provisions of this Section 1, and no registrations of Registrable Securities pursuant to which the Initiating Investor Holders and all other holders of Registrable Securities joining therein are not able to include at least 90% of the Registrable Securities which they desired to include, shall be included in the calculation of numbers of registrations contemplated by this clause (c); (d) If the Company shall have furnished to the Initiating Investor Holders and such other holders of Registrable Securities which the Company has been requested to register pursuant to this Section 1.1.1 a certificate, signed by the President of the Company, stating that in the good faith judgment of the Board it would be detrimental to the Company and its shareholders for such Registration Statement to be filed at the date filing would have been required, in which case the Company shall have an additional period of not more than 270 days within which to file such Registration Statement; provided, however, that the Company shall not so postpone a registration pursuant to this clause (d) more than once in any twelve month period; (e) If the Registration under this Section 1.1.1 covers less than ten percent (10%) of the Registrable Securities then outstanding and the proposed aggregate offering price to the public of the Registrable Securities to be included in the registration by all holders is less than $5,000,000; or (f) After the fifth (5th) anniversary of the closing of the initial Public Offering of the Company's Common Stock, if the Company's Common Stock shall have been listed for trading on a national or regional stock exchange or on NASDAQ National Market, at all times during the preceding twelve (12) consecutive months. 1.1.2. Piggyback Registration. (a) General. If the Company at any time proposes to register any of its securities under the Securities Act, for its own account or for the account of any holder of its securities, for a Public Offering, the Company will each such time give notice to all holders of Registrable Securities of its intention to do so. Any such - 70 - holder may, by written response delivered to the Company within twenty (20) days after the effectiveness of such notice, request that all or a specified part of the Registrable Securities held by such holder be included in such registration. Such response shall also specify the intended method of disposition of such Registrable Securities. The Company thereupon will use its commercially reasonable efforts to cause to be included in such registration under the Securities Act all Registrable Securities which the Company has been so requested to register by such holders of Registrable Securities, to the extent required to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered. No registration of Registrable Securities effected under this Section 1.1.2 shall relieve the Company of any of its obligations to effect registrations of Registrable Securities pursuant to Section 1.1.1 hereof. (b) Excluded Transactions. The Company shall not be obligated to effect any registration of Registrable Securities under this Section 1.1.2 incidental to the registration of any of its securities in connection with: (i) Any Public Offering relating to the acquisition or merger after the date hereof by the Company or any of its Subsidiaries of or with any other business. (ii) Any Public Offering relating to employee benefit plans or dividend reinvestment plans. 1.1.3. Payment of Expenses. The Company shall pay all expenses of holders of Registrable Securities incurred in connection with each registration of Registrable Securities requested pursuant to this Section 1.1, other than underwriting discount and commission, if any, and applicable transfer taxes, if any. 1.1.4. Additional Procedures. (a) Registrations Pursuant to Section 1.1.1. In the case of a registration pursuant to Section 1.1.1 hereof, whenever holders holding a majority of Units (the "Investor Majority Holders") shall request that such registration shall be effected pursuant to an underwritten - 71 - offering, the Company shall include such information in the written notices to holders of Registrable Securities referred to in Section 1.1.1. In such event, the right of any holder of Registrable Securities to have securities owned by such holder included in such registration pursuant to Section 1.1.1 shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holders' Registrable Securities in the underwriting (unless otherwise mutually agreed upon by the Investor Majority Holders and such holder) to the extent provided herein. If requested by such underwriters, the Company together with the holders of Registrable Securities proposing to distribute their securities through such underwriting will enter into an underwriting agreement with such underwriters for such offering containing such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, customary indemnity and contribution provisions. (b) Registrations Pursuant to Section 1.1.2. Holders of Registrable Securities participating in any Public Offering pursuant to Section 1.1.2 shall take all such actions and execute all such documents and instruments that are reasonably requested by the Company to effect the sale of their Registrable Securities in such Public Offering, including, without limitation, being parties to the underwriting agreement entered into by the Company and any other selling shareholders in connection therewith and being liable in respect of the representations and warranties by, and the other agreements (including customary selling stockholder indemnifications and "lock-up" agreements) on the part of, the Company and any other selling shareholders to and for the benefit of the underwriters in such underwriting agreement; provided, however, that (i) with respect to individual representations, warranties and agreements of sellers of Registrable Securities in such Public Offering, the aggregate amount of such liability shall not exceed the lesser of (a) such holder's pro rata portion of any such liability, in accordance with such holder's portion of the total number of Registrable Securities included in the offering or (b) such holder's net proceeds from such offering. - 72 - 1.2. Certain Other Provisions. 1.2.1. Underwriter's Cutback. Notwithstanding any contrary provision of this Section 1, if, in connection with any registration of Registrable Securities, the underwriter determines that marketing factors (including, without limitation, an adverse effect on the per share offering price) require a limitation of the number of shares to be underwritten, the underwriter may limit the number of Registrable Securities to be included in the registration and underwriting or may exclude Registrable Securities entirely from such registration and underwriting, subject to the terms of this paragraph. The Company shall so advise all holders of the Company's securities that would otherwise be registered and underwritten pursuant hereto, and the number of shares of such securities, including Registrable Securities, that may be included in the registration and underwriting (and thereby sold by Persons other than the Company) shall be allocated so that the number of Registrable Securities that may be included shall be allocated among the holders of Registrable Securities thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by each such holder at the time of filing the Registration Statement. No securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any holder of Registrable Securities disapproves of the terms of the underwriting, it may elect to withdraw therefrom by written notice to the Company and the underwriter. The Registrable Securities so withdrawn shall also be withdrawn from registration. 1.2.2. Other Actions. If and in each case when the Company is required to use its commercially reasonable efforts to effect a registration of any Registrable Securities as provided in this Section 1, the Company shall take appropriate and customary actions in furtherance thereof, including, without limitation: (i) filing with the Securities and Exchange Commission (the "Commission") a registration statement and using reasonable efforts to cause such registration statement to become effective, (ii) preparing and filing with the Commission such amendments and supplements to such registration statements as may be required to comply with the Securities Act and to keep such registration statement effective for a period not to exceed 180 days from the date of effectiveness or such earlier time as the Registrable Securities covered by such registration statement have been disposed of in accordance with the intended method of distribution therefor or the expiration of the time when a prospectus relating to such registration is required to be delivered under the Securities Act, (iii) use its commercially reasonable efforts to register or qualify such Registrable Securities under the state securities or "blue sky" laws of such jurisdictions as the sellers shall reasonably request; provided, however, that the Company shall not be obligated to file any general - 73 - consent to services of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it would not otherwise be so subject; and (iv) otherwise cooperate reasonably with, and take such customary actions as may reasonably be requested by the holders of Registrable Securities in connection with such registration. 1.2.3. Lock-Up. For a period of the lesser of (i) 180 days from the effective date of any registration statement filed by the Company, or (ii) the shortest period applicable to any Affiliate (as defined in the Securities Act) of the Company who is a selling shareholder pursuant to such registration statement, each holder of Registrable Securities of the Public Company shall refrain from directly or indirectly selling such securities except pursuant to such registration statement. 1.2.4. Black-Out. Upon receipt of any notice from the Company of the happening of any event of which any prospectus included in such registration statement, as then in effect, includes an untrue statement of material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, each holder of Registrable Securities will forthwith discontinue such holder's disposition of Registrable Securities pursuant to the registration statement until such holder receives copies of a supplemental or amended prospectus from the Company and, if so directed by the Company, shall deliver to the Company all copies, other than permanent file copies, then in such holders' possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice. 1.2.5. Selection of Underwriters and Counsel. The underwriters and legal counsel to be retained in connection with any Public Offering shall be selected by the Board. 1.3. Indemnification and Contribution. 1.3.1. Indemnities of the Company. In the event of any registration of any Registrable Securities or other securities of the Company or any of its Subsidiaries under the Securities Act pursuant to this Section 1 or otherwise, and in connection with any registration statement or any other disclosure document produced by or on behalf of the Company including, without limitation, reports required or other documents filed under the Exchange Act, and other documents pursuant to which securities of the Company are sold (whether or not for the account of the Company), the Company will, and hereby does, and will cause its Subsidiaries, jointly and severally to, indemnify and hold - 74 - harmless each seller of Registrable Securities, any other holder of securities who is or might be deemed to be a controlling Person of the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, their respective direct and indirect partners, advisory board members, directors, officers and shareholders, and each other Person, if any, who controls any such seller or any such holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being referred to herein as a "Covered Person"), against any losses, claims, damages or liabilities, joint or several, to which such Covered Person may be or become subject under the Securities Act, the Exchange Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained or incorporated by reference in any registration statement under the Securities Act, any preliminary prospectus or final prospectus included therein, or any related summary prospectus, or any amendment or supplement thereto, or any document incorporated by reference therein, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of any federal, state or common law rule or regulation applicable to the Company, and will reimburse such Covered Person for any legal or any other expenses incurred by it in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that neither the Company nor any of its Subsidiaries shall be liable to any Covered Person in any such case to the extent that any such loss, claim, damage, liability, action or proceeding arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement, incorporated document or other such disclosure document in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Covered Person specifically stating that it is for use in the preparation thereof. The indemnities of the Company and of its Subsidiaries contained in this Section 1.3.1 shall remain in full force and effect regardless of any investigation made by or on behalf of such Covered Person and shall survive any transfer of securities. 1.3.2. Indemnities to the Company. The Company may require, as a condition to including any securities in any registration statement filed pursuant to this Section 1, that the Company shall have received an undertaking satisfactory to it from the prospective seller of such securities, - 75 - to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall sign such registration statement and each other Person (other than such seller), if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being referred to herein as a "Covered Person") with respect to any statement in or omission from such registration statement, any preliminary prospectus or final prospectus included therein, or any amendment or supplement thereto, or any other disclosure document (including, without limitation, reports and other documents filed under the Exchange Act) or any document incorporated therein, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company through an instrument executed by such seller, specifically stating that it is for use in the preparation of such registration statement, incorporated document, or other disclosure document. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive any transfer of securities. 1.3.3. Indemnification Procedures. Promptly after receipt by a Covered Person of notice of the commencement of any action or proceeding involving a claim of the type referred to in the foregoing provisions of this Section 1.3, such Covered Person will, if a claim in respect thereof is to be made by such Covered Person against any indemnifying party, give written notice to each such indemnifying party of the commencement of such action; provided, however, that the failure of any Covered Person to give notice to such indemnifying party as provided herein shall not relieve any indemnifying party of its obligations under the foregoing provisions of this Section 1.3, except and solely to the extent that such indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against a Covered Person, each indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified, to the extent that it may wish, with counsel reasonably satisfactory to such Covered Person (who shall not, except with the consent of the Covered Person, be counsel to such an indemnifying party), and after notice from an indemnifying party to such Covered Person of its election so to assume the defense thereof, such indemnifying party will not be liable to such Covered Person for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided, however, that (i) if the Covered Person reasonably determines that there may be a conflict between the positions of such indemnifying party and the Covered Person in conducting the defense of such action or if the Covered Person reasonably concludes that representation of both parties by the same counsel would be inappropriate due to actual or - 76 - potential differing interests between them, then counsel for the Covered Person shall conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the Covered Person and such indemnifying party shall employ separate counsel for its own defense, (ii) the indemnifying party shall bear the legal expenses incurred in connection with the conduct of, and the participation in, the defense as referred to in clauses (i) and (ii) above. If, within a reasonable time after receipt of the notice, such indemnifying party shall not have elected to assume the defense of the action, such indemnifying party shall be responsible for any legal or other expenses incurred by such Covered Person in connection with the defense of the action, suit, investigation, inquiry or proceeding. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Covered Person of a release from all liabilities in respect to such claim or litigation. 1.3.4. Contribution. If the indemnification provided for in Sections 1.3.1 or 1.3.2 hereof is unavailable to a party that would have been a Covered Person under any such Section in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each party that would have been an indemnifying party thereunder shall, in lieu of indemnifying such Covered Person, contribute to the amount paid or payable by such Covered Person as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative fault of such indemnifying party on the one hand and such Covered Person on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof). The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or such Covered Person and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just or equitable if contribution pursuant to this Section 1.3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentence. The amount paid or payable by a contributing party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 1.3.4 shall include any legal or other expenses reasonably incurred by such Covered Person in connection with investigating or defending any such action or claim. No Person guilty of fraudulent misrepresentation (within the meaning of - 77 - Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 1.3.5. Limitation on Liability of Holders of Registrable Securities. The liability of each holder of Registrable Securities in respect of any indemnification or contribution obligation of such holder arising under this Section 1.3 shall not in any event exceed an amount equal to the net proceeds to such holder (after deduction of all underwriters' discounts and commissions and all other expenses paid by such holder in connection with the registration in question) from the disposition of the Registrable Securities disposed of by such holder pursuant to such registration. 1.4. Survival. 1.4.1. Survival. The registration rights set forth in this Section 1 shall survive the dissolution of MBW Investors LLC pursuant to Section 15.2(d) of the LLC Agreement and shall remain binding on the Subsidiaries of MBW Investors LLC. - 78 - EX-12.1 21 STATEMENT RE COMPUTATION OF RATIOS EXHIBIT 12.1 MBW FOODS, INC. COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS EXCEPT RATIO DATA)
PRO FORMA YEAR ENDED DECEMBER 31, 1996 -------------- Company Pro Forma: Earnings were calculated as follows: Income before taxes............................................................................. $ 5,606 Add: Fixed charges.............................................................................. 11,076 -------------- Earnings........................................................................................ $ 16,682 -------------- -------------- Fixed charges were calculated as follows: Interest expense(a)............................................................................. $ 11,031 Portion of rentals attributable to interest..................................................... 45 -------------- Fixed charges................................................................................... $ 11,076 -------------- -------------- Ratio of earnings to fixed charges................................................................ 1.5 -------------- --------------
- ------------------------ (a) Interest expense includes commitment fee on revolving facility and amortization of debt issuance costs. EX-21.1 22 SUBSIDIARIES OF REGISTRANT Exhibit 21.1 Subsidiaries of Registrant None EX-23.1 23 CONSENT OF PRICE WATERHOUSE LLP Exhibit 23.1 CONSENT We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-4 of MBW Foods Inc. of our report dated March 28, 1997 relating to the balance sheet of MBW Foods Inc. and our report dated March 14, 1997 relating to the financial statements of Mrs. Butterworth's Business, which appear in such Prospectus. We also consent to the references to us under the headings "Experts" and "Selected Historical Financial Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP has not prepared or certified such "Selected Historical Financial Data." PRICE WATERHOUSE LLP San Francisco, California April 4, 1997 EX-25.1 24 STATEMENT OF ELIGIBILITY OF TRUSTEE EXHIBIT 25.1 Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |_| WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) MBW FOODS INC. (Exact name of obligor as specified in its charter) Delaware 13-3921934 (State of incorporation) (I.R.S. employer identification no.) Community Corporate Center 445 Hutchison Avenue Columbus, Ohio 43235 (Address of principal executive offices) (Zip Code) 9 7/8% Series B Senior Subordinated Notes due 2007 (Title of the indenture securities) ================================================================================ ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Copy of the Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. B. Copy of By-Laws of Wilmington Trust Company. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 20th day of March, 1997. WILMINGTON TRUST COMPANY [SEAL] Attest: /s/ Donald G. MacKelcan By:/s/ Norma P. Closs ----------------------- --------------------- Assistant Secretary Name: Norma P. Closs Title: Vice President 2 EXHIBIT A AMENDED CHARTER Wilmington Trust Company Wilmington, Delaware As existing on May 9, 1987 Amended Charter or Act of Incorporation of Wilmington Trust Company Wilmington Trust Company, originally incorporated by an Act of the General Assembly of the State of Delaware, entitled "An Act to Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name of which company was changed to "Wilmington Trust Company" by an amendment filed in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter or Act of Incorporation of which company has been from time to time amended and changed by merger agreements pursuant to the corporation law for state banks and trust companies of the State of Delaware, does hereby alter and amend its Charter or Act of Incorporation so that the same as so altered and amended shall in its entirety read as follows: First: - The name of this corporation is Wilmington Trust Company. Second: - The location of its principal office in the State of Delaware is at Rodney Square North, in the City of Wilmington, County of New Castle; the name of its resident agent is Wilmington Trust Company whose address is Rodney Square North, in said City. In addition to such principal office, the said corporation maintains and operates branch offices in the City of Newark, New Castle County, Delaware, the Town of Newport, New Castle County, Delaware, at Claymont, New Castle County, Delaware, at Greenville, New Castle County Delaware, and at Milford Cross Roads, New Castle County, Delaware, and shall be empowered to open, maintain and operate branch offices at Ninth and Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in the City of Wilmington, New Castle County, Delaware, and such other branch offices or places of business as may be authorized from time to time by the agency or agencies of the government of the State of Delaware empowered to confer such authority. Third: - (a) The nature of the business and the objects and purposes proposed to be transacted, promoted or carried on by this Corporation are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do and in any part of the world, viz.: (1) To sue and be sued, complain and defend in any Court of law or equity and to make and use a common seal, and alter the seal at pleasure, to hold, purchase, convey, mortgage or otherwise deal in real and personal estate and property, and to appoint such officers and agents as the business of the Corporation shall require, to make by-laws not inconsistent with the Constitution or laws of the United States or of this State, to discount bills, notes or other evidences of debt, to receive deposits of money, or securities for money, to buy gold and silver bullion and foreign coins, to buy and sell bills of exchange, and generally to use, exercise and enjoy all the powers, rights, privileges and franchises incident to a corporation which are proper or necessary for the transaction of the business of the Corporation hereby created. (2) To insure titles to real and personal property, or any estate or interests therein, and to guarantee the holder of such property, real or personal, against any claim or claims, adverse to his interest therein, and to prepare and give certificates of title for any lands or premises in the State of Delaware, or elsewhere. (3) To act as factor, agent, broker or attorney in the receipt, collection, custody, investment and management of funds, and the purchase, sale, management and disposal of property of all descriptions, and to prepare and execute all papers which may be necessary or proper in such business. (4) To prepare and draw agreements, contracts, deeds, leases, conveyances, mortgages, bonds and legal papers of every description, and to carry on the business of conveyancing in all its branches. (5) To receive upon deposit for safekeeping money, jewelry, plate, deeds, bonds and any and all other personal property of every sort and kind, from executors, administrators, guardians, public officers, courts, receivers, assignees, trustees, and from all fiduciaries, and from all other persons and individuals, and from all corporations whether state, municipal, corporate or private, and to rent boxes, safes, vaults and other receptacles for such property. (6) To act as agent or otherwise for the purpose of registering, issuing, certificating, countersigning, transferring or underwriting the stock, bonds or other obligations of any corporation, association, state or municipality, and may receive and manage any sinking fund therefor on such terms as may be agreed upon between the two parties, and in like manner may act as Treasurer of any corporation or municipality. (7) To act as Trustee under any deed of trust, mortgage, bond or other instrument issued by any state, municipality, body politic, corporation, association or person, either alone or in conjunction with any other person or persons, corporation or corporations. 2 (8) To guarantee the validity, performance or effect of any contract or agreement, and the fidelity of persons holding places of responsibility or trust; to become surety for any person, or persons, for the faithful performance of any trust, office, duty, contract or agreement, either by itself or in conjunction with any other person, or persons, corporation, or corporations, or in like manner become surety upon any bond, recognizance, obligation, judgment, suit, order, or decree to be entered in any court of record within the State of Delaware or elsewhere, or which may now or hereafter be required by any law, judge, officer or court in the State of Delaware or elsewhere. (9) To act by any and every method of appointment as trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity in the receiving, holding, managing, and disposing of any and all estates and property, real, personal or mixed, and to be appointed as such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian or bailee by any persons, corporations, court, officer, or authority, in the State of Delaware or elsewhere; and whenever this Corporation is so appointed by any person, corporation, court, officer or authority such trustee, trustee in bankruptcy, receiver, assignee, assignee in bankruptcy, executor, administrator, guardian, bailee, or in any other trust capacity, it shall not be required to give bond with surety, but its capital stock shall be taken and held as security for the performance of the duties devolving upon it by such appointment. (10) And for its care, management and trouble, and the exercise of any of its powers hereby given, or for the performance of any of the duties which it may undertake or be called upon to perform, or for the assumption of any responsibility the said Corporation may be entitled to receive a proper compensation. (11) To purchase, receive, hold and own bonds, mortgages, debentures, shares of capital stock, and other securities, obligations, contracts and evidences of indebtedness, of any private, public or municipal corporation within and without the State of Delaware, or of the Government of the United States, or of any state, territory, colony, or possession thereof, or of any foreign government or country; to receive, collect, receipt for, and dispose of interest, dividends and income upon and from any of the bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property held and owned by it, and to exercise in respect of all such bonds, mortgages, debentures, notes, shares of capital stock, securities, obligations, contracts, evidences of indebtedness and other property, any and all the rights, powers and privileges of individual 3 owners thereof, including the right to vote thereon; to invest and deal in and with any of the moneys of the Corporation upon such securities and in such manner as it may think fit and proper, and from time to time to vary or realize such investments; to issue bonds and secure the same by pledges or deeds of trust or mortgages of or upon the whole or any part of the property held or owned by the Corporation, and to sell and pledge such bonds, as and when the Board of Directors shall determine, and in the promotion of its said corporate business of investment and to the extent authorized by law, to lease, purchase, hold, sell, assign, transfer, pledge, mortgage and convey real and personal property of any name and nature and any estate or interest therein. (b) In furtherance of, and not in limitation, of the powers conferred by the laws of the State of Delaware, it is hereby expressly provided that the said Corporation shall also have the following powers: (1) To do any or all of the things herein set forth, to the same extent as natural persons might or could do, and in any part of the world. (2) To acquire the good will, rights, property and franchises and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation, and to pay for the same in cash, stock of this Corporation, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired, and to exercise all the powers necessary or convenient in and about the conduct and management of such business. (3) To take, hold, own, deal in, mortgage or otherwise lien, and to lease, sell, exchange, transfer, or in any manner whatever dispose of property, real, personal or mixed, wherever situated. (4) To enter into, make, perform and carry out contracts of every kind with any person, firm, association or corporation, and, without limit as to amount, to draw, make, accept, endorse, discount, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or transferable instruments. (5) To have one or more offices, to carry on all or any of its operations and businesses, without restriction to the same extent as natural persons might or could do, to purchase or otherwise acquire, to hold, own, to mortgage, sell, convey or otherwise dispose of, real and personal property, of every class and description, in any State, District, Territory or Colony of the United States, and in any foreign country or place. 4 (6) It is the intention that the objects, purposes and powers specified and clauses contained in this paragraph shall (except where otherwise expressed in said paragraph) be nowise limited or restricted by reference to or inference from the terms of any other clause of this or any other paragraph in this charter, but that the objects, purposes and powers specified in each of the clauses of this paragraph shall be regarded as independent objects, purposes and powers. Fourth: - (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is forty-one million (41,000,000) shares, consisting of: (1) One million (1,000,000) shares of Preferred stock, par value $10.00 per share (hereinafter referred to as "Preferred Stock"); and (2) Forty million (40,000,000) shares of Common Stock, par value $1.00 per share (hereinafter referred to as "Common Stock"). (b) Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the Board of Directors each of said series to be distinctly designated. All shares of any one series of Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends, if any, thereon shall be cumulative, if made cumulative. The voting powers and the preferences and relative, participating, optional and other special rights of each such series, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding; and, subject to the provisions of subparagraph 1 of Paragraph (c) of this Article Fourth, the Board of Directors of the Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of a particular series of Preferred Stock, the voting powers and the designations, preferences and relative, optional and other special rights, and the qualifications, limitations and restrictions of such series, including, but without limiting the generality of the foregoing, the following: (1) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute such series, which number may be increased (except where otherwise provided by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors; (2) The rate and times at which, and the terms and conditions on which, dividends, if any, on Preferred Stock of such series shall be paid, the extent of the preference or relation, if any, of such dividends to the dividends payable on any other class or classes, or series of the same or other class of 5 stock and whether such dividends shall be cumulative or non-cumulative; (3) The right, if any, of the holders of Preferred Stock of such series to convert the same into or exchange the same for, shares of any other class or classes or of any series of the same or any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange; (4) Whether or not Preferred Stock of such series shall be subject to redemption, and the redemption price or prices and the time or times at which, and the terms and conditions on which, Preferred Stock of such series may be redeemed. (5) The rights, if any, of the holders of Preferred Stock of such series upon the voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding-up, of the Corporation. (6) The terms of the sinking fund or redemption or purchase account, if any, to be provided for the Preferred Stock of such series; and (7) The voting powers, if any, of the holders of such series of Preferred Stock which may, without limiting the generality of the foregoing include the right, voting as a series or by itself or together with other series of Preferred Stock or all series of Preferred Stock as a class, to elect one or more directors of the Corporation if there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such circumstances and on such conditions as the Board of Directors may determine. (c) (1) After the requirements with respect to preferential dividends on the Preferred Stock (fixed in accordance with the provisions of section (b) of this Article Fourth), if any, shall have been met and after the Corporation shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts (fixed in accordance with the provisions of section (b) of this Article Fourth), and subject further to any conditions which may be fixed in accordance with the provisions of section (b) of this Article Fourth, then and not otherwise the holders of Common Stock shall be entitled to receive such dividends as may be declared from time to time by the Board of Directors. (2) After distribution in full of the preferential amount, if any, (fixed in accordance with the provisions of section (b) of this Article Fourth), to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up, of the Corporation, the holders of the Common Stock shall be entitled to 6 receive all of the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. (3) Except as may otherwise be required by law or by the provisions of such resolution or resolutions as may be adopted by the Board of Directors pursuant to section (b) of this Article Fourth, each holder of Common Stock shall have one vote in respect of each share of Common Stock held on all matters voted upon by the stockholders. (d) No holder of any of the shares of any class or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series or any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any right to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock or securities convertible into or exchangeable for stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations, whether such holders or others, and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its sole discretion. (e) The relative powers, preferences and rights of each series of Preferred Stock in relation to the relative powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in section (b) of this Article Fourth and the consent, by class or series vote or otherwise, of the holders of such of the series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in the resolution or resolutions as to any series of Preferred Stock adopted pursuant to section (b) of this Article Fourth that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. 7 (f) Subject to the provisions of section (e), shares of any series of Preferred Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (g) Shares of Common Stock may be issued from time to time as the Board of Directors of the Corporation shall determine and on such terms and for such consideration as shall be fixed by the Board of Directors. (h) The authorized amount of shares of Common Stock and of Preferred Stock may, without a class or series vote, be increased or decreased from time to time by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon. Fifth: - (a) The business and affairs of the Corporation shall be conducted and managed by a Board of Directors. The number of directors constituting the entire Board shall be not less than five nor more than twenty-five as fixed from time to time by vote of a majority of the whole Board, provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office, and provided further, that the number of directors constituting the whole Board shall be twenty-four until otherwise fixed by a majority of the whole Board. (b) The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the whole Board permits, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1982, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next annual election of directors. At such election, the stockholders shall elect a successor to such director to hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. No decrease in the number of directors shall shorten the term of any incumbent director. (c) Notwithstanding any other provisions of this Charter or Act of Incorporation or the By-Laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Charter or Act of Incorporation or the ByLaws of the Corporation), any director or the entire Board of Directors of the 8 Corporation may be removed at any time without cause, but only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. (d) Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Such nominations shall be made by notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation not less than 14 days nor more than 50 days prior to any meeting of the stockholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to stockholders, such written notice shall be delivered or mailed, as prescribed, to the Secretary of the Corporation not later than the close of the seventh day following the day on which notice of the meeting was mailed to stockholders. Notice of nominations which are proposed by the Board of Directors shall be given by the Chairman on behalf of the Board. (e) Each notice under subsection (d) shall set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of such nominee and (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee. (f) The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. (g) No action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Sixth: - The Directors shall choose such officers, agent and servants as may be provided in the By-Laws as they may from time to time find necessary or proper. Seventh: - The Corporation hereby created is hereby given the same powers, rights and privileges as may be conferred upon corporations organized under the Act entitled "An Act Providing a General Corporation Law", approved March 10, 1899, as from time to time amended. Eighth: - This Act shall be deemed and taken to be a private Act. 9 Ninth: - This Corporation is to have perpetual existence. Tenth: - The Board of Directors, by resolution passed by a majority of the whole Board, may designate any of their number to constitute an Executive Committee, which Committee, to the extent provided in said resolution, or in the By-Laws of the Company, shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Eleventh: - The private property of the stockholders shall not be liable for the payment of corporate debts to any extent whatever. Twelfth: - The Corporation may transact business in any part of the world. Thirteenth: - The Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation by a vote of the majority of the entire Board. The stockholders may make, alter or repeal any By-Law whether or not adopted by them, provided however, that any such additional By-Laws, alterations or repeal may be adopted only by the affirmative vote of the holders of two-thirds or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class). Fourteenth: - Meetings of the Directors may be held outside of the State of Delaware at such places as may be from time to time designated by the Board, and the Directors may keep the books of the Company outside of the State of Delaware at such places as may be from time to time designated by them. Fifteenth: - (a) In addition to any affirmative vote required by law, and except as otherwise expressly provided in sections (b) and (c) of this Article Fifteenth: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with or into (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder), which, after such merger or consolidation, would be an Affiliate (as hereinafter defined) of an Interested Stockholder, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate fair market value of $1,000,000 or more, or 10 (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of related transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate fair market value of $1,000,000 or more, or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation, or (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any similar transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder, or any Affiliate of any Interested Stockholder, shall require the affirmative vote of the holders of at least two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, considered for the purpose of this Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) The term "business combination" as used in this Article Fifteenth shall mean any transaction which is referred to any one or more of clauses (A) through (E) of paragraph 1 of the section (a). (b) The provisions of section (a) of this Article Fifteenth shall not be applicable to any particular business combination and such business combination shall require only such affirmative vote as is required by law and any other provisions of the Charter or Act of Incorporation of By-Laws if such business combination has been approved by a majority of the whole Board. (c) For the purposes of this Article Fifteenth: (1) A "person" shall mean any individual firm, corporation or other entity. (2) "Interested Stockholder" shall mean, in respect of any business combination, any person (other than the Corporation or any Subsidiary) who or which as of the record date for the determination of stockholders entitled to notice of and to vote on 11 such business combination, or immediately prior to the consummation of any such transaction: (A) is the beneficial owner, directly or indirectly, of more than 10% of the Voting Shares, or (B) is an Affiliate of the Corporation and at any time within two years prior thereto was the beneficial owner, directly or indirectly, of not less than 10% of the then outstanding voting Shares, or (C) is an assignee of or has otherwise succeeded in any share of capital stock of the Corporation which were at any time within two years prior thereto beneficially owned by any Interested Stockholder, and such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be the "beneficial owner" of any Voting Shares: (A) which such person or any of its Affiliates and Associates (as hereafter defined) beneficially own, directly or indirectly, or (B) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding, or (C) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation. (4) The outstanding Voting Shares shall include shares deemed owned through application of paragraph (3) above but shall not include any other Voting Shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options or otherwise. (5) "Affiliate" and "Associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 31, 1981. 12 (6) "Subsidiary" shall mean any corporation of which a majority of any class of equity security (as defined in Rule 3a11-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect in December 31, 1981) is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Investment Stockholder set forth in paragraph (2) of this section (c), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (d) majority of the directors shall have the power and duty to determine for the purposes of this Article Fifteenth on the basis of information known to them, (1) the number of Voting Shares beneficially owned by any person (2) whether a person is an Affiliate or Associate of another, (3) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in paragraph (3) of section (c), or (4) whether the assets subject to any business combination or the consideration received for the issuance or transfer of securities by the Corporation, or any Subsidiary has an aggregate fair market value of $1,00,000 or more. (e) Nothing contained in this Article Fifteenth shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Sixteenth: Notwithstanding any other provision of this Charter or Act of Incorporation or the By-Laws of the Corporation (and in addition to any other vote that may be required by law, this Charter or Act of Incorporation by the By-Laws), the affirmative vote of the holders of at least two-thirds of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of this Charter or Act of Incorporation. Seventeenth: (a) a Director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Laws as the same exists or may hereafter be amended. (b) Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a Director of the Corporation existing hereunder with respect to any act or omission occurring prior to the time of such repeal or modification." 13 EXHIBIT B BY-LAWS WILMINGTON TRUST COMPANY WILMINGTON, DELAWARE As existing on January 16, 1997 BY-LAWS OF WILMINGTON TRUST COMPANY ARTICLE I Stockholders' Meetings Section 1. The Annual Meeting of Stockholders shall be held on the third Thursday in April each year at the principal office at the Company or at such other date, time, or place as may be designated by resolution by the Board of Directors. Section 2. Special meetings of all stockholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. Section 3. Notice of all meetings of the stockholders shall be given by mailing to each stockholder at least ten (10) days before said meeting, at his last known address, a written or printed notice fixing the time and place of such meeting. Section 4. A majority in the amount of the capital stock of the Company issued and outstanding on the record date, as herein determined, shall constitute a quorum at all meetings of stockholders for the transaction of any business, but the holders of a small number of shares may adjourn, from time to time, without further notice, until a quorum is secured. At each annual or special meeting of stockholders, each stockholder shall be entitled to one vote, either in person or by proxy, for each shares of stock registered in the stockholder's name on the books of the Company on the record date for any such meeting as determined herein. ARTICLE II Directors Section 1. The number and classification of the Board of Directors shall be as set forth in the Charter of the Bank. Section 2. No person who has attained the age of seventy-two (72) years shall be nominated for election to the Board of Directors of the Company, provided, however, that this limitation shall not apply to any person who was serving as director of the Company on September 16, 1971. Section 3. The class of Directors so elected shall hold office for three years or until their successors are elected and qualified. Section 4. The affairs and business of the Company shall be managed and conducted by the Board of Directors. Section 5. The Board of Directors shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Board of Directors or the President. Section 6. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors or by the President, and shall be called upon the written request of a majority of the directors. Section 7. A majority of the directors elected and qualified shall be necessary to constitute a quorum for the transaction of business at any meeting of the Board of Directors. Section 8. Written notice shall be sent by mail to each director of any special meeting of the Board of Directors, and of any change in the time or place of any regular meeting, stating the time and place of such meeting, which shall be mailed not less than two days before the time of holding such meeting. Section 9. In the event of the death, resignation, removal, inability to act, or disqualification of any director, the Board of Directors, although less than a quorum, shall have the right to elect the successor who shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, and until such director's successor shall have been duly elected and qualified. Section 10. The Board of Directors at its first meeting after its election by the stockholders shall appoint an Executive Committee, a Trust Committee, an Audit Committee and a Compensation Committee, and shall elect from its own members a Chairman of the Board of Directors and a President who may be the same person. The Board of Directors shall also elect at such meeting a Secretary and a Treasurer, who may be the same person, may appoint at any time such other committees and elect or appoint such other officers as it may deem advisable. The Board of Directors may also elect at such meeting one or more Associate Directors. Section 11. The Board of Directors may at any time remove, with or without cause, any member of any Committee appointed by it or any associate director or officer elected by it and may appoint or elect his successor. Section 12. The Board of Directors may designate an officer to be in charge of such of the departments or division of the Company as it may deem advisable. ARTICLE III Committees Section I. Executive Committee (A) The Executive Committee shall be composed of not more than nine members who shall be selected by the Board of Directors from its own members and who 2 shall hold office during the pleasure of the Board. (B) The Executive Committee shall have all the powers of the Board of Directors when it is not in session to transact all business for and in behalf of the Company that may be brought before it. (C) The Executive Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members, or at the call of the Chairman of the Executive Committee or at the call of the Chairman of the Board of Directors. The majority of its members shall be necessary to constitute a quorum for the transaction of business. Special meetings of the Executive Committee may be held at any time when a quorum is present. (D) Minutes of each meeting of the Executive Committee shall be kept and submitted to the Board of Directors at its next meeting. (E) The Executive Committee shall advise and superintend all investments that may be made of the funds of the Company, and shall direct the disposal of the same, in accordance with such rules and regulations as the Board of Directors from time to time make. (F) In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of the Company by its directors and officers as contemplated by these By-Laws any two available members of the Executive Committee as constituted immediately prior to such disaster shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article III of these By-Laws; and if less than three members of the Trust Committee is constituted immediately prior to such disaster shall be available for the transaction of its business, such Executive Committee shall also be empowered to exercise all of the powers reserved to the Trust Committee under Article III Section 2 hereof. In the event of the unavailability, at such time, of a minimum of two members of such Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section. This By-Law shall be subject to implementation by Resolutions of the Board of Directors presently existing or hereafter passed from time to time for that purpose, and any provisions of these By-Laws (other than this Section) and any resolutions which are contrary to the provisions of this Section or to the provisions of any such implementary Resolutions shall be suspended during such a disaster period until it shall be determined by any interim Executive Committee acting under this section that it shall be to the advantage of the Company to resume the conduct and management of its affairs and business under all of the other provisions of these By-Laws. 3 Section 2. Trust Committee (A) The Trust Committee shall be composed of not more than thirteen members who shall be selected by the Board of Directors, a majority of whom shall be members of the Board of Directors and who shall hold office during the pleasure of the Board. (B) The Trust Committee shall have general supervision over the Trust Department and the investment of trust funds, in all matters, however, being subject to the approval of the Board of Directors. (C) The Trust Committee shall meet at the principal office of the Company or elsewhere in its discretion at such times to be determined by a majority of its members or at the call of its chairman. A majority of its members shall be necessary to constitute a quorum for the transaction of business. (D) Minutes of each meeting of the Trust Committee shall be kept and promptly submitted to the Board of Directors. (E) The Trust Committee shall have the power to appoint Committees and/or designate officers or employees of the Company to whom supervision over the investment of trust funds may be delegated when the Trust Committee is not in session. Section 3. Audit Committee (A) The Audit Committee shall be composed of five members who shall be selected by the Board of Directors from its own members, none of whom shall be an officer of the Company, and shall hold office at the pleasure of the Board. (B) The Audit Committee shall have general supervision over the Audit Division in all matters however subject to the approval of the Board of Directors; it shall consider all matters brought to its attention by the officer in charge of the Audit Division, review all reports of examination of the Company made by any governmental agency or such independent auditor employed for that purpose, and make such recommendations to the Board of Directors with respect thereto or with respect to any other matters pertaining to auditing the Company as it shall deem desirable. (C) The Audit Committee shall meet whenever and wherever the majority of its members shall deem it to be proper for the transaction of its business, and a majority of its Committee shall constitute a quorum. Section 4. Compensation Committee (A) The Compensation Committee shall be composed of not more than 4 five (5) members who shall be selected by the Board of Directors from its own members who are not officers of the Company and who shall hold office during the pleasure of the Board. (B) The Compensation Committee shall in general advise upon all matters of policy concerning the Company brought to its attention by the management and from time to time review the management of the Company, major organizational matters, including salaries and employee benefits and specifically shall administer the Executive Incentive Compensation Plan. (C) Meetings of the Compensation Committee may be called at any time by the Chairman of the Compensation Committee, the Chairman of the Board of Directors, or the President of the Company. Section 5. Associate Directors (A) Any person who has served as a director may be elected by the Board of Directors as an associate director, to serve during the pleasure of the Board. (B) An associate director shall be entitled to attend all directors meetings and participate in the discussion of all matters brought to the Board, with the exception that he would have no right to vote. An associate director will be eligible for appointment to Committees of the Company, with the exception of the Executive Committee, Audit Committee and Compensation Committee, which must be comprised solely of active directors. Section 6. Absence or Disqualification of Any Member of a Committee (A) In the absence or disqualification of any member of any Committee created under Article III of the By-Laws of this Company, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absence or disqualified member. ARTICLE IV Officers Section 1. The Chairman of the Board of Directors shall preside at all meetings of the Board and shall have such further authority and powers and shall perform such duties as the Board of Directors may from time to time confer and direct. He shall also exercise such powers and perform such duties as may from time to time be agreed upon between himself and the President of the Company. Section 2. The Vice Chairman of the Board. The Vice Chairman of the Board of 5 Directors shall preside at all meetings of the Board of Directors at which the Chairman of the Board shall not be present and shall have such further authority and powers and shall perform such duties as the Board of Directors or the Chairman of the Board may from time to time confer and direct. Section 3. The President shall have the powers and duties pertaining to the office of the President conferred or imposed upon him by statute or assigned to him by the Board of Directors in the absence of the Chairman of the Board the President shall have the powers and duties of the Chairman of the Board. Section 4. The Chairman of the Board of Directors or the President as designated by the Board of Directors, shall carry into effect all legal directions of the Executive Committee and of the Board of Directors, and shall at all times exercise general supervision over the interest, affairs and operations of the Company and perform all duties incident to his office. Section 5. There may be one or more Vice Presidents, however denominated by the Board of Directors, who may at any time perform all the duties of the Chairman of the Board of Directors and/or the President and such other powers and duties as may from time to time be assigned to them by the Board of Directors, the Executive Committee, the Chairman of the Board or the President and by the officer in charge of the department or division to which they are assigned. Section 6. The Secretary shall attend to the giving of notice of meetings of the stockholders and the Board of Directors, as well as the Committees thereof, to the keeping of accurate minutes of all such meetings and to recording the same in the minute books of the Company. In addition to the other notice requirements of these By-Laws and as may be practicable under the circumstances, all such notices shall be in writing and mailed well in advance of the scheduled date of any other meeting. He shall have custody of the corporate seal and shall affix the same to any documents requiring such corporate seal and to attest the same. Section 7. The Treasurer shall have general supervision over all assets and liabilities of the Company. He shall be custodian of and responsible for all monies, funds and valuables of the Company and for the keeping of proper records of the evidence of property or indebtedness and of all the transactions of the Company. He shall have general supervision of the expenditures of the Company and shall report to the Board of Directors at each regular meeting of the condition of the Company, and perform such other duties as may be assigned to him from time to time by the Board of Directors of the Executive Committee. Section 8. There may be a Controller who shall exercise general supervision over the internal operations of the Company, including accounting, and shall render to the Board of Directors at appropriate times a report relating to the general condition and internal operations of the Company. 6 There may be one or more subordinate accounting or controller officers however denominated, who may perform the duties of the Controller and such duties as may be prescribed by the Controller. Section 9. The officer designated by the Board of Directors to be in charge of the Audit Division of the Company with such title as the Board of Directors shall prescribe, shall report to and be directly responsible only to the Board of Directors. There shall be an Auditor and there may be one or more Audit Officers, however denominated, who may perform all the duties of the Auditor and such duties as may be prescribed by the officer in charge of the Audit Division. Section 10. There may be one or more officers, subordinate in rank to all Vice Presidents with such functional titles as shall be determined from time to time by the Board of Directors, who shall ex officio hold the office Assistant Secretary of this Company and who may perform such duties as may be prescribed by the officer in charge of the department or division to whom they are assigned. Section 11. The powers and duties of all other officers of the Company shall be those usually pertaining to their respective offices, subject to the direction of the Board of Directors, the Executive Committee, Chairman of the Board of Directors or the President and the officer in charge of the department or division to which they are assigned. ARTICLE V Stock and Stock Certificates Section 1. Shares of stock shall be transferrable on the books of the Company and a transfer book shall be kept in which all transfers of stock shall be recorded. Section 2. Certificate of stock shall bear the signature of the President or any Vice President, however denominated by the Board of Directors and countersigned by the Secretary or Treasurer or an Assistant Secretary, and the seal of the corporation shall be engraved thereon. Each certificate shall recite that the stock represented thereby is transferrable only upon the books of the Company by the holder thereof or his attorney, upon surrender of the certificate properly endorsed. Any certificate of stock surrendered to the Company shall be cancelled at the time of transfer, and before a new certificate or certificates shall be issued in lieu thereof. Duplicate certificates of stock shall be issued only upon giving such security as may be satisfactory to the Board of Directors or the Executive Committee. Section 3. The Board of Directors of the Company is authorized to fix in advance a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders and any adjournment thereof, or entitled to receive payment of 7 any dividend, or to any allotment or rights, or to exercise any rights in respect of any change, conversion or exchange of capital stock, or in connection with obtaining the consent of stockholders for any purpose, which record date shall not be more than 60 nor less than 10 days proceeding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent. ARTICLE VI Seal Section 1. The corporate seal of the Company shall be in the following form: Between two concentric circles the words "Wilmington Trust Company" within the inner circle the words "Wilmington, Delaware." ARTICLE VII Fiscal Year Section 1. The fiscal year of the Company shall be the calendar year. ARTICLE VIII Execution of Instruments of the Company Section 1. The Chairman of the Board, the President or any Vice President, however denominated by the Board of Directors, shall have full power and authority to enter into, make, sign, execute, acknowledge and/or deliver and the Secretary or any Assistant Secretary shall have full power and authority to attest and affix the corporate seal of the Company to any and all deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes, mortgages and all other instruments incident to the business of this Company or in acting as executor, administrator, guardian, trustee, agent or in any other fiduciary or representative capacity by any and every method of appointment or by whatever person, corporation, court officer or authority in the State of Delaware, or elsewhere, without any specific authority, ratification, approval or confirmation by the Board of Directors or the Executive Committee, and any and all such instruments shall have the same force and validity as although expressly authorized by the Board of Directors and/or the Executive Committee. 8 ARTICLE IX Compensation of Directors and Members of Committees Section 1. Directors and associate directors of the Company, other than salaried officers of the Company, shall be paid such reasonable honoraria or fees for attending meetings of the Board of Directors as the Board of Directors may from time to time determine. Directors and associate directors who serve as members of committees, other than salaried employees of the Company, shall be paid such reasonable honoraria or fees for services as members of committees as the Board of Directors shall from time to time determine and directors and associate directors may be employed by the Company for such special services as the Board of Directors may from time to time determine and shall be paid for such special services so performed reasonable compensation as may be determined by the Board of Directors. ARTICLE X Indemnification Section 1. (A) The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. The Corporation shall indemnify a person in connection with a proceeding initiated by such person only if the proceeding was authorized by the Board of Directors of the Corporation. (B) The Corporation shall pay the expenses incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by a Director officer in his capacity as a Director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Director or officer to repay all amounts advanced if it should be ultimately determined that the Director or officer is not entitled to be indemnified under this Article or otherwise. (C) If a claim for indemnification or payment of expenses, under this Article X is not paid in full within ninety days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification of payment of expenses 9 under applicable law. (D) The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Charter or Act of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested Directors or otherwise. (E) Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. ARTICLE XI Amendments to the By-Laws Section 1. These By-Laws may be altered, amended or repealed, in whole or in part, and any new By-Law or By-Laws adopted at any regular or special meeting of the Board of Directors by a vote of the majority of all the members of the Board of Directors then in office. 10 EXHIBIT C Section 321(b) Consent Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as amended, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: March 20, 1997 By: /s/ Norma P. Closs ------------------ Name: Norma P. Closs Title: Vice President EXHIBIT D NOTICE This form is intended to assist state nonmember banks and savings banks with state publication requirements. It has not been approved by any state banking authorities. Refer to your appropriate state banking authorities for your state publication requirements. R E P O R T O F C O N D I T I O N Consolidating domestic subsidiaries of the WILMINGTON TRUST COMPANY of WILMINGTON --------------------------------------- ------------- Name of Bank City in the State of DELAWARE , at the close of business on December 31, 1996. ----------- ASSETS Thousands of dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coins............... 213,895 Interest-bearing balances........................................... 0 Held-to-maturity securities........................................... 465,818 Available-for-sale securities...........................................752,297 Federal funds sold.......................................................95,000 Securities purchased under agreements to resell......................... 39,190 Loans and lease financing receivables: Loans and leases, net of unearned income ............ 3,634,003 LESS: Allowance for loan and lease losses ......... 51,847 LESS: Allocated transfer risk reserve ............. 0 Loans and leases, net of unearned income, allowance, and reserve ...................................................3,582,156 Assets held in trading accounts...............................................0 Premises and fixed assets (including capitalized leases).................89,129 Other real estate owned.................................................. 3,520 Investments in unconsolidated subsidiaries and associated companies........ 52 Customers' liability to this bank on acceptances outstanding..................0 Intangible assets.........................................................4,593 Other assets............................................................114,300 Total assets..........................................................5,359,950 CONTINUED ON NEXT PAGE LIABILITIES Deposits: In domestic offices..................................................3,749,697 Noninterest-bearing ................. 852,790 Interest-bearing ................... 2,896,907 Federal funds purchased................................................ 77,825 Securities sold under agreements to repurchase........................ 192,295 Demand notes issued to the U.S. Treasury................................53,526 Trading liabilities..........................................................0 Other borrowed money:................................................../////// With original maturity of one year or less.....................714,000 With original maturity of more than one year....................43,000 Mortgage indebtedness and obligations under capitalized leases........... 0 Bank's liability on acceptances executed and outstanding.....................0 Subordinated notes and debentures............................................0 Other liabilities..................................................... 98,756 Total liabilities .................................................. 4,929,099 Limited-life preferred stock and related surplus.............................0 EQUITY CAPITAL Perpetual preferred stock and related surplus................................0 Common Stock...............................................................500 Surplus.................................................................62,118 Undivided profits and capital reserves.................................367,371 Net unrealized holding gains (losses) on available-for-sale securities ... 862 Total equity capital...................................................430,851 Total liabilities, limited-life preferred stock, and equity capital..5,359,950 2 EX-99.1 25 FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR TENDER OF 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007 IN EXCHANGE FOR 9 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007 MBW FOODS INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ___________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. DELIVER TO THE EXCHANGE AGENT: WILMINGTON TRUST COMPANY By Registered or Certified Mail or by Overnight Courier: By Hand: Wilmington Trust Company Wilmington Trust Company Attn: Jill Rylee Attn: Corporate Trust Operations Corporate Trust & c/o Harris Trust Co. Administration Window of New York as Agent 1100 North Market Street 75 Water Street Rodney Square North New York, NY 10004 Wilmington, DE 19890-0001 By Facsimile: Wilmington Trust Company (302) 651-1079 Confirm by Telephone: (302) 651-8869 Jill Rylee DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Page 2 The undersigned hereby acknowledges receipt and review of the Prospectus dated ____________________, 1997 (the "Prospectus") of MBW Foods Inc. (the "Company") and this Letter of Transmittal (the "Letter of Transmittal"), which together describe the Company's offer (the "Exchange Offer") to exchange its 9 7/8% Series B Senior Subordinated Notes due February 15, 2007 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which the Prospectus is a part, for a like principal amount of its issued and outstanding 9 7/8% Senior Subordinated Notes due February 15, 2007 (the "Old Notes"). Capitalized terms used but not defined herein have the respective meaning given to them in the Prospectus. The Company reserves the right, at any time or from time to time, to extend the Exchange Offer at its discretion, in which event the term "Expiration Date" shall mean the latest time and date in which the Exchange Offer is extended. The Company shall notify the holders of the Old Notes of any extension by oral or written notice prior to 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. This Letter of Transmittal is to be used by a Holder of Old Notes either if original Old Notes are to be forwarded herewith or if delivery of Old Notes, if available, is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the Prospectus under the caption "The Exchange Offer-Book-Entry Transfer." Holders of Old Notes whose Old Notes are not immediately available, or who are unable to deliver their Old Notes and all other documents required by this Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date, or who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Old Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person in whose name Old Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the Page 3 registered Holder. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Holders who wish to tender their Old Notes must complete this Letter of Transmittal in its entirety. The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. List below the Old Notes to which this Letter of Transmittal relates. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal. ============================================================================== DESCRIPTION OF OLD NOTES TENDERED --------------------------------- - ------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) AGGREGATE OF REGISTERED HOLDER(S), PRINCIPAL EXACTLY AS NAME(S) APPEAR(S) AMOUNT PRINCIPAL ON OLD NOTES REGISTERED REPRESENTED AMOUNT (PLEASE FILL IN, IF BLANK) NUMBERS* BY NOTE(S) TENDERED** - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TOTAL - ------------------------------------------------------------------------------ * Need not be completed by book-entry Holders. ** Unless otherwise indicated, any tendering Holder of Old Notes will be deemed to have tendered the entire aggregate principal amount represented by such Old Notes. All tenders must be in integral multiples of $1,000. ============================================================================== Page 4 / / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH. / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name of Tendering Institution:_____________________________ Account Number:____________________________________________ Transaction Code Number:___________________________________ / / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name(s) of Registered Holder(s) of Old Notes: - ------------------------------------------------------------ Date of Execution of Notice of Guaranteed Delivery:_________ Window Ticket Number (if available):________________________ Name of Eligible Institution that Guaranteed Delivery: - ------------------------------------------------------------ Account Number (if delivered by book-entry transfer): - ------------------------------------------------------------ / / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:________________________________________________________ Address:_____________________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Notes. If the undersigned is a broker-dealer that will receive New Notes for its own account in exchange for Old Notes, it acknowledges that the Old Notes were acquired as a result Page 5 of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Company for exchange the principal amount of Old Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Old Notes tendered in accordance with this Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers to the Company all right, title and interest in and to the Old Notes tendered for exchange hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent, the agent and attorney-in-fact of the undersigned (with full knowledge that the Exchange Agent also acts as the agent of the Company in connection with the Exchange Offer) with respect to the tendered Old Notes with full power of substitution to (i) deliver such Old Notes, or transfer ownership of such Old Notes on the account books maintained by the Book-Entry Transfer Facility, to the Company and deliver all accompanying evidences of transfer and authenticity, and (ii) present such Old Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby and to acquire the New Notes issuable upon the exchange of such tendered Old Notes, and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are accepted for exchange by the Company. The undersigned acknowledge(s) that this Exchange Offer is being made in reliance upon interpretations Page 6 contained in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the "Commission") that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by Holders thereof (other than any such Holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such Holders' business and such Holders are not engaging in and do not intend to engage in a distribution of the New Notes and have no arrangement or understanding with any person to participate in a distribution of such New Notes. The undersigned hereby further represent(s) to the Company that (i) any New Notes acquired in exchange for Old Notes tendered hereby are being acquired in the ordinary course of business of the person receiving such New Notes, whether or not the undersigned, (ii) neither the undersigned nor any such other person is engaging in or intends to engage in a distribution of the New Notes, (iii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes, and (iv) neither the Holder nor any such other person is an "affiliate," as defined in Rule 405 under the Securities Act, of the Company or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned or the person receiving the New Notes is a broker-dealer that is receiving New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, the undersigned acknowledges that it or such other person will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that the undersigned or such other person is an "underwriter" within the meaning of the Securities Act. The undersigned acknowledges that if the undersigned is participating in the Exchange Offer for the purpose of distributing the New Notes (i) the undersigned cannot rely on the position of the staff of the Commission in certain no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes, in which case the Page 7 registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K of the Commission, and (ii) failure to comply with such requirements in such instance could result in the undersigned incurring liability under the Securities Act for which the undersigned is not indemnified by the Company. If the undersigned or the person receiving the New Notes is an "affiliate" (as defined in Rule 405 under the Securities Act), the undersigned represents to the Company that the undersigned understands and acknowledges that the New Notes may not be offered for resale, resold or otherwise transferred by the undersigned or such other person without registration under the Securities Act or an exemption therefrom. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the Old Notes tendered hereby, including the transfer of such Old Notes on the account books maintained by the Book-Entry Transfer Facility. For purposes of the Exchange Offer, the Company shall be deemed to have accepted for exchange validly tendered Old Notes when, as and if the Company gives oral or written notice thereof to the Exchange Agent. Any tendered Old Notes that are not accepted for exchange pursuant to the Exchange Offer for any reason will be returned, without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under "Special Delivery Instructions" as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the undersigned's heirs, personal representatives, successors and assigns. The undersigned acknowledges that the Company's acceptance of properly tendered Old Notes pursuant to the procedures described under the caption "The Exchange Offer -- Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement Page 8 between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated under "Special Issuance Instructions," please issue the New Notes issued in exchange for the Old Notes accepted for exchange and return any Old Notes not tendered or not exchanged, in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail or deliver the New Notes issued in exchange for the Old Notes accepted for exchange and any Old Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the New Notes issued in exchange for the Old Notes accepted for exchange in the name(s) of, and return any Old Notes not tendered or not exchanged to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Old Notes from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Old Notes so tendered for exchange. Page 9 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 6) To be completed ONLY (i) if Old Notes in a principal amount not tendered, or New Notes issued in exchange for Old Notes accepted for exchange, are to be issued in the name of someone other than the undersigned, or (ii) if Old Notes tendered by book-entry transfer which are not exchanged are to be returned by credit to an account maintained at the Book-Entry Transfer Facility. Issue New Notes and/or Old Notes to: Name(s):___________________________________________________ (Please Type or Print) Address: ___________________________________________________________ ___________________________________________________________ (Include Zip Code) ___________________________________________________________ (Tax Identification or Social Security No.) (Complete Substitute Form W-9) / / Credit unexchanged Old Notes delivered by book-entry transfer to the Book-Entry Transfer Facility set forth below: ___________________________________________________________ (Book-Entry Transfer Facility Account Number, if applicable) PLEASE SIGN HERE WHETHER OR NOT OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY (Complete Accompanying Substitute Form W-9 on Reverse Side) _____________________________________ ___________________ Date _____________________________________ ___________________ Date Area Code and Telephone Number:____________________________ The above lines must be signed by the registered Holder(s) of Old Notes as name(s) appear(s) on the Old Notes or on a security position listing, or by person(s) Page 10 authorized to become registered Holder(s) by a properly completed bond power from the registered Holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Old Notes to which this Letter of Transmittal relate are held of record by two or more joint Holders, then all such Holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence satisfactory to the Company of such person's authority so to act. See Instruction 5 regarding the completion of this Letter of Transmittal, printed below. Name(s):___________________________________________________ (Please Type or Print) Capacity:__________________________________________________ Address: ___________________________________________________________ ___________________________________________________________ (Include Zip Code) Page 11 MEDALLION SIGNATURE GUARANTEE (If Required by Instruction 5) Certain signatures must be Guaranteed by an Eligible Institution. Signature(s) Guaranteed by an Eligible Institution: ___________________________________________________________ (Authorized Signature) ___________________________________________________________ (Title) ___________________________________________________________ (Name of Firm) ___________________________________________________________ (Address, Include Zip Code) ___________________________________________________________ (Area Code and Telephone Number) Dated:____________________, 19__ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 6) To be completed ONLY if Old Notes in a principal amount not tendered, or New Notes issued in exchange for Old Notes accepted for exchange, are to be mailed or delivered to someone other than the undersigned, or to the undersigned at an address other than that shown below the undersigned's signature. Mail or deliver New Notes and/or Old Notes to: Name: ___________________________________________________________ (Please Type or Print) Address: ___________________________________________________________ ___________________________________________________________ (Include Zip Code) ___________________________________________________________ (Tax Identification or Social Security No.) Page 12 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Old Notes or Book-Entry Confirmations. All physically delivered Old Notes or any confirmation of a book-entry transfer to the Exchange Agent's account at the Book-Entry Transfer Facility of Old Notes tendered by book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. The method of delivery of the tendered Old Notes, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the Holder and, except as otherwise provided below, the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. Instead of delivery by mail, it is recommended that the Holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the Exchange Agent before the Expiration Date. No Letter of Transmittal or Old Notes should be sent to the Company. 2. Guaranteed Delivery Procedures. Holders who wish to tender their Old Notes and (a) whose Old Notes are not immediately available, or (b) who cannot deliver their Old Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (c) who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Old Notes according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers Inc. or a commercial bank or a trust company having an office or correspondent in the United States (an "Eligible Institution"); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Old Notes, the registration number(s) of such Old Notes and the principal amount of Old Notes tendered, Page 13 stating that the tender is being made thereby and guaranteeing that, within three (3) New York Stock Exchange, Inc. ("NYSE") trading days after the Expiration Date, this Letter of Transmittal (or facsimile hereof) together with the Old Notes (or a Book-Entry Confirmation) in proper form for transfer, must be received by the Exchange Agent within three (3) NYSE trading days after the Expiration Date; and (iii) the certificates for all physically tendered shares of Old Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may be, and all other documents required by this Letter are received by the Exchange Agent within three (3) NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. Any Holder of Old Notes who wishes to tender Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. 3. Tender by Holder. Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer. Any beneficial Holder of Old Notes who is not the registered Holder and who wishes to tender should arrange with the registered Holder to execute and deliver this Letter of Transmittal on his behalf or must, prior to completing and executing this Letter of Transmittal and delivering his Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such Holder's name or obtain a properly completed bond power from the registered Holder. 4. Partial Tenders. Tenders of Old Notes will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Old Notes is tendered, the tendering Holder should fill in the principal amount tendered in the third column of the box entitled "Description of Old Notes" above. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Old Notes is not tendered, then Old Notes for the principal amount of Old Page 14 Notes not tendered and New Notes issued in exchange for any Old Notes accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal, promptly after the Old Notes are accepted for exchange. 5. Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Medallion Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the record Holder(s) of the Old Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Old Notes without alteration, enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in the Book-Entry Transfer Facility, the signature must correspond with the name as it appears on the security position listing as the Holder of the Old Notes. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder or Holders of Old Notes listed and tendered hereby and the New Notes issued in exchange therefor is to be issued (or any untendered principal amount of Old Notes is to be reissued) to the registered Holder, the said Holder need not and should not endorse any tendered Old Notes, nor provide a separate bond power. In any other case, such Holder must either properly endorse the Old Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered Holder or Holders of any Old Notes listed, such Old Notes must be endorsed or accompanied by appropriate bond powers, in each case signed as the name of the registered Holder or Holders appears on the Old Notes. If this Letter of Transmittal (or facsimile hereof) or any Old Notes of bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Page 15 Endorsements on Old Notes or signatures on bond powers required by this Instruction 5 must be guaranteed by an Eligible Institution. No signature guarantee is required if (i) this Letter of Transmittal is signed by the registered holder(s) of the Old Notes tendered herewith (or by a participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of the tendered Old Notes) and the issuance of New Notes (and any Old Notes not tendered or not accepted) are to be issued directly to such registered holder(s) (or, if signed by a participant in the Book-Entry Transfer Facility, any New Notes or Old Notes not tendered or not accepted are to be deposited to such participant's account at such Book-Entry Transfer Facility) and neither the box entitled "Special Delivery Instructions" nor the box entitled "Special Registration Instructions" has been completed, or (ii) such Old Notes are tendered for the account of an Eligible Institution. In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. 6. Special Registration and Delivery Instructions. Tendering holders should indicate, in the applicable box or boxes, the name and address (or account at the Book-Entry Transfer Facility) to which New Notes or substitute Old Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 7. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, New Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered Holder of the Old Notes tendered hereby, or if tendered Old Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, Page 16 the amount of such transfer taxes will be billed directly to such tendering Holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES LISTED IN THIS LETTER OF TRANSMITTAL. 8. Tax Identification Number. Federal income tax law required that a holder of any Old Notes which are accepted for exchange must provide the Company (as payor) with its correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual in his or her social security number. If the Company is not provided with the correct TIN, the Holder may be subject to a $50 penalty imposed by Internal Revenue Service. (If withholding results in an over-payment of taxes, a refund may be obtained.) Certain holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. To prevent backup withholding, each tendering holder must provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the Old Notes are registered in more than one name or are not in the name of the actual owner, see the enclosed "Guidelines for Certification of Taxpayer Identification Number of Substitute Form W-9 for information on which TIN to report. The Company reserves the right in its sole discretion to take whatever steps are necessary to comply with the Company's obligation regarding backup withholding. 9. Validity of Tenders. All questions as to the validity, form, eligibility (including time of receipt), and acceptance of tendered Old Notes will be determined by the Company, in its sole discretion, which determination will be final and binding. The Company reserves the right to reject any and all Old Notes not validly tendered or any Old Notes, the Company's acceptance of which would, in the Page 17 opinion of the Company or its counsel, be unlawful. The Company also reserves the right to waive any conditions of the Exchange Offer or defects or irregularities in tenders of Old Notes as to any ineligibility of any holder who seeks to tender Old Notes in the Exchange Offer. The interpretation of the terms and conditions of the Exchange Offer (includes this Letter of Transmittal and the instructions hereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. The Company will use reasonable efforts to give notification of defects or irregularities with respect to tenders of Old Notes, but shall not incur any liability for failure to give such notification. 10. Waiver of Conditions. The Company reserves the absolute right to waive, in whole or part, any of the conditions to the Exchange Offer set forth in the Prospectus. 11. No Conditional Tender. No alternative, conditional, irregular or contingent tender of Old Notes on transmittal of this Letter of Transmittal will be accepted. 12. Mutilated, Lost, Stolen or Destroyed Old Notes. Any Holder whose Old Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 13. Requests for Assistance or Additional Copies. Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 14. Acceptance of Tendered Old Notes and Issuance of New Notes; Return of Old Notes. Subject to the terms and conditions of the Exchange Offer, the Company will accept for exchange all validly tendered Old Notes as soon as practicable after the Exchange Date and will issue New Notes therefor as soon as practicable thereafter. For purposes of the Exchange Offer, the Company shall be deemed to have accepted tendered Old Notes when, as and if the Company has given written and oral notice thereof to the Exchange Agent. If any tendered Old Notes are not Page 18 exchanged pursuant to the Exchange Offer for any reason, such unexchanged Old Notes will be returned, without expense, to the undersigned at the address shown above (or credited to the undersigned's account at the Book-Entry Transfer Facility designated above) or at a different address as may be indicated under the box entitled "Special Delivery Instructions." 15. Withdrawal. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal of Tenders." IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF (TOGETHER WITH THE OLD NOTES) WHICH MUST BE DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FROM) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME. Page 19 (TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 5)) PAYER'S NAME: MBW FOODS INC. ============================================================================ SUBSTITUTE PART I--Taxpayer Social FORM W-9 Identification No.--For Security DEPARTMENT OF THE TREASURY all accounts, enter your Number INTERNAL REVENUE SERVICE taxpayer identification _________ number in the appropriate box. For most individuals and sole proprietors, this OR is your social security number. For other Employer entities, it is your Identifi- Employer Identification cation Number. If you do not Number have a number, see How to Obtain a TIN in the _________ enclosed Guidelines. Note: If the account is in more than one name, see Employer Identification Number the chart on page 2 of the enclosed Guidelines to determine what number to enter. - ---------------------------------------------------------------------------- Payer's Request for Part II--For Payees Exempt From Backup Taxpayer Identification Withholding (see enclosed Guidelines) Number ============================================================================ CERTIFICATION--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number; (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and Page 20 (3) Any other information provided on this form is true, correct and complete. ___________________________________________________________ SIGNATURE_________________________ Date__________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE NEW NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W- 9 FOR ADDITIONAL DETAILS. EX-99.2 26 FORM OF NOTICE OF GUARANTEED DEL. OF NEW NOTES EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY for Tender of 9 7/8% Senior Subordinated Notes due 2007 in Exchange for 9 7/8% Series B Senior Subordinated Notes due 2007 MBW FOODS INC. This form or one substantially equivalent hereto must be used by a holder to accept the Exchange Offer of MBW Foods Inc., a Delaware corporation (the "Company"), who wishes to tender 9 7/8% Senior Subordinated Notes due 2007 (the "Old Notes") to the Exchange Agent pursuant to the guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed Delivery Procedures" of the Company's Prospectus, dated ____________, 1997 (the "Prospectus") and in Instruction 2 to the related Letter of Transmittal. Any holder who wishes to tender Old Notes pursuant to such guaranteed delivery procedures must ensure that the Exchange Agent receives this Notice of Guaranteed Delivery prior to the Expiration Date (as defined below) of the Exchange Offer. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus or the Letter of Transmittal. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _______________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. The Exchange Agent for the Exchange Offer is: WILMINGTON TRUST COMPANY By Registered or Certified Mail or by Overnight Courier: By Hand: Wilmington Trust Company Wilmington Trust Company Attn:Jill Rylee Attn: Corporate Trust Operations Corporate Trust & Administration Window c/o Harris Trust Company 1100 North Market Street of New York, as Agent Rodney Square North 75 Water Street Wilmington, DE 19890-0001 New York, NY 10004 By Facsimile: Wilimington Trust Company (302) 651-1079 Confirm by Telephone: (302)651-8869 Jill Rylee ---------- EXHIBIT 99.2 Page 2 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED BOX ON THE LETTER OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES. EXHIBIT 99.2 Page 3 Ladies and Gentlemen: The undersigned hereby tenders to the Company, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal. The undersigned hereby tenders the Old Notes listed below: CERTIFICATE NUMBER(S) AGGREGATE AGGREGATE (IF KNOWN) OF OLD NOTES OR PRINCIPAL PRINCIPAL ACCOUNT NUMBER AT THE AMOUNT AMOUNT BOOK-ENTRY FACILITY REPRESENTED TENDERED -------------------------- ----------- -------- PLEASE SIGN AND COMPLETE Signatures of Registered Holder(s) or Authorized Signatory: ______________________________ Date:_________________________ ______________________________ Address: ______________________________ Name(s) of Registered Holder(s): ______________________________ ______________________________ Area Code and Telephone No.: ______________________________ ______________________________ This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly as their name(s) appear on certificates for Old Notes or on a security position listing as the owner of Old Notes, or by person(s) authorized to become Holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information. EXHIBIT 99.2 Page 4 PLEASE PRINT NAME(S) AND ADDRESS(ES) Names(s): ____________________________________________ ____________________________________________ ____________________________________________ Capacity: ____________________________________________ Address(es): ____________________________________________ ____________________________________________ EXHIBIT 99.2 Page 5 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or is a commercial bank or trust company having an office or correspondent in the United States, or is otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, guarantees deposit with the Exchange Agent of the Letter of Transmittal (or facsimile thereof), together with the Old Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility described in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures" and in the Letter of Transmittal and any other required documents, all by 5:00 p.m., New York City time, within five New York Stock Exchange trading days following the Expiration Date. Name of Firm: ___________________________ _______________________ Address: (AUTHORIZED SIGNATURE) ___________________________ Name:______________________ (INCLUDE ZIP CODE) Title:_____________________ Area Code and Tel. Number: (PLEASE TYPE OR PRINT) ___________________________ Date:________________, 19__ DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. EXHIBIT 99.2 Page 6 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. Delivery of this Notice of Guaranteed Delivery. A properly completed and duly executed copy of this Notice of Guaranteed Delivery and any other documents required by this Notice of Guaranteed Delivery must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date. The method of delivery of this Notice of Guaranteed Delivery and any other required documents to the Exchange Agent is at the election and sole risk of the holder, and the delivery will be deemed made only when actually received by the Exchange Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, the holders may wish to consider using an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the Letter of Transmittal. 2. Signatures on this Notice of Guaranteed Delivery. If this Notice of Guaranteed Delivery is signed by the registered holder(s) of the Old Notes referred to herein, the signature must correspond with the name(s) written on the face of the Old Notes without alteration, enlargement, or any change whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of the Old Notes, the signature must correspond with the name shown on the security position listing as the owner of the Old Notes. If this Notice of Guaranteed Delivery is signed by a person other than the registered holder(s) of any Old Notes listed or a participant of the Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by appropriate bond powers, signed as the name of the registered holder(s) appears on the Old Notes or signed as the name of the participant shown on the Book-Entry Transfer Facility's security position listing. If this Notice of Guaranteed Delivery is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit with the Letter of Transmittal evidence satisfactory to the Company of such person's authority to so act. EXHIBIT 99.2 Page 7 3. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company, or other nominee for assistance concerning the Exchange Offer. EX-99.3 27 LETTER TO BROKERS EXHIBIT 99.3 Letter to Brokers for Tender of 9 7/8% Senior Subordinated Notes Due 2007 in Exchange for 9 7/8% Series B Senior Subordinated Notes Due 2007 MBW FOODS INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. To Registered Holders and Depository Trust Company Participants: We are enclosing herewith the material listed below relating to the offer by MBW Foods Inc. (the "Company"), a Delaware corporation, to exchange its 9 7/8% Series B Senior Subordinated Notes Due 2007, (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 9 7/8% Senior Subordinated Notes Due 2007 (the "Old Notes") upon the terms and subject to the conditions set forth in the Company's Prospectus, dated _______________, 1997, and the related Letter of Transmittal (which together constitute the "Exchange Offer"). Enclosed herewith are copies of the following documents: 1. Prospectus dated _______________, 1997; 2. Letter of Transmittal (together with accompanying Substitute Form W-9 Guidelines); 3. Notice of Guaranteed Delivery; and 4. Letter which may be sent to your clients for whose account you hold Old Notes in your name or in the name of your nominee, with space provided for obtaining such client's instruction with regard to the Exchange Offer. We urge you to contact your clients promptly. Please note that the Exchange Offer will expire on the Expiration Date unless extended. The Exchange Offer is not conditioned upon any minimum number of Old Notes being tendered. EXHIBIT 99.3 Page 2 Pursuant to the Letter of Transmittal, each holder of Old Notes will represent to the Company that (i) the New Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution within the meaning of the Securities Act of such New Notes, (iii) if the undersigned is not a broker-dealer, or is a broker-dealer but will not receive New Notes for its own account in exchange for Old Notes, neither the undersigned nor any such other person is engaged in or intends to participate in the distribution of such New Notes and (iv) neither the undersigned nor any such other person is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or, if the undersigned is an "affiliate," that the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer (whether or not it is also an "affiliate") that will receive New Notes for its own account in exchange for Old Notes, it represents that such Old Notes were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The enclosed Letter to Clients contains an authorization by the beneficial owners of the Old Notes for you to make the foregoing representations. The Company will not pay any fee or commission to any broker or dealer or to any other persons (other than the Exchange Agent) in connection with the solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company will pay or cause to be paid any transfer taxes payable on the transfer of Old Notes to it, except as otherwise provided in Instruction 7 of the enclosed Letter of Transmittal. Additional copies of the enclosed material may be obtained from the undersigned. Very truly yours, WILMINGTON TRUST COMPANY EX-99.4 28 LETTER TO CLIENTS EXHIBIT 99.4 Letter to Clients for Tender of 9 7/8% Senior Subordinated Notes Due 2007 in Exchange for 9 7/8% Series B Senior Subordinated Notes Due 2007 MBW FOODS INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. To Our Clients: We are enclosing herewith a Prospectus, dated ______________, 1997, of MBW Foods Inc. (the "Company"), a Delaware corporation, and a related Letter of Transmittal (which together constitute the "Exchange Offer") relating to the offer by the Company, to exchange its 9 7/8% Series B Senior Subordinated Notes Due 2007 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its issued and outstanding 9 7/8% Senior Subordinated Notes Due 2007 (the "Old Notes"), upon the terms and subject to the conditions set forth in the Exchange Offer. The Exchange Offer is not conditioned upon any minimum number of Old Notes being tendered. We are the holder of record of Old Notes held by us for your own account. A tender of such Old Notes can be made only by us as the record holder and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Old Notes held by us for your account. We request instructions as to whether you wish to tender any or all of the Old Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. We also request that you confirm that we may on your behalf make the representations contained in the Letter of Transmittal. Pursuant to the Letter of Transmittal, each holder of Old Notes will represent to the Company that (i) the New Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution within the meaning of the Securities Act of such New Notes, (iii) if the undersigned is not a EXHIBIT 99.4 Page 2 broker-dealer, or is a broker-dealer but will not receive New Notes for its own account in exchange for Old Notes, neither the undersigned nor any such other person is engaged in or intends to participate in the distribution of such New Notes and (iv) neither the undersigned nor any such other person is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or, if the undersigned is an "affiliate," that the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer (whether or not it is also an "affiliate") that will receive New Notes for its own account in exchange for Old Notes, it represents that such Old Notes were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Very truly yours, EX-99.5 29 INSTRUCTIONS TO REGISTERED HOLDER EXHIBIT 99.5 Instruction to Registered Holder and/or Book Entry Transfer Participant from Beneficial Owner for Tender of 9 7/8% Senior Subordinated Notes Due 2007 in Exchange for 9 7/8% Series B Senior Subordinated Notes Due 2007 MBW FOODS INC. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. To Registered Holder and/or Participant of the Book-Entry Transfer Facility: The undersigned hereby acknowledges receipt of the Prospectus dated _________________, 1997 (the "Prospectus") of MBW Foods Inc., a Delaware corporation (the "Company"), and the accompanying Letter of Transmittal (the "Letter of Transmittal"), that together constitute the Company's offer (the "Exchange Offer") to exchange its 9 7/8% Series B Senior Subordinated Notes Due 2007 (the "New Notes") for all of its outstanding 9 7/8% Senior Subordinated Notes Due 2007 (the "Old Notes"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus. This will instruct you, the registered holder and/or book-entry transfer facility participant, as to the action to be taken by you relating to the Exchange Offer with respect to the Old Notes held by you for the account of the undersigned. The aggregate face amount of the Old Notes held by you for the account of the undersigned is (FILL IN AMOUNT): $___________________ of the 9 7/8% Senior Subordinated Notes Due 2007. With respect to the Exchange Offer, the undersigned hereby instructs you (CHECK APPROPRIATE BOX): / / To TENDER the following Old Notes held by you for the account of the undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED (IF ANY)): $____________________ / / Not to TENDER any Old Notes held by you for the account of the undersigned. EXHIBIT 99.5 Page 2 If the undersigned instructs you to tender the Old Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representation and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including, but not limited to, the representations, that (i) the New Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary course of business of the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution within the meaning of the Securities Act of 1933, as amended (the "Securities Act") of such New Notes, (iii) if the undersigned is not a broker-dealer, or is a broker-dealer but will not receive New Notes for its own account in exchange for Old Notes, neither the undersigned nor any such other person is engaged in or intends to participate in the distribution of such New Notes and (iv) neither the undersigned nor any such other person is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act or, if the undersigned is an "affiliate," that the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer (whether or not it is also an "affiliate") that will receive New Notes for its own account in exchange for Old Notes, it represents that such Old Notes were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such New Notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. SIGN HERE Name of beneficial owner(s): ---------------------------------------------------- Signature(s): ------------------------------------------------------------------- Name(s) (please print): -------------------------------------------------------- Address: ------------------------------------------------------------------------ Telephone Number: --------------------------------------------------------------- Taxpayer Identification or Social Security Number: ------------------------------ Date: --------------------------------------------------------------------------- EX-99.6 30 GUIDELINES FOR CERT. OF TAXPAYER ID NUMBER EXHIBIT 99.6 ------------ GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.-- Social Security numbers have nine digits separated by two hyphens: i.e., 000- 00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. GIVE THE SOCIAL FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF: - ------------------------ ------------------ 1. An individual's account The individual 2. Two or more individuals (joint account) The actual owner of the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint account) The actual owner of the account or, if joint funds, either person(1) 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint account) The adult or, if the minor is the only contributor, the minor(1) 6. Account in the name of guardian The ward, minor, or or committee for a designated ward, incompetent person(3) minor or incompetent person 7. a. The usual revocable savings The grantor-trustee(1) trust account (grantor is also trustee) b. So-called trust account that is The actual owner(1) not a legal or valid trust under state law EXHIBIT 99.6 Page 2 GIVE THE SOCIAL FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF: - ------------------------ ------------------ 8. Sole proprietorship account The owner(4) 9. A valid trust, estate, or pension trust The legal entity (Do not furnish the identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The organization 11. Religious, charitable, or educational The corporation organization account 12. Partnership account The partnership 13. Association, club or other tax-exempt The organization organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. EXHIBIT 99.6 Page 3 (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency or instrumentality thereof. - - A registered dealer in securities or commodities registered in the United States or a possession of the United States. - - A real estate investment trust. EXHIBIT 99.6 Page 4 - - A common trust fund operated by a bank under section 584(a) of the Code. - - An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1) of the Code. - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under section 1441 of the Code. - - Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner. - - Payments of patronage dividends where the amount received is not paid in money. - - Payments made by certain foreign organizations. - - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852 of the Code). - - Payments described in section 6049(b)(5) of the Code to non-resident aliens. - - Payments on tax-free covenant bonds under section 1451 of the Code. EXHIBIT 99.6 Page 5 - - Payments made by certain foreign organizations. - - Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 605ON of the Code and their regulations. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EXHIBIT 99.6 Page 6 PAYER'S NAME: WILMINGTON TRUST COMPANY SUBSTITUTE Part I--Please Part III--Social Security FORM W-9 provide your TIN Number OR Employer DEPARTMENT OF THE TREASURY in the box at Identification Number INTERNAL REVENUE SERVICE right and certify __________________ by signing and (If awaiting TIN write dating below. "Applied For") Payer's Request Part II--For Payees Exempt From Backup for Taxpayer Identification Withholding, see the enclosed Guidelines for Number (TIN) Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as instructed therein. CERTIFICATION--Under penalties of perjury, I certify that: (1) The Number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) NAME_________________________________ (Please Print) SIGNATURE____________________________ DATE____________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER EXHIBIT 99.6 Page 7 I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all payments with respect to the Old Notes or the New Notes made to me thereafter will be withheld until I provide a number. SIGNATURE_________________________ DATE_________________ -----END PRIVACY-ENHANCED MESSAGE-----