-----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, SoEg+q+9BbG05CDIiHhRHIvAP5EFCMWih0O830+H0a+6rsLhcaCzyuF3U/BZfS2I k4Pbw+4K8niFJnOy3QUASQ== /in/edgar/work/20000817/0000912057-00-038100/0000912057-00-038100.txt : 20000922 0000912057-00-038100.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-038100 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000807 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE FOOD CENTERS INC CENTRAL INDEX KEY: 0000030908 STANDARD INDUSTRIAL CLASSIFICATION: [5411 ] IRS NUMBER: 363548019 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-17871 FILM NUMBER: 704741 BUSINESS ADDRESS: STREET 1: RTE 67 KNOXVILLE RD CITY: MILAN STATE: IL ZIP: 61264 BUSINESS PHONE: 3097877730 MAIL ADDRESS: STREET 1: PO BOX 6700 CITY: ROCK ISLAND STATE: IL ZIP: 61204-6700 8-K 1 a8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): August 7, 2000 EAGLE FOOD CENTERS, INC. (Exact name of registrant as specified in the charter) Commission File Number 0-17871 DELAWARE 36-3548019 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) RT. 67 & KNOXVILLE RD., MILAN, ILLINOIS 61264 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (309) 787-7700 ITEM 3. BANKRUPTCY OR RECEIVERSHIP. The Company filed a Voluntary Petition under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware on February 29, 2000. The Company's First Amended Reorganization Plan (the "Plan") was confirmed by the Court on July 7, 2000. The Plan was consummated on August 7, 2000. On August 9, 2000, the Company issued a press release announcing consummation of the Plan. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated into this Report by reference. A summary of the material terms of the Plan is contained in the Company's Current Report on Form 8-K filed with the Commission on July 24, 2000 (the "July 24 Report"). A copy of the Plan was attached as Exhibit 2.1 to the July 24 Report." ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits: 2.1 Order Pursuant to 11 U.S.C. Sections 105 and 1127(b) Allowing Non-Material, Technical Modification to First Amended Reorganization Plan of Eagle Food Centers, Inc. 4.1 Indenture between Eagle and U.S. Bank Trust National Association, as Trustee, governing the 11% Senior Notes 4.2 Form of 11% Senior Notes (included in section 202 of Exhibit 4.1 above) 10.1 Escrow Agreement between Eagle and U.S. Bank Trust National Association 10.2 Senior Secured Credit Facility with Congress Financial Corporation 99.1 Press Release dated August 9, 2000 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EAGLE FOOD CENTERS, INC. (Registrant) By: /s/ S. Patric Plumley ---------------------------- S. Patric Plumley Senior Vice President- Chief Financial Officer and Secretary Dated: August 17, 2000 INDEX TO EXHIBITS 2.1 Order Pursuant to 11 U.S.C. Sections 105 and 1127(b) Allowing Non-Material, Technical Modification to First Amended Reorganization Plan of Eagle Food Centers, Inc. 4.1 Indenture between Eagle and U.S. Bank Trust National Association, as Trustee, governing the 11% Senior Notes 4.2 Form of 11% Senior Notes (included in section 202 of Exhibit 4.1 above) 10.1 Escrow Agreement between Eagle and U.S. Bank Trust National Association 10.2 Senior Secured Credit Facility with Congress Financial Corporation 99.1 Press Release dated August 9, 2000 EX-2.1 2 ex-2_1.txt EXHIBIT 2.1 Exhibit 2.1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE - - - - - - - - - - - - - - - - - - - -x : In re: : Chapter 11 : EAGLE FOOD CENTERS, INC., : Case No. 00-01311 (RRM) : Debtor. : : - - - - - - - - - - - - - - - - - - - -x ORDER PURSUANT TO 11 U.S.C. ss.ss. 105 AND 1127(b) ALLOWING NON-MATERIAL, TECHNICAL MODIFICATION TO FIRST AMENDED REORGANIZATION PLAN OF EAGLE FOOD CENTERS, INC. Upon the motion, dated August 8, 2000 (the "Motion")(1), of the above-captioned debtor and debtor-in-possession (the "Debtor"), for an Order under 11 U.S.C. ss.ss. 105 and 1127(b) allowing the Debtor to make a non-material, technical modification to the First Amended Reorganization Plan of Eagle Food Centers, Inc. (the "Debtor"); and this Court having determined that granting the relief requested in the Motion is in the best interests of the Debtor, its estate and creditors; and it appearing that proper and adequate notice has been given and that no other or further notice is - ---------- (1) Capitalized terms not defined herein are used as defined in the Motion. necessary; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED AND DECREED THAT: 1. The Motion is GRANTED. 2. The Debtor is authorized to modify the Plan as indicated in the Motion by deleting "and X.B.1" from the first sentence of Article X.C. of the Plan. 3. Notwithstanding anything to the contrary in the Plan, the Disclosure Statement, or the Confirmation Order, the Consummation Date for the Plan is August 7, 2000. Dated: Wilmington, Delaware August ___, 2000 ------------------------------ Honorable Roderick R. McKelvie United States District Judge EX-4.1 3 ex-4_1.txt EXHIBIT 4.1 Exhibit 4.1 - -------------------------------------------------------------------------------- EAGLE FOOD CENTERS, INC. TO U.S. BANK TRUST NATIONAL ASSOCIATION, Trustee Indenture Dated as of August 7, 2000 $85,000,000 11% Senior Notes due April 15, 2005 - -------------------------------------------------------------------------------- EAGLE FOOD CENTERS, INC. Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of August 7, 2000
Trust Indenture Indenture Act Section Section SECTION 310(a)(1)..........................................................609 .....................................................................(a)(2)609 .....................................................................(a)(3)Not Applicable .....................................................................(a)(4)Not Applicable ........................................................................(b)608 610 SECTION 311(a).............................................................613 ........................................................................(b)613 .....................................................................(b)(2) SECTION 312(a).............................................................701 702(a) ........................................................................(b)702(b) ........................................................................(c)702(c) SECTION 313(a).............................................................703(a) ........................................................................(b) ........................................................................(c)703(a) 703(b) ........................................................................(d)703 SECTION 314(a).............................................................704 ........................................................................(b)Not Applicable .....................................................................(c)(1)102 .....................................................................(c)(2)102 .....................................................................(c)(3)Not Applicable ........................................................................(d)Not Applicable ........................................................................(e)102 SECTION 315(a).............................................................601 ........................................................................(b)602 703(a) ........................................................................(c)601 ........................................................................(d)601 .....................................................................(d)(1)601 .....................................................................(d)(2)601 .....................................................................(d)(3)601 ........................................................................(e)514 SECTION 316(a).............................................................502 ..................................................................(a)(1)(A)502 512 ..................................................................(a)(1)(B)513 .....................................................................(a)(2)Not Applicable ........................................................................(b)508 SECTION 317(a)(1)..........................................................503 .....................................................................(a)(2)504 ........................................................................(b)1003 SECTION 318(a).............................................................107
- ---------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS Page ARTICLE I Definitions and Other Provisions of General Application SECTION 101..................................................Definitions 1 SECTION 102.........................Compliance Certificates and Opinions 18 SECTION 103......................Form of Documents Delivered to Trustee 19 SECTION 104................................Acts of Holders; Record Date 19 SECTION 105.......................Notices, etc., to Trustee and Company 20 SECTION 106...................................Notice to Holders; Waiver 21 SECTION 107...........................Conflict with Trust Indenture Act 21 SECTION 108...................Effect of Headings and Table of Contents 22 SECTION 109......................................Successors and Assigns 22 SECTION 110.........................................Separability Clause 22 SECTION 111.......................................Benefits of Indenture 22 SECTION 112...............................................Governing Law 22 SECTION 113..............................................Legal Holidays 22 SECTION 114..................................No Recourse Against Others 23 ARTICLE II Security Forms SECTION 201.............................................Forms Generally 23 SECTION 202....................................Form of Face of Security 23 SECTION 203.................................Form of Reverse of Security 25 SECTION 204.............Form of Trustee's Certificate of Authentication 28 ARTICLE III The Securities SECTION 301.............................................Title and Terms 28 SECTION 302...............................................Denominations 29 SECTION 303..............Execution, Authentication, Delivery and Dating 29 SECTION 304........................................Temporary Securities 30 SECTION 305.........Registration, Registration of Transfer and Exchange 30 i SECTION 306............Mutilated, Destroyed, Lost and Stolen Securities 31 SECTION 307..............Payment of Interest; Interest Rights Preserved 32 SECTION 308.......................................Persons Deemed Owners 34 SECTION 309................................................Cancellation 34 SECTION 310.....................................Computation of Interest 34 ARTICLE IV Satisfaction and Discharge SECTION 401.....................Satisfaction and Discharge of Indenture 34 SECTION 402..................................Application of Trust Money 36 ARTICLE V Remedies SECTION 501...........................................Events of Default 36 SECTION 502..........Acceleration of Maturity; Rescission and Annulment 38 SECTION 503.....Collection of Indebtedness and Suits for Enforcement by ................................................................Trustee 40 SECTION 504............................Trustee May File Proofs of Claim 40 SECTION 505.Trustee May Enforce Claims Without Possession of Securities 41 SECTION 506..............................Application of Money Collected 41 SECTION 507.........................................Limitation on Suits 42 SECTION 508........Unconditional Right of Holders to Receive Principal, ...................................................Premium and Interest 42 SECTION 509..........................Restoration of Rights and Remedies 43 SECTION 510..............................Rights and Remedies Cumulative 43 SECTION 511................................Delay or Omission Not Waiver 43 SECTION 512..........................................Control by Holders 43 SECTION 513.....................................Waiver of Past Defaults 44 SECTION 514.......................................Undertaking for Costs 44 SECTION 515............................Waiver of Stay or Execution Laws 44 ARTICLE VI The Trustee SECTION 601.........................Certain Duties and Responsibilities 45 SECTION 602..........................................Notice of Defaults 45 ii SECTION 603...................................Certain Rights of Trustee 45 SECTION 604......Not Responsible for Recitals or Issuance of Securities 46 SECTION 605.........................................May Hold Securities 47 SECTION 606.........................................Money Held in Trust 47 SECTION 607..............................Compensation and Reimbursement 47 SECTION 608.....................Disqualification; Conflicting Interests 48 SECTION 609.....................Corporate Trustee Required; Eligibility 48 SECTION 610...........Resignation and Removal; Appointment of Successor 48 SECTION 611......................Acceptance of Appointment by Successor 49 SECTION 612.Merger, Conversion, Consolidation or Succession to Business 50 SECTION 613...........Preferential Collection of Claims Against Company 50 ARTICLE VII Holders' Lists and Reports by Trustee and Company SECTION 701...Company to Furnish Trustee Names and Addresses of Holders 51 SECTION 702......Preservation of Information; Communications to Holders 51 SECTION 703..........................................Reports by Trustee 51 SECTION 704..........................................Reports by Company 52 ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease SECTION 801......Company May Consolidate, Etc., and Sales and Purchases ........................................of Assets Only on Certain Terms 52 SECTION 802.......................................Successor Substituted 55 ARTICLE IX Supplemental Indentures SECTION 901..........Supplemental Indentures Without Consent of Holders 55 SECTION 902.............Supplemental Indentures with Consent of Holders 56 SECTION 903........................Execution of Supplemental Indentures 57 SECTION 904...........................Effect of Supplemental Indentures 57 SECTION 905.........................Conformity with Trust Indenture Act 57 SECTION 906..........Reference in Securities to Supplemental Indentures 57 iii ARTICLE X Covenants SECTION 1001..................Payment of Principal, Premium and Interest 58 SECTION 1002.............................Maintenance of Office or Agency 58 SECTION 1003.............Money for Security Payments to be Held in Trust 58 SECTION 1004...................................................Existence 60 SECTION 1005...................................Maintenance of Properties 60 SECTION 1006...........................Payment of Taxes and Other Claims 60 SECTION 1007....................................Maintenance of Insurance 60 SECTION 1008..................................Limitation on Company Debt 61 SECTION 1009...........Limitation on Subsidiary Debt and Preferred Stock 62 SECTION 1010...........................Limitation on Restricted Payments 62 SECTION 1011...Limitations Concerning Distributions by Subsidiaries, etc 64 SECTION 1012.........................................Limitation on Liens 65 SECTION 1013...............Limitation on Sale and Leaseback Transactions 68 SECTION 1014..................Limitation on Transactions with Affiliates 68 SECTION 1015....................Limitation on Certain Asset Dispositions 69 SECTION 1016....Limitation on Issuances of Capital Stock of Subsidiaries 71 SECTION 1017...........................................Change of Control 71 SECTION 1018..........................Provision of Financial Information 73 SECTION 1019.........................Statement by Officers as to Default 73 SECTION 1020......................................................Rating 73 SECTION 1021.................................Waiver of Certain Covenants 73 ARTICLE XI Redemption of Securities SECTION 1101.........................................Right of Redemption 74 SECTION 1102....................................Applicability of Article 74 SECTION 1103.......................Election to Redeem; Notice to Trustee 74 SECTION 1104...........Selection by Trustee of Securities to Be Redeemed 74 SECTION 1105........................................Notice of Redemption 75 SECTION 1106.................................Deposit of Redemption Price 75 SECTION 1107.......................Securities Payable on Redemption Date 76 SECTION 1108.................................Securities Redeemed in Part 76 iv ARTICLE XII Defeasance SECTION 1201...........Company's Option to Effect Defeasance or Covenant ..............................................................Defeasance 77 SECTION 1202....................................Defeasance and Discharge 77 SECTION 1203.............Conditions to Defeasance or Covenant Defeasance 77 SECTION 1204.......Deposited Money and U.S. Government Obligations to be ...........................Held in Trust; Other Miscellaneous Provisions 79 SECTION 1205...............................................Reinstatement 79 v INDENTURE, dated as of August 7, 2000, between Eagle Food Centers, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at Route 67 and Knoxville Road, Milan, Illinois 61264, and U.S. Bank Trust National Association, a national banking association duly organized and existing under the laws of the United States of America having its principal office at 180 East Fifth Street, St. Paul, Minnesota 55101, as Trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 11% Senior Notes due April 15, 2005 of substantially the tenor and amount hereinafter set forth (the "Securities"), and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE I Definitions and Other Provisions of General Application SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; 1 (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles (whether or not such is indicated herein), and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted as consistently applied by the Company at the date of this instrument; (4) unless otherwise specifically set forth herein, all calculations or determinations of a Person shall be performed or made on a consolidated basis in accordance with generally accepted accounting principles; and (5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Six, are defined in that Article. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any Person means any other Person (i) which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such Person, (ii) which directly or indirectly through one or more intermediaries beneficially owns or holds 10% or more of the combined voting power of the total Voting Stock of such Person or (iii) of which 10% or more of the combined voting power of the total Voting Stock (or, in the case of a Person which is not a corporation, 10% or more of the equity interest) directly or indirectly through one or more intermediaries is beneficially owned or held by such Person, or a Subsidiary or Joint Venture Subsidiary of such Person. "Asset Disposition" by any Person means any transfer, conveyance, sale, lease or other disposition by such Person or any of its Subsidiaries (including a consolidation or merger or other sale of any such Subsidiary with, into or to another Person in a transaction in which such Subsidiary ceases to be a Subsidiary, but excluding a disposition by a Subsidiary of such Person to such Person or a Wholly Owned Subsidiary of such Person or by such Person to a Wholly Owned Subsidiary of such Person) of (i) shares of Capital Stock (other than directors' qualifying shares) 2 or other ownership interests of a Subsidiary or Joint Venture Subsidiary of such Person, (ii) substantially all of the assets of such Person or any of its Subsidiaries representing a division or line of business or (iii) other assets or rights of such Person or any of its Subsidiaries outside of the ordinary course of business. "Attributable Value" means, as to any particular lease under which any Person is at the time liable other than a Capital Lease Obligation, and at any date as of which the amount thereof is to be determined, the total net amount of rent required to be paid by such Person under such lease during the initial term thereof as determined in accordance with generally accepted accounting principles, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a Capital Lease Obligation with like term in accordance with generally accepted accounting principles. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. "Attributable Value" means, as to a Capital Lease Obligation under which any Person is at the time liable and at any date as of which the amount thereof is to be determined, the capitalized amount thereof that would appear on the face of a balance sheet of such Person in accordance with generally accepted accounting principles. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors or such independent members of the Board of Directors as may be specified in this Indenture and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York, are authorized or obligated by law or executive order to close. "Capital Lease Obligation" of any Person means the obligation to pay rent or other payment amounts under a lease of (or other Debt arrangements conveying the right to use) real or personal property of Such Person which is required to be classified and accounted for as a capital lease or a liability on the face 3 of a balance sheet of such Person in accordance with generally accepted accounting principles. The stated maturity of such obligation shall be the date of the last payment of rent or any otheramount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Capital Stock" of any Person means any and all shares, interests, participations or other equivalents (however designated) of corporate stock of such Person. "Change of Control" has the meaning specified in Section 1017. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" of any Person means Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President, a Vice President or Treasurer, and delivered to the Trustee. "Consolidated Cash Flow Available for Fixed Charges" of any Person means for any period the Consolidated Net Income for such period increased by the sum of (i) Consolidated Interest Expense of such Person for such period, plus (ii) Consoli dated Income Tax Expense of such Person for such period, plus (iii) the consolidated depreciation and amortization expense included in the income statement of such Person for such period, plus (iv) other non-cash charges of such Person for such period deducted from consolidated revenues in determining Consolidated Net Income for such period, minus (v) non-cash items of such Person for such period increasing consolidated revenues in determining Consolidated Net Income for such period. 4 "Consolidated Cash Flow Ratio" of any Person means for any period the ratio of (i) Consolidated Cash Flow Available For Fixed Charges of such Person for such period to (ii) the sum of (A) Consolidated Interest Expense of such Person for such period plus (B) the annual interest expense (including the amortization of debt discount) with respect to any Debt proposed to be Incurred by such Person or its Subsidiaries plus (C) the annual interest expense (including the amortization of debt discount) with respect to any other Debt Incurred by such Person or its Subsidiaries since the end of such period to the extent not included in Clause (ii) (A) minus (D) Consolidated Interest Expense of such Person to the extent included in Clause (ii) (A) with respect to any Debt that will no longer be outstanding as a result of the Incurrence of the Debt proposed to be Incurred; PROVIDED, HOWEVER, that in making such computation, the Consolidated Interest Expense of such Person attributable to interest on any Debt bearing a floating interest rate shall be computed on a pro forma basis as if the rate in effect on the date of computation had been the applicable rate for the entire period; and PROVIDED FURTHER that, in the event such Person or its Subsidiaries has made Asset Dispositions or acquisitions of assets not in the ordinary course of business (including acquisitions of other Persons by merger, consolidation or purchase of Capital Stock) during or after such period, such computation shall be made on a pro forma basis as if the Asset Dispositions or acquisitions had taken place on the first day of such period. "Consolidated Income Tax Expense" of any Person means for any period the consolidated provision for income taxes of such Person for such period calculated on a consolidated basis in accordance with generally accepted accounting principles. "Consolidated Interest Expense" for any Person means for any period the consolidated interest expense included in a consolidated income statement (without deduction of interest income) of such Person for such period calculated on a consolidated basis in accordance with generally accepted accounting principles, including without limitation or duplication (or, to the extent not so included, with the addition of), (i) the amortization of Debt discounts; (ii) any payments or fees with respect to letters of credit, bankers acceptances or similar facilities; (iii) fees with respect to interest rate swap or similar agreements or foreign currency hedge, exchange or similar agreements; and (iv) the portion of any rental obligation in respect of Capital Lease Obligations allocable to interest expense in accordance with generally accepted accounting principles. "Consolidated Net Income" of any Person means for any period the consolidated net income (or loss) of such Person for such period determined on a consolidated basis in accordance with generally accepted accounting principles; PROVIDED that there shall be excluded therefrom (a) the net income (or loss) of any Person acquired by such Person or a Subsidiary of such Person in a pooling-of- 5 interests transaction for any period prior to the date of such transaction, (b) the net income (but not net loss) of any Subsidiary of such Person which is subject to restrictions which prevent the payment of dividends or the making of distributions to such Person to the extent of such restrictions, (c) the net income (or loss) of any Person that is not a Subsidiary of such Person except to the extent of the amount of dividends or other distributions actually paid to such Person by such other Person during such period, (d) gains or losses on Asset Dispositions by such Person or its Subsidiaries (except gains on Asset Dispositions relating to a Joint Venture Subsidiary, including the sale or other disposition of all or a portion of the Capital Stock of a Joint Venture Subsidiary, to the extent of the amount of cash dividends or other cash distributions in respect of its Capital Stock relating to the sale of the property or assets or Capital Stock of such Joint Venture Subsidiary that are actually paid to, and received by, the Company during such period out of funds legally available therefor), (e) all extraordinary gains and extraordinary losses and (f) the cumulative effect of changes in accounting principles in the year of adoption of such change. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in accordance with generally accepted accounting principles, less amounts attributable to Redeemable Stock of such Person; PROVIDED that, with respect to the Company, adjustments following the date of this Indenture to the accounting books and records of the Company in accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the acquisition of control of the Company by another Person shall not be given effect to. "Consolidated Subsidiaries" of any Person means all corporations in which such Person has an interest that would be accounted for on a consolidated basis in such Person's financial statements in accordance with generally accepted accounting principles. "Consolidated Tangible Assets" of any Person means the sum of the Tangible Assets of such Person after eliminating inter-company items, determined on a consolidated basis in accordance with generally accepted accounting principles, including appropriate deductions for any minority interest in Tangible Assets of such Person's Subsidiaries; PROVIDED, HOWEVER, that, with respect to the Company, adjustments following the date of this Indenture to the accounting books and records of the Company in accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the acquisition of control of the Company by another Person shall not be given effect to. "Consolidated Tangible Net Worth" of a Person other than the Company means the consolidated stockholders' equity of such Person and its 6 Consolidated Subsidiaries, as determined in accordance with generally accepted accounting principles, less the net book value as shown by the accounting books and records of such Person and its Consolidated Subsidiaries of (i) all its licenses, patents, patent applications, copyrights, trademarks, trade names, goodwill, non-compete agreements or organiza tional expense and other like intangibles, (ii) unamortized debt discount and expense and (iii) any investment by such Person and its Consolidated Subsidiaries in the Company. "Corporate Trust Office" means the principal office of the Trustee in St. Paul, Minnesota, at which at any particular time its corporate trust business shall be administered. "corporation" means a corporation, association, company, joint-stock company, partnership, business trust or other business entity. "Debt" means (without duplication), with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations Incurred in connection with the acquisition of property, assets or businesses, (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or are being contested in good faith), (v) every Capital Lease Obligation of such Person, (vi) the maximum fixed redemption or repurchase price of Redeemable Stock of such Person at the time of determination, (vii) every net obligation of such Person under interest rate swap or similar agreements or foreign currency hedge, exchange or similar agreements of such Person at the time of determination and (viii) every obligation of the type referred to in Clauses (i) through (vii) of another Person and all dividends of another Person the payment of which, in either case, such Person has Guaranteed or is responsible or liable, directly or indirectly, as obligor, Guarantor or otherwise. "Disqualified Stock" of any Person means 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, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the Company, any Subsidiary of the Company or the holder thereof, in whole or in part, on or prior to the final Stated Maturity of the Securities. 7 "Event of Default" has the meaning specified in Section 501. "Exchange Act" refers to the Securities Exchange Act of 1934 as it may be amended and any successor act thereto. "Expiration Date" has the meaning specified in the definition of Offer to Purchase. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person guaranteeing any Debt of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including, without limitation, any obligation of such Person, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Debt of the payment of such Debt, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings correlative to the foregoing); PROVIDED, HOWEVER, that the Guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case, in the ordinary course of business. "Holder" means a Person in whose name a Security is registered in the Security Register. "Incur" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, Guarantee or otherwise become liable in respect of such Debt or other obligation or the recording, as required pursuant to generally accepted accounting principles or otherwise, of any such Debt or other obligation on the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the foregoing); PROVIDED, HOWEVER, that a change in generally accepted accounting principles that results in an obligation of such Person that exists at such time becoming Debt shall not be deemed an Incurrence of such Debt. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities, and, in the case of distribution of shares of Common Stock of the Company as provided for pursuant to Section 301 hereof, shall mean October 15, 2001 and October 15, 2002, respectively. 8 "Investment" by any Person means any direct or indirect loan, advance or other extension of credit or capital contribution to (by means of transfers of cash or other property to others or payments for property or services for the account or use of others, or otherwise), or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by any other Person. "Joint Venture Subsidiary" means (i) any corporation (a) which would be a Subsidiary but for its designation as a Joint Venture Subsidiary by the Board of Directors of the Company at or before the time of determination as provided below and evidenced by a Board Resolution and (b) in which any Person other than the Company or any of its Affiliates which in the unanimous determination of the independent members of the Board of Directors of the Company evidenced by a Board Resolution has a significant joint or shared equity interest with the Company or any of its Subsidiaries and which is created in connection with the purchase of properties and assets used in the business of the Company, and (ii) any Subsidiary of a Joint Venture Subsidiary. The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) which satisfies the requirements of Clause (i)(b) above to be a Joint Venture Subsidiary unless such Subsidiary owns any Capital Stock of or owns or holds any Lien on any property or assets of the Company or any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated, PROVIDED that immediately after giving pro forma effect to such designation (1) the Consolidated Cash Flow Ratio would be greater than 2.0 to 1 and (2) there would not exist any Event of Default or event that with the passing of time or the giving of notice, or both, would become an Event of Default. The Board of Directors of the Company may designate any Joint Venture Subsidiary to be a Subsidiary, PROVIDED that, immediately after giving pro forma effect to such designation, (1) the Consolidated Cash Flow Ratio would be greater than 2.0 to 1 and (2) there would not exist any Event of Default or event that with the passing of time or the giving of notice, or both, would become an Event of Default. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such property or assets (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). 9 "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Net Available Proceeds" from any Asset Disposition by any Person means cash or readily marketable cash equivalents received (including by way of sale or discounting of a note, installment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquiror of Debt or other obligations relating to such properties or assets or received in any other noncash form) therefrom by such Person, net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred and all federal, state, local, provincial and foreign taxes required to be accrued as a liability as a consequence of such Asset Disposition, (ii) reasonable fees and expenses (including brokerage commissions) Incurred by such Person in connection with such Asset Disposition, (iii) all payments made by such Person or its Subsidiaries on any Debt which is secured by such assets in accordance with the terms of any Lien (or agreement creating such Lien) upon or with respect to such assets or which must by the terms of such Lien, 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, (iv) all payments made with respect to liabilities associated with the assets which are the subject of the Asset Disposition, including, without limitation, trade payables and other accrued liabilities, (v) appropriate amounts to be provided by such Person or any Subsidiary thereof, as the case may be, as a reserve in accordance with generally accepted accounting principles against any liabilities associated with such assets and retained by such Person or any Subsidiary thereof, as the case may be, after such Asset Disposition, including, without limitation, liabilities under any indemnification obligations and severance and other employee termination costs associated with such Asset Disposition, (vi) all distributions and other payments made to minority interest holders in Subsidiaries of such Person or joint ventures as a result of such Asset Disposition and (vii) in connection with any sale of the Company's Westville, Indiana distribution facility, any payment made by the Company after the date of this Indenture for the purchase of the lease existing on the date of this Indenture and covering such facility. "Offer" has the meaning specified in the definition of Offer to Purchase. "Offer to Purchase" means a written offer (the "Offer") sent by the Company by first class mail, postage prepaid, to each Holder at his address appearing in the Security Register on the date of the Offer offering to purchase up to the principal amount of Securities specified in such Offer at the purchase price specified in such Offer (as determined pursuant to this Indenture). Unless otherwise 10 required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase which shall be, subject to any contrary requirements of applicable law, not less than 30 days nor more than 60 days after the date of such Offer and a settlement date (the "Purchase Date") for purchase of Securities within five Business Days after the Expiration Date. The Company shall notify the Trustee at least 15 Business Days (or such shorter period as is acceptable to the Trustee) prior to the mailing of the Offer of the Company's obligation to make an Offer to Purchase, and the Offer shall be mailed by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The Offer shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Offer to Purchase. The Offer shall also state: (1) the Section of this Indenture pursuant to which the Offer to Purchase is being made; (2) the Expiration Date and the Purchase Date; (3) the aggregate principal amount of the Outstanding Securities offered to be purchased by the Company pursuant to the Offer to Purchase (including, if less than 100%, the manner by which such has been determined pursuant to the Section hereof requiring the Offer to Purchase) (the "Purchase Amount"); (4) the purchase price to be paid by the Company for each $1,000 aggregate principal amount of Securities accepted for payment (as specified pursuant to this Indenture) (the "Purchase Price"); (5) that the Holder may tender all or any portion of the Securities registered in the name of such Holder and that any portion of a Security tendered must be tendered in an integral multiple of $1.00 principal amount; (6) the place or places where Securities are to be surrendered for tender pursuant to the Offer to Purchase; (7) that interest on any Security not tendered or tendered but not purchased by the Company pursuant to the Offer to Purchase will continue to accrue; (8) that on the Purchase Date the Purchase Price will become due and payable upon each Security accepted for payment pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date; 11 (9) that each Holder electing to tender a Security pursuant to the Offer to Purchase will be required to surrender such Security at the place or places specified in the Offer prior to the close of business on the Expiration Date (such Security being, if the Company or the Trustee so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing); (10) that Holders will be entitled to withdraw all or any portion of Securities tendered if the Company (or its Paying Agent) receives, not later than the close of business on the Expiration Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security the Holder tendered, the certificate number of the Security the Holder tendered and a statement that such Holder is withdrawing all or a portion of his tender; (11) that (a) if Securities in an aggregate principal amount less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase all such Securities and (b) if Securities in an aggregate principal amount in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase Securities having an aggregate principal amount equal to the Purchase Amount on a pro rata basis (with such adjustments as may be deemed appropriate so that only Securities in denominations of $1.00 or integral multiples thereof shall be purchased); and (12) that in case of any Holder whose Security is purchased only in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Security so tendered. Any Offer to Purchase shall be governed by and effected in accordance with the Offer for such Offer to Purchase. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. 12 "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, EXCEPT: (ii) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (iii) Securities for whose payment or redemption money or U.S. Government Obligations in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; PROVIDED that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iv) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a BONA FIDE purchaser in whose hands such Securities are valid obligations of the Company; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "PARI PASSU", when used with respect to the ranking of any Debt of any Person in relation to other Debt of such Person, means that each such Debt (a) either (i) is not subordinated in right of payment to any other Debt of such Person or (ii) is subordinate in right of payment to the same extent to the same Debt of such Person as is the other Debt and (b) is not subordinate in right of payment to the other or to any Debt of such Person as to which the other is not so subordinate. 13 "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Pro Forma Interest Expense" means, for any period, the pro forma amount of interest, determined on the basis of the interest rate payable on the Securities, that would be payable for such period on a principal amount equal to the aggregate amount of the Net Available Proceeds that, within 12 months of the receipt thereof, have not been used to repay Debt which is PARI PASSU to the Securities, to invest in assets related to the business of the Company or to repurchase Securities. "Purchase Amount" has the meaning specified in the definition of Offer to Purchase. "Purchase Date" has the meaning specified in the definition of Offer to Purchase. "Purchase Price" has the meaning specified in the definition of Offer to Purchase. "Qualified Investment" means the following kinds of instruments if, on the date of purchase or other acquisition of any such instrument by the Company or any Subsidiary thereof, the remaining term to maturity thereof is not more than one year: (i) obligations issued or unconditionally guaranteed as to principal and interest by the United States or by any agency or authority controlled or supervised 14 by and acting as an instrumentality of the United States; (ii) obligations (including, but not limited to, demand or time deposits, bankers' acceptances and certificates of deposit) issued by (a) a depository institution or trust company incorporated under the laws of the United States, any state thereof or the District of Columbia, (b) a U.S. branch office or agency of any foreign depository institution or (c) Wholly Owned Subsidiaries of any U.S. depository institution guaranteed by such U.S. bank or depository, PROVIDED that such U.S. bank, trust company or U.S. branch office or agency has, at the time of the Company's or any Subsidiary's investment therein, or contractual commitment providing for such investment, capital, surplus or undivided profits (as of the date of such institution's most recently published financial statements) in excess of $100,000,000 and the long-term unsecured debt obligations (other than such obligations rated on the basis of the credit of a Person or entity other than such institution) of such institution, at the time of the Company's or such Subsidiary's investment therein or contractual commitment providing for such investment, is rated at least A by Standard & Poor's Corporation or A3 by Moody's Investors Service, Inc.; and (iii) debt obligations (including, but not limited to, commercial paper and medium-term notes) issued or unconditionally guaranteed as to principal and interest by any corporation, state or municipal government or agency or instrumentality thereof, or foreign sovereignty if the commercial paper of such corporation, state or municipal government or foreign sovereignty has, at the time of the Company's or any such Subsidiary's investment therein or contractual commitment providing for such investment, credit ratings of A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., or the debt obligations of such corporation, state or municipal government or foreign sovereignty, at the time of the Company's or any such Subsidiary's investment therein or contractual commitment providing for such investment, have credit ratings of at least A by Standard & Poor's Corporation or A3 by Moody's Investors Service, Inc. "Redeemable Stock" of any Person means any equity security of such Person that by its terms or otherwise is required to be redeemed prior to the final Stated Maturity of the Securities or is redeemable at the option of the holder thereof at any time prior to the final Stated Maturity of the Securities. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date means April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date, or in the case of 15 distributions of shares of Common Stock of the Company as provided for pursuant to Section 301 hereof, shall mean October 15, 2001 and October 15, 2002, respectively. "Responsible Officer", when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payments" has the meaning specified in Section 1010. "Revolving Credit Facility" means the Amended and Restated Loan and Security Agreement, dated as of August 7, 2000, between the Company and Congress Financial Corporation (Central), as such may be amended, modified, supplemented, replaced, renewed, extended, refinanced, refunded or restated from time to time; PROVIDED, that no such amendment, modification, supplement, replacement, renewal, extension, refinancing, refunding or restatement shall constitute a "Revolving Credit Facility" if it allows loans, letters of credit and other principal amounts outstanding at any time in excess of $50,000,000 in the aggregate or if it is secured by any property or assets other than inventory and the proceeds thereof; and PROVIDED FURTHER that in no event shall the aggregate principal amount of Debt outstanding under the Revolving Credit Facility, together with any refinancing or refunding of any such Debt, exceed $50,000,000. "Sale and Leaseback Transaction" of any Person means an arrangement with any lender or investor or to which such lender or investor is a party providing for the leasing by such Person of any property or asset of such Person which has been or is being sold or transferred by such Person after the acquisition thereof or the completion of construction or commencement of operation thereof to such lender or investor or to any person to whom funds have been or are to be advanced by such lender or investor on the security of such property or asset. The stated maturity of such arrangement shall be the date of the last payment of rent or any other amount due under such arrangement prior to the first date on which such arrangement may be terminated by the lessee without payment of a penalty. 16 "Securities" means securities designated in the first paragraph of the RECITALS OF THE COMPANY. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security is due and payable. "Store Swap" means any Asset Disposition by the Company or a Subsidiary of the Company pursuant to which (a) the Company or such Subsidiary exchanges (i) title to property and assets used in the business of the Company for (ii) title to the property and assets of another Person of substantially equivalent fair market value located within 150 miles of Milan, Illinois, for use in the business of the Company and (b) the Company or such Subsidiary, on the one hand, or such Person, on the other hand, pays no cash to the other Person in connection with such Store Swap except to the extent necessary to offset any difference between the fair market value of the respective properties and assets being exchanged. "Subordinated Debt" means Debt of the Company as to which the payment of principal of (and premium, if any) and interest and other payment obligations in respect of such Debt shall be subordinate to the prior payment in full of the Securities. "Subsidiary" of any Person means (i) a corporation more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof; PROVIDED, HOWEVER, that a Joint Venture Subsidiary shall not be deemed to be a Subsidiary for purposes of this Indenture and the Securities. "Tangible Assets" of any Person means, at any date, the gross book value as shown by the accounting books and records of such Person of all its property, both real and personal, less (i) the net book value of all its licenses, patents, patent applications, copyrights, trademarks, trade names, goodwill, non-compete agreements or organizational expenses and other like intangibles, (ii) unamortized 17 Debt discount and expense, (iii) all reserves for depreciation, obsolescence, depletion and amortization of its properties and (iv) all other proper reserves which in accordance with generally accepted accounting principles should be provided in connection with the business conducted by such Person; PROVIDED, HOWEVER, that, with respect to the Company and its Consolidated Subsidiaries, adjustments following the date of this Indenture to the accounting books and records of the Company and its Consolidated Subsidiaries in accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the acquisition of control of the Company by another Person shall not be given effect to. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905; PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "U.S. Government Obligations" means securities that are direct obligations of the United States of America for the payment of which its full faith and credit is pledged which are not callable or redeemable at the option of the issuer thereof. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Voting Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of Securities has such voting power by reason of any contingency. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying 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. SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. 18 Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) 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; (3) a statement that, in the opinion of each 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 (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. 19 Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. ACTS OF HOLDERS; RECORD DATE. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation 20 of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. (d) The ownership of Securities shall be proved by the Security Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular 21 Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. SECTION 107. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein, the Cross-Reference Table and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 110. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and 22 the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 112. GOVERNING LAW. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. SECTION 113. LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or Purchase Date, or at the Stated Maturity, PROVIDED that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Purchase Date or Stated Maturity, as the case may be. SECTION 114. NO RECOURSE AGAINST OTHERS. The Securities and the obligations of the Company under this Indenture are solely obligations of the Company and no officer, director, employee or stockholder, as such, of the Company shall be liable for any failure by the Company to pay any amounts on the Securities when due or perform any such obligation. ARTICLE II Security Forms SECTION 201. FORMS GENERALLY. The Securities and the Trustee's certificates of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. 23 The definitive Securities shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. SECTION 202. FORM OF FACE OF SECURITY. 11% SENIOR NOTES DUE APRIL 15, 2005 No. ____________ $____________ Eagle Food Centers, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ______________________________, or registered assigns, the principal sum of _______________________________ Dollars on April 15, 2005 and to pay interest thereon from August 7, 2000 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 15 and October 15 in each year, commencing October 15, 2000 at the rate of 11% per annum, until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 11% per annum on any overdue principal and premium and on any overdue installment of interest until paid. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than five business days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or 24 currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: Eagle Food Centers, Inc. [Seal] By Title: Attest: - ----------------------------------- Title: SECTION 203. FORM OF REVERSE OF SECURITY. This Security is one of a duly authorized issue of Securities of the Company designated as its 11% Senior Notes due April 15, 2005 (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $85,000,000, issued and to be issued under an Indenture, dated as of August 7, 2000 (herein called the "Indenture"), between the Company and U.S. Bank Trust National Association, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities 25 thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Securities are subject to redemption upon not less than 30 nor more than 60 days' notice by mail, at any time, in whole or in part, at the election of the Company, at 100% of the principal amount, together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. The Securities do not have the benefit of any sinking fund obligations. In the event of redemption or purchase pursuant to an Offer to Purchase of this Security in part only, a new Security or Securities for the unredeemed or unpurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture provides that, subject to certain conditions, if (i) certain Net Available Proceeds are available to the Company as a result of Asset Dispositions, (ii) a Change of Control occurs or (iii) certain Net Available Proceeds are available to the Company as a result of Sale and Leaseback Transactions, the Company shall be required to make an Offer to Purchase for all or a specified portion of the Securities. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in 26 exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $1.00 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Interest on this Security shall be computed on the basis of a 360-day year of twelve 30-day months. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York. 27 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased in its entirety by the Company pursuant to Section 801, 1015 or 1017 of the Indenture, check the box: |_| If you want to elect to have only a part of this Security purchased by the Company pursuant to Section 801, 1015 or 1017 of the Indenture, state the amount: $________. Dated: Your Signature:___________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee: _____________________________________ (Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the trustee) ------------------------------------- Employer Identification Number/ Social Security Number SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Securities referred to in the within-mentioned Indenture. U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By ________________________________ Authorized Signatory 28 ARTICLE III The Securities SECTION 301. TITLE AND TERMS. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $85,000,000, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306, 906 or 1108 or in connection with an Offer to Purchase pursuant to Section 801, 1015 or 1017. The Securities shall be known and designated as the "11% Senior Notes due April 15, 2005" of the Company. Their Stated Maturity shall be April 15, 2005 and they shall bear interest at the rate of 11% per annum, from August 7, 2000 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, payable semi-annually on April 15, and October 15 commencing October 15, 2000 until the principal thereof is paid or made available for payment. In addition, (i) unless a Change of Control shall have occurred prior to October 15, 2001, the Holders of Outstanding Securities shall be entitled to the distribution of their PRO RATA share of 5% (five percent) of the authorized Common Stock of the Company (rounded to the closest number of whole shares), and (ii) unless a Change of Control shall have occurred prior to October 15, 2002, the Holders of Outstanding Securities shall be entitled to the distribution of their PRO RATA share of a further 5% (five percent) of the authorized Common Stock of the Company (rounded to the closest number of whole shares). The principal of (and premium, if any) and interest on the Securities shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, maintained for such purpose and at any other office or agency maintained by the Company for such purpose; PROVIDED, HOWEVER, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. The Securities shall be subject to repurchase by the Company pursuant to an Offer to Purchase as provided in Sections 801, 1015 and 1017. The Securities shall be redeemable as provided in Article Eleven. SECTION 302. DENOMINATIONS. 29 The Securities shall be issuable only in registered form without coupons and only in denominations of $1.00 and any integral multiple thereof. SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. SECTION 304. TEMPORARY SECURITIES. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of 30 definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 1002, 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 a like principal amount of definitive Securities of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration or transfer of any Security at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. 31 No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1108 or in accordance with any Offer to Purchase pursuant to Section 801, 1015 or 1017 not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 1104 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporane ously outstanding. If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Trustee and the Company and any agent of either of them harmless from any loss which either of them may suffer if a Security is replaced, then, in the absence of notice to the Trustee that such Security has been acquired by a BONA FIDE purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. 32 Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest (including the distribution of shares of Common Stock of the Company as provided for pursuant to Section 301 hereof) on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in 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 satisfac tory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 10 business days and not less than five business days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the 33 notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than five business days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of, transfer of, or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. CANCELLATION. All Securities surrendered for payment, redemption, registration of transfer or exchange or any Offer to Purchase pursuant to Section 801, 1015 or 1017 shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities 34 shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee and a Certificate of Destruction shall be delivered to the Company. SECTION 310. COMPUTATION OF INTEREST. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE IV Satisfaction and Discharge SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money or U.S. Government Obligations has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore deliv ered to the Trustee for cancellation (i) have become due and payable, or 35 (ii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), or (ii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose, money or U.S. Government Obligations sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction arid discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture pursuant to this Article Four, the obligations of the Company to the Trustee under Section 607 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. APPLICATION OF TRUST MONEY. (a) Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee. 36 (b) All shares of Common Stock of the Company required for the distribution to Holders as provided pursuant to Section 301 hereof shall be deposited with the Trustee shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the distribution, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto. In the event that any shares of Common Stock of the Company are not distributable and will not become distributable (due to the occurrence of a Change of Control or the satisfaction and discharge of this Indenture as provided in Section 401 hereof) all such shares shall be transferred to the Company. ARTICLE V Remedies SECTION 501. EVENTS OF DEFAULT. "Event of Default", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be 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): (1) default in the payment of the principal of (or premium, if any, on) any Security at its Maturity; or (2) default in the payment of any interest (including the distribution of Common Stock of the Company as provided for pursuant to Section 301 hereof) upon any Security when it becomes due and payable, and continuance of such default for a period of 30 days; or (3) default, on the applicable Purchase Date, in the purchase of Securities required to be purchased by the Company pursuant to an Offer to Purchase as to which an Offer has been mailed to Holders; or (4) default in the performance, or breach, of Section 801; or (5) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a 37 period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (6) a default or defaults under any bond(s), debenture(s), note(s) or other evidence(s) of Debt for money borrowed by the Company or any Subsidiary of the Company or under any mortgage(s), indenture(s) or instru ment(s) under which there may be issued or by which there may be secured or evidenced any Debt of such type by the Company or any such Subsidiary with a principal amount then outstanding (or, if such Debt provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, in an amount not greater than such lesser amount), individually or in the aggregate, of at least $3,000,000 or greater, whether such Debt now exists or shall hereafter be created, (i) which results from a failure to pay any portion of the principal of such Debt when due or (ii) shall have resulted in such Debt becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; or (7) a final judgment or final judgments for the payment of money are entered against the Company or any Subsidiary of the Company in an aggregate amount in excess of $1,000,000 by a court or courts of competent jurisdiction, which judgments remain undischarged or unbonded for a period (during which execution shall not be effectively stayed) of 60 days after the right to appeal all such judgments has expired; or (8) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Subsidiary of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any such Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any such Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any such Subsidiary or of any substantial part of the property of the Company or any such Subsidiary, or ordering the winding up or liquidation of the affairs of the Company or any such Subsidiary, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or 38 (9) the commencement by the Company or any Subsidiary of the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or any such Subsidiary to the entry of a decree or order for relief in respect of the Company or any Subsidiary of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insol vency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or any Subsidiary of the Company, or the filing by the Company or any such Subsid iary of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by the Company or any such Subsidiary to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any Subsidiary of the Company or of any substantial part of the property of the Company or any Subsidiary of the Company, or the making by the Company or any Subsidiary of the Company of an assignment for the benefit of creditors, or the admission by the Company or any such Subsidiary in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any such Subsidiary in furtherance of any such action. SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than an Event of Default specified in Section 501(8) or (9)) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal shall become immediately due and payable. If an Event of Default specified in Section 501(8) or (9) occurs, the principal of and any accrued interest on the Securities then Outstanding shall IPSO FACTO become immediately due and payable without any declaration or other Act on the part of the Trustee or any Holder. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if 39 (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all Securities, (B) the principal of (and premium, if any, on) any Securities which have become due otherwise than by such declaration of acceleration (including any Securities required to have been purchased on the Purchase Date pursuant to an Offer to Purchase made by the Company) and, to the extent that payment of such interest is lawful, interest thereon at the rate provided by the Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate provided by the Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, it any, on) any Security at the Maturity thereof or, with respect to 40 any Security required to have been purchased pursuant to an Offer to Purchase made by the Company, at the Purchase Date thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate provided by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such 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 reasonable compensation, expenses, disburse ments and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. 41 No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; and SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Secu rities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively. SECTION 507. LIMITATION ON SUITS. No Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless 42 (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Sections 301, 307 and 402 hereof) interest (including the distribution of Common Stock of the Company as provided for pursuant to Section 301 hereof) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or in the case of an Offer to Purchase made by the Company and required to be accepted as to such Security, on the Purchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued 43 or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. CONTROL BY HOLDERS. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, PROVIDED that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. WAIVER OF PAST DEFAULTS. 44 The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on any Security (including any Security which is required to have been purchased pursuant to an Offer to Purchase which has been made by the Company), or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. 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, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company. SECTION 515. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 45 ARTICLE VI The Trustee SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. Except during the continuance of an event of default, 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. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any 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 for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, 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. SECTION 602. NOTICE OF DEFAULTS. The Trustee shall give the Holders notice of any default hereunder as and to the extent provided by the Trust Indenture Act; PROVIDED, HOWEVER, that in the case of any default of the character specified in Section 501(5), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; 46 (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically pre scribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. MAY HOLD SECURITIES. 47 The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent. SECTION 606. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. COMPENSATION AND REIMBURSEMENT. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or 48 resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $25,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a BONA FIDE Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or 49 (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (1) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a BONA FIDE Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a BONA FIDE Holder of a Security for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property (including shares of Common Stock of the Company held pursuant to 50 Section 402 hereof) and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). ARTICLE VII Holders' Lists and Reports by Trustee and Company SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The Company will furnish or cause to be furnished to the Trustee (a) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and 51 (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; EXCLUDING from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities and the corresponding rights and duties of the Trustee, shall be provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 703. REPORTS BY TRUSTEE. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act within 60 days of May 15 of each year and such other the times as may be required thereby and in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when the Securities are listed on any stock exchange. SECTION 704. REPORTS BY COMPANY. 52 The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; PROVIDED that any such information, documents or reports required to be filed with Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease SECTION 801. COMPANY MAY CONSOLIDATE, ETC., AND SALES AND PURCHASES OF ASSETS ONLY ON CERTAIN TERMS. The Company (a) shall not consolidate with or merge into any other Person; (b) shall not permit any other Person to consolidate with or merge into the Company or any Subsidiary of the Company (in a transaction in which such Subsidiary remains a Subsidiary of the Company); (c) shall not, directly or indirectly, transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets; and (d) shall not, and shall not permit any Subsidiary of the Company to, (i) directly or indirectly acquire capital Stock or other ownership interests of any other Person such that such Person becomes a Subsidiary of the Company or (ii) directly or indirectly, purchase, lease or otherwise acquire all or substantially all of the property and assets of any Person (except pursuant to a Sale and Leaseback Transaction permitted under Section 1013) or any existing business (whether existing as a separate entity, subsidiary, division, unit or otherwise) of any Person, if, with respect to subclauses (i) and (ii) of this Clause (d), the amount of consideration (including the fair market value of property other than cash, as determined in good faith by the Board of Directors evidenced by a Board Resolution) paid for such Capital Stock or other ownership interests and/or properties or assets and the amount of any Debt Incurred in connection therewith plus the aggregate amount of consideration (including the fair market value of property other than cash, as determined in good faith by the Board of Directors evidenced by a Board Resolution) paid by the Company or its Subsidiaries for other such acquisitions consummated during the twelve-month period immediately preceding the date of such acquisition and the amount of any Debt Incurred in connection therewith exceeds 5% of the Consolidated Tangible Assets of the Company as of the latest available consolidated balance sheet of the Company prior to such acquisition; UNLESS, in any such transaction: 53 (1) in the case the Company shall consolidate with or merge into another Person or shall directly or indirectly transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by transfer, conveyance, sale, lease or other disposition all or substantially all of the properties and assets of the Company as an entirety (for purposes of this Article Eight, a "Successor Company") shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume by an indenture supplemental hereto executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately before and after giving effect to such transaction and treating any Debt Incurred by the Company or a Subsidiary of the Company as a result of such transaction as having been Incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default shall have happened and be continuing; (3) immediately after giving effect to such transaction, the Consoli dated Net Worth of the Company or, if applicable, the Successor Company shall be equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction; (4) immediately after giving effect to such transaction, and treating any Debt Incurred by the Company or any Subsidiary of the Company as a result of such transaction as having been Incurred at the time of such transaction, the Company or the Successor Company could Incur at least $1.00 of additional Debt pursuant to the first paragraph under Section 1008; (5) if, as a result of any such transaction, property and assets of the Company or any Subsidiary of the Company (other than property or assets that are being acquired in such acquisition) would become subject to a Lien which would not be permitted by Section 1012, the Company or, if applicable, the Successor Company, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) Debt secured by such Lien in accordance with Section 1012; and 54 (6) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer, lease or acquisition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with, and, with respect to such Officer's Certificate, setting forth the manner of determination of the Consoli dated Net Worth and the ability to Incur Debt in accordance with Clause (4) of Section 801, the Company or, if applicable, of the Successor Company as required pursuant to the foregoing. In the event that, in connection with a sale or other disposition of the Company or any transfer, conveyance, sale, lease or other disposition of all or substantially all of the Company's properties and assets (whether by means of a merger, consolidation, sale of assets or otherwise), the Company makes an Offer to Purchase all Outstanding Notes at a purchase price in cash equal to 100% of their principal amount, plus accrued interest to the Purchase Date, then such transaction and any financing or other transactions in connection therewith shall be deemed to have been Incurred not in violation of any covenant of this Indenture, irrespective of whether such transaction or financing would otherwise violate any covenant of this Indenture (PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Purchase Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307). Holders will have the right to have their Securities repurchased if such Securities are tendered for repurchase no later than five business days prior to the applicable repurchase date. Each Holder shall be entitled to tender all or any portion of the Securities owned by such Holder pursuant to the Offer to Purchase, subject to the requirement that any portion of a Security tendered must be tendered in an integral multiple of $1.00 principal amount. The obligations set forth in Section 1017 (b) shall also apply to any Offer to Purchase made pursuant to this Section 801 as if fully set forth herein. Notwithstanding that the Company shall have made any Offer with respect to an Offer to Purchase pursuant to this Section 801, the Company shall have no obligation to consummate any transaction that is the subject of any such Offer, PROVIDED that the Company shall mail a notice to Holders stating that the proposed transaction was not consummated and that Holders will not have the right to have their Securities repaid by the Successor Company not later than two business days after the Company determines that any such transaction will not be consummated, and the Company, at its own cost, will promptly return by first class mail any Securities tendered for prepayment to their respective Holders. 55 SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any transfer, conveyance, sale, lease or other disposition of all or substantially all of the properties and assets of the Company as an entirety in accordance with Section 801, the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE IX Supplemental Indentures SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of any Holder, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) 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; or (3) to secure the Securities pursuant to the requirements of Section 1012 or otherwise; or (4) to comply with any requirements of the Commission in order to effect and maintain the qualification of this Indenture under the Trust Indenture Act; or (5) to cure any ambiguity, defect or inconsistency with any other provision herein, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions 56 with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, PROVIDED such action pursuant to this Clause (5) shall not adversely affect the interests of the Holders in any material respect. SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable thereon, or change the place of payment where, or the coin or currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforce ment of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date or, in the case of an Offer to Purchase which has been made, on or after the applicable Purchase Date), or (2) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 513 or Section 1021, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, or (4) following the mailing of an Offer with respect to an Offer to Purchase pursuant to Section 801, 1015 or 1017, modify the provisions of this Indenture with respect to such Offer to Purchase in a manner adverse to such Holder. 57 It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. 58 ARTICLE X Covenants SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company will duly and punctually pay the principal of and interest on the Securities in accordance with the terms of the Securities and this Indenture. The Company will, on the date of issuance of the Securities, deposit with the Trustee shares representing 10% (ten percent) of the authorized Common Stock of the Company. SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Securities may be presented or surrendered for any or 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, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. 59 Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of (and premium, if any) or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money or U.S. Government Obligations deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such 60 trust money, and all liability of the Company as trustee thereof, shall thereupon cease. SECTION 1004. EXISTENCE. Subject to Article Eight and Section 1015, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER, that the Company shall not be required to preserve any such right or franchise if the Board of Directors in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 1005. MAINTENANCE OF PROPERTIES. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary of the Company to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, as determined by the Board of Directors in good faith, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries or upon the income, profits or property of the Company or any of its Subsidiaries, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any of its Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1007. MAINTENANCE OF INSURANCE. 61 The Company shall, and shall cause its Subsidiaries to, keep at all times all of their properties which are of an insurable nature insured against loss or damage with insurers believed by the Company to be responsible to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in accordance with good business practice. The Company shall, and shall cause its Subsidiaries to, use the proceeds from any such insurance policy to repair, replace or otherwise restore the property to which such proceeds relate. SECTION 1008. LIMITATION ON COMPANY DEBT. (a) The Company shall not Incur any Debt UNLESS, immediately after giving effect to the Incurrence of such Debt, the Consolidated Cash Flow Ratio for the four full fiscal quarters next preceding the Incurrence of such Debt would be greater than 2.0 to 1. (b) Notwithstanding the foregoing paragraph, the Company may Incur the following Debt: (i) Debt under the Revolving Credit Facility Incurred solely to fund the Company's working capital requirements and for general corporate purposes in an aggregate principal amount not to exceed $50,000,000 at any one time outstanding; (ii) Debt owed by the Company to any Wholly Owned Subsidiary of the Company (PROVIDED that such Debt is at all times held by a Person which is a Wholly Owned Subsidiary of the Company) or Debt owed by a Subsidiary of the Company to the Company or a Wholly Owned Subsidiary of the Company (PROVIDED that such Debt is at all times held by the Company or a Person which is a Wholly Owned Subsidiary of the Company); (iii) Capital Lease Obligations outstanding on the date of this Indenture; (iv) Capital Lease Obligations relating to property used in the business of the Company after the date of this Indenture; and (v) Debt Incurred to renew, extend, refinance or refund any Debt permitted in the immediately preceding paragraph (a) and in Clauses (ii), (iii) and (iv) above or the Securities; PROVIDED, HOWEVER, that such Debt does not exceed the principal amount (or, if such Debt provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, in an amount not greater than such lesser 62 amount) of Debt so renewed, extended, refinanced or refunded; and PROVIDED FURTHER, that Debt the proceeds of which are used to refinance or refund Debt which is PARI PASSU to the Securities or Debt which is subordinate in right of payment to the Securities shall only be permitted if (A) in the case of any renewal, refinancing, refunding or extension of Debt which is PARI PASSU to the Securities, the renewal, refinancing, refunding or extension of Debt is made PARI PASSU to the Securities or subordinated to the Securities, and, in the case of any renewal, refinancing, refunding or extension of Debt which is subordinated to the Securities, the renewal, refinancing, refunding or extension Debt is made subordinate to the Securities to substantially the same extent as the Debt being renewed, refinanced, refunded or extended and (B) in any such case, the renewal, refinancing, refunding or extension Debt by its terms, or by the terms of any agreement or instrument pursuant to which such Debt is issued, (x) does not provide for payments of all or a portion of the principal of such Debt at the stated maturity thereof or by way of a sinking fund applicable thereto or by way of any mandatory redemption, defeasance, retirement or repurchase thereof by the Company (including any redemption, retirement or repurchase which is contingent upon events or circumstances, but excluding any retirement required by virtue of acceleration of such Debt upon an event of default thereunder), in each case prior to the stated maturity of the Debt being renewed, refinanced, refunded or extended and (y) does not permit redemption or other retirement (including pursuant to an offer to purchase made by the Company) of such Debt at the option of the holder thereof prior to the final stated maturity of the Debt being refinanced or refunded. SECTION 1009. LIMITATION ON SUBSIDIARY DEBT AND PREFERRED STOCK. The Company shall not permit any Subsidiary of the Company to Incur or suffer to exist any Debt or issue any Preferred Stock, except (i) Debt owed by a Subsidiary of the Company to the Company or a Wholly Owned Subsidiary of the Company (PROVIDED that such Debt is at all times held by the Company or a Person which is a Wholly Owned Subsidiary of the Company) or (ii) Debt which becomes an obligation of a Subsidiary in accordance with the provisions of Section 801. SECTION 1010. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company (i) shall not, directly or indirectly, declare or pay any dividend, or make any distribution, of any kind or character (whether in cash, property or securities) in respect of any class of its Capital Stock or to the holders of any class of its Capital Stock, (ii) shall not, and shall not permit any Subsidiary or Joint Venture Subsidiary, directly or indirectly, to purchase, redeem or otherwise 63 acquire or retire for value (1) any Capital Stock of the Company or any securities convertible or exchange able into shares of Capital Stock of the Company or (2) any options, warrants or rights to purchase or acquire shares of Capital Stock of the Company or securities convertible or exchangeable into shares of Capital Stock of the Company, (iii) shall not make, or permit any Subsidiary of the Company to make, any Investment (which shall not include any payment of a management or servicing fee by a Joint Venture Subsidiary to an Affiliate for BONA FIDE management services or servicing rendered by such Affiliate) in, or payment on a Guarantee of any obligation of, any Affiliate or Joint Venture Subsidiary, other than the Company or a Wholly Owned Subsidiary of the Company (which is not a Joint Venture Subsidiary) which is a Wholly Owned Subsidiary prior to such Investment, and (iv) shall not, and shall not permit any Subsidiary or Joint Venture Subsidiary to, redeem, defease (including, but not limited to, legal or covenant defeasance), repurchase, retire or otherwise acquire or retire for value prior to any scheduled maturity, repayment or sinking fund payment Debt of the Company (other than the Securities) which is subordinate in any respect in right of payment to the Securities (the transactions described in Clauses (i) through (iv) being referred to herein as "Restricted Payments"), if at the time thereof: (1) an Event of Default, or an event that with the lapse of time or the giving of notice, or both, would constitute an Event of Default, shall have occurred and is continuing, (2) upon giving effect to such Restricted Payment, the Company could not Incur at least $1.00 of additional Debt pursuant to the first paragraph under Section 1008, or (3) upon giving effect to such Restricted Payment, the aggregate of all Restricted Payments (net of any repayment of a Restricted Payment described under clause (iii) of the definition of Restricted Payment) made subsequent to the date of this Indenture by the Company and its Subsidiaries and Joint Venture Subsidiaries would exceed the sum of: (A) 50% (or minus 100% in the event of a deficit) of cumulative Consolidated Net Income of the Company for the period commencing August 1, 2000 and ending on the last day of the last full fiscal quarter ending immediately preceding the date of such Restricted Payment; plus (B) 100% of the aggregate net proceeds, including the fair value of property other than cash (determined in good faith by the Board of Directors and evidenced by a Board Resolution), from the issuance after the date of this Indenture of Capital Stock (other than 64 Disqualified Stock or Capital Stock issued as described in Clause (c) below) of the Company (and, in the event the Company merges or consolidates with another corporation in a transaction in which the outstanding Common Stock of the Company prior to the transaction is cancelled, the Consoli dated Tangible Net Worth of such other corporation), other than to a Subsidiary of the Company or a Joint Venture Subsidiary, or options, warrants or other rights on Capital Stock (other than Disqualified Stock) of the Company; plus (C) the principal amount of Debt that has been converted into Capital Stock (other than Disqualified Stock) of the Company after the date of this Indenture (or, if such Debt provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, in an amount not greater than such lesser amount). (b) Notwithstanding the foregoing limitations of this Section 1010, the following transactions, in an aggregate amount not to exceed $20,000,000, shall not constitute "Restricted Payments" for purposes of this Indenture or the Securities and shall not be subject to any other limitation under this Indenture or the Securities: (i) any direct or indirect declaration or payment of any dividend, or any distribution, in respect of the Company's Capital Stock or to the holders thereof, (ii) any purchase, redemption or other acquisition or retirement for value of (1) any Capital Stock of the Company or any securities convertible or exchangeable into shares of Capital Stock of the Company or (2) any options, warrants or rights to purchase or acquire shares of Capital Stock of the Company or any securities convertible or exchangeable into shares of Capital Stock of the Company, (iii) any Investment in, or payment on a Guarantee of any obligation of, any Affiliate or Joint Venture Subsidiary or (iv) any redemption, defeasance, repurchase, retirement or other acquisition or retirement for value prior to any scheduled maturity, repayment or sinking fund payment, of Debt of the Company which is subordinate in any respect in right of payment to the Securities, by the Company, any Subsidiary of the Company or any Joint Venture Subsidiary; PROVIDED, HOWEVER, that in the event and to the extent that a transaction is permitted under Clause (a) of this Section 1010, the amount of such transaction shall not reduce the amount available for transactions under this Clause (b); and PROVIDED FURTHER that none of the transactions referred to in this Clause (b) shall be consummated if an Event of Default shall have occurred and be continuing. (c) The foregoing provision shall not be violated by reason of (i) the payment of any dividend on Capital Stock of the Company within 60 days after declaration thereof if at the declaration date such payment would have complied with the foregoing provision; or (ii) any refinancing or refunding of any Debt otherwise 65 permitted under Clause (v) of Section 1008(b). For purposes of Clauses (a) (i) and (a) (ii) above, any amounts so paid shall thereafter be considered as Restrictive Payments for purposes of calculating aggregate Restricted Payments under Clause (a) (3) above. SECTION 1011. LIMITATIONS CONCERNING DISTRIBUTIONS BY SUBSIDIARIES, ETC. The Company shall not, and shall not permit any Subsidiary of the Company to, suffer to exist any consensual encumbrance or restriction on the ability of any Subsidiary of the Company (i) to pay, directly or indirectly, dividends or make any other distributions in respect of its Capital Stock or pay any Debt or other obligation owed to the Company or any other Subsidiary of the Company; (ii) to make loans or advances to the Company or any Subsidiary of the Company; or (iii) to transfer any of its property or assets to the Company, except, in any such case, any encumbrance or restrictions with respect to clauses (ii) and (iii) if and to the extent such restriction or encumbrance is: (a) pursuant to any agreement in effect on the date of this Indenture, or (b) pursuant to an agreement relating to any Debt Incurred by such Subsidiary prior to the date on which such Subsidiary was acquired by the Company and outstanding on such date and not Incurred in anticipation of becoming a Subsidiary, or (c) pursuant to customary provisions contained in any lease governing a leasehold interest of any Subsidiary of the Company that do no more than restrict the subletting of the property subject to such lease or the assignment of such lease, or (d) pursuant to an agreement effecting a renewal, extension, refinancing or refunding of Debt Incurred pursuant to an agreement referred to in Clause (a) or (b) above; PROVIDED, HOWEVER, that the provisions contained in such renewal, extension, refinancing or refunding agreement relating to such encumbrance or restriction are no more restrictive in any material respect than the provisions contained in the agreement the subject thereof in the reasonable judgment of the Board of Directors and evidenced by a Board Resolution. SECTION 1012. LIMITATION ON LIENS. (a) The Company shall not, and shall not permit any Subsidiary of the Company to, Incur or permit to exist any Lien upon any property or assets of the Company or any such Subsidiary now owned or hereafter acquired or any interest therein or any income or profits therefrom without making, or causing such Subsidiary to make, effective provision for securing the Securities (and, if the 66 Company shall so determine, any other Debt of the Company or of such Subsidiary, including Debt which is subordinate to the Securities, PROVIDED that Liens securing the Securities and any Debt PARI PASSU to the Securities is senior to such Lien securing such Subordinated Notes) (x) equally and ratably with such Debt or (y) in the event such Debt is Subordinated Debt, prior to such Debt, in either case as to such property or assets for so long as such Debt shall be so secured. The foregoing restrictions will not apply to Liens in respect of Debt existing at the date of this Indenture or to: (i) Liens securing only the Securities; (ii) Liens on property existing immediately prior to the time of the acquisition thereof (and not Incurred in anticipation of such acquisition); (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Subsidiary of the Company (and not Incurred in anticipation of such merger or consolidation); (iv) Liens to secure Debt Incurred for the purpose of financing all or any part of the purchase price or the cost of construction or improvement of property used in the business of the Company and subject to such Liens, PROVIDED, HOWEVER, that (1) the principal amount of any Debt secured by such a Lien does not exceed 100% of such purchase price or cost, (2) such Lien does not extend to or cover any property other than such property and any such improvements and (3) the incurrence of such Debt is permitted by Sections 1008 and 1009; (v) Liens to secure Debt Incurred for the purpose of financing all or any part of the purchase price of property used in the business of the Company and subject to such Liens, PROVIDED, HOWEVER, that (1) the principal amount of any Debt secured by such a Lien does not exceed 100% of such purchase price or cost and (2) such Lien does not extend to or cover any property other than such property and any such improvements; (vi) Liens for taxes or assessments or other governmental charges or levies which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in accordance with generally accepted accounting principles shall have been made; 67 (vii) Liens to secure obligations under workmen's compensation laws or similar legislation, including Liens with respect to judgments which are not currently dischargeable; (viii) Liens Incurred to secure performance bonds or other obligations of a like nature incurred in the ordinary course of business; (ix) materialmen's, mechanics', workmen's, repairmen's, warehouse men's, landlords', vendors' or carriers' Liens created by law Incurred by the Company or any Subsidiary of the Company in good faith in the ordinary course of business, or deposits or pledges arising and continuing in the ordinary course of business to obtain the release of any such Liens; (x) any Lien created in connection with a Capital Lease Obligation that the Company is permitted to enter into pursuant to Clause (iv) of Section 1008(b); (xi) Liens on the Company's inventory to secure amounts used for working capital and general corporate purposes borrowed under, reimbursement obligations in respect of letters of credit issued pursuant to, and all other amounts owing under, the Revolving Credit Facility; (xii) any Lien on property or assets to secure Debt incurred in connection with the acquisition by the Company or any Subsidiary of the Company of such property or assets, as permitted by Clause (5) of Section 801; (xiii) Liens to secure Debt Incurred to extend, renew, refinance or refund (or successive extensions, renewals, refinancings or refundings), in whole or in part, Debt secured by any Lien referred to in the foregoing Clauses (i) to (xi) so long as such Liens do not extend to any other property and the principal amount (or, if such Debt provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, in an amount not greater than such lesser amount) of the Debt so secured is not increased; (xiv) zoning restrictions, easements, covenants, reservations and restrictions on the use of real property, or minor irregularities of title in real property, that do not in the aggregate materially detract from the value or marketability of the property of the Company or any of its Subsidiaries or impair the use of such property in the operation of the business of the Company or any such Subsidiary; and 68 (xv) any Lien securing Debt owing by the Company to a Wholly Owned Subsidiary of the Company (provided that such Debt is at all times held by a Person which is a Wholly Owned Subsidiary of the Company) and any Lien securing Debt owing by one or more Wholly Owned Subsidiaries to the Company, but only so long as such Debt is held by the Company; PROVIDED, HOWEVER, that for purposes of this Section 1012 and Section 1013, upon either (x) the transfer or other disposition of a Debt secured by a Lien so permitted to a Person other than the Company or another Wholly Owned Subsidiary of the Company or (y) the issuance (other than directors' qualifying shares), sale, lease, transfer or other disposition of shares of Capital Stock of any such Wholly Owned Subsidiary to a Person other than the Company or another Wholly Owned Subsidiary of the Company, the provisions of this Clause (xv) shall no longer be applicable to such Lien and such Lien shall be subject (if otherwise subject) to the requirements of this Section 1012 without regard to this Clause (xv). (b) In addition to the foregoing, the Company and its Subsidiaries may Incur a Lien to secure any Debt, without securing the Securities equally and ratably with or prior to such Debt if at the time of such Incurrence the amount of Debt subject to Liens arising after the date of this Indenture and otherwise prohibited by this Indenture, does not exceed 10% of Consolidated Tangible Assets. SECTION 1013. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and shall not permit any Subsidiary of the Company to, enter into any Sale and Leaseback Transaction unless at least 25% of the proceeds of the Sale and Leaseback Transaction are used to pay down the Securities issued pursuant to this Indenture. SECTION 1014. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any Subsidiary of the Company to, directly or indirectly enter into any transaction (including, without limitation, the purchase, sale, lease or exchange of property, the rendering of any service or the making of any loan, advance or investment, but excluding transactions between the Company and Wholly Owned Subsidiaries of the Company) involving aggregate consideration in excess of $500,000, with any Affiliate of the Company, UNLESS: (i) such transaction is, in the good faith judgment of the Board of Directors evidenced by a Board Resolution, on terms no less favorable to the Company or such Subsidiary than those that could be obtained in a comparable arm's length transaction with an entity that is not an Affiliate; 69 (ii) if such transaction (or series of related transactions occurring within any single fiscal year which are similar or part of a common plan) involves in excess of $1,000,000, a majority of the independent members of the Board of Directors determines, in their good faith judgment evidenced by a resolution of such members filed with the Trustee, that such transaction is in the best interests of the Company or such Subsidiary; and (iii) if such transaction (or series of related transactions occurring within any single fiscal year which are similar or part of a common plan) involves in excess of $5,000,000, the Company shall obtain a fairness opinion from an independent banking firm of national standing with experience in appraising the terms and conditions of the type of transaction (or series of related transactions) for which a fairness opinion is required. SECTION 1015. LIMITATION ON CERTAIN ASSET DISPOSITIONS. (a) The Company shall not, and shall not permit any Subsidiary of the Company to, make any Asset Disposition (other than Asset Dispositions permitted by Section 1013) in one or more transactions by the Company or a Subsidiary of the Company in any fiscal year that results in aggregate Net Available Proceeds in excess of $2,000,000, unless: (i) the Company (or the Subsidiary of the Company, as the case may be) receives consideration at the time of such disposition at least equal to the fair market value of the shares or assets disposed of (which shall be as determined in good faith by the Board of Directors and evidenced by a Board Resolution), and (ii) (1) either the Asset Disposition is a Store Swap, or (2) (x) at least 75% of the consideration for such disposition consists of cash or readily marketable cash equivalents or the assumption of Debt of the Company or other obligations relating to such assets and release from all liability on the Debt or other obligations assumed; and (y) 100% of the Net Available Proceeds from such disposition and from the sale of any marketable securities received therein, less any amounts applied within 12 months of such disposition to the repayment of Debt which is PARI PASSU to the Securities or to investment in assets related to the business of the Company, are applied within 12 months of such disposition to purchase Outstanding Securities pursuant to an Offer to Purchase at a purchase price equal to 100% of their principal amount plus accrued interest to the date of purchase; PROVIDED, HOWEVER, that if the amount of Net Available Proceeds available to purchase Securities is less than $5,000,000, the Company's obligation to make an 70 Offer to Purchase may be deferred until such time as Net Available Proceeds, plus the aggregate amount of Net Available Proceeds resulting from any subsequent Asset Disposition or Asset Dispositions not otherwise used to repay Debt which is PARI PASSU to the Securities or to invest in assets related to the business of the Company, are at least equal to $5,000,000, at which time the Company shall be obligated to make such Offer to Purchase at a purchase price equal to 100% of their principal amount plus accrued interest to the date of repurchase. Pending application thereof in accordance with the preceding Clause (ii) (2) (y), the Company shall invest such Net Available Proceeds in Qualified Investments. To the extent the Company uses any portion of the Net Available Proceeds for any purpose other than to repay Debt which is PARI PASSU to the Securities or to invest in assets related to the business of the Company, or to repurchase the Securities, for purposes of computing Consolidated Interest Expense, the Company will be deemed to have Incurred an interest expense equal to the Pro Forma Interest Expense. (b) The Company will mail the Offer for an Offer to Purchase required pursuant to Section 1015(a) not more than 90 days after consummation of the disposition referred to in Section 1015(a). The aggregate principal amount of the Securities to be offered to be purchased pursuant to the Offer to Purchase shall equal the Net Available Proceeds available thereof (rounded down to the next lowest integral multiple of $1.00). Each Holder shall be entitled to tender all or any portion of the Securities owned by such Holder pursuant to the Offer to Purchase, subject to the requirement that any portion of a Security tendered must be tendered in an integral multiple of $1.00 principal amount. The Company shall not be entitled to any credit against its obligations under this Section 1015 for the principal amount of any Securities acquired by the Company otherwise than pursuant to the Offer to Purchase pursuant to this Section 1015. (c) Not later than the date of the Offer with respect to an Offer to Purchase pursuant to this Section 1015, the Company shall deliver to the Trustee an Officers' Certificate as to (i) the Purchase Amount, (ii) the allocation of the Net Available Proceeds from the Asset Disposition pursuant to which such Offer is being made, including, if amounts are invested in assets related to the business, the actual assets acquired and a statement as to the necessity of such assets for the maintenance of such business and (iii) the compliance of such allocation with the provisions of paragraph (a). 71 The Company and the Trustee shall perform their respective obligations specified in the Offer for the Offer to Purchase. On or prior to the Purchase Date, the Company shall (i) accept for payment (on a pro rata basis, if necessary) Securities or portions thereof tendered pursuant to the Offer, (ii) deposit with the paying agent (or, if the Company is acting as its own paying agent, segregate and hold in trust as provided in Section 1003) money sufficient to pay the purchase price of all Securities or portions thereof so accepted and (iii) deliver or cause to be delivered to the Trustee all Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof accepted for payment by the Company. The paying agent (or the Company, if so acting) shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security equal in principal amount to any unpurchased portion of the Security surrendered. Any Security not accepted for payment shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Offer on or as soon as practicable after the Purchase Date. (d) Notwithstanding the foregoing, this Section 1015 shall not apply to any Asset Disposition which constitutes a transfer, conveyance, sale, lease or other disposition of all or substantially all of the Company's properties or assets within the meaning of Section 801 hereof. SECTION 1016. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF SUBSIDIARIES. The Company may not permit any Subsidiary to issue shares of its Capital Stock or securities convertible or exchangeable into, or options, warrants, rights or any other interest with respect to, its Capital Stock to any Person other than to the Company or a Wholly Owned Subsidiary of the Company. SECTION 1017. CHANGE OF CONTROL. (a) Upon the occurrence of a Change in Control, the Company will be required to make an Offer to Purchase Outstanding Securities at a purchase price in cash equal to 100% of their principal amount, plus accrued interest to the Purchase Date, subject to the consummation of the Change of Control, and such transaction and any financing or other transactions in connection therewith will be deemed to have been incurred not in violation of any covenant of this Indenture (irrespective of whether such transaction or financing or other transactions would otherwise violate any covenant of the Indenture). If the Company takes any action in connection with such transaction which would violate any covenant of this Indenture, the Company will give Holders notice of such right of repurchase not more than 45 days prior to the date of consummation of such transaction, mailed by first class mail to the 72 Holders' last addresses as they appear in the Security Register, and any Holder who elects to require the Company to repurchase his or her Securities will be paid prior to or concurrently with the consumma tion of any such transaction. In all other instances, the Company shall, as soon as practicable following the consummation of a transaction resulting in a Change of Control, mail an Offer with respect to an Offer to Purchase all Outstanding Securities, by first class mail to the Holders' last addresses as they appear in the Security Register, at a purchase price in cash equal to 100% of their aggregate principal amount plus accrued interest to the Purchase Date (PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Purchase Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307), and any Holder who elects to require the Company to purchase his or her Securities will be paid 45 days following the date of such notice. Holders will have the right to have their Securities repurchased if such Securities are tendered for repurchase no later than five business days prior to the applicable repurchase date. Each Holder shall be entitled to tender all or any portion of the Securities owned by such Holder pursuant to the Offer to Purchase, subject to the requirement that any portion of a Security tendered must be tendered in an integral multiple of $1.00 principal amount. (b) The Company and the Trustee shall perform their respective obligations specified in the Offer to Purchase. Prior to the Purchase Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) money sufficient to pay the purchase price of all Securities or portions thereof so accepted and (iii) deliver or cause to be delivered to the Trustee all Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security or Securities equal in principal amount to any unpurchased portion of the Security surrendered as requested by the Holder. Any Security not accepted for payment shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Offer on or as soon as practicable after the Purchase Date. (c) A "Change of Control" will be deemed to have occurred at such time as either (a) any Person or any Persons (other than Odyssey Partners, L.P., or any Subsidiary thereof so long as such Subsidiary remains a Subsidiary of Odyssey Partners, L.P.) acting together that would constitute a "group" (for purposes of Section 13(d) of the Exchange Act, or any successor provision thereto) (a "Group"), together with any Affiliates thereof, shall beneficially own (as defined in Rule 13d-3 73 under the Exchange Act, or any successor provision thereto) at least 50% of the Voting Stock of the Company; or (b) any Person (other than Odyssey Partners, L.P., or any Subsidiary thereof so long as such Subsidiary remains a Subsidiary of Odyssey Partners, L.P.) or Group, together with any Affiliates thereof, shall succeed in having sufficient of its nominees elected to the Board of Directors of the Company such that such nominees, when added to any existing director remaining on the Board of Directors of the Company after such election who is an Affiliate of such Group, will constitute a majority of the Board of Directors of the Company. SECTION 1018. PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is required to be subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the Commission the annual reports, quarterly reports and other information, documents and reports which the Company would have been required to file with the Commission pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were so required, such documents to be filed with the Commission on or prior to the respective dates (the "Required Filing Dates") by which the Company would have been required so to file such documents if the Company were so required. The Company shall also in any event (a) within 15 days of each Required Filing Date (i) transmit by mail to all Holders, as their names and addresses appear in the Security Register, without cost to such Holders, and (ii) file with the Trustee copies of the annual reports, quarterly reports and other information, documents and reports which the Company would have been required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, if the Company were required to be subject to such Sections and (b) if filing such information, documents or reports by the Company with the Commission is not permitted under the Exchange Act, promptly upon written request supply copies of such documents to any prospective Holder. SECTION 1019. STATEMENT BY OFFICERS AS TO DEFAULT. (a) The Company will deliver to the Trustee, within 90 days after the end of each fiscal year of the Company ending after the date hereof an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of Section 801 or Sections 1004 to 1019, inclusive, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 74 (b) The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware or should reasonably become aware of the occurrence of an Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default, and the action which the Company proposes to take with respect thereto. SECTION 1020. RATING. The Company will, on or prior to September 30, 2000, use its best efforts to cause the Securities to be rated by either Moody's Investor Service, Inc. or Standard & Poors. SECTION 1021. WAIVER OF CERTAIN COVENANTS. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 801 and Sections 1004 to 1018, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect; PROVIDED, HOWEVER, with respect to an Offer to Purchase as to which an Offer has been mailed, no such waiver may be made or shall be effective against any Holder tendering Securities pursuant to such Offer, and the Company may not omit to comply with the terms of such Offer as to such Holder. ARTICLE XI Redemption of Securities SECTION 1101. RIGHT OF REDEMPTION. The Securities may be redeemed at the election of the Company, in whole or from time to time in part, at any time, as specified in the form of Security hereinbe fore set forth together with accrued interest to the Redemption Date. SECTION 1102. APPLICABILITY OF ARTICLE. 75 Redemption of Securities at the election of the Company, as permitted by any provision of this Indenture, shall be made in accordance with such provision and this Article. SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed. SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1.00 or any integral multiple thereof) of the principal amount of Securities of a denomination larger than $1.00. The Trustee shall promptly notify the Company and each Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 1105. NOTICE OF REDEMPTION. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date, 76 (2) the Redemption Price, (3) if less than all the Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after said date, and (5) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1106. DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money or U.S. Government Obligations sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that Date. SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate provided by the Security. 77 SECTION 1108. SECURITIES REDEEMED IN PART. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. 78 ARTICLE XII Defeasance SECTION 1201. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE. The Company may at its option by Board Resolution, at any time, elect to have either Section 1202 applied to the Outstanding Securities upon compliance with the conditions set forth below in this Article Twelve. SECTION 1202. DEFEASANCE AND DISCHARGE. Upon the Company's exercise of the option provided in Section 1201 applicable to this Section, and subject to compliance with this Article Twelve, the Company shall be deemed to have been discharged from its obligations with respect to the Outstanding Securities on the date the conditions set forth below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights at Holders of such Securities to receive, from the trust fund described in Section 1203 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any) and interest on such Securities when such payments are due, (B) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1001, 1002 and 1003, (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (D) this Article Twelve. SECTION 1203. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The following shall be the conditions to application of Section 1202 to the then Outstanding Securities: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609 who shall agree to comply with the provisions of this Article Twelve applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely 79 to, the benefit of the Holders of such Securities, (A) the shares of Common Stock of the Company as provided for in Section 1001 hereof and, (B) money in an amount, or U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or a combination thereof, sufficient to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of (premium, if any) and each instalment of interest on the Securities on the Stated Maturity of such principal or instalment of interest in accordance with the terms of this Indenture and of such Securities. (2) In the case of an election under Section 1202, the Company shall have delivered to the Trustee an Opinion of Counsel confirming that the Holders of the Outstanding Securities will not recognize gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred. (3) The Company shall have delivered to the Trustee an Officer's Certificate to the effect that the Securities, if then listed on any securities exchange, will not be delisted as a result of such deposit. (4) Such defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 608 and for purposes of the Trust Indenture Act with respect to any securities of the Company. (5) No Event of Default or event which with notice or lapse of time or both would become an Event of Default shall have occurred and be continuing on the date of such deposit. (6) Such defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound. (7) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance under Section 1202 have been complied with. (8) Such defeasance shall not result in the trust arising from such deposit constituting an investment company as defined in the Investment 80 Company Act of 1940, as amended, or such trust shall be qualified under such act or exempt from regulation thereunder. SECTION 1204. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last paragraph of Section 1003, all money, shares of Common Stock of the Company and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee - -- collectively, for purposes of this Section 1204, the Trustee) pursuant to Section 1203 in respect of the Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the shares of Common Stock of the Company or the U.S. Government Obligations deposited pursuant to Section 1203 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities. Anything in this Article Twelve to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1203 which are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. SECTION 1205. REINSTATEMENT. If the Trustee or the Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 1202 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article Twelve until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 1202; PROVIDED, HOWEVER, that if the Company makes any payment of principal of (and premium, if any) or interest on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of 81 the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or the Paying Agent. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. EAGLE FOODS CENTER, INC. By__________________________________ Attest: U.S. BANK TRUST NATIONAL ASSOCIATION By__________________________________ 82 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the _____ day of _____________________________, 2000, before me personally came ______________________________________________________, to me known, who, being by me duly sworn, did depose and say that [he - she] is of Eagle Food Centers, Inc., one of the corporations described in and which executed the foregoing instrument; that [he - she] knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that [he - she] signed [his - her] name thereto by like authority. 83 STATE OF MINNESOTA ) ) ss.: COUNTY OF RAMSEY ) On the _____ day of ______________, 2000, before me personally came ___________________________, to me known, who, being by me duly sworn, did depose and say that [he - she] is______________________________________________ U.S. BANK TRUST NATIONAL ASSOCIATION, one of the corporations described in and which executed the foregoing instrument; that [he - she] knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that [he - she] signed [his - her] name thereto by like authority. 84 EX-10.1 4 ex-10_1.txt EXHIBIT 10.1 Exhibit 10.1 ESCROW AGREEMENT Escrow Agreement, dated as of August 7, 2000 (this "AGREE MENT"), among Eagle Food Centers, Inc., a Delaware corporation (together with its successors and assigns, the "COMPANY"), U.S. Bank Trust Na tional Association, a national banking association, as trustee (the "TRUSTEE") under that certain Indenture (the "INDENTURE") dated as of August 7, 2000 in respect of the Company's 11% Senior Notes due April 15, 2005 (the "NOTES") and U.S. Bank Trust National Association (together with its successors and assigns as escrow agent, the "ESCROW AGENT"). W I T N E S S E T H WHEREAS, the Company, pursuant to the terms of that certain Order of the United States District Court for the District of Delaware and in accordance with the terms of the Indenture has agreed to provide for 10% the common equity of the Company to be held for the ratable benefit of holders of the Notes and to be distributed to such holders upon the terms set forth in the Indenture; and WHEREAS, upon the terms set forth herein, the Escrow Agent has agreed to hold such common equity interests for the ratable benefit of holders of the Notes; and to, in accordance with the terms of the Indenture, provide for the distribution of such equity securities to holders of record of the Notes upon the dates and under the circumstances set forth herein and therein; NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. Capitalized terms not otherwise defined in this Agreement have the meanings ascribed to them in the Indenture. The terms set forth below have the following respective meanings: "ESCROW SECURITIES" initially means 1,286,947 shares of common stock of the Company. "INDENTURE" has the meaning set forth in the preamble hereto. "NOTES" has the meaning set forth in the preamble hereto. "ORDER" has the meaning set forth in Section 2(a) hereof. "TERMINATION CERTIFICATE" has the meaning set forth in Section 3(a) hereof. 2. DELIVERY OF ESCROW SECURITIES. (a) At or prior to the date of original issuance of the Notes, the Company , or the Company's stock transfer agent, as applicable, shall deliver to the Escrow Agent (i) the Indenture, duly executed by each of the Company and the Trustee, (ii) two global securities representing the Escrow Securities, (iii) a written order of the Company, signed by two officers of the Company (the "FIRST ORDER"), dated the date of execution, directing the Trustee to issue 643,473 Shares of the Escrow Securities on October 16, 2001 to holders of record of the Notes as of the close of business October 15, 2001, and (iv) a written order of the Company, signed by two officers of the Company, dated the date of execution, directing the Trustee to issue 643,474 Shares of the Escrow Securities on October 16, 2002 to holders of record of the Notes as of the close of business October 15, 2002 (the "SECOND ORDER" and together with the FIRST ORDER, the "ORDERS"). The Indenture, such securi ties and the Orders delivered to the Escrow Agent pursuant to this Escrow Agreement shall be held in escrow upon the terms and conditions set forth herein. (b) When Escrow Securities are to be released pursuant to the Orders, the Company shall, upon delivery to the Company or its stock transfer agent of a global security therefor, cause to be delivered to the holders of record of the Notes upon the relevant record date, certificates of stock representing 7.57027 shares per $1000 principal amount of Notes rounded, in respect of each holder, to the nearest number of whole shares. 3. RELEASE OF ESCROW SECURITIES. 2 (a) The Company may, in accordance with the terms of the Indenture, offer to redeem all of the Notes outstanding. If the Com pany elects, or is required, to make an Offer to Purchase to all holders of outstanding Notes, the Company shall, in connection therewith, deliver notice of such Offer to Purchase (a "TERMINATION CERTIFICATE") to the Escrow Agent. The Termination Certificate shall be executed by a duly authorized officer of the Company and shall set forth either (i) that the Notes are to be retired, repaid or refinanced in their entirety, (ii) or the Company has agreed to an event of a Change of Control, and in connec tion therewith and in accordance with the terms of the Indenture, the Company has mailed an Offer to Purchase all outstanding Notes to the holders thereof. (b) Promptly upon the Escrow Agent's receipt of the Termination Certificate, the Escrow Agent shall return the remaining Escrow Securities and any remaining Orders then held by it to the Company. (c) The Company will provide, or cause to be provided, to the Escrow Agent all information as the Escrow Agent may from time to time reasonably request. 4. RESPONSIBILITY OF THE ESCROW AGENT. The Company hereby appoints and designates the Escrow Agent as escrow agent for the purposes set forth herein, and the Escrow Agent owes no duty to any other person or entity by reason of this Escrow Agreement. The Escrow Agent accepts the duties expressly set forth in this Escrow Agreement and undertakes to perform only such duties relating thereto as are specifically set forth herein. The parties hereto agree that the following terms and conditions shall govern and control with respect to the rights, duties, liabilities and immunities of the Escrow Agent hereunder: (a) The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Escrow Agree ment, and no implied covenants, duties or obligations shall be read into this Escrow Agreement against the Escrow Agent, nor shall it have, or be deemed to have, any duties or responsibilities under the provisions of 3 any other agreements between the other parties hereto or any other Person; PROVIDED, HOWEVER, that it shall be responsible to holders of the Notes in accordance with the terms hereof. (b) The Escrow Agent shall not be liable for any error of judgment, or any action taken, suffered or omitted by it in good faith, or mistake of fact or law, or for anything it may do or refrain from doing in connection herewith or therewith, except its own gross negligence or willful misconduct. (c) The Escrow Agent may rely and shall be autho rized and protected in acting or refraining from acting in good faith in reliance upon any written instruction, communication, notice, request, resolution, direction, certificate, statement, approval, or other paper or document, not only as to its due execution and the validity and effective ness of its provision, but also as to the truth of any information therein contained, which it in good faith believes to be genuine and to have been presented by the proper party. (d) The Escrow Agent may consult with counsel, auditors and other experts of its own choice and any opinion or advice of counsel or opinion or advice of such auditors or other experts shall be full and complete authorization and protection with respect to any action taken or suffered or omitted by the Escrow Agent hereunder in good faith and in accordance with such opinion or advice of counsel or opinion or advice of such auditors or other experts within the area of their respective expertise. (e) Except as otherwise specifically provided herein, the Escrow Agent may deal with the Company, and its affiliates, in the same manner and to the same extent and with like effect as if it were not the Escrow Agent hereunder. 5. QUALIFICATIONS. The Escrow Agent shall at all times be a bank, trust company or corporation in good standing organized and doing business under the laws of the United States of America or a State of the United States, and having combined capital and surplus of not less than twenty-five million dollars ($25,000,000). If the Escrow Agent shall at any time cease to have the foregoing qualifications, the Escrow Agent shall 4 resign within 30 days thereafter, such resignation to become effective as provided in Section 6 hereof. 6. REMOVAL AND RESIGNATION. The Escrow Agent and any successor Escrow Agent may at any time be removed at the written direc tion of the Company. The Escrow Agent or any successor Escrow Agent may at any time resign and be discharged of its obligations hereunder by giving written notice to the Company and the Trustee, specifying the date upon which it desires that such resignation shall take effect. Such removal or resignation shall take effect on the date specified in the notice of removal or resignation, which date shall not be earlier than 60 days after the giving of the notice of removal or resignation unless previously a successor Escrow Agent shall have been appointed pursuant to Section 7 hereof and shall have accepted such appointment, in which event such removal or resignation shall take effect immediately upon the acceptance by such successor Escrow Agent. The Company agrees to take prompt steps to have a successor Escrow Agent appointed in the manner hereinafter provided. 7. APPOINTMENT OF SUCCESSOR ESCROW AGENT. If at any time the Escrow Agent shall resign or be removed or otherwise become incapa ble of acting or if at any time a vacancy shall occur in the office of the Escrow Agent for any other cause, a successor Escrow Agent (duly quali fied as provided in Section 5 above) shall be appointed by the Company with the consent of the Trustee (or if the Trustee shall also be resigning or being removed as Trustee, by the Company acting alone) by an instrument in writing delivered to the Escrow Agent within the time specified below. Upon delivery of said instrument to and acceptance of said instrument by the successor Escrow Agent, the resignation or removal of the Escrow Agent shall become effective and such successor Escrow Agent shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder. If no successor Escrow Agent shall have been appointed at the effective date of resignation, the Escrow Agent or any other party hereto may petition a court of competent jurisdiction for the appointment of a successor. 8. COMPENSATION; SEPARATE REIMBURSEMENT. The Escrow Agent shall not be entitled to separate compensation from the Company, 5 services rendered by it hereunder, but shall be compensated as Trustee, pursuant to the terms of its engagement therefor. The Escrow Agent, shall, however, be entitled to reimbursement from the Company for all reasonable expenses, disbursements, advances and liabilities incurred or made by the Escrow Agent hereunder (including the reasonable compensation, ex penses and disbursements of the Escrow Agent's agents and counsel). 9. TERMINATION. This Escrow Agreement shall terminate on the earlier of (a) the distribution of all Escrow Securities to the holders of the Notes as provided for herein and (b) the date the Escrow Agent shall have received a Termination Certificate from the Company to such effect. 10. NOTICES. Except as otherwise expressly provided herein, all demands, notices, consents, requests and other documents authorized or required to be given to any party to this Escrow Agreement shall be given in writing and either personally served on an officer of such party or mailed by registered or certified first class mail, postage prepaid, return receipt requested, or sent by telecopier (with a copy sent by first class mail promptly thereafter), addressed as follows: if to the Escrow Agent: U.S. Bank Trust National Association 180 East 5th Street St. Paul, MN 55101 Attn: Rick Prokosch if to the Company: Eagle Food Centers, Inc. P.O. Box 6700 Rock Island, IL 61204 Attn: Patric Plumley with a copy to: 6 Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square Wilmington, DE 19801 Attn: Greg Galardi Any party may change its address by specifying in writing a new address for such notices to each of the other parties hereto. 11. SUCCESSORS AND ASSIGNS; AMENDMENTS AND MODIFICA TIONS. This Escrow Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and shall not inure to the benefit of any third party except for holders of the Note. This Escrow Agreement may not be amended or modified in any respect without the express written consent of the Company, the Escrow Agent and the Trustee. 12. SEVERABILITY. In case any one or more provisions contained in this Escrow Agreement shall be invalid, illegal or unenforce able in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be in any way affected or impaired thereby. 13. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. THIS ESCROW AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PUR POSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELAT ING TO THIS ESCROW AGREEMENT OR THE TRANSACTIONS CON TEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN 7 INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS ESCROW AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 14. COUNTERPARTS. This Escrow Agreement may be exe cuted in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instru ment. 15. NO WAIVER. No course of dealing, nor any delay on the part of any party hereto in exercising any rights hereunder, or any failure to exercise the same, shall operate as a waiver of such or any other rights. 16. DESCRIPTIVE HEADINGS. the descriptive headings of the several sections of this Escrow Agreement are inserted for convenience only and do not constitute a part of this Escrow Agreement. [Signature Page Follows] 8 IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be duly executed by their respective authorized officers, as of the date first above written. EAGLE FOOD CENTERS, INC. By: --------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee under the Indenture By: ------------------------------------ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Escrow Agent By: ------------------------------------ Name: Title: 9 EX-10.2 5 ex-10_2.txt EXHIBIT 10.2 Exhibit 10.2 Amended and Restated Loan and Security Agreement by and between CONGRESS FINANCIAL CORPORATION (CENTRAL) as Lender and EAGLE FOOD CENTERS, INC. as Borrower Dated: August 7, 2000
TABLE OF CONTENTS PAGE SECTION 1. INTERPRETATION; DEFINITIONS......................................1 SECTION 2. CREDIT FACILITIES...............................................10 2.1 REVOLVING LOANS.......................................................10 2.2 LETTER OF CREDIT ACCOMMODATIONS.......................................10 2.3 OPTIONAL REDUCTIONS IN MAXIMUM CREDIT.................................13 SECTION 3. INTEREST AND FEES...............................................13 3.1 INTEREST..............................................................13 3.2 SERVICING FEE.........................................................15 3.3 UNUSED LINE FEE.......................................................15 3.4 CHANGES IN LAWS; INCREASED COSTS OF LOANS; BREAKAGE FEES..............15 SECTION 4. CONDITIONS PRECEDENT............................................16 4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT ACCOMMODATION UNDER THE ORIGINAL AGREEMENT............................16 4.2 CONDITIONS PRECEDENT TO EFFECTIVENESS.................................18 4.3 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS.................................................19 SECTION 5. GRANT OF SECURITY INTEREST......................................20 SECTION 6. COLLECTION AND ADMINISTRATION...................................20 6.1 BORROWER'S LOAN ACCOUNT...............................................20 6.2 STATEMENTS............................................................20 6.3 COLLECTIONS...........................................................20 6.4 PAYMENTS..............................................................21 6.5 AUTHORIZATION TO MAKE LOANS...........................................22 6.6 USE OF PROCEEDS.......................................................22 SECTION 7. COLLATERAL REPORTING AND COVENANTS..............................22 7.1 COLLATERAL REPORTING..................................................22 7.2 INVENTORY COVENANTS...................................................23 7.3 PROCEEDS COVENANTS....................................................23 7.4 POWER OF ATTORNEY.....................................................24 7.5 RIGHT TO CURE.........................................................24 7.6 ACCESS TO PREMISES....................................................25 SECTION 8. REPRESENTATIONS AND WARRANTIES..................................25 8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES................25 8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE......................25 8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS..........................26 8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES; OWNERSHIP OF ASSETS...........26 8.5 TAX RETURNS...........................................................26 8.6 LITIGATION............................................................26 8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS..................27 8.8 ENVIRONMENTAL COMPLIANCE..............................................27 8.9 EMPLOYEE BENEFITS.....................................................28 8.10 CREDIT CARDS ETC....................................................28 i 8.11 ACCURACY AND COMPLETENESS OF INFORMATION............................28 8.12 SURVIVAL OF WARRANTIES; CUMULATIVE..................................29 SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS..............................29 9.1 MAINTENANCE OF EXISTENCE............................................29 9.2 NEW COLLATERAL LOCATIONS............................................29 9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC..............................29 9.4 PAYMENT OF TAXES AND CLAIMS.........................................30 9.5 INSURANCE...........................................................31 9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION..........................31 9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC.............32 9.8 ENCUMBRANCES........................................................33 9.9 INDEBTEDNESS........................................................34 9.10 LOANS, INVESTMENTS, GUARANTEES, ETC.................................34 9.11 DIVIDENDS AND REDEMPTIONS...........................................35 9.12 TRANSACTIONS WITH AFFILIATES........................................35 9.13 CAPITAL EXPENDITURES................................................36 9.14 ADJUSTED NET WORTH..................................................36 9.15 COMPLIANCE WITH ERISA...............................................36 9.16 LANDLORD AGREEMENTS.................................................37 9.17 COSTS AND EXPENSES..................................................37 9.18 FURTHER ASSURANCES..................................................37 SECTION 10. EVENTS OF DEFAULT AND REMEDIES..................................38 10.1 EVENTS OF DEFAULT...................................................38 10.2 REMEDIES............................................................40 10.3 USE OF INTELLECTUAL PROPERTY........................................41 SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW....41 11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER..............................................................41 11.2 WAIVER OF NOTICES...................................................42 11.3 AMENDMENTS AND WAIVERS..............................................42 11.4 WAIVER OF COUNTERCLAIMS.............................................43 11.5 INDEMNIFICATION.....................................................43 SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS................................43 12.1 TERM................................................................43 12.2 NOTICES.............................................................44 12.3 PARTIAL INVALIDITY..................................................44 12.4 SUCCESSORS..........................................................44 12.5 ENTIRE AGREEMENT....................................................45 12.6 CONFIDENTIALITY.....................................................45
ii INDEX TO EXHIBITS AND SCHEDULES Exhibit A Information Certificate Exhibit B Form of Opinion Exhibit C Form of Accountant Letter Exhibit D Form of Officer's Certificate Exhibit E Form of Letter from Accountants Schedule 8.4 Existing Liens Schedule 8.6 Litigation Schedule 8.8 Environmental Matters Schedule 8.9 Employee Benefits Matters Schedule 8.10 Credit Cards Etc. Schedule 9.9(e) Capital Leases iii AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT This Amended and Restated Loan and Security Agreement (as amended, restated, supplemented or otherwise modified, this "Agreement") dated August 7, 2000 is entered into by and between Congress Financial Corporation (Central), an Illinois corporation ("Lender"), and Eagle Food Centers, Inc., a Delaware corporation ("Borrower"), and amends and restates in its entirety that certain Loan and Security Agreement dated May 25, 1995 entered into by and between the Lender and the Borrower, as previously amended (the "Original Agreement"). W I T N E S S E T H: WHEREAS, Borrower and Lender have agreed, as more fully set forth herein, to amend and restate the Original Agreement; and WHEREAS, Lender is willing to continue to provide loans and financial accommodations on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. INTERPRETATION; DEFINITIONS The Original Agreement shall not terminate as contemplated by Section 12.1(j) thereof. This Agreement amends and restates the provisions of the Original Agreement and, as of the Effective Date (as defined in Section 4.2 below), except as expressly modified herein: (a) all of the terms and provisions of the Original Agreement shall continue to apply for the period prior to the Effective Date, including any determinations of payment dates, interest rates, Events of Default or any amount that may be payable, and (b) the Obligations (as defined in the Original Agreement) under the Original Agreement shall continue to be paid or prepaid in accordance with the Original Agreement on or prior to the Effective Date, and be secured by the Collateral, and shall, from and after the Effective Date, continue to be owing, shall constitute Obligations hereunder and shall be subject to the terms of this Agreement. All references in the Financing Agreements to the Original Agreement shall be deemed to include references to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, and such Financing Agreements are hereby amended to reflect such changed reference. All terms used herein which are defined in Article 1 or Article 9 of the Uniform Commercial Code as in effect in the State of Illinois shall have the meanings given therein unless otherwise defined in this Agreement. All references to the plural herein shall also mean the singular and to the singular shall also mean the plural. All references to Borrower and Lender pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns. The words "hereof", "herein", "hereunder", "this Agreement" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. An Event of Default shall exist or continue or be continuing until such Event of Default is cured to the satisfaction of Lender or waived in accordance with Section 11.3. Any accounting term used herein unless otherwise defined in this Agreement shall have the meanings customarily given to such term in accordance with GAAP. For purposes of this Agreement, the following terms shall have the respective meanings given to them below: 1.1 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) determined by dividing (1) the Eurodollar Rate for such Interest Period by (2) a percentage equal to: (i) one (1) MINUS (ii) the Reserve Percentage. For purposes hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a decimal, prescribed by any United States or foreign banking authority for determining the reserve requirement which is or would be applicable to deposits of United States dollars in a non-United States or an international banking office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage. 1.2 "Adjusted Net Worth" shall mean as to any Person, at any time, in accordance with GAAP (except as otherwise specifically set forth below), on a consolidated basis for such Person and its Subsidiaries (if any), the amount equal to the sum of (a) the difference between (i) the aggregate net book value of all assets of such Person and its Subsidiaries, calculating the book value of inventory for this purpose on a first-in-first-out basis, after deducting from such book values all appropriate reserves in accordance with GAAP (including all reserves for doubtful receivables, obsolescence, depreciation and amortization) MINUS (ii) the aggregate amount of the indebtedness and other liabilities of such Person and its Subsidiaries (including tax and other proper accruals) PLUS (b) all losses (and MINUS all gains) recorded after the Closing Date related to store closings, fixed asset dispositions, lease terminations and/or any other significant charge (or credit) which is not in the ordinary course of Borrower's business. 1.3 "Affiliate" shall mean, with respect to a specified person, any other person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise; PROVIDED, THAT, beneficial ownership of ten (10%) percent or more of the voting securities of a person shall be deemed to be control. 1.4 "Availability Reserves" shall mean, as of any date of determination, such amounts as Lender may from time to time establish and revise reducing and adjusting the amount of Revolving Loans and Letter of Credit Accommodations which would otherwise be available to Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Lender in its Permitted Discretion, do or may affect either (i) the Collateral or any other property which is security for the Obligations or its value, (ii) the assets, business or prospects of Borrower or (iii) the security interests and other 2 rights of Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Lender's belief, in its Permitted Discretion, that any collateral report or financial information furnished by or on behalf of Borrower to Lender is or may have been incomplete, inaccurate or misleading in any material respect or (c) in respect of any state of facts which Lender determines in its Permitted Discretion constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default; PROVIDED, HOWEVER, that the amount of any Availability Reserve established hereunder shall be in an amount reasonably related to Lender's perception of the event or circumstance which gives rise to such Availability Reserve; PROVIDED, ADDITIONALLY, that Lender will use good faith efforts to give Borrower notice at least two days prior to establishing any Availability Reserve, but that Lender shall not be liable for any failure to so notify Borrower, nor shall any such failure (i) reduce any or all of Borrower's obligations to Lender or (ii) alter Lender's ability to from time to time, establish and/or revise Availability Reserves. 1.5 "Breakage Fees" shall mean with respect to any Eurodollar Rate Loan which is at any time paid prior to the last day of its Interest Period, regardless of the reason for such prepayment, the positive difference, if any, between the total amount of interest that would have been due for the balance of the scheduled Interest Period on such Eurodollar Rate Loan if it had not been so prepaid and the amount of interest that would be earned if the amount of the prepaid Eurodollar Rate Loan were invested for the remaining balance of such Interest Period at the CD Rate in effect on the first day of the month in which such prepayment occurs. As used herein, "CD Rate" shall mean the rate quoted in the "Money Rates" section of THE WALL STREET JOURNAL for the average of the top rates paid by New York banks on primary new issues of negotiable certificates of deposit in amounts of $1 million and more having a 1-month maturity, as published on the first Business Day of the month in which any prepayment of a Eurodollar Rate Loan occurs. 1.6 "Business Day" shall mean (a) with respect to any borrowing, payment or rate selection relating to Eurodollar Rate Loans, a day other than Saturday or Sunday on which banks are open for business in the States of New York, Illinois and North Carolina on which dealings in United States dollars are carried on in the London interbank market or other applicable Eurodollar Rate market, and (b) for all other purposes, a day other than Saturday or Sunday on which banks are open for business in the States of New York, Illinois and North Carolina. 1.7 "Capital Expenditures" shall mean, for any period, the sum of (i) expenditures (except interest capitalized during construction) by Borrower and its Subsidiaries during such period for the acquisition, construction or improvement of property, plant and equipment or that otherwise have been or should be classified as capital expenditures in conformity with GAAP, PLUS (ii) all payments not included above made by Borrower and/or its Subsidiaries during that period under capital leases. 1.8 "Change in Control" shall mean the occurrence of either (a) any Person or any Persons (other than Odyssey or any Subsidiary of Odyssey, so long as such Subsidiary remains a Subsidiary of Odyssey) acting together that would constitute a "group" (for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, or any successor provision 3 thereto) (a "Group"), together with any affiliates thereof, shall beneficially own (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor provision thereto) at least 50% of the Voting Stock of Borrower; or (b) any Person (other than Odyssey or any Subsidiary of Odyssey, so long as such Subsidiary remains a Subsidiary of Odyssey), or Group, together with any affiliates thereof, shall succeed in having sufficient of its nominees elected to the Board of Directors of the Borrower such that such nominees, when added to any existing director remaining on the Board of Directors of the Borrower after such election who is an affiliate of such Group, will constitute a majority of the Board of Directors of the Borrower. 1.9 "Code" shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto. 1.10 "Collateral" shall have the meaning set forth in Section 5 hereof. 1.11 "Consolidated Net Income" for any fiscal year of the Borrower shall mean the net income of Borrower and its Subsidiaries on a consolidated basis for such fiscal year, determined in accordance with GAAP (excluding the effect of all gains or losses related to store closings, fixed asset dispositions, lease terminations and/or any other significant charge or credit which is not in the ordinary course of Borrower's business). 1.12 "Congress Accounts" shall have the meaning set forth in Section 6.3 hereof. 1.13 "Eligible Inventory" shall mean Inventory consisting of finished goods held for resale in the ordinary course of the business of Borrower which are acceptable to Lender based on the criteria set forth below. In general, Eligible Inventory at any time shall not include (a) work-in-process; (b) components which are not part of finished goods; (c) spare parts for equipment; (d) packaging and shipping materials and/or store displays; (e) supplies used or consumed in Borrower's business; (f) Inventory at premises other than those owned and controlled by Borrower, except if (1) Lender shall have received an agreement in writing from the person in possession of such Inventory and/or the owner or operator of such premises in form and substance reasonably satisfactory to Lender acknowledging Lender's first priority security interest in the Inventory, waiving security interests and claims by such person against the Inventory and permitting Lender access to, and the right to remain on, the premises so as to exercise Lender's rights and remedies and otherwise deal with the Collateral or (2) Borrower is current in all payments owing to the owner and/or lessor of such premises, is not in default under the agreement allowing Borrower to occupy or use such premises and is not in default under Section 9.16 hereof; (g) Inventory subject to a security interest or lien in favor of any person other than Lender except those permitted in this Agreement; (h) bill and hold goods; (i) Slow Moving Inventory at such time; (j) Inventory which is not subject to the first priority, valid and perfected security interest of Lender; (k) returned, spoiled, damaged and/or defective Inventory and/or salvage items; (l) Inventory purchased or sold on consignment, (m) perishable items (including, without limitation, produce, fresh fish, floral items, bakery goods and prepared foods) and (n) in-transit goods not yet received by Borrower. General criteria for Eligible Inventory may be established and revised from time to time by Lender in its Permitted Discretion. Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral. 4 1.14 "Environmental Laws" shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter in effect, applicable to Borrower's business and facilities (whether or not owned by it), including laws relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic or dangerous substances, materials or wastes into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals, or hazardous, toxic or dangerous substances, materials or wastes. 1.15 "Equipment" shall mean all of Borrower's now owned and hereafter acquired equipment, machinery, computers, computer hardware, owned and licensed computer software, vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located. 1.16 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all applicable rules, regulations and interpretations thereunder or related thereto. 1.17 "ERISA Affiliate" shall mean any person required to be aggregated with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code. 1.18 "Eurodollar Rate" shall mean, with respect to any Interest Period for a Eurodollar Rate Loan requested by Borrower by not less than three (3) Business Days' prior notice to Lender, the interest rate per annum equal to the arithmetic mean of the rates of interest per annum (rounded upwards, if necessary, to the next 1/16 of 1%) at which Reference Bank is offered deposits of United States dollars in the London interbank market (or other Eurodollar Rate market selected by Borrower and approved by Lender, which approval shall not be unreasonably withheld) at or about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and available to Borrower in accordance with this Agreement, with a maturity of comparable duration to the Interest Period selected by Borrower. Upon receipt of Borrower's request for a Eurodollar Rate Loan, Lender will, if requested, provide Borrower with an indication of the prevailing Eurodollar Rate on the Business Day of such request; PROVIDED, HOWEVER, that the actual Eurodollar Rate which is applicable to the requested Interest Period shall be determined as provided above and may be higher or lower than such indicative rate. 1.19 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof. 1.20 "Event of Default" shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof. 5 1.21 "Excess Loan Availability" means, at any time, an amount equal to the difference between (a) the lesser of (i) the amount calculated pursuant to Section 2.1(a) hereof at such time and (ii) the Maximum Credit at such time, minus (ii) the aggregate amount of the Loans and Letter of Credit Accommodations outstanding at such time. 1.22 "Financing Agreements" shall mean, collectively, this Agreement and all notes, guarantees, security agreements, and other agreements, documents and instruments now or at any time hereafter executed and/or delivered by Borrower in connection with this Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. 1.23 "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Boards which are applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Sections 9.13 and 9.14 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the audited financial statements delivered to Lender prior to the date hereof. 1.24 "Hazardous Materials" shall mean any hazardous, toxic or dangerous substances, materials and wastes, including, without limitation, hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, friable asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag, and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including, without limitation any that are or become classified as hazardous or toxic under any Environmental Law). 1.25 "Information Certificate" shall mean the Information Certificate of Borrower constituting Exhibit A hereto containing material information with respect to Borrower, its business and assets provided by or on behalf of Borrower to Lender in connection with the preparation of this Agreement and the other Financing Agreements and the financing arrangements provided for herein. 1.26 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2) or three (3) months duration as Borrower may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; PROVIDED THAT Borrower may not elect an Interest Period which will end after the last day of the then-current term of this Agreement. 1.27 "Interest Rate" shall mean: (a) as to Revolving Loans which are Prime Rate Loans and all other non-contingent Obligations not expressly covered in the following clause (b), a rate of one half of one percent (.5%) per annum in excess of the Prime Rate and 6 (b) as to Revolving Loans which are Eurodollar Rate Loans, a rate of two and one quarter percent (2.25%) per annum in excess of the Adjusted Eurodollar Rate for the applicable Interest Period selected by Borrower in accordance with the terms hereof; PROVIDED THAT the Interest Rate shall mean the rate of (i) three percent (3%) per annum in excess of the Prime Rate as to Revolving Loans which are Prime Rate Loans and all other non-contingent Obligations not expressly covered in the following clause (ii) and (ii) five and one half percent (5.50%) per annum in excess of the Adjusted Eurodollar Rate as to Revolving Loans which are Eurodollar Rate Loans, in each case at Lender's option, without notice, (a) for the period on and after the date of termination or non-renewal hereof, or the date of the occurrence of any Event of Default for so long as such Event of Default is continuing as determined by Lender and until such time as such Event of Default has been cured to the satisfaction of Lender or waived or all Obligations are indefeasibly paid in full (notwithstanding entry of any judgment against Borrower) and (b) on the Revolving Loans at any time outstanding in excess of the amounts available to Borrower under Section 2 (if such excess(es) arise or are made without Lender's consent); PROVIDED, HOWEVER, that Lender reserves the right to condition any consent to such excess(es) and/or waiver of an Event of Default resulting therefrom, INTER ALIA, on receiving the higher Interest Rates set forth in the preceding proviso. 1.28 "Inventory" shall mean all of Borrower's now owned and hereafter existing or acquired raw materials, work in process, finished goods and all other inventory of whatsoever kind or nature, wherever located. 1.29 "Inventory Advance Rate" shall mean, at any time, the percentage then being applied for advances against Eligible Inventory pursuant to Section 2.1(a) hereof. 1.30 "Letter of Credit Accommodations" shall mean the letters of credit, merchandise purchase or other guaranties which are from time to time either (a) issued or opened by Lender for the account of Borrower or (b) with respect to which Lender has agreed to indemnify the issuer or guaranteed to the issuer the performance by Borrower of its obligations to such issuer. 1.31 "Letter of Credit Percentage" shall mean at any time, one hundred percent (100%) minus the Inventory Advance Rate at such time. 1.32 "Loans" shall mean the Revolving Loans. 1.33 "Material Adverse Effect" shall mean a material adverse effect upon (i) the business, operations, properties, assets or condition (financial or otherwise) of Borrower, (ii) the ability of Borrower to perform, or of Lender to enforce, any of the Obligations and/or (iii) any right of Lender hereunder and/or under any other Financing Agreement. 1.34 "Maximum Credit" shall mean $40,000,000, as such amount may be reduced pursuant to Section 2.3 hereof. 1.35 "Obligations" shall mean any and all Revolving Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower to Lender and/or its affiliates, including principal, interest, 7 charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether arising under this Agreement or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to Borrower under the United States Bankruptcy Code or any similar statute (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the commencement of such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and however acquired by Lender. 1.36 "Odyssey" shall mean Odyssey Partners, L.P., a Delaware limited partnership. 1.37 "Payment Account" shall have the meaning set forth in Section 6.3 hereof. 1.38 "Permitted Discretion" means Lender's good faith judgment based upon any factor which it believes in good faith: (i) will or could adversely affect the value of any Collateral, the enforceability or priority of Lender's liens and security interests with respect thereto or the amount which Lender would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of such Collateral; (ii) suggests that any collateral report or financial information delivered to Lender by any person on behalf of Borrower is incomplete, inaccurate or misleading in any material respect; (iii) materially increases the likelihood of a bankruptcy, reorganization or other insolvency proceeding involving Borrower or any of its Subsidiaries or any of the Collateral, or (iv) creates or reasonably could be expected to create or result in an Event of Default. In exercising such judgment, Lender may consider such factors already included in or tested by the definition of Eligible Inventory, as well as any of the following: (a) the financial and business climate of Borrower's industry and general macroeconomic conditions, (b) changes in demand for, and pricing of, Inventory, (c) changes in any concentration of risk with respect to Inventory, and (d) any other factors that change the credit risk of lending to Borrower on the security of the Inventory. The burden of establishing lack of good faith shall be on Borrower. 1.39 "Person" or "person" shall mean any individual, sole proprietorship, partnership, corporation, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof. 1.40 "Plan" shall mean that certain First Amended Reorganization Plan of Eagle Food Centers, Inc. dated April 17, 2000 and filed with the United States Bankruptcy Court for the District of Delaware on April 17, 2000. 1.41 "Prime Rate" shall mean the rate from time to time publicly announced by CoreStates Bank, N.A., or its successors, at its office in Philadelphia, Pennsylvania, as its prime rate, whether or not such announced rate is the best rate available at such bank. 1.42 "Prime Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof. 8 1.43 "Records" shall mean all of Borrower's present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Borrower with respect to the foregoing maintained with or by any other person). 1.44 "Reference Bank" shall mean First Union National Bank, or such other bank as Lender may from time to time designate. 1.45 "Revolving Loans" shall mean the loans now or hereafter made by Lender to or for the benefit of Borrower on a revolving basis (involving advances, repayments and readvances) as set forth in Section 2.1 hereof. 1.46 "Sales Tax Reserve" shall mean, at any time, an amount equal to Borrower's good faith estimate of the accrued but unpaid (whether or not yet due) sales tax collected from Borrower's customers. 1.47 "Slow Moving Inventory" shall mean, at any time, Inventory which Borrower has purchased or received more than one hundred and eighty days prior to such time, other than certain health and beauty aid products specifically determined (which determination has not been revoked) and set forth in writing by Lender as not being Slow Moving Inventory which Borrower has purchased or received less than three hundred and sixty days prior to such time. 1.48 "Subsidiary" shall mean, with respect to any Person (the "parent"), any corporation, association or other business entity of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at the time as of which any determination is being made, owned or controlled by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent. 1.49 "Value" shall mean, as determined by Lender in good faith, with respect to Inventory, the lower of (a) cost computed on a first-in-first-out basis in accordance with GAAP or (b) market value. 1.50 "Voting Stock" of any Person shall mean the capital stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 9 SECTION 2. CREDIT FACILITIES 2.1 REVOLVING LOANS. (a) Subject to, and upon the terms and conditions contained herein, Lender agrees to make Revolving Loans to Borrower from time to time in amounts requested by Borrower up to the amount equal to the sum of: (i) the lesser of: (A) the sum of fifty-five percent (55%) of the Value of Eligible Inventory or (B) the amount equal to: (1) the Maximum Credit at such time MINUS (2) the then undrawn amounts of the outstanding Letter of Credit Accommodations, LESS (ii) the Sales Tax Reserve most recently reported to Lender by Borrower, LESS (iii) any Availability Reserves. (b) Lender may, in its Permitted Discretion, from time to time, reduce the lending formula with respect to Eligible Inventory. In addition, if at any time an appraisal of the Inventory conducted by an appraiser acceptable to Lender indicates that the quotient, expressed as a percentage, of (i) eighty percent (80%) of the appraised value of the Eligible Inventory on a "going out of business basis" divided by (ii) the Value of the Eligible Inventory (the "Appraisal Advance Rate") at such time, is less than the Inventory Advance Rate at such time, then the Inventory Advance Rate shall, upon notice from Lender to Borrower, be reduced to the Appraisal Advance Rate at such time (and if the Inventory Advance Rate at such time is less than the Appraisal Advance Rate at such time, the Inventory Advance Rate shall, upon notice from Lender to Borrower, be increased to the lesser of the Appraisal Advance Rate or fifty-five percent (55%). (c) Except in Lender's discretion, the aggregate amount of the Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed the Maximum Credit. In the event that the outstanding amount of the Loans, or the aggregate amount of the outstanding Loans and Letter of Credit Accommodations, exceed the amounts available under the lending formulas, the sublimits for Letter of Credit Accommodations set forth in Section 2.2 or the Maximum Credit, as applicable, such event shall not limit, waive or otherwise affect any rights of Lender in that circumstance or on any future occasions and Borrower shall, within three (3) Business Days of demand by Lender, which may be made at any time or from time to time, repay to Lender the entire amount of any such excess(es) for which payment is demanded. 2.2 LETTER OF CREDIT ACCOMMODATIONS. (a) Subject to, and upon the terms and conditions contained herein, at the request of Borrower, Lender agrees to provide or arrange for Letter of Credit Accommodations for the account of Borrower containing terms and conditions acceptable to Lender and the issuer thereof. Any payments made by Lender to any issuer thereof and/or related parties in connection with the Letter of Credit Accommodations shall constitute additional Revolving Loans to Borrower pursuant to this Section 2. 10 (b) In addition to any charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations, Borrower shall pay to Lender a letter of credit fee at a rate equal to one and one half percent (1.5%) per annum on the average daily outstanding balance of the Letter of Credit Accommodations for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month; PROVIDED, that at Lender's option, without notice, after the occurrence and during the continuance of an Event of Default, such rate shall be increased by two percent (2%) per annum. Such letter of credit fee shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrower to pay such fee shall survive the termination or non-renewal of this Agreement. (c) No Letter of Credit Accommodations shall be available unless on the date of the proposed issuance of any Letter of Credit Accommodations, the Revolving Loans available to Borrower (subject to the Maximum Credit and any Availability Reserves) are equal to or greater than: (i) if the proposed Letter of Credit Accommodation is for the purpose of purchasing Eligible Inventory for which Lender has a first priority perfected security interest in any and all document(s) of title related to such Inventory, the sum of (A) the Letter of Credit Percentage of the cost of such Eligible Inventory, plus (B) freight, taxes, duty and other amounts which Lender estimates must be paid in connection with such Inventory upon arrival and for delivery to one of Borrower's locations for Eligible Inventory within the United States of America and (ii) if the proposed Letter of Credit Accommodation is for any other purpose (including, without limitation, for the purpose of purchasing Eligible Inventory for which Lender does not have a first priority perfected security interest in any and all documents of title related to such Inventory), an amount equal to one hundred (100%) percent of the face amount thereof and all other commitments and obligations made or incurred by Lender with respect thereto. Effective on the issuance of each Letter of Credit Accommodation, the amount of Revolving Loans which might otherwise be available to Borrower shall be reduced by the applicable amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii). (d) Except in Lender's discretion, the amount of all outstanding Letter of Credit Accommodations shall not at any time exceed $20,000,000. At any time an Event of Default exists or has occurred and is continuing, upon Lender's request, Borrower will either furnish cash collateral to secure the reimbursement obligations to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to Lender for the Letter of Credit Accommodations, and in either case, the Revolving Loans otherwise available to Borrower shall not be reduced as provided in Section 2.2(c) to the extent of such cash collateral. (e) Borrower shall indemnify and hold Lender harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Lender may suffer or incur in connection with any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto, including, but not limited to, any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect to any Letter of Credit Accommodation; PROVIDED, HOWEVER, that Borrower shall not be required to indemnify Lender for any claims, damages, losses, liabilities, costs or expenses to the extent caused by (i) the willful misconduct or gross negligence of Lender in determining whether a request presented under any Letter of Credit Accommodation complied with the terms of such 11 Letter of Credit Accommodation or (ii) Lender's failure to pay under any Letter of Credit Accommodation after the timely presentation to it of a request for payment strictly complying with the terms and conditions of such Letter of Credit Accommodation. Borrower assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed Borrower's agent. Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Borrower hereby releases and holds Lender harmless from and against any acts, waivers, errors, delays or omissions, whether caused by Borrower, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit Accommodation. The provisions of this Section 2.2(e) shall survive the payment of Obligations and the termination or non-renewal of this Agreement. (f) Nothing contained herein shall be deemed or construed to grant Borrower any right or authority to pledge the credit of Lender in any manner. Lender shall have no liability of any kind with respect to any Letter of Credit Accommodation provided by an issuer other than Lender unless Lender has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit Accommodation. Borrower shall be bound by any interpretation made in good faith by Lender, or any other issuer or correspondent under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of Borrower. Lender shall have the sole and exclusive right and authority to, and Borrower shall not: (i) at any time an Event of Default exists or has occurred and is continuing, (A) approve or resolve any questions of non-compliance of documents, (B) give any instructions as to acceptance or rejection of any documents or goods, or (C) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, and (ii) at all times, (A) grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents and (B) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit included in the Collateral. After the occurrence and during the continuance of an Event of Default, Lender may take such actions either in its own name or in Borrower's name. (g) Any rights, remedies, duties or obligations granted or undertaken by Borrower to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have been granted or undertaken by Borrower to Lender. Any duties or obligations undertaken by Lender to any issuer or correspondent in any application for any Letter of Credit Accommodation, or any other agreement by Lender in favor of any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have been undertaken by Borrower to Lender and to apply in all respects to Borrower. 12 2.3 OPTIONAL REDUCTIONS IN MAXIMUM CREDIT. (a) Borrower may, at its option, from time to time request in writing that the Maximum Credit be reduced to any amount not less than $20,000,000. Any such request shall be irrevocable, unless Lender shall otherwise agree. (b) Effective on the first Business Day which is fifteen (15) days after the date of the receipt by Lender of such written request, the Maximum Credit shall be reduced as requested by Borrower; PROVIDED, THAT, each such reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. (c) Without limiting any of the other rights of Lender pursuant to the terms hereof, effective on each date when any reduction is effective pursuant to Section 2.3(b) above, Borrower agrees to automatically and without demand make a payment to Lender in respect of the Loans in an amount equal to the excess if any, of the aggregate principal amount of the Loans and outstanding Letter of Credit Obligations then outstanding over the amount of the Loans then available to Borrower pursuant to the Maximum Credit as so reduced. All interest accrued on the principal amount of the Loans paid pursuant to this Section 2.3(c) shall be paid, or may be charged to any of the loan account(s) of Borrower maintained by Lender, at Lender's option, on the date such payment of principal is due. (d) In connection with each and every reduction in the Maximum Credit pursuant to this Section 2.3, and at the time of each such reduction, Borrower shall pay to Lender a reduction fee in an amount equal to .5% of the amount of such reduction. SECTION 3. INTEREST AND FEES 3.1 INTEREST. (a) Borrower shall pay to Lender interest on the daily average outstanding principal amount of the Loans and, to the extent permitted by applicable law, the other non-contingent Obligations from and after the date when actually paid by Lender, at the Interest Rate. All interest accruing hereunder on and after the occurrence and during the continuance of an Event of Default and/or after termination or non-renewal hereof shall be payable on demand. Lender shall make a good faith effort to pay third-party fees and expenses when due and not to charge Borrower's loan account for reimbursement of such Obligations until actually paid by Lender. (b) Borrower may from time to time request that Prime Rate Loans be converted to Eurodollar Rate Loans, that Eurodollar Rate Loans be converted to Prime Rate Loans and/or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from Borrower shall specify the amount of the Prime Rate Loans which will be converted to Eurodollar Rate Loans (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans on not less than three (3) Business Days prior notice to Lender. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Lender of such a request from Borrower, such Prime Rate Loans shall be 13 converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be; PROVIDED THAT (i) no Event of Default, or event which, merely with notice or passage of time or both, would constitute an Event of Default, exists or has occurred and is continuing, (ii) no party hereto shall have sent any notice of termination or non-renewal of this Agreement, (iii) Borrower shall have complied with all reasonable and customary procedures as are established by Lender and specified by Lender to Borrower from time to time for requests by Borrower for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods may be in effect at any one time, (v) the aggregate amount of the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of the Eurodollar Rate Loans at any time requested by Borrower shall not exceed the amount equal to eighty-five percent (85%) of the daily average of the principal amount of the Revolving Loans which it is anticipated will be outstanding during the applicable Interest Period, in each case as reasonably determined by Borrower pursuant to a good faith written computation (but with no obligation of Lender to make such Revolving Loans except as otherwise provided in this Agreement), and (vii) Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to Lender through the Reference Bank and can be readily determined as of the Business Day following the date of the request for such Eurodollar Rate Loan by Borrower. Any request by Borrower to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Lender and Reference Bank shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Lender and Reference Bank had purchased such deposits to fund the Eurodollar Rate Loans. (c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last day of the applicable Interest Period, unless Lender has received a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice by Lender to Borrower, convert to Prime Rate Loans in the event that (i) an Event of Default shall exist, (ii) this Agreement shall terminate or not be renewed, or (iii) the aggregate principal amount of the Prime Rate Loans which have previously been converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans continued, as the case may be, at the beginning of an Interest Period shall at any time during such Interest Period exceed the sum of the then outstanding principal amount of the Revolving Loans then available to Borrower under Section 2 hereof. Borrower shall pay to Lender, upon demand by Lender (or Lender may, at its option, charge any loan account of Borrower) any Breakage Fees and, without duplication thereof, any other reasonable and customary amounts required to compensate Lender, the Reference Bank or any Participant for any loss (including loss of anticipated profits), cost or expense reasonably incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing; PROVIDED, HOWEVER, that no such Breakage Fee or other costs shall be payable if such conversion of Eurodollar Rate Loans to Prime Rate Loans prior to the end of the applicable Interest Period results from Lender's establishment of Availability Reserves, changes in criteria for Eligible Inventory, or reduction of the lending formula set forth in Section 2.1(a). 14 (d) Interest shall be payable by Borrower to Lender monthly in arrears not later than the first Business Day of each calendar month and shall be calculated on the daily average principal balance of the non-contingent Obligations outstanding on the basis of a three hundred sixty (360) day year and actual days elapsed (including the date of borrowing but excluding the date of payment if made in accordance with Section 6.3(b)). The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In no event shall charges constituting interest payable by Borrower to Lender exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto. 3.2 SERVICING FEE. Borrower shall pay to Lender monthly a servicing fee in an amount equal to $5,000 in respect of Lender's services for each full month (or pro rated for any partial month) while this Agreement remains in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be fully earned as of and payable in advance on the first day of each month. 3.3 UNUSED LINE FEE. Borrower shall pay to Lender monthly an unused line fee equal at a rate equal to one quarter of one percent (.25%) per annum calculated upon the amount by which the Maximum Credit exceeds the average daily principal balance of the outstanding Revolving Loans and Letter of Credit Accommodations during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears. 3.4 CHANGES IN LAWS; INCREASED COSTS OF LOANS; BREAKAGE FEES. (a) Notwithstanding anything to the contrary contained herein, all Eurodollar Rate Loans shall, upon notice by Lender to Borrower, convert to Prime Rate Loans in the event that any change in applicable law or regulation (or the interpretation or administration thereof by a banking authority or regulator) shall make it unlawful for Lender, Reference Bank or any Participant to make or maintain Eurodollar Rate Loans or to comply with the terms hereof in connection with the Eurodollar Rate Loans. In the event that any change in applicable law or regulation (or the interpretation or administration thereof by a banking authority or regulator) shall (i) result in the increase in the costs to Lender, Reference Bank or any Participant of making or maintaining any Eurodollar Rate Loans or (ii) reduce the amounts received or receivable by Lender in respect thereof, by an amount deemed by Lender to be material, Borrower shall pay to Lender, upon demand by Lender (or Lender may, at its option, charge any loan account of Borrower) any amounts required to compensate Lender, the Reference Bank or any Participant with Lender for any loss (including loss of anticipated profits), cost or expense reasonably incurred by such person as a result of the foregoing, including, without limitation, any such loss, cost or expense reasonably incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such person to make or maintain the Eurodollar Rate Loans or any portion thereof (but not including any tax based upon the net income of Lender); PROVIDED that in 15 the event that Lender shall determine that the applicable Eurodollar Rate does not adequately reflect the cost to Lender of making or maintaining the Eurodollar Rate Loans, then, unless Borrower compensates Lender for Lender's increased cost of funds, Lender may suspend generally the prospective availability of the Eurodollar Rate option for new Interest Periods and/or Loans until such condition no longer exists. A certificate of Lender setting forth the basis for the determination of such amount necessary to compensate Lender as aforesaid shall be delivered to Borrower and shall be conclusive, absent manifest error. (b) If any payments or prepayments in respect of the Eurodollar Rate Loans are received by Lender other than on the last day of the applicable Interest Period (whether pursuant to acceleration, upon maturity or otherwise), including any payments pursuant to the application of collections under Section 6.3 or any other payments made with the proceeds of Collateral, Borrower shall pay to Lender upon demand by Lender (or Lender may, at its option, charge any loan account of Borrower) Breakage Fees and, without duplication thereof, any other reasonable and customary amounts required to compensate Lender, the Reference Bank or any Participant with Lender for any additional loss (including loss of anticipated profits), cost or expense reasonably incurred by such person as a result of such prepayment or payment, including, without limitation, any loss, cost or expense reasonably incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such person to make or maintain such Eurodollar Rate Loans or any portion thereof. A certificate of Lender setting forth the basis for the determination of such amount necessary to compensate Lender as aforesaid shall be delivered to Borrower and shall be conclusive, absent manifest error. SECTION 4. CONDITIONS PRECEDENT 4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT ACCOMMODATION UNDER THE ORIGINAL AGREEMENT. Each of the following was a condition precedent to Lender making the initial Loans and providing the initial Letter of Credit Accommodations under the Original Agreement: (a) Lender shall have received evidence, in form and substance reasonably satisfactory to Lender, that Lender has valid perfected and first priority security interests in and liens upon the Collateral, subject only to the security interests and liens permitted herein or in the other Financing Agreements; (b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to Lender, and Lender shall have received all information and copies of all documents, including, without limitation, records of requisite corporate action and proceedings which Lender may have requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate officers or governmental authorities; (c) no material adverse change shall have occurred in the assets or business of Borrower and its Subsidiaries since the date of Lender's latest field examination and no change or event shall have occurred which would impair the ability of Borrower and its Subsidiaries to perform its obligations hereunder or under any of the other Financing Agreements to which it is a party or of Lender to enforce the Obligations or realize upon the Collateral; 16 (d) Lender shall have completed a field review of the Records and such other information with respect to the Collateral as Lender may require to determine the amount of Revolving Loans available to Borrower, the results of which shall be reasonably satisfactory to Lender, not more than three (3) Business Days prior to the Original Closing Date; (e) Lender shall have received an appraisal of Borrower's Inventory, on a "going out of business basis," satisfactory to Lender, by Buxbaum, Ginsberg and Associates or another independent firm acceptable to Lender; (f) Borrower shall provide evidence satisfactory to Lender demonstrating that after payment or provision for the payment of all fees and expenses of the transactions contemplated by the Financing Agreements and the disbursement of the proceeds of the initial Loans and the issuance of the initial Letter of Credit Accommodations and after application of the lending formula and all reserves as provided in this Agreement, the Excess Loan Availability shall be greater than or equal to $5,000,000; (g) the accounts payable of Borrower shall be in an amount and in a condition reasonably acceptable to Lender; (h) Lender shall have established and be maintaining the Congress Accounts; (i) Lender shall have received, in form and substance reasonably satisfactory to Lender, all consents, waivers, acknowledgments and other agreements from third persons which Lender may deem reasonably necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, including, without limitation, acknowledgements by landlords, mortgagees and warehousemen of Lender's security interests in the Collateral, waivers by such persons of any security interests, liens or other claims by such persons to the Collateral and agreements permitting Lender access to, and the right to remain on, the premises to exercise its rights and remedies and otherwise deal with the Collateral; PROVIDED, HOWEVER, if Lender has not received appropriate documentation with respect to each such person, this condition shall be satisfied if Borrower is current in all payments owing to such Person, is not in default under the agreement allowing Borrower to occupy or use the applicable premises and Borrower has delivered an officer's certificate, in the form of Exhibit D hereto, setting forth the information, as of April 30, 1995, required by Exhibit D. (j) Lender shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance reasonably satisfactory to Lender, and certificates of insurance policies and/or endorsements naming Lender as loss payee; (k) Lender shall have received an opinion letter of Snyder & Schwarz, counsel to Borrower; (l) Lender shall have received, in form and substance reasonably satisfactory to Lender, an agreement from each issuer of each credit card, debit card, ATM card and each other form of payment accepted by Borrower for the sale of Inventory, or if different, each Person 17 which makes payments with respect to each such card and/or other form of payment, pursuant to which each such Person has agreed to transfer (in a manner acceptable to Lender) to the Payment Account (or such other account as is acceptable to Lender), in immediately available funds, any and all payments due from such Person arising out of the sale or other disposition of Inventory by or on behalf of Borrower; and (m) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Lender, in form and substance reasonably satisfactory to Lender. 4.2 CONDITIONS PRECEDENT TO EFFECTIVENESS. This Agreement shall become effective on the Business Day on which each of the following conditions precedent has been satisfied (or waived by Lender) (such date, the "Effective Date"). (a) Lender shall have received evidence, in form and substance reasonably satisfactory to Lender, that Lender has valid perfected and first priority security interests in and liens upon the Collateral, subject only to the security interests and liens permitted herein or in the other Financing Agreements; (b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to Lender, and Lender shall have received all information and copies of all documents, including, without limitation, records of requisite corporate action and proceedings which Lender may have requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate officers or governmental authorities; (c) Borrower shall provide evidence satisfactory to Lender demonstrating that after payment or provision for the payment of all fees and expenses of the transactions contemplated by the Financing Agreements and the disbursement of the proceeds of the initial Loans and the issuance of the initial Letter of Credit Accommodations and after application of the lending formula and all reserves as provided in this Agreement, the Excess Loan Availability shall be greater than or equal to $20,000,000; (d) Lender shall have established and be maintaining the Congress Accounts; (e) Lender shall have received, in form and substance reasonably satisfactory to Lender, all consents, waivers, acknowledgments and other agreements from third persons which Lender may deem reasonably necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, including, without limitation, acknowledgements by landlords, mortgagees and warehousemen of Lender's security interests in the Collateral, waivers by such persons of any security interests, liens or other claims by such persons to the Collateral and agreements permitting Lender access to, and the right to remain on, the premises to exercise its rights and remedies and otherwise deal with the Collateral; PROVIDED, HOWEVER, if Lender has not received appropriate documentation with respect to each such person, this condition shall be satisfied if Borrower is current in all payments owing to such Person, is not in default under the agreement allowing Borrower to occupy or use the applicable premises 18 and Borrower has delivered an officer's certificate, in the form of Exhibit D hereto, setting forth the information, as of April 30, 2000, required by Exhibit D. (f) ender shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance reasonably satisfactory to Lender, and certificates of insurance policies and/or endorsements naming Lender as loss payee; (g) ender shall have received an opinion letter from each of Snyder & Schwarz and Skadden, Arps, Slate, Meagher & Flom, counsel to Borrower, substantially in the form of Exhibit B hereto; (k) ender shall have received, in form and substance reasonably satisfactory to Lender, an agreement from each issuer of each credit card, debit card, ATM card and each other form of payment accepted by Borrower for the sale of Inventory, or if different, each Person which makes payments with respect to each such card and/or other form of payment, pursuant to which each such Person has agreed to transfer (in a manner acceptable to Lender) to the Payment Account (or such other account as is acceptable to Lender), in immediately available funds, any and all payments due from such Person arising out of the sale or other disposition of Inventory by or on behalf of Borrower; (i) he Consummation Date (as defined in the Plan) shall have occurred; and (j) he other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Lender, in form and substance reasonably satisfactory to Lender. 4.3 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS. Each of the following is an additional condition precedent to Lender making Loans and/or providing Letter of Credit Accommodations to Borrower, including the initial Loans and Letter of Credit Accommodations and any future Loans and Letter of Credit Accommodations: (a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto (except to the extent any such representation or warranty expressly by its terms relates only to an earlier date); and (b) no Event of Default and no event or condition which, with notice or passage of time or both, would constitute an Event of Default, shall exist or have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit Accommodation and after giving effect thereto. 19 SECTION 5. GRANT OF SECURITY INTEREST To secure the prompt payment and performance of all Obligations, Borrower has previously granted to the Lender, and hereby grants to Lender, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Lender as security, all of the Borrower's right, title and interest in, to and under all Inventory, whether now owned or hereafter acquired or existing, and wherever located (collectively, together with all other property which is now or hereafter security for the Obligations, the "Collateral"). SECTION 6. COLLECTION AND ADMINISTRATION 6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letter of Credit Accommodations and other Obligations and the Collateral, (b) all payments made by or on behalf of Borrower and (c) all other appropriate debits and credits as provided in this Agreement, including, without limitation, fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Lender's customary practices as in effect from time to time. 6.2 STATEMENTS. Lender shall render to Borrower each month a statement setting forth the balance in Borrower's loan account(s) maintained by Lender for Borrower pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Lender but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrower and conclusively binding upon Borrower as an account stated except to the extent that Lender receives a written notice from Borrower of any specific exceptions of Borrower thereto within thirty (30) days after the date such statement has been mailed by Lender. Until such time as Lender shall have rendered to Borrower a written statement as provided above, the balance in Borrower's loan account(s) shall be presumptive evidence of the amounts due and owing to Lender by Borrower. 6.3 COLLECTIONS. (a) Lender shall establish and maintain, at Borrower's expense, in the name of Lender, deposit accounts (the "Congress Accounts") into which Borrower shall promptly deposit all payments constituting proceeds of Inventory in the identical form in which such payments are made, whether by cash, check or other manner. The banks at which the Congress Accounts are established shall wire, or otherwise transfer, in immediately available funds, on a daily basis, all funds received or deposited into the Congress Accounts to such bank account of Lender as Lender may from time to time designate for such purpose ("Payment Account"). Borrower agrees that all payments made to such Congress Accounts or other funds received and collected by Lender, whether as proceeds of Inventory or otherwise shall be the property of Lender. In addition, Borrower shall cause each and every issuer of each credit card, debit card, ATM card and each other form of payment accepted by Borrower or, if different, each Person which makes payments with respect to each such card and/or other form of payment, to transfer (in a manner acceptable to Lender) to the Payment Account (or such other account as is acceptable to Lender), in immediately available funds, any and all payments due from each such Person as a result of the sale of Inventory by Borrower. Borrower shall not accept any credit card, debit card, ATM card or other form of payment unless the issuer thereof, or if different, each Person which makes 20 payments with respect to each such card and/or other form of payment, has, pursuant to an agreement in form and substance reasonably satisfactory to Lender, agreed to transfer (in a manner acceptable to Lender) to the Payment Account (or such other account as is acceptable to Lender), in immediately available funds, any and all payments due from such Person as a result of the sale or other disposition of Inventory by Borrower. (b) For purposes of calculating interest on the Obligations, such payments or other funds received will be applied (conditional upon final collection) to the Obligations on the date of receipt of immediately available funds by Lender in the Payment Account. For purposes of calculating the amount of the Revolving Loans available to Borrower such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Lender in the Payment Account, if such payments are received within sufficient time (in accordance with Lender's usual and customary practices as in effect from time to time) to credit Borrower's loan account on such day, and if not, then on the next Business Day. (c) Borrower, as soon as is practicable after receipt thereof, shall deposit or cause the same to be deposited in the Congress Accounts, or remit the same or cause the same to be remitted, in kind, to Lender, as the property of Lender, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Collateral which come into their possession or under their control. In no event shall the same be commingled with Borrower's own funds. Borrower agrees to reimburse Lender on demand for any amounts owed or paid to any bank at which a Congress Account is established or any other bank or person involved in the transfer of funds to or from the Congress Accounts arising out of Lender's payments to or indemnification of such bank or person. The obligation of Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall survive the termination or non-renewal of this Agreement. 6.4 PAYMENTS. All Obligations shall be payable to the Payment Account as provided in Section 6.3 or such other place as Lender may designate from time to time. Lender may apply payments received or collected from Borrower or for the account of Borrower (including, without limitation, the monetary proceeds of collections or of realization upon any Collateral) to such of the Obligations, whether or not then due, in such order and manner as Lender determines. At Lender's option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of Borrower. Borrower shall make all payments to Lender on the Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes (other than income or franchise taxes attributable to the net income of Lender which Borrower is required by law to withhold and which requirement either can not be avoided by the delivery of appropriate documentation or can be avoided but Lender has failed to deliver such documentation after written request therefor from Borrower), deductions, withholding, restrictions or conditions of any kind. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Lender. Borrower shall be liable to pay to Lender, and does hereby indemnify and hold Lender harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4 shall 21 remain effective notwithstanding any contrary action which may be taken by Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination or non-renewal of this Agreement. 6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the Loans and provide the Letter of Credit Accommodations based upon telephonic or other instructions received from anyone purporting to be an officer of Borrower or other authorized person or, at the discretion of Lender, if such Loans are necessary to satisfy any Obligations. All requests for Loans or Letter of Credit Accommodations hereunder shall specify the date on which the requested advance is to be made or Letter of Credit Accommodations established (which day shall be a Business Day) and the amount of the requested Loan. Requests received after 11:00 a.m. Chicago time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. All Loans and Letter of Credit Accommodations under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, Borrower when deposited to the credit of Borrower or otherwise disbursed or established in accordance with the instructions of Borrower or in accordance with the terms and conditions of this Agreement. 6.6 USE OF PROCEEDS. Borrower shall use the initial proceeds of the Loans provided by Lender to Borrower hereunder only for: (a) the repayment of obligations owing to the agent, the co-agents and the lenders under the Existing Credit Agreement and (b) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements. All other Loans made or Letter of Credit Accommodations provided by Lender to Borrower pursuant to the provisions hereof shall be used by Borrower only for working capital purposes or general corporate purposes of Borrower. None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes 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 Loans to be considered a "purpose credit" within the meaning of Regulation G of the Board of Governors of the Federal Reserve System, as amended. SECTION 7. COLLATERAL REPORTING AND COVENANTS 7.1 COLLATERAL REPORTING. Borrower shall provide Lender with the following documents in a form reasonably satisfactory to Lender: (a) on a weekly basis or, at any or all times that the Excess Loan Availability is less than or equal to $10,000,000, more frequently (including, without limitation, on a daily basis) as Lender may request, (i) an officer's certificate setting forth the amount of the Sales Tax Reserve as of the day immediately preceding the date of such officer's certificate, (ii) perpetual inventory reports, (iii) inventory reports by category and (b) upon Lender's request and to the extent practicable, (i) copies of customer statements and credit memos, remittance advices and reports, and copies of deposit slips and bank statements, (ii) copies of shipping and delivery documents, and (iii) copies of purchase orders, invoices and delivery documents for Inventory acquired by Borrower; and (c) such other reports as to the Collateral as Lender shall reasonably request from time to time. If any of Borrower's records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, Borrower hereby irrevocably authorizes such service, contractor, shipper or agent 22 to deliver such records, reports, and related documents to Lender and to follow Lender's instructions with respect to further services at any time that an Event of Default exists or has occurred and is continuing. 7.2 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower shall at all times maintain Inventory records reasonably satisfactory to Lender, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, Borrower's cost therefor and daily withdrawals therefrom and additions thereto; (b) Borrower shall cause an independent firm acceptable to Lender to conduct a cycle count of the Inventory in accordance with Borrower's existing practices with respect thereto on the Original Closing Date, but at any time or times as Lender may request on or after an Event of Default, and promptly following such physical inventory shall supply Lender with a report in the form and with such specificity as may be reasonably satisfactory to Lender concerning such physical count; (c) Borrower shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Lender, except for sales of Inventory in the ordinary course of Borrower's business and except to move Inventory directly from one location set forth or permitted herein to another such location; (d) upon Lender's request, Borrower shall, at its expense, no more than once in any twelve (12) month period, but at any time or times as Lender may request (i) on or after an Event of Default has occurred and is continuing or (ii) on or after a date on which the amount available under the lending formula set forth in Section 2.1(a) hereof exceeds the outstanding Loans and Letter of Credit Accommodations by less than $10,000,000, deliver or cause to be delivered to Lender written reports or appraisals as to the Inventory in form, scope and methodology (including, without limitation, on a "going out of business" basis) acceptable to Lender and by an appraiser acceptable to Lender, addressed to Lender or upon which Lender is expressly permitted to rely; (e) Borrower shall produce, use, store and maintain the Inventory, with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including, but not limited to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) Borrower assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (g) Borrower shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate Borrower to repurchase such Inventory, other than in accordance with Borrower's policies in existence on the Original Closing Date; (h) Borrower shall keep the Inventory in good and marketable condition (ordinary wear and tear excepted); and (i) Borrower shall not, without prior written notice to Lender, acquire or accept any Inventory on consignment or approval. 7.3 PROCEEDS COVENANTS. (a) Lender shall have the right at any time or times, in Lender's name or in the name of a nominee of Lender, to verify the validity, amount or any other matter relating to any proceeds of Inventory, by mail, telephone, facsimile transmission or otherwise. (b) Lender may, at any time or times that an Event of Default exists or has occurred and is continuing, (i) extend the time of payment of, compromise, settle or adjust for cash, credit, or otherwise, and upon any terms or conditions, any and all proceeds of Inventory and thereby discharge or release any party or parties in any way liable for payment thereof 23 without affecting any of the Obligations, (ii) demand, collect or enforce payment of any amounts constituting proceeds of Inventory, but without any duty to do so, and Lender shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto other than any such failure resulting from Lender's or its agents' or attorneys' gross negligence or wilful misconduct and (iii) take whatever other action Lender may reasonably deem necessary or desirable for the protection of its interests. 7.4 POWER OF ATTORNEY. Borrower hereby irrevocably designates and appoints Lender (and all persons designated by Lender) as Borrower's true and lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name, to: (a) at any time an Event of Default or event which with notice or passage of time or both would constitute an Event of Default exists or has occurred and is continuing (i) demand payment on proceeds of Inventory, (ii) enforce payment of proceeds of Inventory by legal proceedings or otherwise, (iii) exercise all of Borrower's rights and remedies to collect any proceeds of Inventory, (iv) sell or assign any proceeds of Inventory upon such terms, for such amount and at such time or times as Lender deems advisable, (v) settle, adjust, compromise, extend or renew any claim representing proceeds of Inventory, (vi) discharge and release any claim representing proceeds of Inventory, (vii) prepare, file and sign Borrower's name on any proof of claim in bankruptcy or other similar document against any party owing amounts representing the proceeds of Collateral, (viii) notify the post office authorities to change the address for delivery of Borrower's mail to an address designated by Lender, and open and dispose of all mail addressed to Borrower, and (ix) do all acts and things which are necessary, in Lender's determination, to fulfill Borrower's obligations under this Agreement and the other Financing Agreements and (b) at any time to (i) take control in any manner of any item of payment or proceeds thereof, (ii) have access to any lockbox or postal box into which Borrower's mail is deposited, (iii) endorse Borrower's name upon any items of payment or proceeds thereof and deposit the same in Lender's account for application to the Obligations, (iv) endorse Borrower's name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Inventory or any proceeds thereof and (v) execute in Borrower's name and file any UCC financing statements or amendments thereto, but only with respect to the Collateral. Borrower hereby releases Lender and its officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Lender's own gross negligence or wilful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction. 7.5 RIGHT TO CURE. Lender may, at its option, (a) cure any default by Borrower under any agreement with a third party or pay or bond on appeal any judgment entered against Borrower, (b) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral (except those permitted by the terms of this Agreement) and (c) pay any amount, incur any expense or perform any act which, in Lender's judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Lender with respect thereto. Lender may add any amounts so expended to the Obligations and charge Borrower's account therefor, such amounts to be repayable by Borrower on demand. Lender shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of Borrower. Any 24 payment made or other action taken by Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly. 7.6 ACCESS TO PREMISES. From time to time as reasonably requested by Lender, at the cost and expense of Borrower, (a) Lender or its designee shall have complete access to all of Borrower's premises during normal business hours and after reasonable prior notice to Borrower, or at any time and without notice to Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of Borrower's books and records, including, without limitation, the Records, and (b) Borrower shall promptly furnish to Lender such copies of such books and records or extracts therefrom as Lender may reasonably request, and (c) use during normal business hours such of Borrower's personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing and if an Event of Default exists or has occurred and is continuing for the collection of the proceeds of Inventory and realization of Collateral. SECTION 8. REPRESENTATIONS AND WARRANTIES Borrower hereby represents and warrants to Lender the following (which shall survive the execution and delivery of this Agreement), the truth and accuracy of which are a continuing condition of the making of Loans and providing Letter of Credit Accommodations by Lender to Borrower: 8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES. Borrower is a corporation duly organized and in good standing under the laws of its state of incorporation and is duly qualified as a foreign corporation and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would not be reasonable likely to have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder are all within Borrower's corporate powers, have been duly authorized and are not in contravention of applicable law or the terms of Borrower's certificate of incorporation, by-laws, or other organizational documentation, or any indenture, agreement or undertaking to which Borrower is a party or by which Borrower or its property are bound. This Agreement and the other Financing Agreements constitute legal, valid and binding obligations of Borrower enforceable in accordance with their respective terms. Borrower does not have any subsidiaries except as set forth on the Information Certificate. 8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial statements relating to Borrower which have been or may hereafter be delivered by Borrower to Lender have been prepared in accordance with GAAP and present fairly in all material respects the financial condition and the results of operation of Borrower as at the dates and for the periods set forth therein (PROVIDED that monthly or quarterly statements are subject to normal year-end adjustments and may not contain all footnote information required by GAAP). Borrower has informed its auditors that a primary intent of Borrower was for the professional services provided or to be provided by its auditors to benefit or influence Lender. Except as disclosed in any interim financial statements furnished by Borrower to Lender prior to the date of this Agreement, there has been no material adverse change in the assets, liabilities, properties and condition, financial 25 or otherwise, of Borrower, since the date of the most recent audited financial statements furnished by Borrower to Lender prior to the date of this Agreement. 8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief executive office of Borrower and Borrower's Records concerning Inventory and the proceeds thereof are located only at the address set forth below and its only other places of business and the only other locations of Collateral, if any, are the addresses set forth in the Information Certificate, subject to the right of Borrower to establish new locations in accordance with Section 9.2 below. The Information Certificate correctly identifies any of such locations which are not owned by Borrower and sets forth the owners and/or operators thereof and to the best of Borrower's knowledge, the holders of any mortgages on such locations. 8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES; OWNERSHIP OF ASSETS. The security interests and liens granted to Lender under this Agreement and the other Financing Agreements constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to existing liens indicated on Schedule 8.4 hereto and, with respect to Collateral other than Inventory, the other liens permitted under Section 9.8 hereof. Borrower has good and marketable title to all of its properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Lender and such others as are specifically listed on Schedule 8.4 hereto or permitted under Section 9.8 hereof. All material assets employed in Borrower's business are owned by Borrower or leased by Borrower under arms-length transactions with unaffiliated third parties, unless consented to in writing by Lender prior to the time such asset is placed into service. Borrower has obtained and holds in full force and effect all patents, trademarks, servicemarks, tradenames, copyrights and other such rights, free from burdensome restrictions, which are necessary for the operation of its business as presently conducted. No product sold by Borrower infringes any patents, trademark, servicemark, tradename, copyright, license or other right owned by any other Person. The Subsidiaries of Borrower, taken as a whole, do not own inventory having a fair market value in excess of $500,000. 8.5 TAX RETURNS. Borrower has filed, or caused to be filed, in a timely manner all income and franchise and all material other tax returns, reports and declarations which are required to be filed by it (without, other than with respect to returns filed prior to the Original Closing Date, any requests for extension except as previously disclosed in writing to Lender). All information in such tax returns, reports and declarations is complete and accurate in all material respects. Borrower has paid or caused to be paid all taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower and with respect to which adequate reserves in accordance with GAAP have been set aside on its books. Adequate provision has been made in accordance with GAAP for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed. 8.6 LITIGATION. Except as set forth on Schedule 8.6, there is no present investigation by any governmental agency pending, or to the best of Borrower's knowledge threatened, against or affecting Borrower, its assets or business and there is no action, suit, proceeding or claim by 26 any Person pending, or to the best of Borrower's knowledge threatened, against Borrower or its assets or goodwill, or against or affecting any transactions contemplated by this Agreement, which if adversely determined against Borrower would reasonably be likely to have a Material Adverse Effect. With respect to conditions or events arising after the Closing Date, but otherwise of a type required to be disclosed on Schedule 8.6 hereto, Borrower may deliver to Lender, from time to time, in writing, supplements to Schedule 8.6 and for purposes of the continuing representation and warranty set forth in this Section 8.6 as of any future date, such representation and warranty shall be deemed made as of such date by Borrower subject to all such supplements delivered on or prior to such date. 8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Borrower is not in default in any material respect under, or in violation in any material respect of any of the terms of, any agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound and Borrower is in compliance in all material respects with all applicable provisions of laws, rules, regulations, licenses, permits, approvals and orders of any foreign, Federal, State or local governmental authority. 8.8 ENVIRONMENTAL COMPLIANCE. Except as set forth on Schedule 8.8 hereto, or as could not reasonably be likely to have a Material Adverse Effect: (a) Borrower has not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner which at any time violates any applicable Environmental Law or any license, permit, certificate, approval or similar authorization thereunder and the operations of Borrower comply in all material respects with all Environmental Laws and all required licenses, permits, certificates, approvals and similar authorizations thereunder. (b) There has been no investigation, proceeding, complaint, order, directive, claim, citation or notice by any governmental authority or any other person nor, or to the best of Borrower's knowledge, is any pending or threatened with respect to (i) any non-compliance with or violation of the requirements of any Environmental Law by Borrower or (ii) the release, spill or discharge, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or any other environmental, health or safety matter, which affects Borrower or its business, operations or assets or any properties at which Borrower has transported, stored or disposed of any Hazardous Materials. (c) Borrower has no liability (contingent or otherwise) in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials. (d) Borrower has all licenses, permits, certificates, approvals or similar authorizations required to be obtained or filed in connection with the operations of Borrower under any Environmental Law and all of such licenses, permits, certificates, approvals or similar authorizations are valid and in full force and effect. 27 8.9 EMPLOYEE BENEFITS. (a) Except as set forth on Schedule 8.9 hereto, Borrower has not engaged in any transaction in connection with which Borrower or any of its ERISA Affiliates could be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, including any accumulated funding deficiency described in Section 8.9(c) hereof. (b) No liability to the Pension Benefit Guaranty Corporation has been or is reasonably expected by Borrower to be incurred with respect to any employee pension benefit plan of Borrower or any of its ERISA Affiliates. There has been no reportable event (within the meaning of Section 4043(b) of ERISA for which the requirement of a 30-day notice has not been waived under ERISA) or any other event or condition with respect to any employee pension benefit plan of Borrower or any of its ERISA Affiliates which is reasonably expected to result in a termination of any such plan by the Pension Benefit Guaranty Corporation. (c) Except as set forth on Schedule 8.9 hereto, full payment has been made of all amounts which Borrower or any of its ERISA Affiliates is required under Section 302 of ERISA and Section 412 of the Code to have paid under the terms of each employee pension benefit plan as contributions to such plan as of the last day of the most recent fiscal year of such plan ended prior to the Closing Date, and no accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any employee pension benefit plan, including any penalty or tax described in Section 8.9(a) hereof. (d) Except as set forth on Schedule 8.9 hereto, the current value of all vested accrued benefits under all employee pension benefit plans maintained by Borrower that are subject to Title IV of ERISA does not exceed the current value of the assets of such plans allocable to such vested accrued benefits. The terms "current value" and "accrued benefit" have the meanings specified in ERISA. (e) Except as set forth on Schedule 8.9 hereto, neither Borrower nor any of its ERISA Affiliates is or has ever been obligated to contribute to any "multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA. 8.10 CREDIT CARDS ETC. Schedule 8.10 hereto sets forth a true, accurate and complete list of all of the credit cards, debit cards and ATM cards (and the issuers thereof) which Borrower accepts for payment. 8.11 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished by or on behalf of Borrower in writing to Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including, without limitation, all information on the Information Certificate is true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading in light of the circumstances under which made. No event or circumstance has occurred which has had or 28 could reasonably be expected to have a Material Adverse Effect which has not been fully and accurately disclosed to Lender in writing. 8.12 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to Lender on the date of each additional borrowing or other credit accommodation hereunder, except to the extent that such representation or warranty expressly by its terms relates to an earlier date, and shall be conclusively presumed to have been relied on by Lender regardless of any investigation made or information possessed by Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which Borrower shall now or hereafter give, or cause to be given, to Lender. SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 9.1 MAINTENANCE OF EXISTENCE. Except permitted by Section 9.7 hereof, Borrower shall at all times preserve, renew and keep in full, force and effect its corporate existence and rights and franchises with respect thereto and maintain in full force and effect all permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts necessary to carry on the business as presently or proposed to be conducted. Borrower shall give Lender thirty (30) days prior written notice of any proposed change in its corporate name, which notice shall set forth the new name and Borrower shall deliver to Lender a copy of the amendment to the Certificate of Incorporation of Borrower providing for the name change certified by the Secretary of State of the jurisdiction of incorporation of Borrower as soon as it is available. 9.2 NEW COLLATERAL LOCATIONS. Borrower may open any new location within the continental United States provided Borrower (a) gives Lender thirty (30) days prior written notice of the intended opening of any such new location and (b) executes and delivers, or causes to be executed and delivered, to Lender such agreements, documents, and instruments as Lender may deem reasonably necessary or desirable to protect its interests in the Collateral at such location, including, without limitation, UCC financing statements. 9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC. (a) Borrower shall, at all times, comply in all material respects with all laws, rules, regulations, licenses, permits, approvals and orders applicable to it and duly observe all requirements of any Federal, State or local governmental authority, including, without limitation, ERISA, the Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all statutes, rules, regulations, orders, permits and stipulations relating to environmental pollution and employee health and safety, including, without limitation, all of the Environmental Laws. (b) Borrower shall monitor its continued compliance with all Environmental Laws in all of its operations, including regular reviews of such compliance by employees or agents of Borrower who are familiar with the requirements of the Environmental Laws. Copies of all environmental surveys, audits, assessments, feasibility studies and results of remedial investigations shall be promptly furnished, or caused to be furnished, by Borrower to Lender. 29 Borrower shall take prompt and appropriate action to respond to any non-compliance with any of the Environmental Laws and shall regularly report to Lender on such response. (c) To the extent the circumstances could reasonably be expected to give rise to liability under Environmental Laws in excess of $250,000, Borrower shall give both oral and written notice to Lender immediately upon Borrower's receipt of any notice of, or Borrower's otherwise obtaining knowledge of, (i) the occurrence of any event involving the release, spill or discharge, of any Hazardous Material or (ii) any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect to: (A) any non-compliance with or violation of any Environmental Law by Borrower or (B) the release, spill or discharge, threatened or actual, of any Hazardous Material or (C) the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials or (D) any other environmental, health or safety matter, which affects Borrower or its business, operations or assets or any properties at which Borrower transported, stored or disposed of any Hazardous Materials. (d) Without limiting the generality of the foregoing, whenever Lender reasonably determines that there is material non-compliance, or any condition which requires any action by or on behalf of Borrower in order to avoid any material non-compliance, with any Environmental Law, Borrower shall, at Lender's request and Borrower's expense: (i) cause an independent environmental engineer acceptable to Lender to conduct such tests of the site where Borrower's non-compliance or alleged non-compliance with such Environmental Laws has occurred as to such non-compliance and prepare and deliver to Lender a report as to such non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Lender a supplemental report of such engineer whenever the scope of such non-compliance, or Borrower's response thereto or the estimated costs thereof, shall change in any material respect. (e) Borrower shall indemnify and hold harmless Lender, its directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including attorneys' fees and legal expenses) (to the extent they are not directly attributable to Lender's willful misconduct or gross negligence) directly or indirectly arising out of or attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material, including, without limitation, the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of Borrower and the preparation and implementation of any closure, remedial or other required plans. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination or non-renewal of this Agreement. 9.4 PAYMENT OF TAXES AND CLAIMS. Borrower shall duly pay and discharge all taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower and with respect to which adequate reserves in accordance with GAAP have been set aside on its books. Borrower shall be liable for any tax or penalties imposed on Lender as a result of the financing arrangements provided for 30 herein and Borrower agrees to indemnify and hold Lender harmless with respect to the foregoing, and to repay to Lender on demand the amount thereof, and until paid by Borrower such amount shall be added and deemed part of the Loans; provided, THAT, nothing contained herein shall be construed to require Borrower to be liable for, pay or to indemnify Lender for any income or franchise taxes (including any interest or penalties thereon and whether imposed directly upon Lender or required to be withheld from payments to Lender) attributable to the income of Lender from any amounts charged or paid hereunder to Lender. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement. 9.5 INSURANCE. Borrower shall, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Said policies of insurance shall be reasonably satisfactory to Lender as to form, amount and insurer. Borrower shall furnish certificates, policies or endorsements to Lender as Lender shall require as proof of such insurance, and, if Borrower fails to do so, Lender is authorized, but not required, to obtain such insurance at the expense of Borrower. All policies shall provide for at least thirty (30) days prior written notice to Lender of any cancellation or reduction of coverage and that Lender may act as attorney for Borrower in obtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling, amending and canceling such insurance. Borrower shall cause Lender to be named as a loss payee and an additional insured (but without any liability for any premiums) under such insurance policies and Borrower shall obtain non-contributory lender's loss payable endorsements to all insurance policies in form and substance reasonably satisfactory to Lender. Such lender's loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Lender as its interests may appear and further specify that Lender shall be paid regardless of any act or omission by Borrower or any of its affiliates. At its option, Lender may apply any insurance proceeds received by Lender at any time to the cost of repairs or replacement of Collateral and/or to payment of the Obligations, whether or not then due, in any order and in such manner as Lender may determine or hold such proceeds as cash collateral for the Obligations. 9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION. (a) Borrower shall keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of Borrower and its Subsidiaries (if any) in accordance with GAAP and Borrower shall furnish or cause to be furnished to Lender: (i) within thirty (30) days after the end of each fiscal month, monthly unaudited consolidated financial statements (including a balance sheet, a statement of income and loss and a statement cash flow), in reasonable detail, fairly presenting the financial position and the results of the operations of Borrower and its Subsidiaries as of the end of and through such fiscal month, subject to normal year-end adjustments, and (ii) within ninety (90) days after the end of each fiscal year, audited consolidated financial statements (including a balance sheet, a statement of income and loss, a statement of cash flow and a statement of shareholders' equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting the financial position and the results of the operations of Borrower and its Subsidiaries as of the end of and for such fiscal year, together with (x) the opinion of 31 independent certified public accountants, which accountants shall be an independent accounting firm selected by Borrower and reasonably acceptable to Lender, that such financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Borrower and its Subsidiaries as of the end of and for the fiscal year then ended (y) a letter from such accountants addressed to Lender and in the form of Exhibit E hereto and (z) a copy of the "management letter" received by Borrower with respect to such audit (which shall be delivered to Lender as soon as it is available, but in no event to exceed one hundred fifty (150) days after the end of the applicable fiscal year). (b) Borrower shall promptly notify Lender in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to the Collateral or any other property which is security for the Obligations or which would result in any material adverse change in Borrower's business, properties, assets, goodwill or condition, financial or otherwise and (ii) the occurrence of any Event of Default or event which, with the passage of time or giving of notice or both, would constitute an Event of Default. (c) Borrower shall promptly after the sending or filing thereof furnish or cause to be furnished to Lender copies of all reports which Borrower sends to its stockholders generally and copies of all reports and registration statements which Borrower files with the Securities and Exchange Commission, any national securities exchange or the National Association of Securities Dealers, Inc. (d) Borrower shall furnish or cause to be furnished to Lender such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrower, as Lender may, from time to time, reasonably request. Lender is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrower to any court or other government agency pursuant to any order, request or demand or to any participant or assignee or prospective participant or assignee to the extent such participant or assignee (or prospective participant or assignee) agrees to keep information confidential in a manner consistent with its customary practices. Borrower hereby irrevocably authorizes and directs all accountants or auditors to deliver to Lender, at Borrower's expense, copies of the financial statements of Borrower and any reports or management letters prepared by such accountants or auditors on behalf of Borrower and to disclose to Lender such information as they may have regarding the business of Borrower. Any documents, schedules, invoices or other papers delivered to Lender may be destroyed or otherwise disposed of by Lender one (1) year after the same are delivered to Lender, except as otherwise designated by Borrower to Lender in writing. (e) Not later than January 1 of each year hereafter during the term of this Agreement, Borrower shall deliver to Lender an updated letter addressed to Borrower's auditors substantially in the form of Exhibit C hereto. In addition, on or about January 1 of each year Borrower shall inform its auditors that a primary intent of Borrower is for the professional services provided or to be provided by its auditors to benefit or influence Lender. 9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower shall not, directly or indirectly, (a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it, or (b) sell, assign, lease or transfer to 32 any other Person, abandon or otherwise dispose of any stock or indebtedness or any of its assets to any other Person (except for (i) sales of Inventory in the ordinary course of business and (ii) the disposition of worn-out or obsolete Equipment or Equipment no longer used in the business of Borrower so long as such sales do not involve Equipment having an aggregate fair market value in excess of $5,000,000 for all such Equipment disposed of in any fiscal year of Borrower, (iii) the sale of Borrower's Westville, Indiana warehouse facility in consideration for the release of all associated liabilities and, (iv) any sale and leaseback transaction (x) which relates solely to any store and (y) other than those referred to in clause (x), where the aggregate fair market value of all property subject to such transactions occurring on or after the Original Closing Date would not exceed $45,000,000, (v) the sale of the assets related to Borrower's bakery business being engaged in by The Eagle Bakery division of the Borrower, (vi) the sale of Borrower's closed stores, and (vii) the sale of Borrower's real property not used in the Borrower's business, or (c) form or acquire any Subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree to do any of the foregoing. 9.8 ENCUMBRANCES. Borrower shall not create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including, without limitation, the Collateral, EXCEPT: (a) liens and security interests of Lender; (b) liens securing the payment of taxes, either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Borrower and with respect to which adequate reserves in accordance with GAAP have been set aside on its books; (c) non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of Borrower's business to the extent: (i) such liens secure indebtedness which is not overdue or (ii) such liens secure indebtedness relating to claims or liabilities which are fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to Borrower, in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books; (d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of real property (and with respect to leasehold interests, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without the consent of the lessee) which do not interfere in any material respect with the use of such real property or ordinary conduct of the business of Borrower as presently conducted thereon or materially impair the value of the real property which may be subject thereto; (e) purchase money security interests in Equipment (including capital leases) and purchase money mortgages on real estate not to exceed $75,000,000 in the aggregate at any time outstanding so long as such security interests and mortgages do not apply to any property of Borrower other than the Equipment or real estate so acquired, and the indebtedness secured thereby does not exceed the cost of the Equipment or real estate so acquired, as the case may be; and (f) the security interests and liens set forth on Schedule 8.4 hereto; (g) liens incurred and pledges and deposits made in the ordinary course of business in connection with workmen's compensation, unemployment insurance, old-age pensions and other social security benefits; (h) liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, surety, customs and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business; (i) liens created in connection with capital 33 leases permitted by Section 9.7(b)(iv) hereof as long as such liens relate solely to the property subject to such capital leases; (j) liens on equipment or other property (other than Inventory) existing at the time such property is acquired by Borrower; provided, in each case, that such liens were not created in contemplation of such acquisition by Borrower; (k) mortgages upon real property owned by Borrower on the Closing Date or hereafter acquired by Borrower, provided that (i) the principal amount of the indebtedness secured by such lien does not exceed the fair market value of the real property to which such lien relates and (ii) the incurrence of such indebtedness is permitted by Section 9.9 hereof; and (l) extensions, renewals and replacements of liens referred to in paragraphs (a) through (k) of this Section 9.8; PROVIDED, HOWEVER, that any such extension, renewal or replacement lien shall be limited to the property or assets covered by the lien extended, renewed or replaced and that the principal amount of the obligations secured by any such extension, renewal or replacement lien shall be in an amount not greater than the principal amount of the obligations secured by the lien extended, renewed or replaced. 9.9 INDEBTEDNESS. Borrower shall not incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any obligations or indebtedness, EXCEPT (a) the Obligations; (b) trade obligations and normal accruals in the ordinary course of business not yet due and payable, or with respect to which Borrower is contesting in good faith the amount or validity thereof by appropriate proceedings diligently pursued and available to Borrower, and with respect to which adequate reserves in accordance with GAAP have been set aside on its books; (c) purchase money indebtedness (including capital leases) to the extent not incurred or secured by liens (including capital leases) in violation of any other provision of this Agreement; (d) obligations or indebtedness set forth on the Information Certificate; (e) obligations in respect of capital leases outstanding on the Closing Date set forth on Schedule 9.9(e) hereto; (f) indebtedness arising under the Indenture (as in effect on the Closing Date) governing Borrower's 11% Senior Notes due April 15, 2005; (g) indebtedness incurred with respect to capital leases as long as Borrower is not in violation of Section 9.13 hereof; (h) indebtedness incurred with respect to the mortgages permitted by Section 9.8(e) and indebtedness incurred hereafter in an amount not to exceed $10,000,000 in any fiscal year of Borrower with respect to mortgages permitted by Section 9.8(k); and (i) other unsecured indebtedness of Borrower having an aggregate outstanding principal amount of not more than $10,000,000; PROVIDED, THAT, Borrower covenants and agrees that (i) Borrower shall only make regularly scheduled payments of principal and interest in respect of such obligations and indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise to such obligations or indebtedness as in effect on the Closing Date, (ii) Borrower shall not, directly or indirectly, (A) amend, modify, alter or change the terms of any such obligations or indebtedness or any agreement, document or instrument related thereto as in effect on the Closing Date, or (B) redeem, retire, defease, purchase or otherwise acquire any such obligations or indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, and (iii) Borrower shall furnish to Lender all notices or demands in connection with all such obligations and indebtedness either received by Borrower or on its behalf, promptly after the receipt thereof, or sent by Borrower or on its behalf, concurrently with the sending thereof, as the case may be. 9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrower shall not, directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the stock or indebtedness or all or a substantial 34 part of the assets or property of any person, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly) the indebtedness, performance, obligations or dividends of any Person or agree to do any of the foregoing, except: (a) the endorsement of instruments for collection or deposit in the ordinary course of business; (b) investments in: (i) short-term direct obligations of the United States Government, (ii) negotiable certificates of deposit issued by any bank reasonably satisfactory to Lender, payable to the order of Borrower or to bearer and delivered to Lender, and (iii) commercial paper rated A-1 or P-1, (iv) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one (1) year or less from the date of acquisition, and (v) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (i) through (iv) above; and (c) the guarantees set forth in the Information Certificate; (d) loans from Borrower to Borrower's Subsidiary BOGOs, Inc. in the ordinary course of business in an amount not to exceed $3,000,000 at any one time outstanding; e) loans to landlords in the ordinary course of business in connection with improvements made to property leased to Borrower, not to exceed an aggregate amount of $3,000,000 at any time outstanding; (f) loans to Borrower by Borrower's Subsidiary, Talon Insurance Company, Inc., (g) loans in an amount not to exceed $300,000 at any time outstanding by Borrower to its chief executive officer to finance the purchase of shares of Borrower's common stock by such chief executive officer and (h) loans, in an amount not in excess of $300,000 in any fiscal year of Borrower, to employees of Borrower for moving costs incurred or to be incurred by such employees. 9.11 DIVIDENDS AND REDEMPTIONS. Borrower shall not, directly or indirectly, declare or pay any dividends on account of any shares of class of capital stock of Borrower now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class of capital stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration other than common stock or apply or set apart any sum, or make any other distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do any of the foregoing; PROVIDED, HOWEVER, that Borrower may make any such payment as long as (i) immediately after giving effect to such payment, Borrower has Excess Loan Availability of at least $10,000,000 and (ii) no Event of Default, or event or circumstance which with the giving of notice or the passage of time, or both, would constitute an Event of Default, shall exist and be continuing. 9.12 TRANSACTIONS WITH AFFILIATES. Borrower shall not enter into any transaction for the purchase, sale or exchange of property or the rendering of any service to or by any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of Borrower's business and upon fair and reasonable terms no less favorable to Borrower than Borrower would obtain in a comparable arm's length transaction with an unaffiliated person; PROVIDED, however, that this Section 9.12 shall not restrict the ability of any Subsidiary of Borrower to (i) pay, directly or indirectly, dividends or make any other distributions in respect of its capital stock or pay any indebtedness or other obligation owed to Borrower or any other Subsidiary of the Borrower; (ii) make loans or advances to Borrower or any Subsidiary of Borrower; (iii) transfer any of its property or assets to Borrower; or (iv) enter into employment agreements with its 35 senior executives or make loans to its chief executive officer in connection with his purchase of Borrower's common stock. 9.13 CAPITAL EXPENDITURES. Borrower shall not, and shall not permit its Subsidiaries to, make or incur (or commit to make or incur) any Capital Expenditures, except Capital Expenditures of Borrower and its Subsidiaries in any of the periods set forth below not in excess of the amount set forth below opposite such period:
PERIOD MAXIMUM AMOUNT Borrower's fiscal year 2000 $75,000,000 or such and each fiscal year of the greater amount as agreed Borrower thereafter to by Lender in writing prior to the first day of such fiscal year
; provided, that if the maximum amount set forth above exceeds the aggregate amount of Capital Expenditures made and/or incurred and/or committed to be made and/or incurred during the applicable period (the "Earlier Period"), then the maximum amount set forth above for the period immediately following such Earlier Period shall be increased by the lesser of (i) the amount of such excess and (ii) the dollar amount set forth above with respect to such Earlier Period. 9.14 ADJUSTED NET WORTH. Borrower shall, at all times, maintain Adjusted Net Worth of not less than $3,000,000. 9.15 COMPLIANCE WITH ERISA. Borrower shall not with respect to any "employee pension benefit plans" maintained by Borrower or any of its ERISA Affiliates: (a) (i) terminate any of such employee pension benefit plans so as to incur any liability to the Pension Benefit Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer to exist any prohibited transaction involving any of such employee pension benefit plans or any trust created thereunder which would subject Borrower or such ERISA Affiliate to a tax or penalty or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA, (iii) fail to pay to any such employee pension benefit plan any contribution which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such plan, (iv) allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such employee pension benefit plan, (v) allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such employee pension benefit plan that is a single employer plan, which termination could reasonably be expected to result in any liability to the Pension Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect to any multiemployer pension plan which singly or in the aggregate could reasonably be expected to result in a payment by the Borrower and/or a liability of the Borrower in excess of $100,000. (b) As used in this Section 9.15, the term "employee pension benefit plans," "employee benefit plans", "accumulated funding deficiency" and "reportable event" shall have 36 the respective meanings assigned to them in ERISA, and the term "prohibited transaction" shall have the meaning assigned to it in Section 4975 of the Code and ERISA. 9.16 LANDLORD AGREEMENTS. Borrower shall use reasonable best efforts to obtain agreements, in form and substance reasonably satisfactory to Lender, from each owner of real property leased from time to time by Borrower, and each mortgagee with respect to real property owned from time to time by Borrower, pursuant to which each such Person, among other things, acknowledges Lender's interest in the Collateral, waives any and all claims such Person has or may have to all or any portion of the Collateral and permits Lender access to and the right to remain on the applicable premises to exercise Lender's rights and remedies and to otherwise deal with the Collateral. Borrower covenants and agrees that Borrower shall, within ten (10) days of the end of each calendar month, deliver an officer's certificate, in the form of Exhibit D hereto or such other form as is agreed to by Lender, setting forth the information, as of the last day of such calendar month, required by Exhibit D. Lender shall have the right at any time or times, in Lender's name or in the name of a nominee of Lender, to verify, by mail, telephone or otherwise, any or all of the information set forth on one or more officer's certificates delivered pursuant to this Section. 9.17 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all reasonable out-of-pocket costs, expenses, filing fees and taxes (other than income taxes payable on the income of Lender or franchise taxes payable by Lender) paid or payable in connection with the preparation, negotiation, execution, delivery, recording, administration, collection, liquidation, enforcement and defense of the Obligations, Lender's rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including, but not limited to: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees and documentary taxes); (b) costs and expenses and fees for title insurance and other insurance premiums, environmental audits, surveys, assessments, engineering reports and inspections, appraisal fees and search fees; (c) costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Congress Accounts, together with Lender's customary charges and fees with respect thereto; (d) charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations; (e) costs and expenses of preserving and protecting the Collateral; (f) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Lender, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Lender arising out of the transactions contemplated hereby and thereby (including, without limitation, preparations for and consultations concerning any such matters); and (g) the reasonable fees and disbursements of counsel (including legal assistants) to Lender in connection with any of the foregoing. 9.18 FURTHER ASSURANCES. At the request of Lender at any time and from time to time, Borrower shall, at its expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be necessary or proper to evidence, perfect, maintain and enforce the security 37 interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements. Lender may at any time and from time to time request a certificate from an officer of Borrower representing that all conditions precedent to the making of Loans and providing Letter of Credit Accommodations contained herein are satisfied. In the event of such request by Lender, Lender may, at its option, cease to make any further Loans or provide any further Letter of Credit Accommodations until Lender has received such certificate and, in addition, Lender has determined that such conditions are satisfied. Where permitted by law, Borrower hereby authorizes Lender to execute and file one or more UCC financing statements signed only by Lender. SECTION 10. EVENTS OF DEFAULT AND REMEDIES 10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more of the following events are referred to herein individually as an "Event of Default", and collectively as "Events of Default": (a) Borrower fails to pay when due any of the Obligations or fails to perform any or all of the terms, covenants, conditions or provisions contained in any or all of Sections 9.1, 9.2, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15 or 9.16 hereof; (b) Borrower fails to perform any or all of the terms, covenants, conditions or provisions (i) contained in any or all of Sections 9.3, 9.4, 9.18 hereof and such failure shall continue unremedied for ten (10) or more days or (ii) arising under or pursuant to this Agreement and/or any other Financing Agreement (other than those described in any or all of Section 10.1(a) or 10.1(b)(i) hereof) and such failure shall continue unremedied for twenty (20) or more days; (c) any representation, warranty or statement of fact made by Borrower to Lender in this Agreement, the other Financing Agreements or any other agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect; (d) one or more judgments for the payment of money is rendered against Borrower or any Subsidiary of Borrower in excess of $1,000,000 in the aggregate and shall remain undischarged or unvacated for a period in excess of thirty (30) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against Borrower or any Subsidiary of Borrower or any of their assets; (e) Borrower or any Subsidiary of Borrower (other than Eagle Pharmacy Co., Milan Distributing Co. or Eagle Country Markets, Inc.) which is a partnership or corporation, dissolves or suspends or discontinues doing business; (f) Borrower or any Subsidiary of Borrower becomes Insolvent (as defined under the bankruptcy laws of the United States of America now or hereafter in effect), makes an assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a meeting of its creditors in their capacity as creditors, one of the purposes of which is to restructure or 38 reorganize indebtedness of Borrower or principal creditors in their capacity as creditors, one of the purposes of which is to restructure or reorganize indebtedness of Borrower; (g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed against Borrower or any Subsidiary of Borrower or all or any material part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or Borrower or any Subsidiary of Borrower shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner; (h) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by Borrower or any Subsidiary of Borrower or for all or any part of its property; or (i) any default by Borrower, any Subsidiary of Borrower under any agreement, document or instrument relating to any indebtedness for borrowed money owing to any person other than Lender, or any capitalized lease obligations, contingent indebtedness in connection with any guarantee, letter of credit, indemnity or similar type of instrument in favor of any person other than Lender, in any case in an amount in excess of $1,000,000, which default continues for more than the applicable cure period, if any, with respect thereto, or any default by Borrower under any material (given the specific circumstances) contract lease, license or other obligation (including, without limitation, Borrower's obligation to pay sales tax) to any person other than Lender, which default continues for more than the applicable cure period, if any, with respect thereto; (j) any Change in Control shall have occurred; (k) the indictment of Borrower under any criminal statute, or commencement of criminal or civil proceedings against Borrower or any Subsidiary of Borrower, pursuant to which statute or proceedings the penalties or remedies sought or likely to be available include forfeiture of any of the Collateral or any material amount of other property of Borrower. (l) any event or circumstance shall occur or exist and such event or circumstance is likely, in the Lender's reasonable judgment, to have a Material Adverse Effect; or (m) there shall be an event of default under any of the other Financing Agreements. 39 10.2 REMEDIES. (a) At any time an Event of Default exists or has occurred and is continuing, Lender shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the Uniform Commercial Code and other applicable law, all of which rights and remedies may be exercised without notice to or consent by Borrower, any Subsidiary of Borrower or any other Person, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Lender hereunder, under any of the other Financing Agreements, the Uniform Commercial Code or other applicable law, are cumulative, not exclusive and enforceable, in Lender's discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by Borrower of this Agreement or any of the other Financing Agreements. Lender may, at any time or times, proceed directly against Borrower or any other Person to collect the Obligations without prior recourse to the Collateral. (b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Lender may, in its discretion and without limitation, (i) accelerate the payment of all Obligations and demand immediate payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any Event of Default described in Sections 10.1(g) and/or 10.1(h), all Obligations shall automatically become immediately due and payable), (ii) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (iii) require Borrower, at Borrower's expense, to assemble and make available to Lender any part or all of the Collateral at any place and time designated by Lender, (iv) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (v) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including, without limitation, entering into contracts with respect thereto, public or private sales at any exchange, broker's board, at any office of Lender or elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon credit or for future delivery, with Lender having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of Borrower, which right or equity of redemption is hereby expressly waived and released by Borrower and/or (vii) terminate this Agreement. If any of the Collateral is sold or leased by Lender upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Lender. If notice of disposition of Collateral is required by law, five (5) days prior notice by Lender to Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Borrower waives any other notice. In the event Lender institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, Borrower waives the posting of any bond which might otherwise be required. 40 (c) Lender may apply the cash proceeds of Collateral actually received by Lender from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in such order as Lender may elect, whether or not then due. Borrower shall remain liable to Lender for the payment of any deficiency with interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including attorneys' fees and legal expenses. (d) Without limiting the foregoing, upon the occurrence of an Event of Default or an event which with notice or passage of time or both would constitute an Event of Default, Lender may, at its option, without notice, (i) cease making Loans or arranging for Letter of Credit Accommodations or reduce the lending formulas or amounts of Revolving Loans and Letter of Credit Accommodations available to Borrower and/or (ii) terminate any provision of this Agreement providing for any future Loans or Letter of Credit Accommodations to be made by Lender to Borrower. 10.3 USE OF INTELLECTUAL PROPERTY. Borrower hereby irrevocably grants Lender a license to use any and all of Borrower's right, title and interest in, to and under any and all trademarks, tradenames, copyrights (and materials subject to one or more copyrights) and other intellectual property, without cost to Lender, to the extent Lender reasonably deems it necessary to assist Lender in any and all liquidations of Collateral or for the practical realization of the benefits intended to be granted to Lender hereunder. SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW 11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER. (a) THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW). (b) Borrower and Lender irrevocably consent and submit to the non-exclusive jurisdiction of the courts of the State of Illinois located in Chicago, Illinois and the United States District Court for the Northern District of Illinois and waive any objection based on venue or FORUM NON CONVENIENS with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Lender shall have the right to bring any action or proceeding against Borrower or its property in the courts of any other jurisdiction which Lender reasonably deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against Borrower or its property). 41 (c) Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth on the signature pages hereof and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Lender's option, by service upon Borrower in any other manner provided under the rules of any such courts. Within thirty (30) days after such service, Borrower shall appear in answer to such process, failing which Borrower shall be deemed in default and judgment may be entered by Lender against Borrower for the amount of the claim and other relief requested. (d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (e) Lender shall not have any liability to Borrower (whether in tort, contract, equity or otherwise) for losses suffered by Borrower in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Lender, that the losses were the result of acts or omissions constituting gross negligence or willful misconduct. In any such litigation, Lender shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with the exercise of ordinary care in the performance by it of the terms of this Agreement. 11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and commercial paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on Borrower which Lender may elect to give shall entitle Borrower to any other or further notice or demand in the same, similar or other circumstances. 11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision hereof shall be amended, modified, waived or discharged orally or by course of conduct, but only by a written agreement signed by an authorized officer of Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its rights, powers and/or remedies unless such waiver shall be in writing and signed by an authorized officer of 42 Lender. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Lender of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Lender would otherwise have on any future occasion, whether similar in kind or otherwise. 11.4 WAIVER OF COUNTERCLAIMS. Borrower waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto. 11.5 INDEMNIFICATION. Borrower shall indemnify and hold Lender, and its directors, agents, employees and counsel, harmless from and against any and all losses, claims, damages, liabilities, costs or expenses imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto, including, without limitation, amounts paid in settlement, court costs, and the reasonable fees and expenses of counsel, other than any losses, claims, damages, liabilities, costs or expenses directly resulting from Lender's or its directors', agents' employees' or counsel's gross negligence or wilful misconduct. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion which it is permitted to pay under applicable law to Lender in satisfaction of indemnified matters under this Section. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement. SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS 12.1 TERM. (a) This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on the date two (2) years from the Closing Date (the "Renewal Date"), with the Renewal Date being extended on each Renewal Date to the date one year from the date of the then current Renewal Date unless this Agreement and the other Financing Agreements have been terminated prior to the then current Renewal Date pursuant to the terms hereof. On each extension of the Renewal Date Borrower shall pay Lender a renewal fee of $50,000, which fee shall be fully earned and payable on each applicable Renewal Date. Lender or Borrower may terminate this Agreement and the other Financing Agreements effective on the Renewal Date or on the anniversary of the Renewal Date in any year by giving to the other party at least sixty (60) days prior written notice; PROVIDED, THAT, this Agreement and all other Financing Agreements must be terminated simultaneously. Upon the effective date of termination or non-renewal of the Financing Agreements, Borrower shall pay to Lender, in full, all outstanding and unpaid Obligations and shall furnish cash collateral to Lender in such amounts as Lender determines are reasonably necessary to secure Lender from loss, cost, damage or expense, including attorneys' fees and legal expenses, in connection with any or all issued and outstanding Letter of Credit 43 Accommodations and checks or other payments provisionally credited to the Obligations and/or as to which Lender has not yet received final and indefeasible payment. Such cash collateral shall be remitted by wire transfer in Federal funds to such bank account of Lender, as Lender may, in its discretion, designate in writing to Borrower for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrower to the bank account designated by Lender are received in such bank account later than 12:00 noon, Chicago time. (b) No termination of this Agreement or the other Financing Agreements shall relieve or discharge Borrower of its respective duties, obligations and covenants under this Agreement or the other Financing Agreements until all Obligations have been fully and finally discharged and paid, and Lender's continuing security interest in the Collateral and the rights and remedies of Lender hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid. (c) If for any reason this Agreement is terminated prior to the end of the then current term or renewal term of this Agreement, in view of the impracticality and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of Lender's lost profits as a result thereof, Borrower agrees to pay to Lender, upon the effective date of such termination, an early termination fee in an amount equal to 1% of the Maximum Credit. Such early termination fee shall be presumed to be the amount of damages sustained by Lender as a result of such early termination and Borrower agrees that it is reasonable under the circumstances currently existing. The early termination fee provided for in this Section 12.1 shall be deemed included in the Obligations. 12.2 NOTICES. All notices, requests and demands hereunder shall be in writing and (a) made to Lender at its address set forth below and to Borrower at its chief executive office set forth below, or to such other address as either party may designate by written notice to the other in accordance with this provision, and (b) deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. 12.3 PARTIAL INVALIDITY. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law. 12.4 SUCCESSORS. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Lender, Borrower and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Lender. Lender may, after notice to Borrower and with Borrower's consent (which consent shall not be unreasonably withheld or delayed), assign its rights and delegate its obligations under this 44 Agreement and the other Financing Agreements and, with Borrower's consent (which consent shall not be unreasonably withheld or delayed) in the case of an assignment, further may assign, or sell participations in, all or any part of the Loans, the Letter of Credit Accommodations or any other interest herein to another financial institution or other person, in which event, the assignee or participant shall have, to the extent of such assignment or participation, the same rights and benefits as it would have if it were Lender hereunder, except as otherwise provided by the terms of such assignment; PROVIDED, HOWEVER, that in the case of any participation (i) Lender's obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to Borrower for the performance of such obligations, (iii) no such grant of a participation shall, without the consent of Borrower, require Borrower to file a registration statement with the Securities and Exchange Commission or apply to qualify the Loans under the blue sky laws of any State, (iv) Borrower shall continue to deal solely and directly with Lender in connection with Lender's rights and obligations under this Agreement and (v) Lender shall retain the sole right to enforce the obligations of Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than a modification, alteration or amendment hereof in any "material respect" (within the meaning of such term in any or all applicable participation agreements) or a waiver or release of any "material rights" (within the meaning of such term in any or all applicable participation agreements)). 12.5 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. 12.6 CONFIDENTIALITY. Lender shall use good faith efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any non-public information supplied to it by Borrower pursuant to this Agreement, PROVIDED, that, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to bank examiners and other regulators, auditors and/or accountants, (iii) in connection with any litigation with Borrower to which Lender is a party or in connection with any other litigation, PROVIDED, that, Lender shall notify Borrower of Lender's receipt of a request for any information from any third party in connection with any such litigation, (iv) to any assignee or participant (or prospective assignee or participant) which shall have agreed to treat such information as confidential or (v) to counsel for Lender or any participant or assignee (or prospective participant or assignee). [Signature page follows] 45 IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be duly executed as of the day and year first above written. LENDER BORROWER CONGRESS FINANCIAL CORPORATION EAGLE FOOD CENTERS, INC. (Central) By: By: ------------------------------- ---------------------------------- Title: Title: ---------------------------- ------------------------------- ADDRESS: CHIEF EXECUTIVE OFFICE: 150 South Wacker Drive Route 67 & Knoxville Road Suite 2200 Milan, Illinois 61264 Chicago, Illinois 60606 [Signature Page to Amended and Restated Loan and Security Agreement] EXHIBIT D I, ________________________________________ certify that (i) I am the duly elected _________________________ of Eagle Food Centers, Inc. and (ii) the information set forth on Schedule I hereto is true, correct and complete as of ______________________________. By: --------------------------------------- Name: -------------------------------------- Title: ------------------------------------- SCHEDULE I
Amount Paid Store # Contact Monthly Rent this Month % Rent Accrual - ------- ------- ------------ ---------- --------------
EX-99.1 6 ex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 PRESS RELEASE FOR IMMEDIATE RELEASE EAGLE FOOD CENTERS P.O. Box 6700, Rock Island, Illinois 61204-6700 Executive Offices & Distribution Center Route 67 & Knoxville Road, Milan, Illinois 61264 Telephone: 309-787-7700/Fax: 309-787-7895 FROM: S. Patric Plumley TITLE: Senior Vice President-CFO DATE: August 9, 2000 EAGLE EXITS CHAPTER 11 - STOCK TO RESUME TRADING MILAN, ILLINOIS, (August 9, 2000)--Eagle Food Centers, Inc., (NASDAQ: EGLE) announced today that the Company has consummated its first amended plan of reorganization relating to the voluntary petition under Chapter 11 of the Bankruptcy Code and has exited Chapter 11. This plan of reorganization was confirmed by the United States District Court for the District of Delaware on July 7, 2000. The Plan provided for, among other things, replacement of the Senior Notes with new notes that have the following material terms and conditions; (i) a maturity date of April 15, 2005, (ii) an interest rate of 11%, (iii) a $15 million reduction of outstanding principal by Eagle upon the effective date of the Plan; and (iv) Eagle may, at its option, redeem the New Senior Notes at 100% of the principal amount outstanding at the time of redemption. In addition, under the Plan, Eagle will give 15% of the fully-diluted common stock of Eagle to the holders of the Senior Notes, some of which will be returned to Eagle (up to 10%) upon the occurrence of certain events. In a related matter, NASDAQ has notified the Company that the trading halt on the Company's stock will be lifted on August 10, 2000 and the Company anticipates trading of its stock to resume on or after that date. Trading of the Company's stock was halted by NASDAQ on February 29, 2000 as a result of the Chapter 11 filing. "We are happy to report that the Company has exited from Chapter 11 and the Company's stock will resume trading", said Jeff Little, President and CEO. "We are looking forward to focusing our energies to step up the implementation of strategies we believe are necessary to perform as a successful company, benefiting our shareholders, customers, suppliers and associates." Eagle Food Centers, Inc., a leading regional supermarket chain headquartered in Milan, Illinois, operates 64 stores in northern and central Illinois and eastern Iowa under the trade names of Eagle Country Markets and BOGO'S Food and Deals. ### This press release may include statements that constitute "forward-looking" statements. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to, continued acceptance of the Company's products in the marketplace, competitive factors, dependence upon third-party vendors and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. -----END PRIVACY-ENHANCED MESSAGE-----