-----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, EzRkOgYYPBuvps8HtJSSJCgG9BcSfsP2FH7uDI6l7Gw/a8/TKSMGfF23mngc2peJ 7WwQs50Cb0g+cNibB6iKFg== 0000950136-03-002227.txt : 20030905 0000950136-03-002227.hdr.sgml : 20030905 20030905151915 ACCESSION NUMBER: 0000950136-03-002227 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030902 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JARDEN CORP CENTRAL INDEX KEY: 0000895655 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 351828377 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13665 FILM NUMBER: 03883711 BUSINESS ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 914 967 9400 MAIL ADDRESS: STREET 1: 555 THEODORE FREMD STREET 2: AVE CITY: RYE STATE: NY ZIP: 10580 8-K 1 file001.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 2, 2003 Jarden Corporation (Exact name of registrant as specified in its charter)
Delaware 0-21052 35-1828377 - ------------------------------------------------------------------------------------------------------------------ (State or other jurisdiction (Commission File Number) (IRS Employer Identification No.) of incorporation) 555 Theodore Fremd Avenue, Rye, New York 10580 - ------------------------------------------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 967-9400 (Former name or former address, if changed since last report.) Item 2 . Acquisition of Assets On September 2, 2003, we acquired all of the issued and outstanding stock of Lehigh Consumer Products Corporation ("Lehigh"), the largest supplier of rope, cord and twine for the U.S. consumer marketplace and a leader in innovative storage and organization products for the home and garage as well as products in the security door and fencing market. Its customers include North America's largest and rapidly growing warehouse, home centers and mass merchants. We acquired Lehigh pursuant to the terms of a Stock Purchase Agreement dated as of August 15, 2003, by and among Jarden Corporation, American Manufacturing Company, Inc. ("AMC"), and Lehigh (the "Stock Purchase Agreement"). The consideration for this acquisition consisted of the following: o $155 million in cash paid at closing (excluding transaction costs); and o an Earn-Out provision with a potential payment in cash or our common stock, at our election, of up to $25 million payable in 2006. If the Earn-Out is paid, we expect to capitalize its cost. If we issue stock in satisfaction of the Earn-Out, the value of each share will be determined by taking the average of the closing price of our common stock on the New York Stock Exchange over a period consisting of the ten consecutive business days ending on the date that is two days prior to the issuance of such stock. We have entered into a Registration Rights Agreement, dated as of September 2, 2003, with AMC (the "Registration Rights Agreement"), pursuant to which we have agreed to file a registration statement with respect to the resale under the Securities Act of 1933, as amended, of shares issued in satisfaction of the Earn-Out. This acquisition was financed at closing with the combination of our available cash and borrowings under our credit facility, which we have amended and restated to increase our available borrowings. See "Other Events - Amendment and Restatement of Existing Credit Facility". Copies of the Stock Purchase Agreement and the Registration Rights Agreement are attached to this report as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference as though fully set forth herein. The foregoing summary description of the Stock Purchase Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by the complete text of the Stock Purchase Agreement and the Registration Rights Agreement. 2 Item 5. Other Events AMENDMENT AND RESTATEMENT OF EXISTING CREDIT FACILITY On September 2, 2003, we refinanced our existing senior indebtedness by closing on an amendment and restatement to our existing credit facility (the "Existing Agreement") pursuant to the Amended and Restated Credit Agreement, dated as of September 2, 2003, among Jarden Corporation, Bank of America, N.A., as Administrative Agent, Swing Line Lender, and L/C Issuer, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents, and the other Lenders party thereto (the "Amended and Restated Credit Agreement"). Our Amended and Restated Credit Agreement, among other things, provides for a senior credit facility for up to $280 million of senior secured loans, consisting of a $70 million five-year revolving credit facility (the "Revolving Credit Facility"), a $60 million five-year term loan facility (the "Term Loan A Facility"), and a new $150 million five-year term loan facility (the "Term Loan B Facility"). The Revolving Credit Facility includes up to an aggregate of $15 million in standby and commercial letters of credit and up to an aggregate of $10 million in swing line loans. As of September 2, 2003, we have not drawn any amounts under the Revolving Credit Facility. We have used an amount of approximately $7.1 million of availability under the Revolving Credit Facility for the issuance of letters of credit. As of September 2, 2003, $54.5 million was outstanding under the Term Loan A Facility. Payments of principal under the Term Loan A Facility are payable quarterly in accordance with a specified amortization schedule. The final payment of all amounts outstanding under the Term Loan A Facility is due on April 24, 2007. On September 2, 2003, we drew down the full amount of the $150 million Term Loan B Facility. These funds were used principally to pay the cash consideration for the Lehigh acquisition under the Stock Purchase Agreement. See "Acquisition of Assets" set forth above. Payments of principal under the Term Loan B Facility are payable quarterly in accordance with a specified amortization schedule. The final payment of all amounts outstanding under the Term Loan B Facility is due on April 24, 2008. The Revolving Credit Facility, the Term Loan A Facility and the Term Loan B Facility bear interest at a rate equal to (i) the Eurodollar Rate (as determined by the Administrative Agent) pursuant to an agreed formula or (ii) a Base Rate equal to the higher of (a) the Bank of America prime rate and (b) the federal funds rate plus 0.50%, plus, (x) for loans under each of the Revolving Credit Facility and the Term Loan A Facility, an applicable margin ranging from 0.75% to 1.75% for Base Rate loans and from 2.00% to 2.75% for Eurodollar Rate loans, and (y) for loans made under the Term Loan B Facility, 2.75% per annum with respect to Eurodollar Rate loans and 1.75% per annum with respect to Base Rate loans. Interest under the Revolving Credit Facility, the Term Loan A Facility and the Term Loan B Facility are payable quarterly if a loan is a Base Rate loan or on a date which is one, two 3 or three months from the date of disbursement, as selected by us, if the loan is a Eurodollar Rate loan; provided, that for six-month Eurodollar Rate loans, interest shall be paid quarterly. The Amended and Restated Credit Agreement contains certain restrictions on the conduct of our business, including, among other things, restrictions, generally, on: o incurring debt; o disposing of certain assets; o making investments; o exceeding certain agreed capital expenditures; o creating or suffering liens on our assets; o completing certain mergers, consolidations, and with permitted exceptions, acquisitions (other than the Lehigh Acquisition); o declaring dividends; o redeeming or prepaying other debt; and o transactions with affiliates. The Amended and Restated Credit Agreement also requires us to maintain the following financial covenants: o our consolidated net worth may not be at any time less than the sum of: o $62,000,000; o an amount equal to 50% of our consolidated net income earned in each fiscal quarter ending after June 30, 2003 (with no deduction for a net loss in any such fiscal quarter); and o an amount equal to 100% of the aggregate increases in the stockholders' equity of Jarden and our subsidiaries after September 2, 2003, by reason of the issuance and sale of our capital stock (including upon any conversion of our debt securities into our capital stock); 4 o our total leverage ratio as of the end of any four-quarter period may not be greater than the ratio set forth below opposite such four-quarter period:
------------------------------------------------- -------------------------------------------- Four-Quarter Period ending closest to: Maximum Total Leverage Ratio ------------------------------------------------- -------------------------------------------- June 30, 2003; September 30, 2003; December 31, 2003; 3.50 to 1.00 March 31, 2004; June 30, 2004; and September 30, 2004 ------------------------------------------------- -------------------------------------------- December 31, 2004; March 31, 2005; 3.25 to 1.00 June 30, 2005; and September 30, 2005 ------------------------------------------------- -------------------------------------------- December 31, 2005 and thereafter 3.00 to 1.00 ------------------------------------------------- -------------------------------------------- o our senior leverage ratio as of the end of any four-quarter period may not be greater than the ratio set forth below opposite such four-quarter period: ------------------------------------------------- -------------------------------------------- Four-Quarter Period ending closest to: Maximum Senior Leverage Ratio ------------------------------------------------- -------------------------------------------- June 30, 2003; September 30, 2003; December 31, 2003; 2.25 to 1.00 March 31, 2004; June 30, 2004; and September 30, 2004 ------------------------------------------------- -------------------------------------------- December 31, 2004; March 31, 2005; 2.00 to 1.00 June 30, 2005; and September 30, 2005 ------------------------------------------------- -------------------------------------------- 5 ------------------------------------------------- -------------------------------------------- Four-Quarter Period ending closest to: Maximum Senior Leverage Ratio ------------------------------------------------- -------------------------------------------- December 31, 2005 and thereafter 1.75 to 1.00 ------------------------------------------------- --------------------------------------------
; and o our fixed charge ratio as of the end of any applicable period, beginning with the period ending closest to June 30, 2003, may not be less than 1.25 to 1.00. However, the Amended and Restated Credit Agreement does not make any significant restrictions on our or our domestic subsidiaries' ability to obtain funds from their respective subsidiaries by dividend or loan. The occurrence of certain events or conditions described in the Amended and Restated Credit Agreement (subject to grace periods in certain cases) constitutes an event of default. If an event of default occurs, the Administrative Agent may, at the request or consent of the Lenders, among other things, declare the entire outstanding balance of principal and interest of all outstanding loans to be immediately due and payable. The events of default include, among other things: o our failure to pay any principal, interest, or other fees on the loans made under the Amended and Restated Credit Agreement when due; o our failure to make payment on other indebtedness or contingent liabilities when due; o any material judgment or order entered against us; o any inaccuracy in the representations and warranties; o we incur any of certain specified liabilities under the Employee Retirement Income Security Act of 1974; o any of the loan documents under the Amended and Restated Credit Agreement cease to be in full force and effect; o failure to observe certain covenants under the Amended and Restated Credit Agreement (including, e.g., the financial covenants); o bankruptcy, insolvency or receivership proceedings with respect to Jarden; and 6 o a change of control of Jarden. The Amended and Restated Credit Agreement provides that we shall make required prepayments of the Term Loan A, the Term Loan B and the Revolving Loan, including, among other things, upon the happening of the following events: o in the event that our total leverage ratio is greater than 3.00 to 1.00 as of the end of any fiscal year, beginning with the fiscal year ending December 31, 2004, we must make a prepayment in an amount equal to fifty percent (50%) of the amount of excess cash flow, each such prepayment to be made on the date our and our subsidiaries' financial statements for such fiscal year are required to be delivered (or if earlier, the date such financial statements are delivered) pursuant to the Amended and Restated Credit Agreement; o we must make, or must cause each applicable subsidiary to make, a prepayment with respect to each private or public offering of equity securities of Jarden or any of our subsidiaries (other than equity securities issued to Jarden or a guarantor) in an amount equal to fifty percent (50%) of the net proceeds of each issuance of equity securities of the Jarden or any of our subsidiaries, each such prepayment to be made within ten (10) business days of receipt of such proceeds and upon not less than five (5) business days' prior written notice to the Administrative Agent; provided, however, subject to certain exceptions set forth in the Amended and Restated Credit Agreement, with respect to private or public offerings of equity securities made on or prior to February 29, 2004, such prepayment shall be equal to (i) 100 percent of the first $50 million dollars of net proceeds of such equity issuance after subtracting (a) the amount of such proceeds used for any permitted acquisitions (as defined in the Amended and Restated Credit Agreement) that we have completed within such period and (b) $50 million, and (ii) 50 percent of any remaining net proceeds of such equity issuance; o we must make, or must cause each applicable subsidiary to make, a prepayment in an amount equal to one hundred percent (100%) of the net proceeds from each Disposition (as defined below) other than certain Permitted Dispositions (as defined below), each such prepayment to be made within ten (10) business days of receipt of the net proceeds thereof and upon not less than five (5) business days' prior written notice to the Administrative Agent. Disposition means the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property by any person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. A Disposition shall not include (a "Permitted Disposition"): o Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business; o Dispositions of inventory in the ordinary course of business; 7 o Dispositions by Jarden or any of our subsidiaries of equipment or real property which is replaced by equipment or real property of substantially equivalent or greater utility and value within ninety (90) days of the date of disposition thereof, provided that if the fair market value of the property so disposed of is greater than $6,000,000, the Administrative Agent will have received notice of such disposition from us not less than twenty (20) days prior to the consummation of such disposition; o Dispositions of property (i) by any of our subsidiaries to a guarantor, (ii) by us or any guarantor to any guarantor, and (iii) by any of our subsidiaries that is not a guarantor to any other of our subsidiaries that is not a guarantor; o any of our subsidiaries may merge with or transfer substantially all its assets (upon voluntary liquidation or otherwise) to any guarantor, provided that, if a merger, the guarantor must be the continuing or surviving person, and provided further that if a transfer of assets in the form of a sale by a subsidiary that is not a guarantor, the sale shall be at fair market value and the aggregate amount of all such sales will not exceed $10,000,000; o any of our subsidiaries substantially all of whose assets consist of other subsidiaries' securities or other equity securities in any person may merge with or transfer substantially all its assets (upon voluntary liquidation or otherwise) to us, provided that, if a merger, we will be the continuing or surviving person, and provided further that if a transfer of assets in the form of a sale by a subsidiary that is not a guarantor, the sale will be at fair market value and the aggregate amount of all such sales will not exceed $10,000,000; o any of our subsidiaries that is not a guarantor may merge with or sell substantially all its assets (upon voluntary liquidation or otherwise) to any one or more subsidiaries that is not a guarantor; and o Dispositions not otherwise permitted by above, so long as the aggregate fair market value of all such property so disposed in any fiscal year of Jarden does not exceed $50,000,000 and the net proceeds therefrom are applied in accordance with the Amended and Restated Credit Agreement; o in the event that the net proceeds received from insurance carried with respect to the collateral securing our obligations under the Amended and Restated Credit 8 Agreement and the other loan documents is not completely and fully utilized for the repair or replacement of such collateral, we must make, or must cause each applicable subsidiary to make, a prepayment in an amount equal to one hundred percent (100%) of the net proceeds received with respect to such insurance that is not so utilized. In connection with entering into the Amended and Restated Credit Agreement, the following domestic subsidiaries have agreed to guarantee our obligations under the Amended and Restated Credit Agreement: Hearthmark, Inc., Alltrista Plastics Corporation, Alltrista Newco Corporation, Alltrista Zinc Products, L.P., Tilia, Inc. (formerly known as Alltrista Acquisition I, Inc.), Tilia Direct, Inc. (formerly known as Alltrista Acquisition II, Inc.), Tilia International, Inc. (formerly known as Alltrista Acquisition III, Inc.) and Quoin Corporation (the "Guarantors"). In connection with the Lehigh acquisition, Lehigh has also agreed to guarantee our obligations under the Amended and Restated Credit Agreement. Pursuant to a securities pledge agreement entered into in connection with the Existing Agreement, as amended by the Consolidated Security Instrument Amendment, dated as of September 2, 2003, among Jarden, the Guarantors, and Bank of America, as Administrative Agent (the "Consolidated Security Instrument Amendment") entered into in connection with the Amended and Restated Credit Agreement, all obligations under the Amended and Restated Credit Agreement are secured by a security interest in all of the capital stock or other equity interests of each of our existing or future direct or indirect domestic subsidiaries (other than Immaterial Subsidiaries), and 65% of the voting capital stock or other equity interests and 100% of the nonvoting stock or other equity interests of each of our (or any of our direct or indirect domestic subsidiaries') existing or future direct foreign subsidiaries. Pursuant to the terms of a security agreement and an intellectual property security agreement, each entered into in connection with the Existing Agreement, as each amended by the Consolidated Security Instrument, the obligations under the Amended and Restated Credit Agreement are also secured by a security interest in substantially all of the personal property of us and our domestic subsidiaries that are not Immaterial Subsidiaries. A copy of the Amended and Restated Credit Agreement is attached to this report as Exhibit 10.3 and is incorporated herein by reference as though fully set forth herein. Other documents entered into by us and our subsidiaries in connection with the Amended and Restated Credit Agreement are attached to this report as Exhibits 10.4 through 10.8 and are incorporated herein by reference as though fully set forth herein. The foregoing summary description of the Amended and Restated Credit Agreement and the transactions contemplated thereby is not intended to be complete and is qualified in its entirety by the complete text of the Amended and Restated Credit Agreement and the other agreements attached to this report as Exhibits 10.4 through 10.8. EMPLOYMENT AGREEMENT MATTERS We employ James E. Lillie as Chief Operating Officer of Jarden pursuant to an Employment Agreement, dated as of August 4, 2003 (the "Employment Agreement"). Under the Employment Agreement, Mr. Lillie is employed for an initial two-year term subject to 9 successive one-year renewal terms, such renewal terms to be automatic unless either party gives prior written notice of non-renewal. Mr. Lillie receives a base salary of $375,000 per year, subject to an annual increase at least equal to the change in the Consumer Price Index, plus a performance-based bonus package. Mr. Lillie also received 35,000 shares of restricted common stock on August 4, 2003, as well as 100,000 stock options with the option price being the closing price of our common stock on such date. Mr. Lillie will receive a prescribed severance pay amount if he is terminated without cause or suffers a specified disability. A copy of the Employment Agreement is attached to this report as Exhibit 10.9 and is incorporated herein by reference as though fully set forth herein. The foregoing summary description of Employment Agreement and the employment relationship contemplated thereby is not intended to be complete and is qualified in its entirety by the complete text of the Employment Agreement. Our employment agreements with each of Messrs. Franklin and Ashken are for a term of two years ending December 31, 2003, subject to certain termination rights and renewal provisions. The Compensation Committee of our Board of Directors has engaged an independent compensation consultant to conduct an evaluation of compensation of executive officers of other comparable public companies and based on the results of that study will provide to the Compensation Committee compensation recommendations for each of Messrs. Franklin and Ashken. The Compensation Committee intends to consider the independent compensation consultants' recommendations and the respective achievements of Messrs. Franklin and Ashken in formulating its recommendation to our Board regarding amendments to their respective employment agreements. Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired. Audited consolidated balance sheet of Lehigh as of December 31, 2002 and audited consolidated statement of income, stockholder's equity and comprehensive income and cash flows for the year ended December 31, 2002. Unaudited consolidated balance sheets of Lehigh as of June 30, 2002 and 2003 and unaudited consolidated statement of income and cash flows for each of the six-month periods ended June 30, 2002 and 2003. (b) Pro Forma Financial Information. Unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2002 of Jarden Corporation which gives effect to the acquisition of Lehigh as if it had occurred on January 1, 2002. Unaudited pro forma condensed consolidated balance sheet as of June 30, 2003 and condensed consolidated statement of operations for the six months ended June 30, 2003. See "Index to Financial Statements." (c) Exhibits. The following Exhibits are filed herewith as part of this report:
Exhibit Description - ------- ----------- 10.1 Stock Purchase Agreement dated as of August 15, 2003, by and among Jarden 10 Exhibit Description - ------- ----------- Corporation, American Manufacturing Company, Inc., and Lehigh Consumer Products Corporation. 10.2 Registration Rights Agreement, dated as of September 2, 2003, among Jarden Corporation, American Manufacturing Company, Inc., and the Holders named therein. 10.3 Amended and Restated Credit Agreement, dated as of September 2, 2003, among Jarden Corporation, Bank of America, N.A., as Administrative Agent, Swing Line Lender, and L/C Issuer, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents. 10.4 Consolidated Amendment to Guaranty and Security Instruments, dated as of September 2, 2003, among Jarden Corporation, the Guarantors, and Bank of America, N.A., as Administrative Agent. 10.5 Guaranty Agreement, dated as of April 24, 2002, by the Domestic Subsidiaries and Bank of America, NA., as Administrative Agent (filed as Exhibit 10.2 to Jarden's Current Report on Form 8-K filed with the Commission on May 9, 2002, and incorporated herein by reference). 10.6 Security Agreement, dated as of April 24, 2002, among Jarden, the Domestic Subsidiaries, and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.3 to Jarden's Current Report on Form 8-K filed with the Commission on May 9, 2002, and incorporated herein by reference). 10.7 Intellectual Property Security Agreement, dated as of April 24, 2002, among Jarden, the Domestic Subsidiaries and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.4 to Jarden's Current Report on Form 8-K filed with the Commission on May 9, 2002, and incorporated herein by reference). 10.8 Securities Pledge Agreement, dated as of April 24, 2002, among Jarden, Quoin Corporation, Alltrista Newco Corporation, Caspers Tin Plate Company, and Bank of America, NA., as Administrative Agent (filed as Exhibit 10.5 to Jarden's Current Report on Form 8-K filed with the Commission on May 9, 2002, and incorporated herein by reference). 10.9 Employment Agreement, dated as of August 4, 2003, between Jarden Corporation and James E. Lillie. 23.1 Consent of PricewaterhouseCoopers LLP. 99.1 Press Release of Jarden Corporation, dated September 2, 2003.
11 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. Dated: September 5, 2003 JARDEN CORPORATION By: /s/ Desiree DeStefano ---------------------------------------------- Name: Desiree DeStefano Title: Senior Vice President 12 INDEX TO FINANCIAL STATEMENTS
Audited Consolidated Financial Statements of Lehigh Consumer Products Corporation Report of Independent Auditors............................................................................ F-2 Consolidated Balance Sheet as of December 31, 2002........................................................ F-3 Consolidated Statement of Income for the Year Ended December 31, 2002...................................................................... F-4 Consolidated Statement of Stockholder's Equity and Comprehensive Income for the Year Ended December 31, 2002...................................................................... F-5 Consolidated Statement of Cash Flows for the Year Ended December 31, 2002...................................................................... F-6 Notes to Consolidated Financial Statements................................................................ F-7 Unaudited Condensed Consolidated Financial Statements of Lehigh Consumer Products Corporation Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2002 and 2003........................................................... F-15 Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002........................... F-16 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2003.......................................................... F-17 Notes to Unaudited Condensed Consolidated Financial Statements............................................ F-18 Unaudited Pro Forma Condensed Financial Statements........................................................ F-19
F-1 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholder of Lehigh Consumer Products Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, stockholder's equity and comprehensive income, and of cash flows present fairly, in all material respects, the financial position of Lehigh Consumer Products Corporation and its subsidiaries at December 31, 2002, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 3, the Company adopted Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" effective January 1, 2002. PricewaterhouseCoopers LLP Philadelphia, PA April 17, 2003, except as to Note 11, for which the date is September 2, 2003 F-2 LEHIGH CONSUMER PRODUCTS CORPORATION CONSOLIDATED BALANCE SHEET DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents $ 6,513 Accounts receivable, net of allowance for doubtful accounts of $423 18,293 Inventory 16,745 Prepaid expenses and other assets 994 -------- Total current assets 42,545 -------- Property, plant and equipment Land and buildings 10,201 Machinery and equipment 17,863 -------- 28,064 Accumulated depreciation (14,053) -------- Total property, plant and equipment 14,011 -------- Other assets Goodwill 38,365 Intangible assets, net 1,357 Other 1,839 -------- Total other assets 41,561 -------- Total assets $ 98,117 ======== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Current portion of long-term debt $ 3,557 Accounts payable - trade 4,492 Due to related parties, net 1,758 Deferred compensation 6,928 Reserve for customer rebates 3,713 Accrued compensation 1,522 Accrued liabilities 2,472 -------- Total current liabilities 24,442 -------- Noncurrent liabilities Long-term debt 18,629 Derivative instruments 1,457 -------- Total noncurrent liabilities 20,086 -------- Total liabilities 44,528 -------- Commitments and contingencies Stockholder's equity Common stock, par value $1 per share; authorized 10 shares; 1 share outstanding 1 Additional paid-in capital 29,979 Retained earnings 24,923 Accumulated other comprehensive income (1,314) -------- Total stockholder's equity 53,589 -------- Total liabilities and stockholder's equity $ 98,117 ======== The accompanying notes are an integral part of these financial statements. F-3 LEHIGH CONSUMER PRODUCTS CORPORATION CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) Net sales $ 128,128 Cost of sales 89,704 --------- Gross profit from sales 38,424 --------- Operating expenses Selling and administrative 13,905 Other operating expense 5,627 --------- Total operating expenses 19,532 --------- Operating profit 18,892 --------- Other income (expense) Interest and dividend income 11 Interest expense (1,885) Other, net (380) --------- Total other expense (2,254) --------- Income before income taxes 16,638 Income tax expense - --------- Net income $ 16,638 ========= The accompanying notes are an integral part of these financial statements. F-4 LEHIGH CONSUMER PRODUCTS CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY AND COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS)
ACCUMULATED ADDITIONAL OTHER COMMON PAID-IN RETAINED COMPREHENSIVE TOTAL STOCK CAPITAL EARNINGS INCOME EQUITY BALANCE AT DECEMBER 31, 2001 $ 1 $29,979 $ 15,124 $ (354) $ 44,750 ---- ------- -------- ------- -------- Comprehensive income: Net income 16,638 16,638 Derivative instruments (869) (869) Minimum pension liability adjustment (91) (91) Distributions (6,839) (6,839) ---- ------- -------- ------- -------- BALANCE AT DECEMBER 31, 2002 $ 1 $29,979 $ 24,923 $(1,314) $ 53,589 ==== ======= ======== ======= =======
The accompanying notes are an integral part of these financial statements. F-5 LEHIGH CONSUMER PRODUCTS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income $16,638 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,877 Amortization 287 Provision for doubtful accounts 155 Loss on disposal of property and equipment 2 Unrealized loss on derivatives (869) Minimum pension liability adjustment (91) Change in Assets Accounts receivable (5,717) Inventories (1,592) Due from related parties 68 Prepaid expenses and other 357 Other noncurrent assets 394 Liabilities Accounts payable 1,189 Accrued liabilities 6,456 Due to related parties 1,758 Derivative instruments 890 ------- Net cash provided by operating activities 21,802 ------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (454) ------- Net cash used in investing activities (454) ------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on line-of-credit, net (5,500) Payments on note payable (2,857) Payments on mortgage (700) Distributions (6,839) ------- Net cash used in financing activities (15,896) ------- NET INCREASE IN CASH AND CASH EQUIVALENTS 5,452 Cash and cash equivalents, beginning of year 1,061 ------- Cash and cash equivalents, end of year $ 6,513 ======= The accompanying notes are an integral part of these financial statements. F-6 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The consolidated financial statements include the accounts of Lehigh Consumer Products Corporation ("the Company") and its consolidated subsidiaries, whose operations primarily consist of the manufacture and distribution of cordage, security doors and window guards, and home storage organizer and hardware products. Principal markets include home centers and mass merchandisers. All intercompany transactions have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. REVENUE RECOGNITION Revenue from product sales is recognized when title and risk of loss transfer to the customer. Provisions for discounts and rebates to customers, returns, and other adjustments are provided in the same period that the related sales are recorded. SHIPPING AND HANDLING COSTS Shipping and handling fees related to sales transactions are billed to customers and recorded as revenue. Shipping and handling costs incurred are recorded in cost of sales. CASH AND CASH EQUIVALENTS The Company considers all highly liquid instruments purchased with maturities of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE Accounts receivable are stated net of allowances for doubtful accounts of $423 at December 31, 2002. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets, generally by the declining balance method for machinery and equipment and by the straight-line, and declining-balance methods for buildings. Useful lives are seven years for machinery and equipment, and range from ten to forty years for buildings. Depreciation expense was $1,877 for 2002. Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to operations as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation are removed from the consolidated balance sheets and any gain or loss is reflected in the consolidated statements of operations. F-7 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) INCOME TAXES The Company's tax status with the Internal Revenue Service is an "S" Corporation subsidiary. As an S Corporation subsidiary, the Company is considered a "flow-through entity." Taxable income generated after the election is passed directly to the shareholders and the Company is not required to pay income tax on total income generated. All states in which it operates recognize this status. DERIVATIVE FINANCIAL INSTRUMENTS Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133 requires that all derivatives be recognized in the balance sheet at their fair value. Derivatives that are not hedges must be recorded at fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives are either offset against the change in fair value of the underlying assets or liabilities through earnings or recognized in other comprehensive income until the underlying hedged item is recognized in earnings. Derivatives used by the Company are highly effective as all critical terms of the instruments match the hedged items. IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews its long-lived assets, including goodwill, and identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based on undiscounted cash flows. In determining the amount of an impairment loss, the Company compares an asset's carrying value to its fair market value as measured by market price or future discounted cash flows. When the carrying amount of the asset exceeds the fair value, the Company recognizes an impairment loss in an amount equal to the excess. After an impairment loss is recognized, the adjusted carrying amount of the asset becomes its new accounting basis. ACCRUED PRODUCT WARRANTY COSTS The Company offers a wide variety of warranty terms for its products. All warranty obligations anticipated to be fulfilled beyond one year are classified as noncurrent liabilities. CONCENTRATIONS OF CREDIT RISKS Financial instruments which expose the Company to concentrations of credit risk, as defined by Statement of Financial Accounting Standards No. 105, Disclosure of Information About Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk, consist primarily of cash and cash equivalents and accounts receivable. At times, such cash balances may be in excess of the FDIC insurance limits. Sales to one customer during 2002 were 62 percent of the Company's total. Trade receivables from this customer were 63 percent of total accounts receivable at December 31, 2002. ADVERTISING COSTS Advertising costs are expensed as incurred. Total advertising expense for 2002 was $368. GOODWILL Goodwill, representing the excess of the cost over the net tangible and identifiable assets acquired in business combinations, is stated at cost. Goodwill and intangibles with indefinite lives are not amortized, but tested for impairment no less frequently than annually. Impairment is measured by comparing the carrying value to fair value using quoted market prices, a discounted cash flow model, or a combination of both. F-8 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) OTHER INTANGIBLE ASSETS Other intangible assets are amortized on a straight-line basis over the useful life of the asset, which is the period the asset is expected to contribute directly or indirectly to the future cash flows. The Company uses a range of five to eleven years for amortization of specific intangibles, the largest of which relates to non-compete covenants. Intangible assets were presented net of accumulated amortization of $698 at December 31, 2002. Amortization expense related to intangible assets was $287 in 2002. Amortization expense is anticipated to be $287 in 2003, $287 in 2004, $287 in 2005, $287 in 2006, and $208 in 2007. 2. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out ("LIFO") basis. Inventories at December 31, 2002 consisted of the following: Finished goods $12,038 Work in process 298 Raw materials 4,409 ------- 16,745 Less allowance to reduce carrying value to LIFO basis - ------- Total inventory $16,745 ======= 3. GOODWILL Goodwill represents the excess of the cost over the net tangible and identifiable assets acquired in business combinations, is stated at cost. Prior to the adoption of Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets ("FAS No. 142") in 2002, goodwill was being amortized over 15 years. Goodwill was presented net of accumulated amortization of $11,360 at December 31, 2002. Amortization expense related to goodwill was $0 in 2002. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires goodwill be tested for impairment on an annual basis and between annual tests in certain circumstances, and written down when impaired, rather than being amortized as previous accounting standards required. In accordance with SFAS No. 142, the Company ceased amortizing goodwill totaling $38,365 as of January 1, 2002. Based upon impairment tests performed at the transition date of January 1, 2002 and the testing date of December 31, 2002, there was no impairment of goodwill in 2002. The following is a reconciliation of previously reported financial information to adjusted amounts excluding goodwill amortization for the year ended December 31, 2002: Net income related to common shareholders $16,659 Addback: Goodwill amortization - ------- Adjusted net income related to common shareholders $16,659 ======= F-9 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) 4. PENSION PLANS The Company participates in a non-contributory pension plan with American Manufacturing Corporation. The plan covering salaried, office hourly, plant hourly and management employees provides pension benefits that are based on length of service and a percentage of average qualifying compensation for the highest five consecutive years of employment. The funding policy is to contribute the requirements set forth in the Employee Retirement Income Security Act ("ERISA") plus such additional amounts as the Company may determine to be appropriate. Total plan assets exceed projected benefit obligations at December 31, 2002. As of December 31, 2002, the Company had prepaid pension assets of $408, and had pension income of $284 for 2002. The Company has a qualified 401(k) defined contribution plan, which covers substantially all its domestic non-union full-time employees. Eligible employees may elect to defer up to 15 percent of their salary. The Company will match 50 percent of the employees' contribution up to 6 percent of their salary. Eligible employees are vested in the Company's contributions and related investment income after five years of service. Expenses for the plans were charged to continuing operations in the amounts of $179 in 2002. The Company participates in a qualified deferred compensation plan for certain key executives. The participant's right to receive an award-granted vests over five years subject to certain redemption provisions. There were no awards granted in 2002. At December 31, 2002, the Company had an accrued liability of $6,928, and the Company had an expense of $3,337 for the year ended December 31, 2002, related to this plan. 5. DEBT Debt at December 31, 2002 consisted of the following: Line-of-credit of $27,000, variable rate plus 1.50% (2.88% at December 31, 2002) through December 2005. $ - Note payable to a bank, variable rate plus 1.50% (2.92% at December 31, 2002) and due in monthly installments of $238 plus interest beginning on February 1, 2001 and ending January 1, 2008. 14,286 Bonds payable: Private placement demand bonds, variable rate (6.65% at December 31, 2002) due July 1, 2012. 6,900 Industrial revenue bonds, variable rate (5.10% at December 31, 2002) due July 1, 2012. 1,000 ------- 22,186 Current portion (3,557) ------- Long-term portion $18,629 ======= F-10 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) On December 27, 2000, the Company entered into a credit facility with a bank. Under the agreement, the bank has made available to the Company $34,000 of committed 360-day revolving credit, through December 2005. The Company lowered this availability to $27,000 on December 17, 2001. Interest rate is defined as the Prime Rate, LIBOR, or Euro Rate plus between 1.5 percent and 2.25 percent based on set criteria, with the method selected at the option of the Company. In addition, the Company has a $20,000 note payable to the bank due in monthly installments of $238 plus interest beginning on February 1, 2001 and ending January 1, 2008. Interest rate is defined as the LIBOR or Euro Rate plus 1.50 percent with the method selected at the option of the Company. The credit facility is collateralized by the assets of the Company. The amount outstanding on the $20,000 note payable at December 31, 2002 was $14,286. The Company has outstanding $6,900 in privately placed demand bonds, and $1,000 in industrial revenue bonds through a bank to finance the construction of a new facility for one of its subsidiaries. The debt is collateralized by this facility. The interest rate on these instruments is determined on a weekly basis, and varies with the prevailing market rate for similar instruments, such that the Company's bonds will always trade at face value, without premium or discount. While, at the discretion of the Company, the interest rate determination method is in the weekly mode, the bonds are callable on any interest payment date at the option of the Company without penalty. Interest is payable monthly. Interest paid on all debt was $1,864 in 2002. The following schedule outlines principal payments due on the above long-term debt and bonds over the next 5 years: 2003 $ 3,557 2004 3,557 2005 3,557 2006 3,557 2007 3,557 2008 and thereafter 4,401 ------- $22,186 ======= The long-term debt and bond agreements include restrictive covenants, the most significant of which requires that the Company maintain minimum capitalization and certain financial ratios. The Company was compliant with all covenants during 2002. 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company maintains an interest rate risk management strategy by using interest rate swaps to minimize economic exposure to fluctuating interest rates. The Company's interest rate swap agreements ("swaps"), which mature in 2006 and 2012, are designated as a cash flow hedge. Therefore, all unrealized gains and losses are recorded in other comprehensive income. As the underlying transaction occurs, any unrealized gains or losses on the hedges are reclassified from other comprehensive income to the statement of operations (interest expense), offsetting the income effects of the transactions for which they relate. F-11 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) The Company entered into a swap for the notional amount of $19,286 in order to hedge the variable interest rate associated with a note payable. The Company pays a fixed rate of 4.95 percent on the notional amount and receives from the counterparty, LIBOR, with the rate determined monthly on the first day of the month. At December 31, 2002, the notional amount was $14,286. The net amount paid to the Company under the agreements was $290 for 2002. The swap expires April 3, 2006. Additionally, the Company entered into two swaps with a counterparty for the notional values of $1,000 and $8,000 in order to hedge the variable interest rate associated with its bonds. The Company pays fixed rates of 3.45 percent and 4.59 percent on the notional amounts and receives from the counterparty, variable rates equal to LIBOR, with the rate determined monthly on the first day of the month. At December 31, 2002, the notional amounts were $6,900 and $1,000. The net amount paid to the Company under the agreements was $223 for 2002. The swaps expiration coincide with the maturity date on its bonds. Also, the Company entered into an option agreement ("swaption") with the counterparty that gives the counterparty the right, but not the obligation to either terminate one of the Company's existing swap agreements before its maturity date without penalty or extend the life of an existing swap for two years beyond the exercise date of April 30, 2004. The counterparty may only exercise the option on April 30, 2004. The option agreement is marked to market and recorded in the Consolidated Statement of Income. The fair value of the swaption at December 31, 2002 was $21. At the adoption date, the Company recorded a transition adjustment of $370. At December 31, 2002, the fair value of the swaps was a liability of $1,457. The net unrealized loss on the swaps are included in accumulated other comprehensive income at December 31, 2002. 7. LEASE COMMITMENTS Total rental expense under operating leases for the years ended December 31, 2002 aggregated $849 in 2002. As of December 31, 2002, future minimum payments under non-cancelable operating leases are as follows: 2003 $ 855 2004 845 2005 832 2006 598 2007 429 2008 and thereafter - ------- $ 3,559 ======= 8. RELATED PARTIES Amounts due from (to) related parties at December 31, 2002 consisted of the following: American Manufacturing Corporation of Pennsylvania $(1,851) American Group 93 ------- Total amounts due to related parties $(1,758) ======= F-12 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) The entities listed above are considered related parties in that they, along with the Company, are controlled by American Manufacturing Corporation of Pennsylvania. The Company believes that the costs of the related party services are a reasonable reflection of the utilization of services provided or the benefits received. However, the financial information included herein may not reflect the consolidated financial position, operating results and cash flows of the Company if the services or transactions had occurred with an unrelated third party. The amounts due to American Manufacturing Corporation of Pennsylvania relate to a declared distribution of $1,851. The amounts due from American Group primarily relate to receivables from product sales of $1,441 for 2002. A management fee of $500 was paid to American Manufacturing Corporation of Pennsylvania for 2002. 9. CONTINGENT LIABILITIES The Company has been named a defendant in several lawsuits relative to product liability in which damages of substantial amounts are being sought. While it is not feasible to predict the outcome of all pending suits and claims, management does not anticipate that the ultimate resolution of these matters will have a material adverse effect upon the consolidated financial position of the Company, although the resolution of any of the matters during a specific period could have a material effect on the annual operating results for that period. All product liability lawsuits are covered by the Company's insurance policy and are subject to a $50 to $500 deductible. 10. RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS 143 addresses accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company must adopt SFAS 143 in 2003. Management believes that adopting this pronouncement will not have a material impact on the Company's results of operations, financial position or cash flows. Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002 ("SFAS No. 145"), among other things, rescinds various pronouncements regarding early extinguishment of debt. It allows extraordinary accounting treatment for early extinguishment of debt only when the provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions are met. SFAS No. 145 provisions regarding early extinguishment of debt are generally effective for fiscal years beginning after May 15, 2002. The Company adopted this statement effective January 1, 2003. Management believes that adopting SFAS No. 145 will not have a material impact on the Company's financial position, results of operations or cash flows. F-13 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 - -------------------------------------------------------------------------------- (IN THOUSANDS) Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146"), addresses financial accounting and reporting for costs associated with exit and disposal activities and supercedes Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring) ("EITF 94-3"). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost was recognized at the date of commitment to an exit or disposal plan. SFAS No. 146 also establishes that fair value is to be used for initial measurement of the liability. The Company must adopt SFAS No. 146 for all exit or disposal activities that are initiated after December 31, 2002. Management does not believe that adopting this pronouncement will have a material impact on the Company's results of operations, financial position or cash flows. Financial Accounting Standards Board Interpretation No. 45, FIN 45 Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ("FIN 45"), details the disclosures to be made by a guarantor about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Company has issued no guarantees, and therefore, the adoption of FIN 45 has not had a material impact on the Company's financial position, results of operations or cash flows. Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Management has determined that the Company does not have any variable interests in any variable interest entities. Therefore, no disclosures are required and the adoption of the provisions of FIN 46 is not expected to impact on the Company's financial position, results of operations or cash flows. 11. SUBSEQUENT EVENTS On September 2, 2003, the Company was acquired by the Jarden Corporation for $155 million. In addition, the acquisition agreement includes an earn-out provision for additional cash or common stock of Jarden Corporation provided that certain growth targets are met. F-14 LEHIGH CONSUMER PRODUCTS CORPORATION UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands)
Six months ended June 30, 2003 2002 -------------- ------------- Net sales $67,655 $65,349 Costs and expenses Cost of sales 47,462 47,024 Selling, general and administrative expenses 9,025 8,819 -------------- ------------- Operating earnings 11,168 9,506 Interest expense, net 734 1,048 -------------- ------------- Income before taxes 10,434 8,458 Income tax (benefit) expense (129) (29) -------------- ------------- Net income $ 10,563 $ 8,487 ============== =============
See accompanying notes to unaudited condensed consolidated financial statements. F-15 LEHIGH CONSUMER PRODUCTS CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET (dollars in thousands)
June 30, December 31, 2003 2002 ------------------- ------------------ ASSETS Current assets Cash and cash equivalents $ 130 $ 6,513 Accounts receivable, net 30,570 18,293 Inventories, net 14,494 16,745 Other current assets 1,058 994 ------------------- ------------------ Total current assets 46,252 42,545 ------------------- ------------------ Property, plant and equipment, net $ 13,439 $ 14,011 Intangibles, net 39,580 39,722 Other assets 402 1,839 ------------------- ------------------ Total assets $ 99,673 $ 98,117 =================== ================== LIABILITIES AND EQUITY Current liabilities Short-term and current portion of long-term debt 3,557 3,557 Accounts payable - trade 3,395 4,492 Accrued salaries and wages 1,034 1,522 Deferred Compensation 8,128 6,928 Other current liabilities 5,816 7,943 ------------------- ------------------ Total current liabilities 21,930 24,442 ------------------- ------------------ Noncurrent Liabilities Long-term debt 17,138 18,629 Derivative Instruments 1,457 1,457 ------------------- ------------------ Total noncurrent liabilities 18,595 20,086 ------------------- ------------------ Equity 59,148 53,589 ------------------- ------------------ Total liabilities and equity $ 99,673 $ 98,117 =================== ==================
See accompanying notes to unaudited condensed consolidated financial statements. F-16 LEHIGH CONSUMER PRODUCTS CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
Six months ended June 30, 2003 2002 -------------- ------------- Cash flows from operating activities Net income $ 10,563 $ 8,487 Reconciliation of net income to net cash provided by Operating activities: Depreciation and amortization 975 1,203 Changes in working capital components (11,126) (8,718) -------------- ------------- Net cash provided by operating activities 412 972 -------------- ------------- Cash flows from financing activities Payments on debt (3,990) (4,090) Proceeds from debt 2,500 5,100 Dividends Paid (5,094) - -------------- ------------- Net cash used in financing activities (6,584) 1,010 -------------- ------------- Cash flows from investing activities Additions to property, plant and equipment (211) (231) -------------- ------------- Net cash used in investing activities (211) (231) -------------- ------------- Net (decrease) increase in cash $ (6,383) $ 1,751 Cash and cash equivalents, beginning of period 6,513 1,062 -------------- ------------- Cash and cash equivalents, end of period $ 130 $ 2,813 ============== =============
See accompanying notes to unaudited condensed consolidated financial statements. F-17 LEHIGH CONSUMER PRODUCTS CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation Certain information and footnote disclosures, including significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented. Results of operations for the periods shown are not necessarily indicative of results for the year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements of Lehigh Consumer Products Corporation, incorporated by reference hereto. 2. Subsequent events On September 2, 2003, Lehigh Consumer Products Corporation and its subsidiaries (collectively "Lehigh"), was acquired by Jarden Corporation pursuant to a stock purchase agreement (the "Acquisition"). Pursuant to the Acquisition, Lehigh was acquired for approximately $155 million in cash. In addition, the Acquisition includes an earn-out provision with a potential payment in cash or Company common stock of up to $25 million, provided that certain earnings performance targets are met. F-18 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma financial information as of and for the year ended December 31, 2002 has been derived from our audited consolidated financial statements as of and for such period. The following unaudited pro forma financial information as of and for the six months ended June 30, 2003 has been derived from our unaudited interim consolidated financial statements as of and for such period. The unaudited pro forma condensed consolidated financial statements give effect to (collectively, the "Transactions"): i. the April 2002 acquisition (the "Tilia Acquisition") of substantially all of the assets of Tilia International, Inc. and its subsidiaries ("Tilia") including the related refinancing of our senior credit facility and the offering of 9(3/4)% senior subordinated notes; ii. the February 2003 acquisition (the "Diamond Acquisition") of substantially all of the assets of Diamond Brands International, Inc. and its subsidiaries ("Diamond") including the related financing; and iii. the September 2003 acquisition (the "Lehigh Acquisition") of Lehigh Consumer Products Corporation and its subsidiary ("Lehigh") including the related amendment and restatement of our senior credit facility and issuance of an additional $150 million of term debt thereunder. The unaudited pro forma financial information is not necessarily indicative of our results of operations or financial position had the events reflected herein actually been consummated at the assumed dates, nor is it necessarily indicative of our results of operations or financial position for any future period. The unaudited pro forma financial information should be read in conjunction with the Jarden consolidated financial statements with the related notes incorporated by reference herein and the Lehigh and Diamond consolidated financial statements with the related notes incorporated by reference herein. The pro forma adjustments related to the purchase price allocation of the Lehigh and Diamond Acquisitions are preliminary and are subject to revision as additional information becomes available. Revisions to the preliminary purchase price allocation of the Lehigh and Diamond Acquisitions may have a significant impact on the unaudited pro forma information. F-19 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2003
LEHIGH ACQUISITION JARDEN PRO FORMA PRO FORMA AS REPORTED LEHIGH ADJUSTMENTS COMBINED ------------- ---------- ------------- ---------- (dollars in thousands) ASSETS Current assets Cash and cash equivalents ................. $ 4,704 $ 130 $ 4,834 Accounts receivable, net .................. 56,136 30,570 $ (246)A 86,460 Inventories, net .......................... 82,666 14,494 97,160 Deferred taxes on income .................. 11,055 11,055 Other current assets ...................... 6,009 1,058 7,067 -------- ------- -------- -------- Total current assets .................... 160,570 46,252 (246) 206,576 Property, plant and equipment, net ......... 71,353 13,439 (6,702)B 84,090 6,000 C Intangibles, net ........................... 192,962 39,580 68,020 D 300,562 Other assets ............................... 15,861 402 3,500 E 19,763 -------- ------- -------- -------- Total assets ............................... $440,746 $99,673 $ 70,572 $610,991 ======== ======= ======== ======== LIABILITIES AND EQUITY Current liabilities Short-term debt and current portion of long-term debt .......................... $ 20,673 $ 3,557 $ (3,557)F $ 32,173 10,000 G 1,500 G Accounts payable .......................... 26,119 3,395 29,514 Other current liabilities ................. 42,296 14,978 (8,128)H 49,146 -------- ------- -------- -------- Total current liabilities ............... 89,088 21,930 (185) 110,833 -------- ------- -------- -------- Noncurrent liabilities ..................... Long-term debt ............................ 233,613 17,138 (17,138)F 382,113 148,500 G Deferred taxes on income .................. 7,617 7,617 Other noncurrent liabilities .............. 14,044 1,457 (1,457)I 14,044 -------- ------- -------- -------- Total noncurrent liabilities ............ 255,274 18,595 129,905 403,774 Equity ..................................... 96,384 59,148 (59,148)J 96,384 -------- ------- -------- -------- Total liabilities and equity ............... $440,746 $99,673 $ 70,572 $610,991 ======== ======= ======== ========
F-20 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003
DIAMOND LEHIGH ACQUISITION SUBTOTAL ACQUISITION JARDEN PRO FORMA PRO FORMA PRO FORMA PRO FORMA AS REPORTED DIAMOND(1) ADJUSTMENTS COMBINED LEHIGH ADJUSTMENTS COMBINED ------------- ------------ ------------- ------------- ---------- ------------ ------------- (dollars in thousands, except per share data) Net sales ............... $228,114 $ 6,814 $234,928 $67,655 $302,583 Costs and expenses: ..... Cost of sales ........... 140,264 4,649 $ 119 K 145,032 47,462 $ 429 P 192,923 Selling, general and administrative expenses ............... 56,306 884 57,190 9,025 489 Q 65,158 (96)R (250)S (1,200)T Reorganization costs (2) .............. 1,536 1,536 -- 1,536 -------- ------- ---- -------- ------- ------- -------- Operating income (loss) ................. 31,544 (255) (119) 31,170 11,168 628 42,966 Interest expense (income), net .......... 8,219 921 (921)L 8,423 734 3,395 U 12,168 155 M (734)V 49 N 350 W -------- ------- ------ -------- ------- -------- -------- Income (loss) before taxes .................. 23,325 (1,176) 598 22,747 10,434 (2,383) 30,798 Income tax provision (benefit) .............. 9,144 (227)O 8,917 (129) 3,285 O 12,073 -------- ------- ------ -------- ------- -------- -------- Net income (loss) ....... $ 14,181 $(1,176) $ 825 $ 13,830 $10,563 $(5,668) 18,725 ======== ======= ====== ======== ======= ======= ======== Basic earnings per share .................. $ 1.00 $ 0.97 $ 1.31 Diluted earnings per share .................. $ 0.96 $ 0.94 $ 1.27 Weighted average shares outstanding: Basic ................... 14,242 14,242 14,242 Diluted ................. 14,727 14,727 14,727 Other data: Depreciation and amortization ........... 7,230 83 119 K 7,432 975 429 P 8,740 (96)R
- ---------- (1) The results for Diamond represent Diamond's unaudited actual results for the month ended January 31, 2003, which are not included in Jarden's results. (2) On May 22, 2001, Diamond filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Accordingly, its expenses related to the bankruptcy are included in "Reorganization Costs." F-21 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002
DIAMOND LEHIGH ACQUISITION SUBTOTAL ACQUISITION JARDEN PRO FORMA PRO FORMA PRO FORMA PRO FORMA AS REPORTED TILIA (1) DIAMOND(1) ADJUSTMENTS COMBINED LEHIGH ADJUSTMENTS COMBINED ------------ ---------- ----------- ------------- ----------- --------- ----------- ----------- (dollars in thousands, except per share data) Net sales ..................... $367,104 $38,525 $101,604 $507,233 $128,128 $635,361 Costs and expenses: ........... Cost of sales ................. 216,629 19,343 72,163 $1,429 K 309,564 89,704 $ 857 P 400,125 Selling, general and administrative expenses....... 85,366 13,468 10,033 172 Y 109,039 19,532 978 Q 125,894 (500)S (198)R (3,337)T 380 U Reorganization costs (2) ...... 4,565 4,565 4,565 -------- ------- -------- ------- -------- -------- ------- -------- Operating income (loss) ....................... 65,109 5,714 14,843 (1,601) 84,065 18,892 1,820 104,777 Other expense ................. 380 (380)U Interest expense, net ......... 12,611 (52) 9,182 (1,232)Z 17,895 1,874 7,738 V 26,333 (9,182)L 4,344 AA (1,874)W 1,525 M 474 N 225 BB 700 X -------- ------- -------- ------- -------- -------- ------- -------- Income (loss) before taxes..... 52,498 5,766 5,661 2,245 66,170 16,638 (4,364) 78,444 Income tax provision (3) ...... 16,189 1,801 3,558 O 21,548 4,811 O 26,359 -------- ------- -------- ------- -------- -------- ------- -------- Net income (loss) ............. $ 36,309 $ 3,965 $ 5,661 $(1,313) $ 44,622 $ 16,638 $(9,175) 52,085 ======== ======= ======== ======= ======== ======== ======= ======== Basic earnings per share ...... $ 2.60 $ 3.20 $ 3.74 Diluted earnings per share .................... $ 2.52 $ 3.10 $ 3.62 Weighted average shares outstanding: Basic ......................... 13,940 13,940 13,940 Diluted ....................... 14,392 14,392 14,392 Other data: Depreciation and amortization ................. 10,001 471 2,321 172 Y 14,394 2,164 857 P 17,217 1,429 K (198)R
- ---------- (1) Amounts in the Tilia column represent Tilia's actual results for the three months ended March 31, 2002, which are not included in Jarden's reported results. (2) On May 22, 2001, Diamond filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Accordingly, its expenses related to the bankruptcy are included in "Reorganization Costs." (3) The income tax provision of Jarden for the year ended December 31, 2002 includes a net release of a $4.4 million tax valuation allowance. The actual effective tax rate for the year (excluding the net release) was 39.2%. F-22 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) Balance sheet adjustments: (a) Adjustment to reflect the elimination of a receivable from Lehigh's parent company not purchased in the Lehigh Acquisition. (b) Adjustment to reflect the elimination of the net book value of Lehigh's Macungie, Pennsylvania land and building not purchased in the Lehigh Acquisition. Pursuant to the terms of the Lehigh Acquisition, Lehigh entered into a ten (10) year lease with the Seller for the property. See Note (q). (c) Adjustment to reflect the estimated step-up in fair value of Lehigh's manufacturing related machinery and equipment. (d) Adjustment to reflect the estimated step-up in fair value of intangible assets (trademarks and goodwill) to be recorded with the Lehigh acquisition. (e) Adjustment to capitalize the debt issuance costs associated with the new senior term debt issued to fund the cash purchase price of the Lehigh Acquisition. The costs will be amortized over the term of the debt (5 years). (f) Adjustment to reflect the elimination of debt which Jarden is not assuming in the Lehigh Acquisition. (g) Adjustment to reflect borrowings on Jarden's senior credit facility used to fund the Lehigh Acquisition ($10,000 of Revolving Credit Facility, $1,500 of short-term portion of Term Loan B and $148,500 of long-term portion of Term Loan B). (h) Adjustment to reflect the elimination of the stockholder appreciation rights plan liability which Jarden is not assuming in the Lehigh Acquisition. (i) Adjustment to reflect the elimination of the interest rate swap liability which Jarden is not assuming in the Lehigh Acquisition. (j) Adjustment to reflect the elimination of the existing stockholders' equity of Lehigh. Statements of operations adjustments: (k) Adjustment to reflect depreciation expense on the estimated step up in valuation of Diamond's manufacturing related machinery and equipment amortized over an estimated useful life of seven (7) years. (l) Adjustment to reflect the elimination of Diamond's historical interest expense. (m) Adjustment to reflect interest expense on the drawdown of Jarden's revolving credit facility and the issuance of term debt in order to fund a portion of the cash purchase price of the Diamond Acquisition based upon Jarden's effective borrowing rate on its senior credit facility. The effect of a 1/8% change in interest rates would be $35 per year. (n) Adjustment to reflect the elimination of Jarden's interest income related to cash on hand used to fund a portion of the cash purchase price of the Diamond Acquisition. (o) Adjustment to reflect an effective tax rate of 39.2% on the pre-tax results of the acquired business and related adjustments based on Jarden's effective tax rate for the period. (p) Adjustment to reflect the depreciation expense on the estimated step up in valuation of Lehigh's manufacturing related machinery and equipment amortized over an estimated useful life of seven (7) years. See note (c). F-23 (q) Adjustment to reflect rental expense for the Macungie, Pennsylvania property not purchased with the Lehigh acquisition, but leased from the seller by Jarden in conjunction with the Lehigh Acquisition. See note (b). (r) Adjustment to reflect the elimination of historical depreciation of the building not purchased in the Lehigh Acquisition. See note (b). (s) Adjustment to reflect the elimination of Lehigh's historical management fee expense charged from its former parent. The management fee contract was terminated in conjunction with the Lehigh Acquisition. (t) Adjustment to reflect the elimination of the historical stockholders' appreciation rights plan expense. See note (h). (u) Adjustment to reflect the reclassification of Lehigh's other expense to selling, general and administrative expenses to conform to Jarden's presentation. (v) Adjustment to reflect pro forma interest expense relating to: i. the $10 million borrowing under Jarden's revolving credit facility to partially fund the purchase price of the Lehigh acquisition, based upon Jarden's effective borrowing rate for its senior credit facility. ii. the $150 million term loan issued to fund the purchase price of the Lehigh Acquisition, based upon Jarden's effective borrowing rate for its senior credit facility. The effect of a 1/8% change in interest rates would be $200 per year (w) Adjustment to reflect the elimination of Lehigh's historical interest expense. (x) Adjustment to reflect amortization of debt issue costs for new senior term loan issued in conjunction with the Lehigh Acquisition. (y) Adjustment to reflect amortization of identifiable intangible assets recorded with the Tilia acquisition. (z) Adjustment to reflect the elimination of Jarden's historical interest expense prior to the Tilia acquisition for the first quarter of 2002. (aa) Adjustment to reflect pro forma interest expense relating to: i. the new senior credit facility issued in conjunction with the Tilia Acquisition at 5%, based upon Jarden's effective borrowing rate on its senior credit facilities for first quarter 2002; ii. the interest bearing subordinated seller note issued in conjunction with the Tilia Acquisition at 5% based upon Jarden's effective borrowing rate on its senior credit facilities for first quarter 2002; and iii. the 9(3/4)% Senior Subordinated Notes due 2012 issued in conjunction with the Tilia Acquisition. (bb) Adjustment to reflect the amortization of debt issue costs for both the new senior credit facility and the Senior Subordinated Notes due 2012 issued in conjunction with the Tilia Acquisition. F-24 EX-10.1 3 file002.txt STOCK PURCHASE AGREEMENT EXECUTION COPY STOCK PURCHASE AGREEMENT by and among Lehigh Consumer Products Corporation, American Manufacturing Company, Inc. and Jarden Corporation STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated as of August 15, 2003 by and among AMERICAN MANUFACTURING COMPANY, INC., a Pennsylvania corporation ("SELLER"), LEHIGH CONSUMER PRODUCTS CORPORATION, a Pennsylvania corporation and wholly-owned subsidiary of Seller (the "COMPANY"), and JARDEN CORPORATION, a Delaware corporation ("BUYER"). Certain defined terms are set forth in Section 13 hereof. BACKGROUND The Company and Desarrollo Industrial Fitec, S. R.L. de C.V., a Mexico variable capital limited liability partnership (the "SUBSIDIARY"), 99.999% of the outstanding equity interests of which are owned by the Company and 0.001% of the outstanding equity interests of which are owned by American Manufacturing Corporation, a Delaware corporation and an Affiliate of Seller ("AMCDE"), are engaged in the Business. The parties hereto desire to provide for the acquisition by Buyer of the Business through the sale by Seller of all of the outstanding capital stock of the Company (the "STOCK") and the assignment by AMCDE of its equity interest in the Subsidiary (the "SUBSIDIARY INTEREST" and, together with the Stock, the "SECURITIES") and for certain other matters, all on the terms and conditions set forth in this Agreement. American Manufacturing Corporation, a Pennsylvania corporation ("AMCPA") and an Affiliate of AMCDE and Seller, has agreed to guaranty certain of Seller's and AMCDE's obligations pursuant to this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained, Seller, the Company and Buyer, all intending to be legally bound, hereby agree as follows: SECTION 1 - ACQUISITION OF SECURITIES 1.1 Purchase and Sale of Securities. 1.2 Subject to the terms and conditions of, and on the basis of and in reliance upon the covenants, agreements and representations and warranties set forth in, this Agreement, at the Closing, Buyer shall acquire, free and clear of all Encumbrances, all of the Securities through the sale, assignment, transfer and conveyance of the Stock to Buyer by Seller and the assignment of the Subsidiary Interest to Buyer by AMCDE. SECTION 2 - PURCHASE PRICE AND PAYMENT 2.1 Purchase Price. Subject to the post-closing adjustment as provided in paragraph (c) below, the aggregate purchase price for the Securities shall be equal to the sum of (a) and (b) below: (a) One Hundred and Fifty-Five Million Dollars ($155,000,000) (the "PURCHASE PRICE"), to be paid by Buyer in cash at Closing. 2 (b) The additional consideration, if any, determined in accordance with the terms set forth in Section 2.2 (the "CONTINGENT CONSIDERATION"). (c) If, after the Closing Date, Buyer calculates the Tangible Net Worth of the Company and the Subsidiary on a consolidated basis as of the Closing Date (immediately prior to the Closing) and such Tangible Net Worth is less than $42,000,000, then Seller shall pay to Buyer any such shortfall promptly following (i) agreement between Buyer and Seller as to the amount of the shortfall or (ii) final determination by the Arbitrating Accountant pursuant to this Section 2.1(c). Any disputes between the parties regarding the determination of Tangible Net Worth shall be finally determined by the Arbitrating Accountant in a manner consistent with the last sentence of Section 2.2(b) hereof. 2.2 Contingent Consideration. (a) As soon as practicable, but in any event no later than 90 days following December 31, 2004 and 75 days following December 31, 2005, Buyer shall (i) prepare in accordance with GAAP a statement derived from the audited financial statements of Buyer (each, an "EARN-OUT STATEMENT") of the Business EBITDA (as defined below) for each of the full fiscal years ending on such dates (such one-year periods together being the "EARN-OUT PERIOD") and, in the Earn-Out Statement for the fiscal year ending December 31, 2005, the Average Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii) deliver each Earn-Out Statement to Seller. Following delivery of an Earn-Out Statement, Buyer shall upon reasonable notice provide Seller and Seller's accountant with access to the management of the Company and Buyer during normal business hours, shall, and shall cause Buyer's accountants, upon reasonable notice and prior to the Final Earn-Out Determination Date (as defined below), to provide access to any and all documents, records and work papers used in the preparation of the Earn-Out Statements and shall cooperate with Seller and Seller's accountants in connection with their review of the Earn-Out Statements and the documents, records and work papers related thereto. Seller shall have forty-five (45) days after receipt of the Earn-Out Statement prepared for the fiscal year ending December 31, 2004 (such period, the "PRELIMINARY DISPUTE PERIOD") to dispute any or all amounts or elements of such Earn-Out Statement ("PRELIMINARY DISPUTE"). Seller shall provide to Buyer, prior to the end of the Preliminary Dispute Period, written notice of the Preliminary Dispute (a "PRELIMINARY DISPUTE NOTICE"), setting forth in reasonable detail the amounts and elements with which it disagrees. If Seller does not deliver a Preliminary Dispute Notice to Buyer prior to the end of the Preliminary Dispute Period, such Earn-Out Statement shall be final and binding upon Seller in the form in which it was delivered to Seller and no amounts in such Earn-Out Statement may be disputed by Seller in the Dispute Notice. Seller shall have forty-five (45) days after receipt of the Earn-Out Statement prepared for the fiscal year ending December 31, 2005 (the "FINAL EARN-OUT STATEMENT") (such period, the "FINAL DISPUTE PERIOD") to dispute any or all amounts or elements of the Final Earn-Out Statement and any items set forth in a Preliminary Dispute Notice with respect to the Preliminary Dispute Period that have not been resolved between Buyer and Seller in accordance with Section 2.2(b) (a "DISPUTE"). If Seller determines to pursue a Dispute, Seller shall provide to Buyer, prior to the end of the Final Dispute Period, written notice of the Dispute (a "DISPUTE NOTICE"), setting forth in reasonable detail the amounts and elements with which it disagrees, and any Dispute shall be limited to the matters included by Seller in the Dispute Notice with respect to the Final Earn-Out Statement and any Preliminary Dispute 3 Notice. If Seller does not deliver a Dispute Notice to Buyer prior to the end of the Final Dispute Period, the Final Earn-Out Statement shall be final and binding upon Seller in the form in which it was delivered to Seller. (b) If Seller shall have delivered to Buyer a Preliminary Dispute Notice prior to the end of the Preliminary Dispute Period, Seller and Buyer shall attempt to resolve the Preliminary Dispute and agree in writing upon the final content of the Earn-Out Statement relating to the fiscal year ending December 31, 2004 within ninety (90) days following delivery by Seller of the Preliminary Dispute Notice to Buyer. If Seller and Buyer cannot agree upon the final content of such Earn-Out Statement within such 90-day period, Seller shall retain the right to incorporate any and all unresolved amounts or elements in a Dispute Notice. If Seller shall have delivered to Buyer a Dispute Notice prior to the end of the Final Dispute Period, Seller and Buyer shall attempt to resolve the Dispute and agree in writing upon the final content of the Earn-Out Statements within fifteen (15) days following delivery by Seller of the Dispute Notice to Buyer. If Seller and Buyer are unable to resolve the Dispute within such fifteen (15) day period, then Seller and Buyer shall promptly submit the Dispute for resolution to an independent certified public accounting firm of recognized international standing, mutually acceptable to Seller and Buyer (the "ARBITRATING ACCOUNTANT"), for review and resolution of any and all matters that remain in dispute and that were properly included in the Dispute Notice. In connection with the resolution of any Dispute, the Arbitrating Accountant shall have access to the management of the Company and Buyer and all work papers, records, documents and facilities necessary to perform its functions as arbitrator. The Arbitrating Accountant's function shall be to resolve the matters in Dispute in accordance with the terms and provisions of this Section 2.2 and to revise the Earn-Out Statements (if required) in order to conform with its resolution of the Dispute. In rendering its decision, the Arbitrating Accountant shall, in its sole discretion, apportion its fees and expenses in connection with the Dispute, based on its views as to the relative merits of the positions of each party in the Dispute; provided, however, that Seller shall advance half, and Buyer shall advance the other half, of any retainer fee or deposit required by the Arbitrating Accountant in advance of a final resolution, subject to reapportionment by the Arbitrating Accountant of its fees and expenses as aforesaid. All determinations of the Arbitrating Accountant, including any revisions made to the Earn-Out Statements and the Arbitrating Accountant's apportionment of expenses as between Seller and Buyer, shall be final and binding on the parties hereto, and neither Seller nor Buyer shall have the right to appeal such determinations. (c) Seller and Buyer agree to cooperate fully and expeditiously with the Arbitrating Accountant in order to facilitate the receipt of the final determinations of the Arbitrating Accountant within thirty (30) days following submission of a Dispute to the Arbitrating Accountant. (d) (i) No later than five (5) business days following the final determination of both Earn-Out Statements (whether as a result of the failure by Seller to timely deliver a Dispute Notice, the agreement by Seller and Buyer on the final content of the Earn-Out Statements or the determination of the Arbitrating Accountant) (such date, the "FINAL EARN-OUT DETERMINATION DATE"), Buyer shall pay to Seller or its assigns or designees in cash or Buyer Common Stock, or a combination thereof, the following applicable amount (subject to any 4 withholdings required by applicable Law, provided that Buyer has provided Seller with prior notice of such withholding requirements), if any, in respect of the Contingent Consideration: (1) If the Average Annual Business EBITDA (as defined below) is less than $26,300,000, no amount shall be required to be paid. (2) If the Average Annual Business EBITDA is equal to or greater than $26,300,000 but less than $28,700,000, an amount equal to: (A) $5,000,000; plus (B) an amount equal to (x) the excess of Average Annual Business EBITDA over $26,300,000 multiplied by (y) 6.25, but in no event will the aggregate of (A) and this (B) exceed $20,000,000. (3) If the Average Annual Business EBITDA is equal to or greater than $28,700,000 but less than $31,200,000, an amount equal to $20,000,000. (4) If the Average Annual Business EBITDA is equal to or greater than $31,200,000, an amount equal to $25,000,000. (ii) The parties acknowledge and agree that the right to receive the Contingent Consideration represents additional consideration and not a royalty payment. The parties agree to file Tax Returns that are consistent with the characterization of the Contingent Consideration as additional consideration and not a royalty payment to the extent consistent with applicable Law. (iii) In the event that the undisputed amounts under the Earn-Out Statements are sufficient to satisfy one of the Average Annual Business EBITDA targets set forth in subsections (2)-(4) above, Buyer shall pay to Seller in accordance with the provisions of this Section 2.2 within five (5) Business Days of Seller informing Buyer in writing of such undisputed amounts (the date Buyer receives such written notice, the "INITIAL DETERMINATION DATE"), the amount of Contingent Consideration applicable to such undisputed amount of Average Annual Business EBITDA. The amount of Contingent Consideration payable to Seller following the Final Earn-Out Determination Date shall be reduced by the amount, if any, of Contingent Consideration paid to Seller following the Initial Determination Date in accordance with this Section 2.2(d)(iii). (e) Notwithstanding anything to the contrary contained in this Section 2.2, in the event that (1) Buyer or Company terminates the employment of Frederick Keller pursuant to the Keller Employment Agreement other than for "Cause" (as defined in the Keller Employment Agreement), or (2) the Company ceases to be an Affiliate of Buyer (through any sale, merger, consolidation, recapitalization or otherwise) or all or substantially all of the assets of the Lehigh Business are sold to a Person that is not an Affiliate of Buyer (any event set forth in (1) or (2) above, an "EARN-OUT ACCELERATION EVENT"), Buyer shall be required to pay to Seller or its assigns or designees in cash or Buyer Common Stock, or a combination thereof, an amount equal to $25,000,000 in respect of the Contingent 5 Consideration (regardless of the actual amount of Business EBITDA), such payment to be made on or before March 15, 2006. In the event that Buyer consummates a Buyer Sale Transaction at any time prior to the Final Earn-Out Determination Date, Buyer shall, at or prior to the closing of such Buyer Sale Transaction, fund $25,000,000 into an escrow account for the benefit of Seller (and its Permitted Assignees (as defined in Section 14.7(a) below)) with respect to the payment of the Contingent Consideration on the Contingent Consideration Closing Date, and such funds shall be subject to payment to Seller (and its Permitted Assignees) and, if applicable, return to Buyer in accordance with the provisions of this Section 2.2. (f) On the Initial Determination Date, the Final Earn-Out Determination Date or on the effective date of an Earn-Out Acceleration Event, as applicable, Buyer shall provide to Seller a written statement (1) electing to pay the Contingent Consideration, if any, in cash ("CASH PAYMENT ELECTION"), in shares of the common stock, par value $.01 per share, of Buyer ("BUYER COMMON STOCK") ("STOCK PAYMENT ELECTION"), or in some combination of the foregoing and (2) setting forth a date within five (5) business days of the Initial Determination Date, the Final Earn-Out Determination Date or the effective date of the Earn-Out Acceleration Event, as applicable, on which the payment of the Contingent Consideration shall be made by Buyer (the "CONTINGENT CONSIDERATION CLOSING DATE"). The following provisions shall be applicable to the making of a Stock Payment Election and a Cash Payment Election by Buyer: (i) If a Stock Payment Election is made by Buyer, the number of shares of Buyer Common Stock to be delivered to Seller or its assigns or designees pursuant to this Section 2.2 shall be calculated on the basis of the average closing price of a share of Buyer Common Stock on the New York Stock Exchange ("NYSE") for the ten (10) consecutive trading days ending on the date that is two (2) business days prior to the Contingent Consideration Closing Date (such ten-day period, the "DETERMINATION PERIOD"). (ii) The Stock Payment Election may only be exercised, and Buyer Common Stock may only be issued instead of cash, if (A) subject to Section 2.2(f)(iii), the product obtained by multiplying the average daily trading volume of the Buyer Common Stock on the NYSE during the Determination Period by the average closing price per share of Buyer Common Stock on the NYSE during the Determination Period is at least $2,000,000, (B) the registration statement covering the registered resale of the shares of Buyer Common Stock issued on the Contingent Consideration Closing Date shall be declared effective by the Securities and Exchange Commission on or before the Contingent Consideration Closing Date (except to the extent that the Registration Rights Agreement has been terminated in accordance with Section 3.3(c) thereof) and (C) Seller receives a legal opinion of counsel for Buyer dated the Contingent Consideration Closing Date, and in form and substance reasonably satisfactory to Seller, substantially to the effect that (1) the Buyer Common Stock has been validly issued and is fully paid and non-assessable by Buyer, (2) the Buyer Common Stock has been issued by Buyer in compliance with applicable federal and state securities laws, (3) the registration statement has become effective under the Securities Act of 1933, as amended (the "Securities Act"), (4) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, and (5) the registration statement, the related prospectus and each 6 amendment or supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements contained therein). Notwithstanding anything to the contrary contained in this Section 2.2, Buyer shall be required to make payment of the Contingent Consideration in cash on the Contingent Consideration Closing Date if any of the conditions set forth in (A), (B) or (C) above are not satisfied in full, except in the event that such conditions are not applicable as a result of the provisions of Section 2.2(f)(iii). (iii) Notwithstanding anything herein to the contrary, should Buyer then be prohibited from paying the Contingent Consideration in full in cash pursuant to the Senior Credit Facility, Buyer shall be permitted to make payment of the Contingent Consideration in Buyer Common Stock without having to satisfy the condition set forth in Section 2.2(f)(ii)(A) and without having to satisfy the conditions set forth in Section 2.2(f)(ii)(B) and (C) (other than (C)(1) and (2)) if Buyer is unable to satisfy such conditions after using its best efforts. If Buyer makes a Cash Payment Election or is otherwise required to pay the Contingent Consideration in cash and is unable to pay the Contingent Consideration in cash because of its failure to satisfy the condition in the preceding sentence relating to the Senior Credit Facility, then Buyer and Seller agree that Buyer shall, to the extent not prohibited under the Senior Credit Facility, pay to Seller the Contingent Consideration in cash, and shall pay the balance of any amounts due to Seller pursuant to Section 2.2(d) in Buyer Common Stock (subject to Buyer using its best efforts to satisfy the conditions set forth in Section 2.2(f)(ii)(B) and (C)). (g)Between the Closing Date and continuing through December 31, 2005, Buyer shall comply in all respects with the following covenants: (i) Buyer shall operate and manage the Lehigh Business consistent with reasonable business practices. Buyer further agrees and undertakes to Seller that Buyer will use commercially reasonable efforts to promote, support and continue the operations of the Lehigh Business and will act in good faith with regard to the achievement of the Average Annual Business EBITDA target set forth in Section 2.2(d)(i)(4). Notwithstanding the foregoing but subject to (ii) below, Buyer shall be entitled to do any act (or refrain therefrom) in the conduct of the Lehigh Business if it acts in good faith, consistent with reasonable business practices and reasonably considers such action (or determination not to act) to be in the best interests of the business of Buyer and not for the purpose of adversely affecting the calculation of the Average Annual Business EBITDA. (ii) Buyer shall maintain the separate legal existence of the Company and the Subsidiary, provided that Buyer shall be permitted to change the legal form of the Company and the Subsidiary so long as any such change does not adversely affect the ability of the Company to achieve the Average Annual Business EBITDA target set forth in Section 2.2(d)(i)(4). 7 (h) For purposes of this Section 2.2, the following terms shall have the following meanings: (i) "ACQUIRED BUSINESS" shall mean any business (other than the business described on Section 2.2(h)(i) of the Disclosure Schedule) that is acquired by Buyer or any of its Affiliates (including the Company) and that, by written agreement among Buyer and Seller, is included in the definition of Lehigh Business for the purpose of calculating Business EBITDA, and for which the Average Annual Business EBITDA targets set forth in Sections 2.2(d)(i) hereof may be adjusted upon the mutual written agreement of Buyer and Seller. (ii) "AVERAGE ANNUAL BUSINESS EBITDA" shall mean (x) the sum of the Business EBITDA for each of the two full fiscal years ending December 31, 2004 and 2005 divided by (y) 2.0. (iii) "BUSINESS EBITDA" shall mean, for each full fiscal year in the Earn-Out Period, the Net Income of the Lehigh Business (without deducting any legal, accounting, investment banking and other expenses incurred in connection with the transactions contemplated hereby, including Transfer Taxes) plus an amount which, in the determination of Net Income for each such fiscal year, has been deducted for (1) interest expense for such fiscal year, (2) total Taxes for such fiscal year, (3) depreciation and amortization expense for such fiscal year, and (4) Excluded Expenses. (iv) "BUYER SALE TRANSACTION" shall mean (1) the sale, transfer or other disposition of all or substantially all of the assets of Buyer and its Affiliates, or (2) the acquisition of Buyer by a Person or group of Persons by means of any transaction or series of related transactions (including, without limitation, any merger, consolidation, or reorganization), if, following such transaction or transactions, the Persons that were stockholders of Buyer immediately prior to such transaction or transactions beneficially own, directly or indirectly, less than 50 percent of the voting power of the then outstanding securities of the purchaser, transferee or successor. (v) "EXCLUDED EXPENSES" shall mean the following expenses: (1) Buyer's and any of its Affiliates' general corporate overhead and administrative expenses, other than those directly related to the Company or the Subsidiary, provided that such direct expenses shall not exceed the amount that would be charged by an independent third party; (2) nonrecurring business expenses that are not related to the generation of revenues in subsequent fiscal periods and are mutually approved in writing by Seller and Buyer as nonrecurring expenses; (3) any compensation expenses relating to the issuance, conversion, cancellation and payments with respect to options or stock; (4) direct and indirect costs (including time and travel expenses) incurred by the Company or the Subsidiary in working with Buyer's corporate office on matters not directly pertaining to the Lehigh Business, (5) other expenses allocated to the Company or the Subsidiary and agreed to by Buyer and Seller, and (6) extraordinary items as determined in accordance with GAAP. (vi) "LEHIGH BUSINESS" shall mean the Business (including the business described on Section 2.2(h)(i) of the Disclosure Schedule and any additional product 8 lines developed by the Company or the Subsidiary) and any Acquired Business as of the date the acquisition of such Acquired Business is consummated. (vii) "NET INCOME" shall mean, for any period, net income as determined in accordance GAAP. (viii) "SENIOR CREDIT FACILITY" shall mean Buyer's credit facility under the Credit Agreement dated as of April 24, 2002 by and among the Buyer, Bank of America, N.A. in its capacity as administrative agent, and the various lenders signatory thereto (as heretofore amended and as from time to time hereafter further amended, modified, supplemented, restated, amended and restated, replaced, renewed, or refinanced from time to time). SECTION 3 - REPRESENTATIONS AND WARRANTIES REGARDING SELLER Seller represents and warrants to Buyer as of the date of this Agreement, except as set forth in the Disclosure Schedule attached hereto, as follows: 3.1 Organization and Good Standing. Seller is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and has all necessary corporate power and authority to carry on its business as presently conducted. AMCDE is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. AMCPA is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. 3.2 Power and Authorization. Seller has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and under the other agreements and documents required to be delivered by it pursuant hereto at the Closing (the "SELLER CLOSING DOCUMENTS"). AMCDE has all requisite corporate power and authority to enter into and perform its obligations under the Assignment Agreement (as defined in Section 9.2(b)). AMCPA has all requisite corporate power and authority to enter into and perform its obligations under the joinder agreements (the "JOINDERS") annexed hereto and to the Non-Compete Agreement. The execution, delivery and performance by Seller of this Agreement and the Seller Closing Documents and the execution, delivery and performance by AMCDE of the Assignment Agreement and the execution, delivery and performance by AMCPA of the Joinders have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by Seller and constitutes the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms and, when executed and delivered as contemplated herein, each of the Seller Closing Documents shall constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, in each case subject to applicable bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally, general equitable principles, the discretion of courts in granting equitable remedies and matters of public policy. The joinder agreement annexed hereto has been duly and validly executed and delivered by AMCPA and constitutes the legal, valid and binding obligation of AMCPA, enforceable against it in accordance with its terms, and when executed and delivered as contemplated herein, the Assignment Agreement and the joinder annexed to the 9 Non-Compete Agreement shall constitute the legal, valid and binding agreement obligation of AMCDE and AMCPA, respectively, enforceable against AMCDE and AMCPA, respectively, in accordance with its terms, in each case subject to applicable bankruptcy, insolvency and similar laws affecting the enforceability of creditors rights generally, general equitable principles, the discretion of courts in granting equitable remedies and matters of public policy. 3.3 No Conflicts. (a) The execution, delivery and performance of this Agreement, the Seller Closing Documents, the Joinders and the Assignment Agreement do not and will not (with or without the passage of time or the giving of notice): (i) violate or conflict with the articles of incorporation or bylaws of Seller, AMCDE or AMCPA; (ii) violate or conflict with any Law (as defined in Section 13) binding upon Seller, AMCDE, or AMCPA or violate or conflict with, result in a breach of, constitute a default or otherwise cause any loss of benefit under any material agreement or other material obligation to which Seller, AMCDE or AMCPA is a party or by which either of them or any of their assets are bound, except, in each case, for such violations, conflicts, breaches, defaults or losses as would not have an adverse effect upon the ability of Seller to enter into or perform its obligations under this Agreement or any Seller Closing Document or the ability of AMCDE to enter into or perform its obligations under the Assignment Agreement or the ability of AMCPA to enter into or perform its obligations under the Joinders; or (iii) result in, require or permit the creation or imposition of any Encumbrance upon or with respect to the Securities. Except for filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"), no consent, authorization, waiver by or filing with any governmental agency, administrative body or other third party is required in connection with the execution, delivery or performance of this Agreement by Seller or the consummation by Seller, AMCDE or AMCPA of the transactions contemplated hereby, except for such consents, authorizations, waivers or filings, as to which the failure to obtain would not have an adverse effect upon the ability of Seller to enter into or perform its obligations under this Agreement or any Seller Closing Document, the ability of AMCDE to enter into or perform its obligations under the Assignment Agreement or the ability of AMCPA to enter into or perform its obligations under the Joinders. (b) There are no judicial, administrative or other governmental actions or proceedings pending or, to the Knowledge of Seller, threatened, and to the Knowledge of Seller, no governmental investigations are pending or threatened, that question any of the transactions contemplated by, or the validity of, this Agreement or any of the other agreements or instruments contemplated hereby or which, if adversely determined, would have an adverse effect upon the ability of Seller to enter into or perform its obligations under this Agreement or any such other agreements or instruments, the ability of AMCDE to enter into or perform its obligations under the Assignment Agreement or the ability of AMCPA to enter into or perform its obligations under the Joinders. 3.4 Ownership of the Securities. (a) Seller owns, and has good and valid title to, all of the Stock of the Company, beneficially and of record, free and clear of any Encumbrance. There are no shareholder or other agreements affecting the right of Seller to convey the Stock to Buyer or any 10 other right of Seller with respect to the Stock, and Seller has the absolute right, authority, power and capacity to sell, assign and transfer the Stock to Buyer, free and clear of any Encumbrance (except for restrictions imposed generally by applicable securities laws). Upon delivery to Buyer of the certificate for the Stock, Buyer will acquire good and valid title to such Stock, free and clear of any Encumbrance (except for applicable securities laws restrictions). (b) AMCDE owns, and has good and valid title to, the Subsidiary Interest, beneficially and of record, free and clear of any and all Encumbrances. Other than pursuant to the Bylaws of the Subsidiary (the "SUBSIDIARY BYLAWS"), there are no agreements affecting the right of AMCDE to convey the Subsidiary Interest to Buyer or any other right of AMCDE with respect to the Subsidiary Interest, and AMCDE has the absolute right, authority, power and capacity to sell, assign and transfer the Subsidiary Interest to Buyer, free and clear of any Encumbrance (except for those contained in the Subsidiary Bylaws and restrictions imposed generally by applicable securities laws). Upon Closing, Buyer will acquire good and valid title to the Subsidiary Interest, free and clear of any Encumbrance (except for those contained in the Subsidiary Bylaws, a copy of which is attached to Section 3.4(b) of the Disclosure Schedule, and applicable securities laws restrictions). SECTION 4 - REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE SUBSIDIARY Seller represents and warrants to Buyer, as of the date of this Agreement, except as set forth on the Disclosure Schedule attached hereto, as follows: 4.1 Organization and Good Standing. Each of the Company and the Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and has all necessary corporate or other power and authority, as applicable, to conduct its business as presently conducted and to own and lease the properties and assets used in connection therewith and to perform all of its obligations under each agreement and instrument by which it is bound. Each of the Company and the Subsidiary is qualified to do business and is in good standing in each jurisdiction where the nature or character of the property owned, leased or operated by it or the nature of the business transacted by it makes such qualification necessary, except where the failure to be so qualified or be in good standing would not be reasonably likely to have a Material Adverse Effect. Section 4.1 of the Disclosure Schedule sets forth all jurisdictions in which the Company or the Subsidiary is qualified to do business. 4.2 Power and Authorization. The Company has all requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by the Company of this Agreement have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally, general equitable principles, the discretion of courts in granting equitable remedies and matters of public policy. 11 4.3 Capitalization. (a) The total outstanding shares of the Company's capital stock consist of 1,000 shares of common stock, par value $1.00 per share, all of which are owned of record by Seller. There are no outstanding offers, options, warrants, rights, agreements or commitments of any kind (contingent or otherwise), including employee benefit arrangements, relating to the issuance, conversion, registration, voting, sale, repurchase or transfer of any equity interests or other securities of the Company or obligating the Company or any other Person to purchase or redeem any such equity interests or other securities. All of the issued and outstanding shares of the Company have been duly authorized, are validly issued and outstanding, are fully paid and nonassessable and have been issued and are held in compliance with all applicable securities and other Laws. No securities issued by the Company from the date of its incorporation to the date hereof were issued in violation of any statutory or common law preemptive rights. There are no dividends which have accrued or been declared but are unpaid on the Stock. All Taxes required to be paid in connection with the issuance and any transfers of the Stock have been paid. All permits or authorizations required to be obtained from or registrations required to be effected with any Person in connection with any and all issuances of securities of Company from the date of its incorporation to the date hereof have been obtained or effected. (b) The total outstanding equity interests of the Subsidiary consist of two equity quotas, of which one, having a value of 16,981,383 pesos, is owned by the Company and one, having a value of 1 peso, is owned by AMCDE. Other than pursuant to the Subsidiary Bylaws, there are no outstanding offers, options, warrants, rights, agreements or commitments of any kind (contingent or otherwise), including employee benefit arrangements, relating to the issuance, conversion, registration, voting, sale, repurchase or transfer of any equity interests or other securities of the Subsidiary or obligating the Subsidiary or any other Person to purchase or redeem any such equity interests or other securities. All of the issued and outstanding equity quotas of the Subsidiary have been issued and are held in compliance with all applicable securities and other Laws. No securities issued by the Subsidiary from the date of its incorporation to the date hereof were issued in violation of any statutory or common law preemptive rights. There are no dividends which have accrued or been declared but are unpaid on the outstanding equity interests of the Subsidiary. All Taxes required to be paid in connection with the issuance and any transfers of the outstanding equity interests of the Subsidiary have been paid. All permits or authorizations required to be obtained from or registrations required to be effected with any Person in connection with any and all issuances of securities of Subsidiary from the date of its incorporation to the date hereof have been obtained or effected. 4.4 Investments and Subsidiaries. 4.5 The Business is conducted solely by and through the Company and the Subsidiary, and neither the Company nor the Subsidiary directly or indirectly owns, controls or has any investment or other ownership interest in any corporation, partnership, limited liability company, joint venture, business trust or other entity other than the Company's ownership of its interest in the Subsidiary. Neither the Company nor the Subsidiary has agreed, contingently or otherwise, to share any profits, revenues, losses, costs or liabilities with, or to guaranty the obligations of, any Person or entity. 4.5 No Conflicts. The execution, delivery and performance of this Agreement and the Company Closing Documents do not and will not (with or without the passage of time or 12 the giving of notice): (i) violate or conflict with the certificate of incorporation or bylaws (or other organizational documents) of the Company or the Subsidiary; (ii) violate or conflict with any Law binding upon the Company or the Subsidiary, except as would not be reasonably likely to have a Material Adverse Effect; (iii) violate or conflict with, result in a breach of, constitute a default or otherwise cause any loss of benefit under any material agreement or other obligation to which the Company or the Subsidiary is a party (including, without limitation, the Contracts set forth on Section 4.14 of the Disclosure Schedule) or by which either of them or any of their assets are bound, except, in each case, for such violations, conflicts, breaches, defaults or losses as would not have an adverse effect; or (iv) result in the creation of an Encumbrance pursuant to, or give rise to any penalty, acceleration of remedies, right of termination or otherwise cause any alteration of any rights or obligations of any party under any material Contract to which either the Company or the Subsidiary is a party or by which either of them or any of their assets are bound . Except for filings under the HSR Act, no consent, notice, authorization, waiver by or filing with any governmental agency, administrative body or other third party is required in connection with the execution or performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby. 4.6 Financial Statements. The Company has delivered to Buyer true and complete copies of the Company's (i) audited consolidated balance sheets and related audited consolidated statements of income, stockholder's equity and comprehensive income, and cash flows at and for the fiscal years ended December 31, 2001 and 2002, including the notes thereto (the "AUDITED FINANCIAL STATEMENTS"), and (ii) unaudited consolidated balance sheet at June 30 2003 (the "INTERIM BALANCE SHEET") and the related unaudited consolidated statements of income and cash flows for the six months ended June 30, 2003 (the "INTERIM FINANCIAL STATEMENTS" and, together with the Audited Financial Statements, the "FINANCIAL STATEMENTS"). The Company's audited consolidated balance sheet at December 31, 2002 is referred to herein as the "BALANCE SHEET." The Financial Statements (a) have been prepared based on the books and records of the Company and the Subsidiary, in accordance with GAAP consistently applied throughout the periods covered thereby, except, in the case of the Interim Financial Statements, for normal year-end adjustments, the omission of footnote disclosures required by GAAP and the omission of a statement of stockholder's equity and comprehensive income, and (b) fairly reflect in all material respects the financial position of the Company and the Subsidiary on a consolidated basis as of the respective dates thereof and the results of operations, changes in stockholders' equity and comprehensive income (in the case of the Audited Financial Statements), and cash flows for the periods covered thereby. 4.7 Absence of Undisclosed Liabilities. There are no liabilities or obligations of the Company or the Subsidiary, either accrued, absolute, contingent or otherwise, other than those that (i) are disclosed or reserved against on the Interim Balance Sheet or the Balance Sheet or the notes thereto; (ii) are not required by GAAP to be reflected on the Interim Balance Sheet or the Balance Sheet; or (iii) have been incurred in the ordinary course of business since the date of the Interim Balance Sheet. 4.8 Real Property. (a) Section 4.8 of the Disclosure Schedule sets forth the address of all real property owned or leased by each of the Company and the Subsidiary (the "PROPERTIES"). 13 Each of the Company and the Subsidiary has good and valid title in fee simple to all of the real property reflected on the Balance Sheet as owned by it and owns all right, title and interest in all leasehold estates and other rights purported to be granted to them by the leases and other agreements relating to real property listed in Section 4.8 of the Disclosure Schedule, in each case free and clear of any Encumbrance except for: (i) liens for current taxes, assessments and governmental charges and levies which may be paid without penalty, interest or other additional charge or which are being contested in good faith by appropriate proceedings and are not material in amount or value in relation to the value of the associated property and adequate reserves with respect thereto are maintained on the books and records of the Company; (ii) any zoning or other governmentally established restrictions or encumbrances; (iii) materialmen's, mechanics', carriers', warehousemen's, landlords', workmen's, repairmen's, or other like liens arising in the ordinary course of business and which are not overdue for more than a period of 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained in the books of the Company; (iv) liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance, social security and other like laws, or to secure the performance of construction contracts, leases, statutory obligations, surety, appeal or performance bonds, all to the extent incurred in the ordinary course of business; and (v) such utility and municipal easements and restrictions, if any, as do not detract in any material respect from the value of the property subject thereto and do not materially interfere with the properties used in the ordinary conduct of the Business as presently conducted (collectively, the "PERMITTED ENCUMBRANCES"). No building or structure, to the extent of the premises owned or leased by the Company or the Subsidiary, or any appurtenance thereto or equipment therein, or the operation or maintenance thereof, violates in any material respect any restrictive covenant or any Law (including without limitation any such Laws relating to health, safety, subdivision and zoning). To the Knowledge of Seller, no such building, structure or appurtenance encroaches on any property owned by others. All governmental permits, approvals and licenses required in connection with the operation and, in the case of the facilities owned by the Company or the Subsidiary, ownership, of such real property and all improvements thereon and the conduct of the Business on the date hereof have been duly obtained, are in full force and effect and no proceedings are pending or, to the Knowledge of Seller, threatened which could lead to a revocation or other impairment of any thereof, except where the failure to hold such permits, approvals or licenses would not be reasonably likely to have a Material Adverse Effect, and such permits, approvals, and licenses shall not be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. No condemnation proceeding or special assessment is pending or, to the Knowledge of Seller, threatened with respect to any real property identified in Section 4.8 of the Disclosure Schedule. No tax certiorari or similar proceeding is pending or, to the Knowledge of Seller, threatened with respect to any real property identified in Section 4.8 of the Disclosure Schedule. (b) To the Knowledge of Seller, there is no violation of a condition or agreement contained in any covenant, easement or right-of-way affecting any Property. To the Knowledge of Seller, the covenants, easements or rights-of-way affecting the Properties do not impair in any material respect the Company or the Subsidiary's ability to use any such Properties in the operation of the Business as presently conducted. To the Knowledge of Seller, each of the Company and the Subsidiary has access to public roads, streets or the like or valid perpetual easements over private streets, roads or other private property for such ingress to and 14 egress from the Properties, except as would not impair in any material respect its ability to use any such Properties in the operation of the Business as presently conducted. (c) Neither the Company nor the Subsidiary has received written notice (other than published notice not actually received) of any pending or contemplated rezoning proceeding affecting the Properties. (d) Seller has not received any notice from any utility company or municipality of any fact or condition which could reasonably be expected to result in the discontinuation of presently available sewer, water, electric, gas, telephone or other utilities or services for the Properties. (e) The improvements to, or which constitute a portion of, the Properties are in satisfactory condition and repair, ordinary wear and tear excepted, and to the Knowledge of Seller, there are no material defects in the structural elements of such improvements. (f) To the Knowledge of Seller, all material building systems located on or which constitute a portion of the Properties, including the plumbing, electrical, fire-life-safety and HVAC systems, are in satisfactory operating condition, ordinary wear and tear excepted. 4.9 Personal Property. Each of the Company and the Subsidiary has good and valid title to the personal property (including intellectual property) owned by them, free and clear of all Encumbrances, except for any Permitted Encumbrances. All leased personal property used in the Business is used pursuant to valid, subsisting and enforceable leases, subleases, licenses and other agreements binding upon the parties thereto in accordance with their terms, except as would not have a Material Adverse Effect. The material properties and assets owned or leased by the Company and the Subsidiary are in the possession or under the control of the Company or the Subsidiary and are of a condition, nature and quantity sufficient for the conduct of the Business as of the date hereof. 4.10 Taxes. Notwithstanding anything herein to the contrary, the Seller shall not be deemed to breach any representation or warranty made with respect to AMCDE or AMCPA to the extent such breach or misrepresentation does not adversely effect the Company or the Subsidiary. (a) Each of AMCDE, AMCPA, Seller, the Company and the Subsidiary have duly and timely (with due regard to valid extensions properly secured) filed all material Tax Returns required to be filed by them prior to the date of this Agreement. All such Tax Returns are correct and complete in all material respects as filed or as validly amended thereafter. Each of AMCDE, AMCPA, Seller, the Company and the Subsidiary have timely paid all Taxes required to be paid in respect of the periods covered by such Tax Returns (whether or not shown on any Tax Return) and has (or will have by the Closing Date) adequately reserved for the payment of all material Taxes with respect to periods ended on or before the Closing Date for which Tax Returns have not yet been, but will be, FILED by them. To the Knowledge of Seller, there is no proposed additional tax assessment against AMCDE, AMCPA or the Seller with 15 respect to the Company's operations, the Company or the Subsidiary. In addition, each of AMCDE, AMCPA, Seller, the Company and the Subsidiary has withheld and paid (or will have withheld and paid on or before the Closing Date) all Taxes required to be withheld and paid (including federal, state and local requirements) with respect to amounts paid or owing as of the Closing Date to any employee, creditor, independent contractor or other third party. AMCPA has been a "qualified S corporation" (as defined in the Code) for federal income tax purposes and applicable state and local income tax purposes since January 1, 1998 and has filed all forms and taken all actions necessary to maintain such status. Each of AMCDE, the Company and Seller has been a "qualified subchapter S subsidiary" (as defined in Section 1361(b)(3)(B) of the Code) for federal income tax purposes and all applicable state and local tax purposes since its taxable year beginning January 1, 1998 and has filed all forms and taken all actions necessary to maintain such status. To the extent that AMCDE, AMCPA OR Seller is responsible for the payment of Taxes on the income of the Company on account of the Company's status as a qualified subchapter S subsidiary, Seller warrants and represents that AMCDE, AMCPA or Seller, as the case may be, has timely paid such Taxes. Neither AMCDE, AMCPA, Seller, the Company, nor any of their respective shareholders, has taken any action, will take any action, or omitted to take any action, which action or omission could result in the loss of S corporation and qualified subchapter S subsidiary status, as the case may be, for such periods prior to and including the day of Closing. (b) No Tax Return of either the Company or the Subsidiary is the subject of a pending audit or other administrative or court proceeding. Neither the Company nor the Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Tax for any open Tax year. Section 4.10(b) of the Disclosure Schedule lists income tax returns filed by the Company or by the Subsidiary with respect to which an assessment could be made against either the Company or the Subsidiary. No federal, state, local or foreign taxing authority is asserting or, to the Knowledge of Seller, threatening to assert against the Company or the Subsidiary any deficiency or claim for Taxes or for failure to file a Tax Return. No claim has been made, nor does Seller have Knowledge of any claim that is pending, by an authority in any jurisdiction where the Company or the Subsidiary does not file Tax Returns alleging that the Company or the Subsidiary is or may be subject to taxation in that jurisdiction. (c) All Tax deficiencies that have been assessed or asserted in writing against either the Company or the Subsidiary have been fully paid or finally settled or otherwise resolved, and there is no audit, Proceeding or assessment pending against the Company or the Subsidiary in respect of any Tax. (d) Neither the Company nor the Subsidiary is required to include in income any adjustment pursuant to Section 481 of the Internal Revenue Code of 1986, as amended (the "CODE") (or similar provisions of other law or regulation) by reason of a change in accounting method. (e) There are no liens for Taxes (other than for current Taxes not yet due and payable, property taxes which are not delinquent or for other immaterial Taxes that are being contested in good faith) upon the assets of the Company or the Subsidiary. 16 (f) Neither the Company nor the Subsidiary is a party to or bound by any tax indemnity or tax sharing agreement or any "closing agreement" with any taxing authority. (g) Section 4.10(g) of the Disclosure Schedule lists the states in which the Company (or AMCDE, AMCPA, or the Seller) files income tax returns to report the Company's business operations and also lists those states in which valid S corporation and qualified subchapter S subsidiary elections exist. (h) All of the issued and outstanding shares of capital stock of Seller are owned by AMCDE. All of the issued and outstanding shares of capital stock of AMCDE are owned by AMCPA. 4.11 Litigation. There are no actions, suits or proceedings (arbitration or otherwise) against either the Company or the Subsidiary or their directors, officers, shareholders or members in their capacities as such, pending or, to the Knowledge of Seller, threatened, before any court or governmental agency or instrumentality, or before an arbitrator of any kind and, to the Knowledge of Seller, no governmental investigations involving or affecting either the Company or the Subsidiary or their directors, officers, shareholders or members in their capacities as such, are threatened or pending (any of the foregoing, a "PROCEEDING"), except for any Proceeding that would not be reasonably likely to exceed $50,000 individually (or $100,000 in the aggregate) in costs, penalties and damages to such Person or Persons. Neither the Company nor the Subsidiary is bound by any judgment, award, determination, order, writ, injunction or decree of any court or federal, state, municipal or governmental department or any commission, board, bureau, agency, instrumentality, administrator or arbitrator compliance with which, or which if not complied with, could be reasonably expected to materially affect the Business. Nothing contained herein shall be deemed to raise any presumption that the threshold for a Proceeding required to be disclosed pursuant to this Section 4.11 shall be deemed to be material for purposes of satisfying the condition set forth in Section 7.2. 4.12 Labor Matters. There are no collective bargaining agreements or similar agreements applicable to any Persons employed by the Company or the Subsidiary, and each of the Company and the Subsidiary (i) have complied in all material respects with all applicable federal, state, and local legal requirements relating to its employees, arising from statutes relating to wages, hours, collective bargaining, unemployment insurance, worker's compensation, equal employment opportunity, age and disability discrimination and the payment and withholding of Taxes and (ii) have complied with all applicable federal, state and local legal requirements relating to its employees arising from statutes relating to immigration and I-9 compliance. There is no labor strike, organized dispute, stoppage or lockout actually pending or, to the Knowledge of Seller, threatened against the Business, and since January 1, 2001, there has not been any such action. To the Knowledge of Seller, there is no organized slowdown actually pending or threatened against the Business, and since January 1, 2001, there has not been any such action. Except as set forth on Section 4.12 of the Disclosure Schedule, none of the employees of the Company or the Subsidiary is represented by any labor organization, and, to the Knowledge of Seller, since January 1, 2001, there have been no union organizing activities among any of the employees of the Company or the Subsidiary. 17 4.13 Intellectual Property Rights. (a) The Company and/or the Subsidiary own, license or otherwise possess legally enforceable rights to use all Intellectual Property. To the Knowledge of Seller, (i) no third party is infringing the Intellectual Property, (ii) none of the Intellectual Property has been used, disclosed or appropriated to the detriment of the Company or the Subsidiary for the benefit of any other Person other than Seller; and (iii) no employee, independent contractor or agent of Seller, the Company, or the Subsidiary has misappropriated any trade secrets or other confidential information of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of Seller, the Company, or the Subsidiary. (b) Seller has no Knowledge, and has not received any written communication alleging, that the Company or the Subsidiary has violated any of the patents, licenses, trademarks, service marks, trade names, copyrights, trade secrets or other proprietary rights of any Person or challenging Seller's ownership or use of, or the validity or enforceability of, any Intellectual Property. To the Knowledge of Seller, no third party is infringing upon or violating any of the Intellectual Property owned by the Company or the Subsidiary. (c) Section 4.13(c) of the Disclosure Schedule sets forth a true, complete and current list of all patents, patents pending, trademark/service mark applications and registrations, copyright applications and registrations and license agreements pertaining to the Intellectual Property. All renewal fees, maintenance fees, and other fees in respect of the Intellectual Property that have fallen due on or prior to the date of this Agreement have been paid. No Intellectual Property is the subject of any final refusal of registration. The consummation of the transactions contemplated hereby will not alter or impair any Intellectual Property. (d) Neither the Company nor the Subsidiary is under any obligation to pay royalties or other payments in connection with any agreement, nor is it restricted from assigning its rights respecting Intellectual Property, nor will it otherwise be, as a result of the execution, delivery, or performance of this Agreement, in breach of any agreement relating to the Intellectual Property. Each of the Company and the Subsidiary is in compliance with all license or other agreements pertaining to Intellectual Property. (e) Except as set forth in Section 4.13(e) of the Disclosure Schedule, to the Knowledge of Seller, no Person (except the Company and/or the Subsidiary), including, without limitation, any present or former employee, shareholder, officer or director of the Company or the Subsidiary, or agent or outside contractor of the Company or the Subsidiary, holds any right, title or interest, directly or indirectly, in whole or in part, in or to any Intellectual Property. Other than as part of the Business, neither Seller nor, to the Knowledge of Seller, any third party has used or currently uses any Trademarks listed on Section 4.13(c) of the Disclosure Schedule or any other trademark or service mark containing "Lehigh" in connection with goods or services identical or similar to those provided in the Business. (f) To the Knowledge of Seller, the Company and the Subsidiary's transmission, reproduction, use, display or modification (including framing and linking web site content) or other practices with respect to web, infomercial or other marketing content 18 proprietary to any other Person do not infringe or violate any proprietary or other right of any other Person and no claim relating to such infringement or violation is pending, or, to the Knowledge of Seller, threatened. (g) Each of the Company and the Subsidiary owns or has the right to use all Software used in the Business. (h) No unlicensed copies of any mass market Software that is available in consumer retail stores or otherwise commercially available and subject to "shrink-wrap" or "click-through" license agreements are installed on any of the Company or the Subsidiary's computers or computer systems. 4.14 Contracts and Commitments. Section 4.14 of the Disclosure Schedule hereto sets forth a complete and accurate list of: (a) Each Contract (other than open purchase orders) with, and a complete and correct list of, (a) the top five customers of the Company (together with the Subsidiary) and the aggregate sales to such customers (identifying the approximate percent of total sales derived from each such customer), and (b) the top five (5) suppliers, by dollar volume of the Business and the aggregate dollar volume of purchases (broken down by principal categories) by the Business from such suppliers for such period, each for the six-month period ended June 30, 2003 and the twelve-month period ended December 31, 2002. (b) Each Contract (other than open sales orders) that involved the performance of services for or the delivery of goods or materials to the Company and/or the Subsidiary during the Company's most recently completed fiscal year of amount or value in excess of $100,000 or pursuant to which the Company or the Subsidiary is obligated to purchase future services, goods or materials in an amount or value that is reasonably expected to exceed $100,000; (c) Each Contract that was not entered into in the ordinary course of business that involves future expenditures or receipts in excess of $100,000 to which the Company and/or the Subsidiary is a party; (d) Each license or other Contract with respect to the Intellectual Property to which the Company and/or the Subsidiary is a party other than with respect to commercially available software; (e) Each Contract relating to the borrowing of money or a line of credit to which the Company and/or the Subsidiary is a party or pursuant to which the Company and/or the Subsidiary has guaranteed any indebtedness or obligation of any other Person; (f) Each Contract with respect to environmental remediation at any facility or property now or formerly owned by the Company and/or the Subsidiary; (g) Each representative, distribution, marketing or sales agency Contract to which the Company and/or the Subsidiary is a party; 19 (h) Each Contract containing covenants limiting the freedom of the Company and/or the Subsidiary to engage in any line of business or to compete with any Person or covenants of another Person not to compete with the Company or the Subsidiary; (i) Each sole source supply Contract for the purchase of any material, raw material, component or product that is otherwise not generally available and that is used in the manufacture of any product of the Business; (j) Each guaranty and indemnity by the Company and/or the Subsidiary to any Person in connection with the supply of components or raw materials to the Business; (k) All agreements with respect to the proposed acquisition of any other entity, business, line of business or material amount of assets; (l) All employment, severance or change of control agreements with employees of the Company or the Subsidiary and all consulting agreements to which the Company or the Subsidiary is a party (other than unwritten employment arrangements terminable at will without payment of any contractual severance or other amount); (m) Each agreement to which the Company or the Subsidiary is a party or is otherwise bound with respect to the sharing of profits, revenues, losses, costs or liabilities of any Person or entity, other than those between the Company and the Subsidiary; (n) All standard warranties made with respect to the Business; and (o) Any other Contract to which the Company or the Subsidiary is a party that is material to the condition (financial or otherwise), results of operations, assets, properties, liabilities and business of the Company or the Subsidiary taken as a whole. Neither the Company nor the Subsidiary is in breach or default with respect to any of the above Contracts and, to the Knowledge of Seller, no other party thereto is in breach or default with respect to any of the above Contracts, except, in each case, for such breaches or defaults as would not be reasonably likely to have a Material Adverse Effect, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default. The Company has not received any written notice since January 1, 2002, of any breach or default with respect to any of the above Contracts. Neither the Company nor the Subsidiary is a party to any contract, agreement, binding bid, binding proposal, or binding quotation with any Governmental Entity. 4.15 Existing Condition. Except as disclosed in Section 4.15 of the Disclosure Schedule, since the date of the Balance Sheet there has not occurred (i) any Material Adverse Effect or any event, change or effect which is reasonably likely to have a Material Adverse Effect; (ii) any damage to, destruction or loss of any material asset of the Company or the Subsidiary not covered by insurance; (iii) any change by the Company in its accounting principles or policies; (iv) any material revaluation by the Company of any of its or the Subsidiary's assets, including, without limitation, writing off or writing down notes or accounts receivable or inventory, other than in the ordinary course of business consistent with past 20 practice; (v) any increase in compensation outside of the ordinary course of business payable to any stockholder, director, officer or employee or entry into (or amendment of) any employment, severance or similar agreement with any stockholder, director, officer or employee; (vi) waiver of any material right, forbearance of any material debt or release of any material claim, except in each case in the ordinary course of business; (vii) adoption of or change in any Plan or labor policy; (viii) entry into, amendment, termination or receipt of notice of termination of any agreement which is required to be disclosed in the Disclosure Schedule, or any material transaction (including, without limitation, any such relating to capital expenditures); (ix) sale (other than sales of inventory in the ordinary course of business), assignment, conveyance, lease, or other disposition of any material asset or property of the Company or the Subsidiary or mortgage, pledge, or imposition of any lien or other encumbrance on any material asset or property of the Company or the Subsidiary, except, in each case, as permitted hereunder; (x) any capital expenditure in excess of $50,000, or additions made to property, plant and equipment used in the operations of the Business other than in the ordinary course of business; (xi) any loss or received notice of potential loss of any material customers or of a reduction in orders from any material customer; or (xii) any binding agreement to do any of the foregoing by the Company or the Subsidiary. 4.16 Employee Benefit Plans (a) Section 4.16 of the Disclosure Schedule contains a complete list of all "employee benefit plans" as defined in Section 3(3) of ERISA ("PLANS"), sponsored, maintained or contributed to, or required to be contributed to, by the Company. All Plans required to be listed in Section 4.16 of the Disclosure Schedule have been administered in substantial compliance with their terms and the applicable provisions of ERISA and the Code. With respect to each Plan required to be listed in Section 4.16 of the Disclosure Schedule, (i) each Plan which is intended to be qualified within the meaning of Section 401(a) of the Code, including, but not limited to, the American Manufacturing Corporation 401(k) Plan, is so qualified and is the subject of a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (ii) all contributions required under the terms of the Plans or under applicable law have been made within the time required by law and the terms of the Plans; (iii) there have been no "prohibited transactions" (as described in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with respect to any Plan; (iv) no fiduciary of any such Plan has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Plan; and (v) there are no inquiries, proceedings, claims or suits pending or threatened by any governmental agency or authority or by any participant or beneficiary against any of the Plans, the assets of any of the trusts under such Plans or the Plan sponsor or the Plan administrator, or against any fiduciary of any of such Plans with respect to the design or operation of the Plans, other than routine claims for benefits. (b) Neither the Company nor any entity required to be aggregated with the Company under Section 414(b), (c), (m), or (o) of the Code ("ERISA AFFILIATE") contributes (or is obligated to contribute) to a "multiemployer plan" as such term is defined in ERISA Section 3(37) and, during the six-year period ending on the Closing Date, neither the Company nor any ERISA Affiliate has contributed or been obligated to contribute to such a plan. 21 Neither the Company nor any ERISA Affiliate has incurred any withdrawal liability as a result of a complete or partial withdrawal, as those terms are defined in Part I of Subtitle E of Title IV of ERISA, from a multiemployer plan that has not been satisfied in full. Neither the Company nor any ERISA Affiliate has received any notification, or has any reason to believe that any multiemployer plan to which any of them contributes or is obligated to contribute is in reorganization, is insolvent, has been terminated, or may reasonably be expected to be in reorganization, to be insolvent, or to be terminated. (c) There are no unsatisfied liabilities to participants, the IRS, the United States Department of Labor ("DOL"), the Pension Benefit Guaranty Corporation ("PBGC") or to any other person or entity which have been incurred as a result of the termination of any Plan ever maintained by the Company or any ERISA Affiliate. With respect to each Plan maintained by the Company or any ERISA Affiliate which is subject to the minimum funding requirements of Part 3 of Subtitle B of Title I of ERISA or subject to Section 412 of the Code (i) there does not exist any "accumulated funding deficiency" within the meaning of Section 302 of ERISA or Section 412 of the Code and there has been no waived funding deficiency within the meaning of Section 303 of ERISA or Section 412 of the Code; (ii) no "reportable event," as defined in Section 4043 of ERISA for which notice has not been waived by the regulations issued under such Section has occurred; (iii) all premiums to the PBGC have been timely paid in full; and (iv) the Company and the Subsidiary have not incurred, and the Company does not have any reason to expect that the Company or the Subsidiary will incur, any liability to the Pension Benefit Guaranty Corporation (other than with respect to premium payments not yet due) or otherwise under Title IV of ERISA or under the Internal Revenue Code with respect to any Plan. (d) All reports and information required to be filed with the DOL, IRS and PBGC or furnished to plan participants and their beneficiaries with respect to each Plan required to be listed in Section 4.16 of the Disclosure Schedule, including, but not limited to, any required Form 5500, have been so filed and/or furnished and no material change has occurred with respect to matters covered by the most recent Form 5500 since the date thereof. Seller has delivered to Buyer, with respect to the Plans required to be listed in Section 4.16 of the Disclosure Schedule, correct and complete copies of the Plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service with respect to each Plan, the most recent annual report (Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts and other funding arrangements which implement each such Plan. (e) The consummation of the transactions contemplated herein will not, either alone or in combination with another event, (i) entitle any employee or any current or former employee, officer, director, consultant or agent of the Company to severance pay, unemployment compensation or any other payment, or (ii) accelerate the time of payment or vesting of, or increase the amount of, compensation or benefits due to any such individual. (f) There has been no violation of the "continuation coverage requirement" of "group health plans" as set forth in Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA (sometimes referred to as "COBRA") with respect to any Plan maintained by the Company or any ERISA Affiliate to which such continuation coverage 22 requirements apply. There has been no violation of the health insurance obligations imposed by Section 9801 of the Code and Part 7 of Subtitle B of Title I of ERISA with respect to any Plan to which such insurance obligations apply. Neither the Company nor any ERISA Affiliate has contributed to a nonconforming group health plan (as defined in Section 5000(c) of the Code) and no ERISA Affiliate of the Company has incurred a tax under Section 5000(a) of the Code which is or is reasonably expected to become a liability of the Company or an ERISA Affiliate. (g) Other than such continuation of benefit coverage under group health plans as is required by applicable law, neither the Company nor the Subsidiary maintains retiree life or retiree health plans providing for continuing coverage for any employee or any beneficiary of an employee after the employee's termination of employment. (h) All employee benefits required under the Subsidiary's agreement with the Union of Employees of Trade and Industry, Particular and Similar de Yucatan have been provided substantially in accordance with the terms of such agreement and the applicable provisions of Mexican law. (i) For purposes of the representations set forth in Section 4.16(a), in the second sentence of Section 4.16(c), and in the first sentence of Section 4.16(d), the term "Plan" shall also include the Lehigh Sales and Hourly Pension Plan as in effect prior to its merger into and with the American Manufacturing Corporation and Subsidiaries Pension Plan. (j) The Company has no unsatisfied liabilities with respect to any employee benefit plan, as defined in Section 3(3) of ERISA, which it has ever maintained or to which it has ever contributed other than with respect to those Plans listed in Section 4.16 of the Disclosure Schedule. 4.17 Directors and Officers. Section 4.17 of the Disclosure Schedule sets forth the names of all directors and officers of the Company. 4.18 Compliance with Laws. Each of the Company and the Subsidiary is in compliance in all material respects with, and since January 1, 2002 has not received any written notice of any violation or delinquency with respect to, any Laws applicable to the Business. Each of the Company and the Subsidiary possesses all licenses, permits, registrations and government approvals (collectively, "PERMITS") (other than Permits required under any Environmental Law which are exclusively provided for in Section 4.19) which are required in order for the Company and the Subsidiary to conduct the Business as presently conducted, except for such Permits as to which the failure to possess would not be reasonably likely to have a Material Adverse Effect. Each Permit is valid and in full force and effect, and is not subject to any pending or, to the Knowledge of Seller, threatened administrative or judicial proceeding to revoke, cancel or declare such Permit invalid in any respect. 4.19 Environmental Compliance. (a) The Company and the Subsidiary are in material compliance with and have not received any written notice of any violation or delinquency with respect to, any Law, or any agreement with, or any Permit or order from, any governmental, regulatory or administrative authority, to which the operation of the Business or any of its assets or personnel 23 is subject and which relates to the protection of the environment (indoors or outdoors) or the regulation of Hazardous Materials including, without limitation, any Environmental Laws. Neither the Company, the Subsidiary, nor any of the Properties, has been made subject to any claim, judgment, decree, order, arbitration award, deed restriction, permit condition, licensing restriction or any other restriction of the operation of the Business by any federal, state or local governmental, regulatory or administrative authority relating to Environmental Laws which is reasonably likely to have a Material Adverse Effect. Except as set forth on Section 4.19 of the Disclosure Schedule, the Company and the Subsidiary have obtained all Permits required under Environmental Laws for the conduct of the Business and such Permits are set forth on Section 4.19 of the Disclosure Schedule. Without limiting the foregoing, Seller represents that the compliance conditions described in the January 2003 Draft Environmental and Environmental Health Compliance Evaluation of the Leslie-Locke facility located at 675 West Manville Street, Compton, California, prepared by Jorgensen Environmental Compliance Services, Inc. have been adequately addressed and that any conditions of noncompliance have been corrected. (b) There is no Environmental Claim pending or, to the Knowledge of the Company or Seller, threatened against the Company, the Subsidiary or the Properties. To Knowledge of Seller, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Hazardous Materials that could form the basis of any Environmental Claim relating to the Business or against the Company or the Subsidiary or the Properties. (c) Neither the Company nor the Subsidiary use or, to the Knowledge of Seller, has used, any Hazardous Materials on, at, beneath or near any of the Properties or any surface waters or groundwaters thereon or thereunder in violation of Environmental Laws. Neither the Company nor the Subsidiary own or operate, and, to the Knowledge of Seller, have ever owned or operated, an "underground storage tank" containing a "regulated substance," as such term is defined in Subchapter IX of the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6991 et seq., or, own or operate, and, to the Knowledge of Seller, have ever owned or operated, a surface impoundment, landfill, or gas or oil well, PCB containing electrical equipment, urea formaldehyde containing materials, or asbestos containing materials. Seller has delivered or otherwise made available for inspection to Buyer or its agents true, complete and correct copies of all current Phase I Environmental Site Assessments possessed or initiated by or on behalf of Seller, the Company, or the Subsidiary pertaining to Hazardous Materials on, at, beneath or near any of the Properties or any surface waters or groundwaters thereon or thereunder, or any current reports, studies or assessments regarding existing material noncompliance with or liability under any Environmental Law. (d) Neither the Company nor the Subsidiary have any obligations under any agreement with any Person or pursuant to an order of a Governmental Entity for conducting any site investigation or cleanup that would be triggered by the execution of this Agreement or consummation of the transactions contemplated by this Agreement. Neither the Company nor the Subsidiary now or, to the Knowledge of Seller, in the past has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled or released any Hazardous Materials in violation of Environmental Laws or, to the Knowledge of Seller, owned, occupied or operated any facility or property so as to give rise to liabilities of the Company or the Subsidiary for response costs, natural resource damages or attorneys fees pursuant to any 24 Environmental Law. Neither the Company nor the Subsidiary has, either expressly or by operation of law, assumed or undertaken any liability or corrective, investigatory or remedial obligation of any other Person relating to any Environmental Law. 4.20 Transactions With Affiliates. Section 4.20 of the Disclosure Schedule sets forth for each Person who is an Affiliate every agreement, undertaking, understanding or compensation arrangement of any Affiliate with the Company and/or the Subsidiary (other than normal employment arrangements) and any interest of any Affiliate in any property, real, personal or mixed, tangible or intangible, used in or pertaining to the Business. Since January 1, 2002, to the Knowledge of Seller, none of the Affiliates (other than SRTI), executive officers or directors of the Company or the Subsidiary has been a director or executive officer of, or has had any direct or indirect interest in (excluding the ownership of no more than 2% of the outstanding securities in any publicly traded company), any firm, corporation, association or business enterprise which during such period was one of the top fifteen customers of the Company by dollar volume of sales or supplier of the Company satisfying the requirements for disclosure set forth in Section 4.14(a). 4.21 Insurance. The Company and the Subsidiary maintain insurance under various insurance policies, as set forth in Section 4.21(a) of the Disclosure Schedule. Each of the Company and the Subsidiary has complied with all terms and conditions of such policies, including premium payments, and such policies are, to the Knowledge of Seller, valid and enforceable in accordance with their terms. Neither the Company nor the Subsidiary has received (i) any written notice of cancellation of any policy or binder of insurance required to be identified in Section 4.21(a) of the Disclosure Schedule or refusal of coverage thereunder; (ii) any written notice that any issuer of such policy or binder has filed for protection under applicable bankruptcy or insolvency laws or is otherwise in the process of liquidating or has been liquidated; or (iii) any other indication that any such policy or binder may no longer be in full force or effect or that the issuer of any such policy or binder may be unwilling or unable to perform its obligations thereunder. There is no claim pending by or on behalf of the Company or the Subsidiary against any of the insurance carriers under any of such policies and, to the Knowledge of Seller, there has been no actual or alleged occurrence of any kind which would be reasonably likely to give rise to any such claim. The Company has not made any claims under any such policy at any time since January 1, 2001, except as set forth in Section 4.21(a) of the Disclosure Schedule. 4.22 Inventory. All inventory of the Company and the Subsidiary used in the Business as set forth in the Financial Statements consists of raw materials, work-in-process and finished goods of a quality and quantity usable or salable in the ordinary course of the Business except for obsolete and slow-moving items and items which are below standard quality which have been written down to estimated net realizable value ("OBSOLETE INVENTORY"). The value at which inventories were reflected in the Financial Statements was stated at the lower of cost or market, with cost determined using the last in - first out (LIFO) inventory valuation principle, subject to provisions for or omissions of Obsolete Inventory, all in accordance with GAAP, applied on a basis consistent with that of the preceding fiscal year. All Inventory that is not in transit is located only at the locations as set forth on Schedule 4.22 of the Disclosure Schedule. 25 4.23 Accounts Receivable. All accounts receivable of the Business as set forth in the Financial Statements are, and all accounts receivable which have arisen or arise between the date of the Interim Financial Statements and the Closing Date are and will be, genuine, valid, binding and subsisting, having arisen or arising out of bona fide sales and deliveries of products or the performance of services in the ordinary course of business consistent with past practice and are subject to no defenses, counterclaims or set-offs (other than in the ordinary course). The allowances for bad debts reflected in the Financial Statements are reasonable, adequate and appropriate based on the Company's prior experience and are in accordance with GAAP, applied on a basis consistent with that of the preceding fiscal year. 4.24 Brokers. No Person acting on behalf of the Company or any of its Affiliates or under the authority of any of the foregoing is or will be entitled to any brokers' or finders' fee or any other commission or similar fee, directly or indirectly, from any of such parties in connection with any of the transactions contemplated by this Agreement, other than US Bancorp Piper Jaffray Inc, whose fees and expenses will be paid in full by Seller at Closing. 4.25 Product Liability. There has not been any recall of any product, substance or material produced, distributed or sold by or on behalf of the Business (a "PRODUCT") since January 1, 2001. To the Knowledge of Seller, no Product contains a design or manufacturing defect that would be reasonably likely to have a Material Adverse Effect. 4.26 Absence of Certain Business Practices. To the Knowledge of Seller, neither the Company, the Subsidiary, nor any of their respective directors or executive officers, acting alone or together, has: (a) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, trading company, shipping company, governmental employee or other Person with whom the Company or the Subsidiary has done business; or (b) directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, trading company, shipping company, governmental employee or other Person with whom the Company or the Subsidiary has done business, except where (i) such actions have not subjected, or would not reasonably be expected to subject the Company, the Subsidiary, or their respective executive officers or directors to any fine or penalty in any criminal or governmental litigation or proceeding, (ii) if not given in the past, such actions would not reasonably be expected to have Material Adverse Effect or (iii) if not continued in the future, such actions would not reasonably be expected to have a Material Adverse Effect. SECTION 5 - REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller, as of the date of this Agreement, that: 5.1 Incorporation and Good Standing. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to conduct its business as presently conducted and to own and lease the properties and assets used in connection therewith. 5.2 Power and Authorization. Buyer has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and under any other 26 agreement, instrument or other document necessary to consummate the transactions contemplated herein (the "BUYER CLOSING DOCUMENTS"). The execution, delivery and performance by Buyer of this Agreement and the Buyer Closing Documents have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms and, when executed and delivered as contemplated herein, each of the Buyer Closing Documents shall constitute the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally, general equitable principles, the discretion of courts in granting equitable remedies and matters of public policy. 5.3 Validity of Contemplated Transactions. Neither the execution and delivery of this Agreement nor any other agreement, instrument or other document necessary to consummate the transactions contemplated herein by Buyer nor the consummation by Buyer of the transactions provided for herein or therein will conflict with, violate, or result in a breach of or default under any material contract or agreement to which Buyer is a party or by which it is bound or any law, permit, license, order, judgment or decree applicable to Buyer or any provision of the charter or bylaws of Buyer, except in each case, for such violations, conflicts, breaches, defaults or losses as would not adversely affect the Buyer's ability to consummate the transactions contemplated hereby. 5.4 Litigation. There is no pending action or Proceeding that has been commenced or, to the knowledge of Buyer, threatened against Buyer that may have the effect of preventing, delaying, or making illegal the transactions contemplated herein. 5.5 Consents. Except for filings under the HSR Act and consents from the Buyer's lenders (the "Bank Consents") or as set forth in Section 5.5 of the Buyer Disclosure Schedule, no consent, authorization, waiver by or filing with any governmental agency, administrative body or other third party is required in connection with the execution or performance of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby, except for such consents, authorizations, waivers or filings, as to which the failure to obtain would not adversely affect the Buyer's ability to consummate the transactions contemplated hereby. 5.6 Sufficient Funds. Provided that Seller has satisfied (or can demonstrate that it is capable of satisfying on or before the Closing Date) all of the conditions set forth in Section 7 (other than the conditions, if any, that have been waived in writing by Buyer), Buyer will have available to it sufficient funds to pay the aggregate Purchase Price set forth in Section 2.1(a) and will have obtained any required Bank Consents. 5.7 Investment Representations. (a) Buyer is acquiring the Securities for its own account for purposes of investment and not for the account of any other Person, not for resale to any other Person, and not with a view to or in connection with a sale or distribution of the Securities. Buyer has no 27 present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment for the disposition of the Securities by Buyer. (b) Buyer understands that (i) the Securities have not been registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or the securities laws of any state or other jurisdiction, (ii) the Securities may not be sold, transferred, or otherwise disposed of without registration under the Securities Act and under any applicable state or other jurisdiction's respective securities laws, or an exemption therefrom, and that without an effective registration statement covering the Securities or an available exemption from registration under the aforementioned securities laws (including, without limitation, the Securities Act), the Securities must be held indefinitely and (iii) Seller does not have any obligation to register the Securities. (c) Buyer acknowledges that (i) Buyer has sufficient knowledge and experience in finance and business matters that it is capable of evaluating the risks and merits of its investment in the Securities and Buyer is able financially to bear the risks thereof; and (ii) Buyer and its directors, officers, employees, attorneys, accountants and advisors have been given the opportunity to ask questions of the officers and management employees of the Company and the Subsidiary concerning the terms and conditions of this Agreement and the transactions contemplated herein, the purchase of the Securities, and the Business. Buyer acknowledges that the representations and warranties contained in this Agreement, as modified by the Disclosure Schedule, shall be deemed to be the only representations and warranties made with respect to Seller, the Company, the Subsidiary or the Business. 5.8 Issuance of Buyer Common Stock. If Buyer issues shares of Buyer Common Stock on the Contingent Consideration Closing Date, such shares, when so issued, will be validly issued by Buyer, fully paid and nonassessable securities of Buyer, and issued in compliance with applicable federal and state securities laws. 5.9 Brokers. No Person acting on behalf of Buyer or any of its Affiliates or under the authority of any of the foregoing is or will be entitled to any brokers' or finders' fee or any other commission or similar fee, directly or indirectly, from any of such parties in connection with any of the transactions contemplated by this Agreement. SECTION 6 - COVENANTS OF THE PARTIES UNTIL CLOSING 6.1 Conduct of Business Pending Closing. Except as set forth in Section 6.1 of the Disclosure Schedule or as otherwise expressly provided in this Agreement, between the date hereof and the Closing, except as otherwise agreed in writing by Buyer, the Company shall, and shall cause the Subsidiary to operate their respective businesses only in the ordinary course consistent with past practices and to use commercially reasonable efforts to preserve intact their business organization and good will in all material respects, including without limitation the good will and relationships of the Company and the Subsidiary's customers, suppliers, employees and vendors, and shall also: (a) maintain their respective existence, and discharge debts, liabilities and obligations as they become due, and operate in the ordinary course in a manner 28 consistent with past practice and in compliance in all material respects with all applicable Laws, authorizations, and Contracts (including, without limitation, those identified in the Disclosure Schedule); (b) maintain their respective facilities and assets in the same state of repair, order and condition as they were on the date hereof, reasonable wear and tear excepted; (c) maintain their respective books and records in accordance with past practice, and use commercially reasonable efforts to maintain in full force and effect all authorizations and all insurance policies and binders; (d) use commercially reasonable efforts to maintain their respective relations and goodwill with the landlords, suppliers, customers, employees and others having a business relationship with the Company or the Subsidiary; and (e) file, when due or required, subject to applicable extensions, federal, state, foreign and other Tax Returns and other reports required to be filed and pay when due all Taxes, assessments, fees and other charges lawfully levied or assessed against them, unless the validity thereof is contested in good faith and by appropriate proceedings diligently conducted. 6.2 Negative Covenants. Except as set forth in Section 6.2 of the Disclosure Schedule or as otherwise expressly provided in this Agreement, between the date hereof and the Closing, without the prior written consent of Buyer, the Company shall not, and shall not allow the Subsidiary to: (a) make any change in the Company's or the Subsidiary's authorized or issued capital stock or other securities, grant any option or other right to purchase securities of the Company or the Subsidiary, issue or make any security convertible into capital stock, grant any registration rights, or purchase, redeem, retire or make any other acquisition of any shares of capital stock or other securities; (b) amend the certificate or articles of incorporation or bylaws (or equivalent governing documents) of the Company or the Subsidiary; (c) fail to pay or discharge when due any material liability or obligation of the Company or the Subsidiary; (d) make, enter into, amend in any material respect, renew, extend or terminate any agreement, commitment or transaction, including, without limitation, any Contract set forth on Section 4.14 of the Disclosure Schedule, other than in the ordinary course of business, consistent with past practice and having a term or duration of less than one year; (e) enter into any Contract with Seller or any Affiliate of Seller; (f) make any material change in the conduct of the Business; 29 (g) make any sale, assignment, transfer, abandonment or other conveyance of the assets of the Company or the Subsidiary or any part thereof, except transactions pursuant to existing contracts set forth in the Disclosure Schedule and dispositions of inventory or of worn-out or obsolete equipment and machinery in the ordinary course of business consistent with past practice; (h) subject any of the assets of the Company or the Subsidiary, or any part thereof, to any Encumbrance, other than such Encumbrances as may arise in the ordinary course of business consistent with past practice by operation of law and that will not, individually or in the aggregate, interfere materially with the use, operation, enjoyment or marketability of any of the assets of the Company or the Subsidiary; (i) acquire any assets, raw materials or properties, other than in the ordinary course of business consistent with past practice; (j) enter into any new (or amend any existing) Plan or employment, severance or consulting agreement, grant any general increase in the compensation of officers or employees (including any such increase pursuant to any Plan) or grant any increase in the compensation payable or to become payable to any employee, except in accordance with pre-existing contractual provisions or consistent with past practice; (k) without notifying Buyer in writing at least five (5) business days prior thereto, (A) make any change in any tax election or in any accounting principle, method, estimate or practice (except for any such change required by reason of a concurrent change in GAAP) or (B) except in the ordinary course of business consistent with past practice, write down the value of any inventory or write off as uncollectible any accounts receivable; (l) settle, release or forgive any claim or litigation or waive any right, in an amount greater than $50,000 or having a term or duration of more than one year or other than in the ordinary course of business and consistent with past practice; (m) enter into any real property lease, sublease or occupancy agreement or assign or sublet any existing real property lease, sublease or occupancy agreement; (n) make any distributions to Seller or its Affiliates that in the good faith determination of Seller would reduce the Company's Tangible Net Worth to below $42,000,000; provided, that, notwithstanding anything herein to the contrary, Buyer's sole remedy for a breach of this Section 6.2(n) shall be the purchase price adjustment described in Section 2.1(c) above; or (o) agree or commit to do any of the foregoing. 6.3 Access. Buyer and its respective officers, directors, attorneys, accountants and representatives, and the Buyer's lenders and their officers, directors, attorneys, accountants and representatives, shall be permitted to examine the property, books and records of the Company and the Subsidiary, and such officers, directors, attorneys, accountants and representatives shall be afforded reasonable access during normal business hours to such property, books and records upon reasonable prior notice and Seller shall furnish promptly to 30 Buyer all other information concerning the Business, its properties and its personnel as Buyer may reasonably request, provided that no investigation or receipt of information pursuant to this Section 6.3, or otherwise, shall qualify any representation or warranty of Seller, the Company or the Subsidiary or the conditions to the obligations of Buyer. Anything in this Section 6.3 or elsewhere in this Agreement to the contrary notwithstanding, effective as of the Closing, Buyer waives, and at Closing shall cause the Company and the Subsidiary to waive, all rights that Buyer, the Company or the Subsidiary may have, if any, to any notes, work product or communications within the attorney-client privilege (collectively, the "ATTORNEY MATERIALS") to or from the Seller or any of its Affiliates prepared or received by Drinker Biddle & Reath LLP in the course of their representation of Seller and the Company in connection with and relating to the transactions contemplated by this Agreement to the extent any such right would arise as a result of Drinker Biddle & Reath LLP also having been engaged by or receiving payments from the Company or the Subsidiary in connection with such transactions; provided that such waivers shall be null and void and of no effect with respect to Attorney Materials that are not protected by the attorney-client privilege if it is asserted. 6.4 Consents. Prior to the Closing, Seller (i) shall, at its cost and expense, and with the reasonable cooperation of Buyer, use its commercially reasonable efforts to obtain all consents, permits, approvals of, and exemptions by, any Governmental Entity or third party necessary or desirable for the consummation of the transactions contemplated by this Agreement as set forth in Section 6.4 of the Disclosure Schedule (the "MATERIAL CONSENTS") and (ii) shall diligently assist and cooperate with Buyer in preparing and filing all documents required to be submitted by Buyer to any Governmental Entity in connection with such transactions and in obtaining any governmental consents, waivers, authorizations or approvals which may be required to be obtained by Buyer in connection with such transactions (which assistance and cooperation shall include, without limitation, timely furnishing to Buyer all information concerning Seller, the Company, or the Subsidiary that counsel to Buyer determines is required to be included in such documents or would be helpful in obtaining any such required consent, waiver, authorization or approval). Without limiting the generality of the foregoing, in the event the landlord under that certain lease listed as item (c)1 in Section 4.14 of the Disclosure Schedule requires an additional security deposit in connection with the transactions contemplated by this Agreement, as provided for in such lease, at the Closing Buyer shall deposit such additional security deposit with such landlord to the extent commercially reasonable. 6.5 HSR. Each of the parties hereto undertakes and agrees to file as soon as practicable, and in any event within five business days after the date of this Agreement, a Notification and Report Form under the HSR Act with the United States Federal Trade Commission (the "FTC") and the United States Department of Justice, Antitrust Division (the "ANTITRUST DIVISION"), and to make any other competition filing or notifications required by any other governmental authority as promptly as practicable. Each of the parties shall (i) respond as promptly as practicable to any formal or informal inquiries received from the FTC or the Antitrust Division for additional information or documentary materials, and to all inquiries and requests received from any State Attorney General or other governmental authority in connection with antitrust or competition matters, (ii) take all commercially reasonable steps to seek early termination of any applicable waiting period under the HSR Act or any similar laws and to obtain all required approvals, and (iii) refrain from entering into any agreement with the FTC or the Antitrust Division or any governmental authority not to consummate or delay consummation 31 of or to give notice of consummation other than as required by law, of the transactions contemplated by this Agreement, except with the prior written consent of the other parties hereto (which shall not be unreasonably withheld or delayed). Each of the parties or its counsel shall promptly notify the other party or its counsel of any written or oral communication to that party or counsel from the FTC, the Antitrust Division, any State Attorney General or any other governmental authority and shall permit the other party or its counsel to review in advance any proposed written communication to any of the foregoing. Notwithstanding the foregoing or any other covenant herein contained, in connection with the receipt of any necessary approvals under the HSR Act, none of Buyer, Seller, the Company, or the Subsidiary shall be required to (i) divest or hold separate or otherwise take or commit to take any action that limits Buyer's freedom of action with respect of, or its ability to retain, the Company or the Subsidiary or any material portions thereof or any of the businesses, product lines, properties or assets of Buyer, the Company, or the Subsidiary, without Buyer's prior written consent; or (ii) commence any litigation against any entity in order to facilitate the consummation of any of the transactions contemplated hereby. 6.6 INTENTIONALLY OMMITTED 6.7 No Solicitation. (a) Seller and the Company shall not, directly or indirectly, continue, initiate or participate in discussions or negotiations with, or provide any nonpublic information to, any Person (other than Buyer and its representatives in connection with the transactions contemplated by this Agreement) concerning any sale of assets (other than in the ordinary course of its business consistent with past practice) or shares of capital stock of the Company or any merger, consolidation, recapitalization, liquidation or similar transaction involving the Company (collectively, a "COMPANY ACQUISITION TRANSACTION"). (b) Seller and the Company will promptly communicate to Buyer the terms of any inquiry or proposal that it may receive after the date of this Agreement in respect of a Company Acquisition Transaction. Any notification under this Section 6.7 shall include the identity of the Person making such proposal, the terms of such proposal and any other information with respect thereto as Buyer may reasonably request. (c) In the event of a breach of this Section 6.7 by Seller or the Company, in addition to any other remedies available to Buyer, Buyer shall be entitled to seek equitable remedies in a court of competent jurisdiction, including the equitable remedy of specific performance with respect to the transactions set forth in this Agreement, and shall be entitled to such injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, as a court of competent jurisdiction shall determine. 6.8 Assumption and Release of Real Estate Debt. At or prior to the Closing, the Company shall assign and transfer to Seller (or such other Person as Seller may designate) all of its right, title and interest (other than any interest therein as a tenant pursuant to the Macungie Lease) in and to the land, building and other structures, including all building systems and fixtures (for the sake of clarity, the term fixtures does not include trade fixtures, moveable office furniture and furnishings, signs, machinery and equipment), located in Macungie, Lehigh 32 County, Pennsylvania, and used by the Company in the operation of the Business (collectively, the "REAL ESTATE"), under and subject to all Encumbrances, and subject to the assumption by Seller of, and the release of the Company from, the Real Estate Debt. Seller (or such other Person as Seller may designate) shall use commercially reasonable efforts to assume and obtain the complete and irrevocable release of the Company from any and all obligations of the Company under and in connection with the Real Estate Debt, including, without limitation, documents evidencing the release of all liens or security interests upon or in any of the assets of the Company. 6.9 Assumption and Release of Bank Debt. In connection with either the assumption by 6.10 Seller (or such other Person as Seller may designate) of the Bank Debt or the payoff of the Bank Debt in accordance with Section 9.4, Seller shall use commercially reasonable efforts to obtain payoff letters and other written documents evidencing the complete and irrevocable release of the Company from any and all obligations under and in connection with the Bank Debt including, without limitation, the release of all liens or security interests upon or in any assets of the Company. 6.10 Landlord Waivers. Seller shall use commercially reasonable efforts to obtain landlord waivers, in the form reasonably required by Buyer's lenders, from the lessors that lease real property to the Company located at 675 West Manville Street, Los Angeles, California and at 1401 Artesia Blvd., Los Angeles, California. Seller shall provide a landlord waiver with respect to the real property located at 2834 Schoeneck Road, Macungie, Pennsylvania. SECTION 7 - CERTAIN CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS Unless waived by Buyer, the obligation of Buyer to consummate the transactions contemplated hereunder is subject to the fulfillment, prior to or at the Closing, of each of the following conditions: 7.1 Deliveries at Closing. Seller shall have delivered, or caused to be delivered, to Buyer all items required pursuant to Section 9.2. 7.2 Representations and Warranties. The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except for representations and warranties (i) made as of a specified date, which shall be true and correct in all material respects as of the specified date, and (ii) containing a specific reference to a Material Adverse Effect or other materiality qualification, which, giving effect to such specific reference or qualification, shall be true and correct in all respects), and Buyer shall have received a certificate dated the Closing Date to that effect, signed by the chief executive officer or president of Seller. 7.3 Performance of Covenants. Seller and the Company shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by them at or prior to Closing, and Buyer shall have received a certificate dated the Closing Date to that effect signed by the chief executive officer or president of Seller. 33 7.4 Approvals. (a) All Material Consents shall have been obtained in form and substance reasonably satisfactory to the Buyer and shall be in full force and effect on the Closing Date, (b) all waiting periods applicable under the HSR Act shall have expired or been terminated, and (c) any other material governmental consent, authorization or filing requirement required for Buyer to consummate the transactions contemplated by this Agreement shall have been obtained or otherwise complied with. 7.5 Legal Matters. The Closing shall not violate any order or decree of any court or governmental body of competent jurisdiction and no Proceeding shall have been brought or threatened by any Person (other than Buyer or an Affiliate of Buyer) which questions the validity or legality of this Agreement or the transactions contemplated herein. 7.6 Assumption and Release of Real Estate Debt. Buyer shall have received evidence reasonably satisfactory to it of the assumption by Seller (or such other Person as Seller may designate) of, and the complete and irrevocable release of the Company from, any and all obligations of the Company under and in connection with the Real Estate Debt, including, without limitation, the release of all liens or security interests upon or in any of the assets of the Company. 7.7 Assumption and Release of Bank Debt. Buyer shall have received evidence reasonably satisfactory to it of the assumption by Seller (or such other Person as Seller may designate) of (or the payoff of the Bank Debt in accordance with Section 9.4), and the complete and irrevocable release of the Company from, any and all obligations under and in connection with the Bank Debt including, without limitation, the release of all liens or security interests upon or in any assets of the Company. 7.8 Termination of Stock Appreciation Rights Plan. Buyer shall have received evidence reasonably satisfactory to it of the termination of the Stock Appreciation Rights Plan. 7.9 No Material Adverse Effect. There shall not have occurred any event or condition which has had, or could reasonably be expected to have, a Material Adverse Effect. SECTION 8 - CERTAIN CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS Unless waived by Seller, the obligation of Seller to consummate the transactions contemplated hereunder is subject to the fulfillment, prior to or at the Closing, of each of the following conditions: 8.1 Deliveries at Closing. Buyer shall have delivered, or caused to be delivered, to Seller all items required pursuant to Section 9.3. 8.2 Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except for representations and warranties (i) made as of a specified date, which shall be true and correct in all material respects as of the specified date, and (ii) containing a specific reference to a materiality qualification, which, giving effect to such specific reference, 34 shall be true and correct in all respects), and Seller shall have received a certificate dated the Closing Date to that effect, signed by an authorized officer of Buyer. 8.3 Performance of Covenants. Buyer shall have performed or complied with all agreements and covenants required by this Agreement to be performed or complied with by it at or prior to Closing, and Seller shall have received a certificate dated the Closing Date to that effect signed by an authorized officer of Buyer. 8.4 Approvals. (a) All waiting periods applicable under the HSR Act shall have expired or been terminated and (b) any other material governmental consent, authorization or filing requirement for Seller to consummate the transactions contemplated by this Agreement shall have been obtained or otherwise complied with. 8.5 Legal Matters. The Closing shall not violate any order or decree of any court or governmental body of competent jurisdiction and no Proceeding shall have been brought or threatened by any Person (other than Seller or an Affiliate of Seller) which questions the validity or legality of this Agreement or the transactions contemplated herein. SECTION 9 - CLOSING 9.1 Time and Place of Closing. The closing of the purchase and sale of the Stock (the "CLOSING") pursuant to this Agreement shall take place at the offices of Kane Kessler, P.C, 1350 Avenue of the Americas, New York, New York 10019, commencing at 10:00 A.M., local time on August 28, 2003 or as soon thereafter as the conditions to the Closing set forth in Section 7 and Section 8 shall have been satisfied or waived, or at such other date, time or place as may be agreed to by Buyer and Seller (the "CLOSING DATE"). Subject to Section 10, failure to consummate the Closing shall not result in the termination of this Agreement or relieve any Person of any obligation hereunder. 9.2 Deliveries at the Closing by Seller. At the Closing, in addition to the other actions contemplated elsewhere herein, Seller shall deliver or cause to be delivered to Buyer: (a) a stock certificate evidencing the Stock, free and clear of Encumbrances, accompanied by a stock power duly executed in blank and sufficient to convey to Buyer good and valid title to the Stock together with all accrued benefits and rights attaching thereto; (b) an agreement relating to the transfer of the Subsidiary Interest (the "ASSIGNMENT AGREEMENT"), duly executed by AMCDE; (c) a counterpart of a lease agreement relating to the lease of the Real Estate in substantially the form of EXHIBIT B (the "MACUNGIE LEASE"), duly executed by Seller; (d) a counterpart of a non-compete agreement in substantially the form of EXHIBIT C (the "NON-COMPETE AGREEMENT"), duly executed by Samson Rope Technologies, Inc, a Pennsylvania corporation and an Affiliate of Seller ("SRTI"); 35 (e) a counterpart of a license agreement in substantially the form of EXHIBIT D (the "SAMSON LICENSE"), duly executed by SRTI; (f) a counterpart of a supply agreement in substantially the form of EXHIBIT E (the "SUPPLY AGREEMENT"), duly executed by SRTI (g) a counterpart of a registration rights agreement in substantially the form of EXHIBIT F (the "REGISTRATION RIGHTS AGREEMENT"), duly executed by Seller and the participants under the Stock Appreciation Rights Plan; (h) a counterpart of the Keller Employment Agreement, duly executed by Frederick W. Keller; (i) (1) a certificate of the secretary or an assistant secretary of Seller and the Company certifying as of the Closing Date the following: (A) copies, certified by the appropriate governmental authority as of a date not more than 30 days prior to the Closing Date, of the articles of incorporation of the Company and all amendments thereto, (B) copies of the bylaws of the Company, as amended,, (C) copies of resolutions of the board of directors of Seller and the Company authorizing the execution and delivery of this Agreement and any other agreement, instrument or other document necessary for Seller to consummate the transactions contemplated hereby and (D) the name, title and incumbency of, and bearing the signatures of, the officers of Seller and the Company authorized to execute and deliver this Agreement and any other agreement, instrument or document necessary for Seller to consummate the transactions contemplated hereby, (2) a certificate or certificates of the secretary or an assistant secretary of the Subsidiary attaching the following, each certified by a notary public: (A) copies of the articles of incorporation of the Subsidiary and all amendments thereto, (B) copies of the current bylaws of the Subsidiary, and (C) copies of the power of attorney of the officers of the Subsidiary authorized to execute any agreement, instrument or other document necessary to consummate the transactions contemplated hereby, (3) a certificate or certificates of the secretary or an assistant secretary of AMCPA attaching the following: (A) copies of resolutions of the board of directors of AMCPA authorizing the execution and delivery of the Joinders and (B) the name, title and incumbency of, and bearing the signatures of, the officers of AMCPA authorized to execute and deliver the Joinders, and (4) a certificate or certificates of the secretary or an assistant secretary of SRTI attaching the following: (A) copies of resolutions of the board of directors of SRTI authorizing the execution and delivery of the Samson License, the Supply Agreement and the Non-Compete Agreement, and (B) the name, title and incumbency of, and bearing the signatures of, the officers of SRTI authorized to execute and deliver the Samson License, the Supply Agreement and the Non-Compete Agreement; (j) the certificate required as a condition to Buyer's obligation to close under Sections 7.2 and 7.3 (the "SELLER CLOSING CERTIFICATE"); (k) resignations of the directors and certain officers of the Company and the Subsidiary as requested by Buyer effective as of the Closing Date; 36 (l) a legal opinion from Drinker Biddle & Reath LLP, counsel for each of Seller and AMCPA, dated as of the Closing, stating that such opinion may be relied upon by Buyer's lenders and in form and substance reasonably satisfactory to Buyer; (m) a letter from Environmental Resources Management, Inc. stating that Buyer may rely on its report dated June 2003 and addressed to Seller and/or the Company as if such reports were addressed to Buyer, in form and substance reasonably satisfactory to Buyer; and (n) such other documents and instruments as the Buyer may reasonably request. 9.3 Deliveries at the Closing by Buyer. At the Closing, in addition to the other actions contemplated elsewhere herein, Buyer shall deliver, or shall cause to be delivered, to Seller: (a) the Purchase Price, by wire transfer in immediately available funds or by certified or bank cashiers' check payable to the order of Seller; provided, however, that if Seller has not elected to assume the Bank Debt, the Purchase Price shall be paid in accordance with Section 9.4; (b) a counterpart of the Macungie Lease, duly executed by the Company; (c) a counterpart of the Non-Compete Agreement, duly executed by the Company; (d) a counterpart of the Samson License, duly executed by the Company; (e) a counterpart of the Supply Agreement, duly executed by the Company; (f) a counterpart of the Keller Employment Agreement, duly executed by the Company; (g) a counterpart of the Registration Rights Agreement, duly executed by Buyer; (h) (1) a certificate of the secretary or an assistant secretary of Buyer certifying as of the Closing Date the following: (A) copies of resolutions of board of directors of Buyer authorizing the execution and delivery of this Agreement and any other agreement, instrument or other document necessary to consummate transactions contemplated hereby and (B) the name, title and incumbency of, and bearing the signatures of, the officers of Buyer authorized to execute and deliver this Agreement and any other agreement, instrument or 37 document necessary to consummate the transactions contemplated hereby; and (2) a certificate of the secretary or an assistant secretary of the Company certifying as of the Closing Date the following: (A) copies of resolutions of board of directors of the Company (as constituted immediately following the Closing) authorizing the execution and delivery of the Macungie Lease, the Non-Compete Agreement, the Samson License, the Supply Agreement and the Keller Employment Agreement, and (B) the name, title and incumbency of, and bearing the signatures of, the officers of the Company authorized to execute and deliver the Macungie Lease, the Non-Compete Agreement, the Samson License, the Supply Agreement and the Keller Employment Agreement; (i) a legal opinion from Kane Kessler, PC, counsel for Buyer, dated as of the Closing and in form and substance reasonably satisfactory to Seller; (j) the certificate required as a condition to Seller's obligation to close under Sections 8.2 and 8.3 (the "BUYER CLOSING CERTIFICATE"); and (k) such other documents and instruments as the Seller may reasonably request. 9.4 Payment of Bank Debt; Deemed Closing Order. If Seller has not assumed the Bank Debt at or prior to the Closing, then, at Closing Seller shall provide written payment instructions to Buyer, together with a payoff letter from the Lenders (together, the "PAYMENT INSTRUCTIONS"), directing Buyer to (i) pay a portion of the Purchase Price in an amount equal to the Bank Debt (such amount, the "PAY-OFF AMOUNT") to such account or accounts of the Lenders as Seller shall designate in the Payment Instructions, and (ii) pay the balance of the Purchase Price to such account or accounts of Seller as Seller shall designate in the Payment Instructions. In such event, the Closing shall be deemed to have occurred in the following order: (i) the Pay-Off Amount shall be deemed to have first been paid by Buyer to Seller; (ii) Seller shall be deemed to have next remitted the Pay-Off Amount to the Lenders in order to satisfy the Bank Debt; (iii) Buyer shall be deemed to have next paid the balance of the Purchase Price to Seller; and (iv) Seller shall be deemed to have next delivered the Stock and caused AMCDE to deliver the Subsidiary Interest to Buyer. SECTION 10 - TERMINATION AND ABANDONMENT 10.1 Termination. This Agreement may be terminated and the transactions contemplated herein may be abandoned at any time prior to the Closing: (a) by Buyer or Seller if the Closing has not occurred by September 30, 2003 (or October 15, 2003, if the conditions set forth in Sections 7.4(c) and 8.4(b) have not been satisfied by September 30, 2003), but in no event shall this Agreement be terminated pursuant to this Section 10.1(a) if the Closing has not occurred as a result of any material breach of any representation, warranty, agreement or covenant by the terminating party; (b) by mutual written consent of Buyer and Seller; (c) by Buyer, if there has been a material breach of any representation, warranty, agreement or covenant of Seller or the Company such that Section 7.2 38 or 7.3 will not be satisfied, provided that (i) any such breach has not been waived by Buyer and (ii) Buyer shall have notified Seller in writing of such breach and such breach has not been cured by the Company or Seller within 20 days after receipt of such notice (it being understood that in the case of a breach of any representation or warranty that is so cured, such representation or warranty shall be deemed to have been true and correct as of the date of this Agreement); (d) by Seller, if there has been a material breach of any representation, warranty, agreement or covenant of Buyer such that Section 8.2 and 8.3 will not be satisfied, provided that (i) any such breach has not been waived by Seller and (ii) Seller shall have notified Buyer in writing of such breach and such breach has not been cured by the Buyer within 20 days after receipt of such notice (it being understood that in the case of a breach of any representation or warranty that is so cured, such representation or warranty shall be deemed to have been true and correct as of the date of this Agreement). 10.2 Procedure for Termination. A party terminating this Agreement pursuant to Section 10.1 shall give written notice thereof to each other party hereto, whereupon this Agreement (other than this Section 10.2 and Section 12.2 and Section 14 (excluding Section 14.3)) shall terminate and the transactions contemplated herein shall be abandoned without further action by any party and there shall be no liability on the part of any party; provided, however, that if such termination is by Buyer or Seller pursuant to Section 10.1(c) or 10.1(d) and results from (i) the deliberate failure of any party to fulfill a condition of performance of the obligations of the other party under this Agreement, (ii) the failure of any party to perform a material covenant under this Agreement, or (iii) the material breach by any party of any representation or warranty contained in this Agreement, and, at the time of termination the terminating party was not in breach of its obligations under this Agreement such that the non-terminating party would have been entitled to terminate this Agreement, such non-terminating party shall be liable for any damages incurred or suffered by the other party as a result of such failure or breach; and provided, further, that if Closing does not occur, no party may bring any legal action, suit or Proceeding relating to any claimed breach or violation of this Agreement, excluding a breach of Section 6.7 hereof, unless such party has first terminated this Agreement in accordance with this Section 10. SECTION 11 - INDEMNIFICATION 11.1 Indemnity. (a) Subject to the limitations set forth in this Section 11, Seller shall indemnify and hold harmless Buyer and its officers, directors, employees, stockholders, representatives, agents, Affiliates, successors and assigns, from and against any Loss or Losses sustained or required to be paid by any of such indemnified parties resulting from (i) any misrepresentation or breach of any representation or warranty made by Seller in this Agreement, the Seller Closing Certificate, (ii) any breach of or failure to perform any covenant, agreement or obligation of Seller (or, with respect to the period ending on the Closing Date, the Company) contained in this Agreement or of AMCDE pursuant to the Assignment Agreement, (iii) any liability of the Company or the Subsidiary for unpaid federal or state income Taxes or unpaid foreign income Taxes relating to periods prior to the Closing Date, (iv) any liability of the Company or the Subsidiary under or in connection with (a) the Stock Appreciation Rights Plan 39 (for the avoidance of doubt, other than in connection with the matter listed as Item (a)(iii) in Section 13(b) of the Disclosure Schedule), including without limitation withholding taxes, (b) the Real Estate Debt, (c) the Bank Debt, (d) any employee change-in-control payments arising as a result of the transactions contemplated hereby, (e) the litigation described in Section 4.11(8) of the Disclosure Schedule; provided that Seller's indemnification obligation with respect to this clause (e) shall be limited to one-half of all Losses in excess of $500,000 incurred by the Company and the Subsidiary as a result of such litigation and (f) any liability arising due to the failure of the Seller or its Affiliates to file any required Form 5500 for their fully insured medical plan. (b) Subject to the limitations set forth in this Section 11, Buyer shall indemnify and hold harmless Seller and its officers, directors, employees, stockholders, members, representatives, agents, successors and assigns from and against any Loss or Losses sustained or required to be paid by any of such indemnified persons resulting from (i) any misrepresentation or breach of any representation or warranty made by Buyer in this Agreement or the Buyer Closing Certificate, or (ii) any breach of any covenant, agreement or obligation of Buyer contained in this Agreement. (c) In the event that any indemnified party is entitled to indemnification with respect to any Loss or potential Loss arising from any Proceeding, judicial or administrative, instituted by any third party (any such third-party Proceeding being referred to as a "THIRD-PARTY CLAIM"), the indemnified party shall give the indemnifying party prompt notice thereof together with copies of all notices and documents (including court papers) in the possession of the indemnified party relating to such Third-Party Claim. Any failure or delay on the part of the indemnified party to give such notice shall not affect whether an indemnifying party is liable hereunder except and to the extent that the indemnifying party is prejudiced thereby. The indemnifying party shall be entitled to control, contest and defend such Third-Party Claim; provided that the indemnifying party provides evidence reasonably satisfactory to the indemnified party that the indemnifying party has (and will continue to have) adequate financial resources to pay the costs associated with defending such Third-Party Claim. Within fifteen (15) days following the receipt of notice by the indemnifying party of any Third-Party Claim and such additional documentation or information relating to such Third-Party Claim in the possession of the indemnified party that the indemnifying party requests, the indemnifying party shall provide notice to the indemnified party of its election to assume control of the defense of such Third- Party Claim in accordance with the provisions of this Section 11.1. The indemnifying party shall conduct the defense of such claim through counsel reasonably acceptable to the indemnified party. So long as the indemnifying party is conducting the defense of the Third-Party Claim in accordance with this Section 11.1, the indemnified party shall be entitled, at its own cost and expense (which expense shall not constitute a Loss unless counsel for the indemnified party advises in writing that there is a conflict of interest, and only to the extent that such expenses are reasonable) to participate in, but not control, such contest and defense and to be represented by attorneys of its or their own choosing. In the event that the indemnifying party (A) elects not to control, contest and defend such Third-Party Claim, or (B) fails to notify the indemnified party within the required time period of its election as provided in this Section 11.1, the indemnified party may control, contest and defend such Third-Party Claim at the cost and expense of the indemnifying party, provided that the indemnified party shall defend the Third-Party Claim in good faith; and provided, further, that the indemnifying party 40 may assume within a reasonable period of time under the circumstances its right to control, contest and defend such Third-Party Claim upon providing written notice thereof to the indemnified party, and thereafter the indemnifying party shall not be liable for the fees and expenses of the indemnified party's counsel (except for such reasonable fees and expenses as are incurred in the transition of such defense to the indemnifying party). If the indemnifying party assumes the defense of any Third-Party Claim, (a) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party's consent (which consent shall not be unreasonably withheld) unless (i) there is no finding or admission of any violation of Law and no effect on any other claims that may be made against the indemnified party and (ii) the sole relief provided is monetary damages that are paid in full by the indemnifying party; and (b) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected without its consent. Notwithstanding anything in this Section 11.1(c) to the contrary, with respect to the Third-Party Claim specified in Section 11.1(a)(iv)(e), (1) Seller shall not be permitted to control, contest and defend such claim, (2) Seller shall be entitled, at its own cost and expense, to participate in the contest and defense of such claim and to be represented by attorneys of its own choosing, and (3) no compromise or settlement of such claim may be effected by the indemnified party without Seller's consent (which consent shall not be unreasonably withheld) unless such compromise or settlement results in Losses to the Company and the Subsidiary of no more than $500,000. Each party shall cooperate and cause their respective Affiliates to cooperate in the defense or prosecution of any Third-Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith. (d) Seller's aggregate liability for all claims under Section 11(a)(i) (other than claims with respect to any breach of any representation or warranty contained in Sections 3.4, 4.3, 4.10, 4.13(h) or 4.24 (the "EXCLUDED SECTIONS")) shall not exceed a dollar amount equal to $30,000,000 (the "CAP"). Seller shall not be liable for any Losses arising under Section 11.1(a)(i) unless the aggregate amount of all Losses (other than Losses in respect of any breach of any representation or warranty contained in the Excluded Sections) for which Buyer is otherwise entitled to indemnification pursuant to Section 11(a)(i) exceeds $1,000,000, in which case Seller shall be liable only for Losses in excess of $1,000,000, subject to the limitations set forth in the preceding sentence. (e) Notwithstanding anything herein to the contrary, any Loss otherwise indemnifiable hereunder shall be reduced by any amount actually received in connection therewith under any such insurance or other contract providing for insurance coverage or indemnification. (f) If an indemnifying party makes any payment under this Section 11 in respect of any Losses, such indemnifying party shall be subrogated, to the extent of such payment, to the rights of the indemnified party against any third party with respect to such Losses; provided, however, that such indemnifying party shall not have any rights of subrogation with respect to any other party hereto or any of their respective Affiliates or their Affiliates' respective officers, directors, agents or employees. 41 (g) Buyer and Seller agree to take and cause their Affiliates (including, in the case of Buyer after the Closing has occurred, the Company and the Subsidiary) to take commercially reasonable steps to mitigate Losses upon the executive officers of Buyer, the Company or Seller, as applicable, becoming aware of any event which would reasonably be expected to, or does, give rise to any rights under this Section 11, including incurring costs only to the extent commercially reasonable to remedy the breach which gives rise to the Loss. (h) No claim for indemnity for a breach of a particular representation, warranty or covenant shall be made after the Closing if (i) such claim is based on any fact, circumstance, occurrence or event occurring or arising prior to Closing (whether or not also occurring or arising prior to the date of this Agreement) and (ii) such fact, circumstance, occurrence or event was disclosed in writing pursuant to the Seller Closing Certificate or the Buyer Closing Certificate by the breaching party to the non-breaching party after the date hereof and prior to or at the Closing, which writing described such fact, circumstance, occurrence or event in reasonable detail. 11.2 Duration. The obligations of a party to indemnify and hold harmless an indemnified party (i) pursuant to Sections 11.1(a)(i) and 11.1(b)(i) shall terminate when the applicable representation or warranty terminates pursuant to Section 14.3, (ii) pursuant to Sections 11.1(a)(iii) and 11.1(a)(iv) shall terminate when any claim based thereon shall have been barred by the relevant statute of limitations, and (iii) pursuant to Sections 11.1(a)(ii) and 11.1(b)(ii) shall not terminate but shall survive indefinitely; provided, however, that as to clause (i) of this sentence, if a claim has been asserted in accordance with the notice provisions of this Section 11 prior to the termination of the applicable representation or warranty, but is unresolved at the conclusion of such period, then such obligations to indemnify and hold harmless shall continue beyond the termination of such period with respect to such unresolved claim. 11.3 Exclusive Remedy. Buyer and Seller acknowledge and agree that the foregoing indemnification provisions in this Section 11 shall be the sole and exclusive rights and remedy of Buyer, Seller and the Company with respect to the transactions contemplated by this Agreement including, without limitation, with respect to (i) any misrepresentation, breach or default of or under any of the representations, warranties, covenants and agreements contained in this Agreement or (ii) any failure duly to perform or observe any term, provision, covenant or agreement contained in this Agreement; provided, however, that nothing set forth herein shall be deemed to limit any party's rights or remedies in the event that the other party has committed fraud in connection therewith; and provided further that nothing set forth herein shall be deemed to limit the right of Buyer to seek equitable relief pursuant to Section 12.4(f). Without limiting the generality of the preceding sentence, (i) no legal action sounding in contribution, tort or strict liability may be maintained by any party hereto, or any of their respective officers, directors, employees, stockholders, representatives, agents, successors or assigns, against any other party hereto with respect to any matter that is the subject of this Section 11 and (ii) Buyer, for itself and its officers, directors, employees, stockholders, representatives, agents, successors and assigns, hereby waives any and all statutory rights of contribution or indemnification that any of them might otherwise be entitled to under any federal, state or local law, including, without limitation, any legal action pursuant to any Environmental Law or any similar rules of law embodied in the common law. . Notwithstanding anything to the contrary contained in this 42 Agreement, Buyer and Seller acknowledge and agree that none of the indemnification provisions in this Section 11 shall be applicable until after the Closing. SECTION 12 - CERTAIN ADDITIONAL COVENANTS 12.1 Tax Matters. (a) Seller, AMCDE, AMCPA and their respective shareholders shall be responsible for all federal, foreign, state and local Taxes imposed with respect to the operations of Company (including any US or foreign income tax returns due for Subsidiary) for any prior taxable years and for the taxable year or period that begins before and ends on the Closing Date, including any Taxes (including Transfer Taxes) imposed with respect to the transactions contemplated herby, and shall prepare all Tax Returns required to report and pay all such Taxes. (b) Buyer shall be responsible for preparing and filing any foreign Tax Return required for Subsidiary for the taxable year or period beginning before and ending after the Closing Date. Taxes due on such Return shall be allocated (i) to Seller for the period up to and including the Closing Date and (ii) to Buyer for the period subsequent to the Closing Date. For purposes of this Section 12(b), Taxes for the period up to and including the Closing Date shall be determined on the basis of an interim closing of the books as of the end of the Closing Date; provided, however, that in the case of any Tax not based on income or receipts, such Seller's Taxes shall be equal to the amount of such Taxes for the taxable year multiplied by a fraction, the numerator of which shall be the number of dates from the beginning of the taxable year through the Closing Date, and the denominator of which shall be the number of days in the taxable year. Such Tax Return shall be prepared in accordance with prior practice, and Buyer shall deliver a copy of the Tax Return to Seller for its review and approval, which may not be unreasonably withheld, not less than thirty (30) days prior to the date on which such Tax Return is due to be filed. Seller shall pay to Buyer its share of any Taxes due within five (5) days prior to their due date. (c) The parties agree to use their respective reasonable efforts to determine the amount of and the allocation of the total consideration (Purchase Price and liabilities of the Company), as well as any adjusted consideration after the Closing Date, to meet the requirements of IRC Section 1060, which shall be allocated in the order of working capital, tangible assets and intangible assets (including the Non-Compete Agreement). Each party agrees to prepare and submit to the other party a draft copy of the Form 8594 required by IRC Section 1060 that it proposes to file at least 45 days before the proposed filed date thereof and to jointly discuss and attempt to agree, in good faith, with respect to the contents thereof. Each party shall provide to the other party the final version of such Form and information after filing. Any agreed determination and allocation of the total consideration shall be conclusive and binding for all purposes, and each party will file all forms, returns and other documents in a manner consistent with such allocation. (d) After the Closing, Buyer and Seller shall furnish, or cause to be furnished, to each other, upon request, as promptly as reasonably practicable, such information and assistance relating to the Company (including access to books and records) as is reasonably 43 necessary for the filing of all tax returns, the making of any election related to Taxes, the preparation for any audit by any taxing authority and the prosecution or defense of any claim, suit or proceeding relating to any tax return. Without limiting the foregoing, Buyer shall furnish, or cause the Company to furnish, to Seller within 90 days after the Closing Date such information as is reasonably necessary for Seller to prepare and file tax returns relating to periods ending on or prior to the Closing Date. Such information shall be prepared in a manner consistent with the Company's past practice. (e) Each party hereto agrees (on such party's behalf and on behalf of all employees, representatives or other agents of such party) that, notwithstanding anything to the contrary, each other party hereto (and each employee, representative or other agent of such other party) may disclose to any and all persons, without limitation of any kind, the purported or claimed Federal income tax treatment and tax structure of the transactions contemplated herein and all materials of any kind (including opinions or other tax analyses) that are provided to such other party relating to such tax treatment and tax structure. (f) If on the Closing Date, AMCPA is a qualified S corporation and each of AMCDE, Seller and Company is a qualified subchapter S subsidiary, neither Buyer, the Company, nor any of their Affiliates shall make any election under Code Section 338 with respect to the transaction contemplated by this Agreement. If, however, on the Closing Date (and without consideration of the sale of Company's shares), one of the above conditions is not met, thereby not affording to Buyer and Company the tax consequences outlined in IRC Regulation Section 1.1361-5(b)(3), Example 9, Seller agrees to join with Buyer in an election under IRC Section 338(h)(10) and the regulations thereunder in order to provide a post-closing tax result to Buyer and Company identical to that in Example 9. (g) It is the intention of the parties that this transaction is treated for federal and state tax purposes as an asset acquisition and that certain of the representations and warranties contained in Section 4.10 of the Disclosure Schedule are being made in furtherance of such intended tax treatment. (h) Notwithstanding anything to the contrary contained herein, Buyer and Seller shall each be responsible for one-half of all of the Transfer Taxes, together with any related fees, penalties and interest, incurred in connection with or as a result of this transaction, this Agreement and all of the transactions contemplated hereby. 44 12.2 Employee Benefits Matters. (a) As of the Closing, the Company shall cease to be a participating employer in all Plans sponsored by Seller or any of its Affiliates. (b) (i) Subject to the conditions of 12.2 (b)(v), Buyer shall cause the Company to become a participating employer effective as of the Closing in a defined contribution savings plan qualified under sections 401(a) and 401(k) of the Code which is maintained by Buyer (the "BUYER'S SAVINGS PLAN") a defined contribution plan qualified under Section 401(a) and 401(k) of the Code. Upon compliance with the requirements of Section 12.2 (b)(v), Seller shall direct the Trustee of the American Manufacturing Corporation 401(k) Plan ("AMC SAVINGS PLAN") a defined contribution plan qualified under Section 401(a) and 401(k) of the Code to transfer to the Trust under the Buyer's Savings Plan the account balance of each participant in the AMC Savings Plan who remains an employee of the Company after the Closing Date and who are eligible to participate in Buyer's Savings Plan (the "COMPANY PARTICIPANTS") and said Trustee shall simultaneously transfer cash (or cash equivalents if determined acceptable by Buyer's Savings Plan), equal to the liability for transferred account balances, valued as of the valuation date under the AMC Savings Plan coincident with or closest preceding to the date of the transfer; provided, that any outstanding non-defaulted participant loans to Company Participants shall be transferred in kind. Buyer and the Company shall cause the Buyer Savings Plan to continue to administer the outstanding non-defaulted participant loans which are transferred in kind in accordance with the amortization schedules to which they are subject as of date of transfer. All Company participants, account balances and loan provisions shall be subject to the rules, regulations, provisions and procedures of the Buyer's Savings Plan effective as of the Closing notwithstanding anything to the contrary herein. The transfer described herein shall be pursuant to Internal Revenue Code ss. 414(1). (ii) Except for any outstanding non-defaulted loans, which will be transferred in kind, the transfer described in 12.2 (b)(i) will be accomplished by the AMC Savings Plan converting affective Participants' account balances into cash and wire transferring the aggregate cash amount to the Buyer's Savings Plan. Upon receipt of the wire transfer, the cash will be reinvested in accordance with procedures established by the administrator of the Buyer's Savings Plan in accordance with its terms. Immediately after the transfer, each Participant will have a balance in the Buyer's Savings Plan equal to the account balance such Participant had in the AMC Savings Plan immediately prior to the transfer. Each such Participant's total account balance in the Buyer's Savings Plan immediately after the transfer will be 100% vested and nonforfeitable. (iii) In consideration of the transfer contemplated in 12.2 (b)(i) hereunder and pending the transfer of account balances to the Buyer's Savings Plan, the AMC Savings Plan will not default any outstanding loan of any Participant whose account balance is expected to be transferred to the Buyer's Savings Plan pursuant to 12.2 (b)(i). 45 (iv) The terms and conditions of Section 12.2 (b)(i)-(v) shall bind Seller and Buyer and their successors and their Savings Plans and shall operate as if it were fully set forth within each of the Savings Plans. (v) The Company shall provide Seller with written notice of the name and address of the Trustee and will exchange copies of the most recent IRS favorable determination letters for each Savings Plan. The Company and Seller shall cooperate in the filing by Seller of any IRS Forms 5310A required by the transfer of assets and liabilities described in this Agreement. Anything contained in this Agreement to the contrary notwithstanding, the transfer of assets and liabilities described in this Agreement shall not take place until the 31st day following the filing of any required Forms 5310A. In addition, the Company and Seller shall cooperate in (i) making all other filings required under the Code or ERISA and any applicable securities laws, (ii) implementing all appropriate communications with the participants, (iii) transferring appropriate records, and (iv) taking all such other actions as may be necessary and appropriate to implement the provisions of this Section 12.2 in a timely manner. Each party and Savings Plan shall bear its own costs and expenses in connection with administration and implementation of the transfer and procedures in 12.2 (b)(i)(v). (c) For the period from Closing through December 31, 2003, Buyer shall, or shall cause the Company to, continue to maintain the policies providing the insured Company health plan benefits that are in effect for such employees immediately prior to the Closing. (d) Seller shall timely file, following Closing, any notices or filings required to be made with the Pension Benefit Guarantee Corporation. 46 12.3 Letters of Credit. Buyer shall, prior to or contemporaneously with the Closing, provide replacement letters of credit to the landlords under the leases listed in Section 4.14(c) of the Disclosure Schedule (the "REPLACEMENT LETTERS OF CREDIT"). The Replacement Letters of Credit shall not exceed the amounts set forth in Section 4.14(c) of the Disclosure Schedule and shall contain such terms and conditions as are required by the terms of such leases, and shall be issued by such financial institutions as are reasonably acceptable to the landlords under such leases and Buyer's lenders. 12.4 General Confidentiality; Non-Competition, Non-Solicitation; Non-Disparagement. 12.5 For the purposes of this Section 12.4, all references to Seller shall include AMCPA, and its Affiliates, successors and assigns (other than SRTI and its successors and assigns). (a) Seller acknowledges that Buyer would not enter into this Agreement without the following assurances related to the confidential and proprietary information with respect to the business and operations of the Company and the Subsidiary and, accordingly, Seller agrees that Seller shall not, without the prior written consent of Buyer, disclose, directly or indirectly, to any Person or use, whether or not for Seller's own benefit, any confidential or proprietary information with respect to the Company, the Subsidiary or the Business, including (i) trade secrets, confidential or proprietary designs, formulae, drawings, diagrams, techniques, research and development, specifications, data, know-how, formats, marketing plans, business plans, budgets, strategies, forecasts and client data; (ii) confidential or proprietary information relating to Products; (iii) the names of customers and contacts, the names of its vendors and suppliers, the cost of its materials and labor, the prices obtained for services sold (including the methods used in price determination, manufacturing and sales costs), lists or other written records used in the Business, compensation paid to employees and consultants and other terms of employment, confidential or proprietary production or operation techniques or any other confidential or proprietary information of, about or pertaining to the Business, and any other confidential or proprietary information and material relating to any customer, vendor, licensor, licensee, or other party transacting business with the Company or the Subsidiary as of the date hereof; (iv) all confidential and proprietary records, files, memoranda, reports, price lists, drawings, plans, sketches and other written and graphic records, documents, equipment, and the like, relating to the Business as it is currently conducted; and (v) any confidential or proprietary information or trade secrets relating to the business or affairs of Buyer or any of its Affiliates which Seller may acquire or develop in connection with or as a result of the performance of the terms and conditions of this Agreement, excepting only such information that (A) is requested or required to be disclosed by subpoena, court order or other similar process or otherwise required by Law, provided that Seller shall have used its reasonable best efforts to notify Buyer in time to afford Buyer an opportunity to contest such process or order, or (B) as is already known to the public or which may become known to the public without any fault of Seller. (b) Seller acknowledges that the agreements and covenants contained in this Section 12.4 are essential to protect the value of the Business being acquired by Buyer. Therefore, Seller agrees that during the period commencing on the Closing Date and 47 ending on the fifth anniversary of the Closing Date (such period is hereinafter referred to as the "RESTRICTED PERIOD"), Seller shall not, anywhere in the United States of America, Mexico, or Canada, participate or engage, for itself or through or on behalf of or in conjunction with any Person, whether as an agent, consultant, shareholder, director, officer, member, manager, partner, joint venturer, investor or in any other capacity, in the Non-Compete Activities (as defined below); provided, however, that the foregoing shall not prohibit the ownership by Seller of equity securities of a public company in an amount not to exceed 2% of the issued and outstanding shares of such company. For purposes of this Agreement, the "NON-COMPETE ACTIVITIES" means the Business. (c) During such Restricted Period, Seller agrees that it will not at any time or for any reason (i) solicit or divert any business or clients or customers away from the Company or the Subsidiary; (ii) induce any customers, clients, suppliers, agents or other Persons under contract or otherwise associated or doing business with the Company or the Subsidiary, to reduce or alter any such association or business with the Company or the Subsidiary; (iii) hire any Person employed by the Company or the Subsidiary or any Person who leaves the employ of the Company or the Subsidiary after the date hereof (other than any such Person whose employment with the Company or the Subsidiary has been terminated by the Company or the Subsidiary); and (iv) solicit any person in the employment of the Company or the Subsidiary to (A) terminate such employment, and/or (B) accept employment, or enter into any consulting arrangement, with any Person other than Buyer or any of its Affiliates. (d) Except as necessary to enforce its rights hereunder, Seller agrees not to (i) make or cause to be made, directly or indirectly, any disparaging or derogatory statements which later become public concerning the Company, the Subsidiary or their respective businesses, services, reputations, or prospects, or its past or present officers, directors, employees, attorneys, and agents or (ii) intentionally do or say anything to damage any of the business, supplier, or customer relationships of the Company or the Subsidiary nor in any way, directly or indirectly, assist any Person in inducing or otherwise counseling, advising, encouraging, or soliciting any Person to terminate or in any way diminish its relationship with the Company or the Subsidiary. (e) Except as necessary to enforce its rights hereunder or otherwise in connection with its commercial activities or in the ordinary course of its business, Seller agrees not to make or cause to be made, directly or indirectly, any disparaging or derogatory statements which later become public concerning Buyer or its Affiliates (other than the Company or the Subsidiary) or their respective businesses, services, reputations, or prospects, or its past or present officers, directors, employees, attorneys, and agents. (f) Seller agrees that a monetary remedy for a breach of the agreements set forth in Section 12.4 hereof will be inadequate and impracticable and further agrees that such a breach would cause Buyer and its Affiliates irreparable harm, and that Buyer and its Affiliates shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damages. In the event of such a breach, Seller agrees that Buyer and its Affiliates shall be entitled to such injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, as a court of competent jurisdiction shall determine. 48 (g) If Seller breaches the covenant set forth in Section 12.4(b), the running of the Restricted Period described therein shall be tolled for so long as such breach continues. If any provision of this Section 12.4 is invalid in part, it shall be curtailed, as to time, location or scope, to the minimum extent required for its validity under the laws of the United States or any applicable law and shall be binding and enforceable with respect to Seller as so curtailed. In addition, if any party brings an action to enforce Section 12.4 hereof or to obtain damages for a breach thereof, the prevailing party in such action shall be entitled to recover from the non-prevailing party all attorney's fees and expenses incurred by the prevailing party in such action. (h) If any provision of this Section 12.4 is adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render them enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties. 12.5 Insurance Credits. Seller shall promptly cause to be paid to the Company any credits or refunds related to prepaid premiums received by Seller or its Affiliates in connection with the removal of the Company from the insurance policies of Seller or its Affiliates. 12.6 Workers' Compensation Reimbursements. To the extent Seller or any of its Affiliates pay any amounts in respect of deductibles relating to the Company's workers' compensation insurance, the Company shall reimburse Seller for such payments up to the amount of the accrual reserve for workers' compensation claims on the Company's July 31, 2003 balance sheet. SECTION 13 - DEFINITIONS Whenever used in this Agreement, the following terms and phrases shall have the following respective meanings: "AFFILIATE" means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls such Person, and (ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. "BANK DEBT" means the outstanding obligations of the Company under or in connection with that certain Credit Agreement dated December 20, 2000 by and among the Company, M&K Industries, Inc., the lending institutions which are parties thereto and First Union National Bank, as agent, as amended by the First Amendment to Credit and Security Agreement dated March 23, 2001. "BUSINESS" means the business of the Company and the Subsidiary as currently conducted, including, but not limited to, the design, manufacture, marketing and sale of products 49 for the cordage, home storage and organization, workshop accessories, power tool accessories, security screen doors and window guards, and ornamental fencing markets. "CONTRACT" means any contract, undertaking, agreement, arrangement, commitment, indemnity, indenture, instrument, lease or understanding, including any and all amendments, supplements, and modifications thereto, to which the Company or the Subsidiary is legally bound. "ENCUMBRANCE" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other laws, which secures the payment of a debt (including, without limitation, any Tax) or the performance of an obligation. "ENVIRONMENTAL CLAIM" shall mean any Proceeding or written notice by any Person alleging potential liability arising out of, based on, or resulting from (i) the release or disposal into, or the presence in the environment, including, without limitation, the indoor environment, of any Hazardous Materials by the Company or the Subsidiary at any location owned or leased by the Company or the Subsidiary, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Laws by the Company or the Subsidiary. "ENVIRONMENTAL LAWS" shall mean all federal, state, local or foreign laws, statutes, regulations, orders, ordinances, judgments or decrees (i) related to releases or threatened releases of any Hazardous Materials in soil, surface water, groundwater or air; or (ii) governing the use, treatment, storage, disposal, transport, or handling of Hazardous Materials. Such Environmental Laws shall include, but are not limited to, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act. "ERISA " means the Employee Retirement Income Security Act of 1974, as amended, or a successor law, and the regulations and rules issued pursuant to that act or to any successor law. "GAAP" means generally accepted accounting principles in the United States as in effect on the date hereof, applied on a basis that is consistent with the past practices of the Company in connection with the preparation of the Financial Statements. "GOVERNMENTAL ENTITY" shall mean any domestic, international, foreign, national, multinational, territorial, regional, state or local governmental authority, quasi-governmental authority, instrumentality, court, commission or tribunal or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing. "HAZARDOUS MATERIALS" shall mean any pollutant, toxic substance, contaminant, hazardous waste, hazardous substance or extremely hazardous material regulated under any 50 Environmental Laws, including, without limitation, petroleum or any refined product or fraction thereof, asbestos, or polychlorinated biphenyls. "INTELLECTUAL PROPERTY" shall mean all of the following used in the Business: (i) United States and foreign trademarks, service marks, and trademark and service mark registrations and applications, trade names, assumed names, logos, designs indicating source and slogans, and all goodwill related to the foregoing (collectively, "TRADEMARKS"); (ii) applications for patent and patents pertaining to inventions, improvements, know-how, formula methodology, research and development, business methods, processes, technology and Software in any jurisdiction, including re-issues, continuations, divisions, continuations-in-part, renewals or extensions (collectively, the "PATENTS"); (iii) trade secrets, including confidential information and the right in any jurisdiction to limit the use or disclosure thereof; (iv) copyrights in writings, designs, Software, mask works or other works, applications or registrations in any jurisdiction for the foregoing, other original works of authorship and all moral rights related thereto; (v) database rights; (vi) Internet web sites, web pages, domain names and applications and registrations pertaining thereto (the "DOMAIN NAMES") and all intellectual property used in connection with or contained in all versions of Seller's web sites; (vii) all rights under agreements relating to the foregoing; (viii) books and records pertaining to the foregoing; and (ix) claims or causes of action arising out of or related to past, present or future infringement or misappropriation of the foregoing. "KELLER EMPLOYMENT AGREEMENT" means the employment agreement to be entered into between Company and Frederick W. Keller in the form attached hereto as EXHIBIT A. "KNOWLEDGE" or "KNOWLEDGE OF SELLER" means the actual knowledge, without duty of inquiry, of Frederick W. Keller, Eugene J. Marino, Martin F. Clay, John F. Yaglenski, Jr. or Timothy J. Dwyer regarding a particular matter. "LAW" means any law (including without limitation the Foreign Corrupt Practices Act), statute, regulation (including, without limitation, zoning, land use and similar laws and regulations), Permit, license, certificate, judgment, order, award or other decision or requirement of any arbitrator, court, government or governmental agency or instrumentality (domestic or foreign). "LENDERS" means the financial institutions that are parties to the Credit Agreement referred to in the definition of Bank Debt. "LOSS" or "LOSSES" means all damages, losses, liabilities, fines, penalties, costs and expenses (including settlement costs, court costs and any reasonable legal expenses incurred in connection with defending any actions but excluding indirect, punitive, special or exemplary damages and unforeseen or other consequential damages) less the net Tax benefit, if any, to be realized by the Person suffering such Loss (net of any Tax liability resulting from the indemnification payment hereunder with respect to such Loss). "MATERIAL ADVERSE EFFECT" means a material adverse effect on the operations, properties or condition (financial or otherwise) of the Company and the Subsidiary taken as a whole, except any such effect resulting from or arising in connection with (i) changes in 51 economic, regulatory or political conditions generally, including acts of war or terrorism, or (ii) economic or other conditions affecting the industry in which the Company competes as a whole, including, without limitation, fluctuating conditions resulting from the cyclicality of such industry, provided further, that for purposes of determining whether any misrepresentations or breaches of any warranty, covenant or other obligation under this Agreement has a Material Adverse Effect, the effect of such misrepresentations and breaches shall be aggregated. "PERSON" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, Governmental Entity, a business or other trust, a joint venture, any other business entity or an unincorporated organization. "REAL ESTATE DEBT" means all obligations of the Company under or in connection with (i) the Variable Rate Demand Bonds, Series 1997, issued by Seller (and subsequently assumed by the Company) in the original principal amount of $9,000,000, and (ii) the Variable Rate Demand Revenue Bonds, Series 1997 (American Manufacturing Company, Inc. Project), issued by the Lehigh County Industrial Development Authority in the original principal amount of $1,000,000, in each case, to finance a portion of the costs of acquiring and constructing the Real Estate, and including, in each case, the Company's obligations with respect to the irrevocable, direct-pay letters of credit of Wachovia Bank, National Association, securing the payment of such bonds. "SOFTWARE" means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code form, and all off-the-shelf or "shrink-wrap" software, (ii) databases, compilations, and any other electronic data files, including any and all collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts, technical and functional specifications, and other work product used to design, plan, organize, develop, test, troubleshoot and maintain any of the foregoing, (iv) without limitation to the foregoing, the software technology supporting any functionality contained on Seller's Internet site(s), and (v) all documentation, including technical, end-user, training and troubleshooting manuals and materials, relating to any of the foregoing. "STOCK APPRECIATION RIGHTS PLAN" means the First Amended and Restated Lehigh Consumer Products Corporation 1999 Phantom Stock and Stock Appreciation Rights Plan and any awards of rights made thereunder or award agreements entered into pursuant thereto. "TANGIBLE NET WORTH" shall mean the consolidated tangible net worth of the Company and the Subsidiary determined in accordance with GAAP, as of the Closing Date immediately prior to the Closing, and after giving effect to the adjustments set forth on Section 13(b) of the Disclosure Schedule, which shall be calculated after the Closing Date. "TAX" or "TAXES" means all federal, state local or foreign taxes of any kind, including, without limitation, all net income, gross receipts, ad valorem, value added, transfer, gains, franchise, profits, inventory, net worth, capital stock, assets, sales, use, license, estimated, withholding, payroll, premium, capital employment, social security, workers compensation, unemployment, excise, severance, stamp, occupation and property taxes, together with any 52 interest and penalties, fines, additions to tax or additional amounts imposed by any taxing authority. "TAX RETURN" means any return, report, declaration, statement, extension, form or other documents or information filed with or submitted to, or required to be filed with or submitted to, any governmental body in connection with the determination, assessment, collection or payment of any Tax (including all filings with respect to employment-related Taxes). "TRANSFER TAXES" shall mean all sales (including bulk sales), use, transfer, recording, ad valorem, privilege, documentary, gains, gross receipts, registration, conveyance, excise, license, stamp, duties or similar Taxes and fees. SECTION 14 - MISCELLANEOUS 14.1 Construction. Within this Agreement and all other documents required to consummate the transactions contemplated herein, the singular shall include the plural and the plural shall include the singular, and any gender shall include all other genders, all as the meaning and the context of this Agreement shall require. Unless otherwise specified, references to section numbers contained herein shall mean the applicable section of this Agreement and references to exhibits and schedules shall mean the applicable exhibits and schedules to this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or Law shall be deemed also to refer to all rules and regulations promulgated thereunder and any successor statute or Law thereto, unless the context requires otherwise. 14.2 [INTENTIONALLY OMMITTED] 14.3 Survival of Representations, Warranties and Covenants. The representations and warranties contained in this Agreement shall survive the Closing solely for the purposes of Sections 11.1(a) and 11.1(b) until March 15, 2005 and shall thereafter terminate, except that (i) the representations of Seller contained in Section 4.10 (Taxes), Section 4.16 (Employee Benefit Plans), and Section 4.19 (Environmental Compliance), shall survive the Closing until any claim based thereon shall have been barred by the relevant statutes of limitations, and (ii) the representations contained in Section 3.2 (Power and Authorization), Section 3.4 (Ownership of the Securities), Section 4.2 (Power and Authorization), Section 4.3 (Capitalization), Section 4.24 (Brokers), Section 5.2 (Power and Authorization) and Section 5.8 (Issuance of Buyer Common Stock) shall survive the Closing indefinitely. The covenants contained in this Agreement shall survive the Closing indefinitely. 14.4 Further Assurances. Each party hereto shall use its commercially reasonable efforts to comply with all requirements imposed hereby on such party and to cause the transactions contemplated herein to be consummated as contemplated herein and shall, from 53 time to time and without further consideration, either before or after the Closing, execute such further instruments and take such other actions as any other party hereto shall reasonably request in order to fulfill its obligations under this Agreement and to effectuate the purposes of this Agreement and to provide for the orderly and efficient transition to Buyer of the ownership of the Securities. Each party shall promptly notify the other parties of any event or circumstance known to such party that could prevent or delay the consummation of the transactions contemplated herein or which would indicate a breach or non-compliance with any of the terms, conditions, representations, warranties or agreements of any of the parties to this Agreement. 14.5 Costs and Expenses. Except as otherwise expressly provided herein, each party shall bear its own expenses in connection herewith; provided, however, expenses of the Company or the Subsidiary incurred on or prior to the Closing Date in connection herewith shall be borne by Seller. Notwithstanding the foregoing, Buyer shall initially pay all fees payable in connection with the filing required by the HSR Act; provided, however, that Seller shall reimburse 50% of all such fees to Buyer at Closing. 14.6 Notices. All notices or other communications permitted or required under this Agreement shall be in writing and shall be sufficiently given if and when hand delivered to the Persons set forth below or if sent by documented overnight delivery service or certified mail, postage prepaid, return receipt requested, addressed as set forth below or to such other Person or Persons and/or at such other address or addresses as shall be furnished in writing by any party hereto to the others. Any such notice or communication shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor in all other cases. To Buyer (or the Company after Closing): --------------------------------------- Jarden Corporation 555 Theodore Fremd Avenue Rye, NY 10580 Attn: Martin E. Franklin With copies to: Kane Kessler, P.C. 1350 Avenue of the Americas New York, New York 10019 Attn: Robert L. Lawrence, Esq. 54 To Seller: --------- American Manufacturing Company, Inc. 555 Croton Road Suite 300 King of Prussia, PA 19406 Attn: President With copies to: The AMC Group, L.P. 555 Croton Road Suite 300 King of Prussia, PA 19406 Attn: General Counsel and Drinker Biddle & Reath LLP Suite 300 105 College Road East Princeton, NJ 08542-0627 Attn: John E. Stoddard III, Esq. To the Company (prior to Closing): ---------------------------------- Lehigh Consumer Products Corporation 2834 Schoeneck Road Macungie, PA 18062-9679 Attn: President With copies to: The AMC Group, L.P. 555 Croton Road Suite 300 King of Prussia, PA 19406 Attn: General Counsel and Drinker Biddle & Reath LLP Suite 300 105 College Road East Princeton, NJ 08542-0627 Attn: John E. Stoddard III, Esq. 55 14.7 Assignment and Benefit. (a) This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and permitted assigns. Neither this Agreement, nor any of the rights hereunder or thereunder, may be assigned by any party, nor may any party delegate any obligations hereunder or thereunder, without the written consent of the other party hereto or thereto, provided, that (1) Buyer may assign its rights hereunder to one or more of its Affiliates if Buyer delivers to Seller a written instrument reasonably satisfactory to Seller pursuant to which Buyer agrees to remain liable for all of its obligations under this Agreement and (2) following the Closing Date, Seller may (i) assign its rights, but not its obligations, hereunder to one or more of its Affiliates, and (ii) assign part of the Contingent Consideration to employees of the Company pursuant to the management incentive agreements to be entered into between Seller and certain employees of the Company (collectively the "Permitted Assignees"). Any non-permitted assignment or attempted assignment shall be void. In the event any party to this Agreement or any of their successors or assigns consolidates with or merges into any other Person and shall not be the surviving entity of such consolidation or merger, or transfers all, or substantially all, of its assets, such party shall make or cause to be made proper provision so that the successors and assigns of such party shall assume the obligations of such party described herein. (b) Except as otherwise provided in Sections 6.7 and 11, this Agreement shall not be construed as giving any Person, other than the parties hereto and their permitted successors, heirs and assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any of the provisions herein contained, this Agreement and all provisions and conditions hereof being intended to be, and being, for the sole and exclusive benefit of such parties, and permitted successors, heirs and assigns and for the benefit of no other Person or entity. 14.8 Amendment, Modification and Waiver. The parties may amend or modify this Agreement in any respect, provided that any such amendment or modification shall be in writing and executed by all of the parties. The waiver by a party of any breach of any provision of this Agreement shall not constitute or operate as a waiver of any other breach of such provision or of any other provision hereof, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. 14.9 Governing Law; Consent to Jurisdiction. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of Delaware (and United States federal Law, to the extent applicable), irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law. Any legal action, suit or Proceeding arising out of or relating to this Agreement (other than in connection with the dispute resolved by the Arbitrating Accountant pursuant to Sections 2.1(c) or 2.2(b)) shall be instituted in any federal court or in any state court in the State of Delaware, and each party waives any objection which such party may now or hereafter have to the laying of the venue of any such action, suit or Proceeding, and irrevocably submits to the jurisdiction of any such court. Any and all service of process and any other notice in any such action, suit or Proceeding shall be effective against any 56 party if given as provided herein. Nothing herein contained shall be deemed to affect the right of any party to serve process in any other manner permitted by Law. 14.10 Section Headings and Defined Terms. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. Except as otherwise indicated, all agreements defined herein refer to the same as from time to time amended or supplemented or the terms thereof waived or modified in accordance herewith and therewith. 14.11 Severability. The invalidity or unenforceability of any particular provision, or part of any provision, of this Agreement shall not affect the other provisions or parts hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions or parts were omitted. 14.12 Counterparts. This Agreement and the other documents required to consummate the transactions contemplated herein may be executed in one or more counterparts, each of which shall be deemed an original (including facsimile signatures), and any Person may become a party hereto by executing a counterpart hereof, but all of such counterparts together shall be deemed to be one and the same instrument. The parties hereto may deliver this Agreement and the other documents required to consummate the transactions contemplated herein by telecopier machine/facsimile and each party shall be permitted to rely upon the signatures so transmitted to the same extent and effect as if they were original signatures. 14.13 Entire Agreement. This Agreement, together with the Disclosure Schedule, the Confidentiality Agreement dated June 23, 2003 by and between US Bancorp Piper Jaffray, on behalf of the Company, and Buyer, and the schedules and certificates referred to herein or delivered pursuant hereto, but not the exhibits, constitute the entire agreement between the parties hereto with respect to the purchase and sale of the Securities and supersede all prior agreements and understandings. The submission of a draft of this Agreement or portions or summaries thereof does not constitute an offer to purchase or sell the Securities, it being understood and agreed that neither Buyer, Seller nor the Company shall be legally obligated with respect to such a purchase or sale or to any other terms or conditions set forth in such draft or portion or summary unless and until this Agreement has been duly executed and delivered by all parties. 14.14 Retention of Counsel. In any dispute or proceeding arising under or in connection with this Agreement, including, without limitation, Sections 2.2 and 11.1, Seller shall have the right, at its election, to retain the firm of Drinker Biddle & Reath LLP to represent it in such matter, and Buyer, for itself and the Company and for its and the Company's successors and assigns, hereby irrevocably waives and consents to any such representation in any such matter and the communication by such counsel to Seller in connection with any such representation of any fact known to such counsel arising by reason of such counsel's prior representation of Seller or the Company. Buyer, for itself and the Company and for its and the Company's successors and assigns, hereby irrevocably acknowledges and agrees that all communications between Seller and its counsel, including, without limitation, Drinker Biddle & Reath LLP, made in connection with the negotiation, preparation, execution, delivery and closing under, or any dispute or proceeding arising under or in connection with, this Agreement which, immediately 57 prior to the Closing, would be deemed to be privileged communications of Seller and its counsel and would not be subject to disclosure to Buyer in connection with any process relating to a dispute arising under or in connection with, this Agreement or otherwise, shall continue after the Closing to be communications between Seller and such counsel and neither Buyer nor any Person purporting to act on behalf of or through Buyer shall seek to obtain the same by any process on the grounds that the privilege attaching to such communications belongs to the Company and not Seller. Other than as explicitly set forth in this Section 14.14, the parties acknowledge that any attorney-client privilege attaching as a result of legal counsel representing the Company prior to the Closing shall survive the Closing and continue to be a privilege of the Company, and not Seller, after the Closing. [Remainder of Page Intentionally Left Blank] 58 IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement, under seal, all as of the date first above written. American Manufacturing Company, Inc. Jarden Corporation By: /s/ Robert Strouse By: /s/ Ian Ashken --------------------------------- --------------------------------- Name: Robert Strouse Name: Ian Ashken Title President Title Vice President and Secretary Lehigh Consumer Products Corporation By: /s/ John Yagasky --------------------------------- Name: John Yagasky Title Vice President Joinder Agreement For value received, and to induce the Buyer to enter into this Agreement, the undersigned, a Pennsylvania corporation ("Guarantor"), hereby irrevocably and unconditionally guarantees to Buyer the full and prompt payment when due of any and all obligations of Seller to Buyer pursuant to Section 11 of this Agreement. Commencing as of the Closing Date, Guarantor hereby irrevocably and unconditionally guarantees to Buyer the faithful, prompt and complete compliance by Seller and its Affiliates of all their obligations pursuant to this Agreement, including, but not limited to, the obligations set forth in Section 12.4 hereof. The undertakings of Guarantor hereunder are independent of the obligations of Seller, and a separate action or actions for payment, damages or performance may be brought or prosecuted against Guarantor, whether or not an action is brought against Seller, whether or not Seller is joined in any such action or actions, and whether or not notice is given to Seller or demand is made upon Seller. Buyer shall not be required to proceed first against Seller, or any other person, or entity, before resorting to Guarantor for payment. The provisions of Section 14 of the Agreement are hereby incorporated by reference as if fully set forth herein. Notices to Seller made in accordance with the terms of Section 14.6 shall be deemed to constitute notice to Guarantor. This Guaranty is binding upon Guarantor and its successors or assigns, and shall inure to the benefit of the Buyer and its permitted successors or assigns. AMERICAN MANUFACTURING CORPORATION, a Pennsylvania corporation By: /s/ Robert Strouse ------------------------------------ Name: Robert Strouse Title: President 59 EX-10.2 4 file003.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into as of September 2, 2003 by and between Jarden Corporation, a Delaware corporation ("JARDEN"), and American Manufacturing Company, Inc., a Pennsylvania corporation ("AMC" ). WHEREAS, pursuant to a Stock Purchase Agreement dated August 15, 2003 (the "PURCHASE AGREEMENT") by and among Jarden, Lehigh Consumer Products Corporation, a Pennsylvania corporation ("LEHIGH"), and AMC, on the date hereof Jarden acquired all of the outstanding capital stock of Lehigh from AMC; WHEREAS, pursuant to Section 2.2 of the Purchase Agreement, Jarden may issue shares of its common stock, $.01 par value per share ("JARDEN COMMON STOCK"), to AMC (and its assignees and designees) if Lehigh satisfies certain post-closing earn-out targets; and WHEREAS, Jarden and AMC have agreed to enter into this Agreement (the execution of this Agreement by Jarden and AMC being a condition to the closing of the transactions contemplated by the Purchase Agreement) providing for the registration of the shares of Jarden Common Stock that may be issued to AMC (and its assignees and designees) pursuant to the Purchase Agreement. NOW, THEREFORE, in consideration of the foregoing recitals and for good and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. The following terms, as used herein, shall have the following meanings: "HOLDER" and "HOLDERS" means AMC, any assignee or designee of AMC's rights to receive Jarden Common Stock pursuant to Section 2.2 of the Purchase Agreement and any Lehigh Manager to whom AMC assigns Jarden Common Stock received pursuant to Section 2.2 of the Purchase Agreement following the issuance thereof; provided that any such assignee, designee or Lehigh Manager execute a joinder to this Agreement in accordance with Section 5.9 hereof. "LEHIGH MANAGERS" means the individuals that have entered into Executive Agreements with AMC pursuant to which such individuals are granted the right to receive a portion of the Jarden Common Stock issued or issuable to AMC pursuant to Section 2.2 of the Purchase Agreement. "NYSE" means the New York Stock Exchange. "PERSON" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a business or other trust, a joint venture, any other business entity or an unincorporated organization. "PROSPECTUS" means the prospectus included in the Shelf Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Shelf Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments and all material incorporated by reference or deemed to be incorporated by reference in the Prospectus. "REGISTRABLE SECURITIES" means (i) the shares of Jarden Common Stock issued to the Holders pursuant to Section 2.2 of the Purchase Agreement, (ii) any shares of Jarden Common Stock issued to the Holders pursuant to Section 2.1(c)(ii) hereof, and (iii) any shares of Jarden Common Stock issued with respect to the shares described in clauses (i) and (ii) above as a result of stock splits, stock dividends, reclassifications, recapitalizations or similar events; provided that such shares of Jarden Common Stock shall cease to be Registrable Securities (x) when such shares have been sold or otherwise transferred by the Holders pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 ACT"), or (y) when such shares have been sold or otherwise transferred by the Holders in a private transaction in which the transferor's rights under this Agreement are not assigned, or (z) when all Registrable Securities issued to AMC may be sold without restriction by AMC pursuant to Rule 144(k) under the 1933 Act (such determination to be made either by counsel selected by AMC or by the delivery of a "no-action letter" by the Commission specifically addressing the resale by AMC of the Registrable Securities pursuant to Rule 144(k)). "STOCK ISSUANCE CLOSING DATE" means the date upon which the shares of Jarden Common Stock are issued to the Holders pursuant to Section 2.2 of the Purchase Agreement. SECTION 1.2 CONSTRUCTION. Whenever the context requires, the gender of any word used in this Agreement includes the masculine, feminine or neuter, and the number of any word includes the singular or plural. Unless the context otherwise requires, all references to articles, sections and paragraphs refer to articles, sections and paragraphs of this Agreement, and the terms "hereof," "herein" and other like terms refer to this Agreement as a whole. SECTION 1.3 HEADINGS. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. 2 ARTICLE II REGISTRATION RIGHTS SECTION 2.1 SHELF REGISTRATION. ------------------ (a) Unless Jarden delivers to the Holders a written instrument satisfactory in form and substance to AMC that Jarden waives its rights to deliver Jarden Common Stock to the Holders pursuant to Section 2.2 of the Purchase Agreement, Jarden shall, by January 15, 2006, prepare and file with the Securities and Exchange Commission (the "COMMISSION") a registration statement on Form S-3 or any successor form thereto (as amended and supplemented from time to time, the "SHELF REGISTRATION STATEMENT") with respect to the resale of the Registrable Securities by the Holders in accordance with Rule 415 under the 1933 Act. (b) Jarden will use its best efforts to cause the Shelf Registration Statement to be declared effective (i) on or prior to the Stock Issuance Closing Date (the "FIRST REGISTRATION DATE") or (ii) if Jarden is unable to cause the Shelf Registration Statement to be declared effective on or prior to the Stock Issuance Closing Date after using its best efforts and Jarden is permitted to issue the Jarden Common Stock to the Holders in accordance with Section 2.2(f)(iii) of the Purchase Agreement instead of cash, no later than six (6) months following the Stock Issuance Closing Date (such effective date, the "SECOND REGISTRATION DATE"), and Jarden will notify the Holders in writing of the First Registration Date or the Second Registration Date, as applicable, at least five (5) Business Days prior to its good faith estimate of such date. Except as provided in Section 3.4 hereof, Jarden will use its best efforts to keep such Shelf Registration Statement continuously effective and in compliance with the 1933 Act and usable for resale of the Registrable Securities until the earlier of (x) the second anniversary of the Stock Issuance Closing Date (or, if Jarden Common Stock is issued pursuant to Section 2.1(c)(ii) hereof, the second anniversary of the issuance date with respect to such Jarden Common Stock) and (y) the date on which all shares of Jarden Common Stock cease to be Registrable Securities (such period being called the "SHELF REGISTRATION PERIOD"). (c) If the Shelf Registration Statement is not declared effective by the Commission by the First Registration Date and Jarden is permitted to issue Jarden Common Stock to the Holders pursuant to Section 2.2(f)(iii) of the Purchase Agreement, Jarden shall make payments to the Holders as follows (which shall be the Holders' exclusive remedy under this Agreement with respect to any delay in the effectiveness of the Shelf Registration Statement beyond the First Registration Date): (i) For the period from the Stock Issuance Closing Date through the Second Registration Date, Jarden shall pay to each Holder interest at the annual rate of eight percent (8%) (calculated on the basis of a year of 365 days) based upon the Initial Average Market Price, multiplied by the number of Registrable Securities issued to such Holder (the "INTEREST AMOUNT"). For purposes of this Agreement, the "INITIAL AVERAGE MARKET PRICE" shall be equal to the average of the closing prices for a share of Jarden Common Stock on the NYSE during the ten (10) consecutive trading days ending two business days prior to the Stock Issuance Closing Date. 3 (ii) On the Second Registration Date, Jarden shall pay the Interest Amount and such amount shall be paid, at Jarden's option, in cash and/or in Jarden Common Stock (based upon the Final Average Market Price). Any Jarden Common Stock issued pursuant to this Section 2.1(c)(ii) shall be deemed to be "Registrable Securities" hereunder and shall be included in the Shelf Registration Statement as of the date of issuance of such Jarden Common Stock. For purposes of this Agreement, the "FINAL AVERAGE MARKET PRICE" shall be equal to the average of the closing prices for a share of Jarden Common Stock on the NYSE during the ten (10) consecutive trading days ending two business days prior to the Second Registration Date. (d) If at any time within sixty (60) days following the First Registration Date or the Second Registration Date a Sales Blackout Period is commenced under Section 3.4 hereof, Jarden shall make payments to the Holders as follows: (i) For the period from the first day of such Sales Blackout Period (the "BLACKOUT PERIOD COMMENCEMENT Date") through the last day of such Sales Blackout Period (the "BLACKOUT PERIOD TERMINATION DATE"), Jarden shall pay to each Holder interest at the annual rate of eight percent (8%) (calculated on the basis of a year of 365 days) based upon the Initial Average Market Price (or, as applicable, the Final Average Market Price with respect to any shares of Jarden Common Stock issued on the Second Registration Date in accordance with Section 2.1(c)(ii)), multiplied by the number of Registrable Securities held by such Holder on the Blackout Period Commencement Date (the "BLACKOUT PERIOD INTEREST AMOUNT"). (ii) Jarden shall pay the Blackout Period Interest Amount to each Holder within five (5) business days of the Blackout Period Termination Date, any such payment to be made by wire transfer of immediately available funds to an account specified in writing by such Holder. ARTICLE III REGISTRATION PROCEDURES SECTION 3.1 FILINGS; INFORMATION. -------------------- (a) In connection with the Shelf Registration Statement filed pursuant to Section 2.1 hereof, Jarden shall: (i) at least three (3) days prior to filing the Shelf Registration Statement, the Prospectus or any amendments or supplements thereto, furnish to each Holder copies thereof without charge so as to permit such Holder to comment on the information provided by such Holder for inclusion in the Shelf Registration Statement, the Prospectus or any amendments or supplements thereto; (ii) subject to Section 3.4 hereof, prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the Prospectus as may be necessary to keep the Shelf Registration Statement effective during the Shelf Registration Period and to enable the Registrable Securities to be sold under the Shelf Registration Statement 4 by the Holders in accordance with the intended method or methods of disposition described in the Shelf Registration Statement; (iii) furnish to each Holder, without charge, such number of conformed copies of the Shelf Registration Statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the Prospectus (including each preliminary prospectus), and such documents incorporated by reference in the Shelf Registration Statement or the Prospectus as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities; and Jarden hereby consents (except as otherwise provided in Sections 3.1(b)(ii) or 3.4 hereof) to the use of the Prospectus or any amendment or supplement thereto in accordance with applicable law by the Holders, in each case in the form most recently provided by Jarden, during the Shelf Registration Period in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto in accordance with applicable law; (iv) use its commercially reasonable efforts to register or qualify all Registrable Securities covered by the Shelf Registration Statement under the securities or blue sky laws of such jurisdictions as the Holders shall request, to keep such registration or qualification in effect for the Shelf Registration Period, and to take any other reasonable action which may be necessary to enable the Registrable Securities to be sold under the Shelf Registration Statement in such jurisdictions; provided, that Jarden shall not be required to (A) qualify generally to do business as a foreign corporation in any such jurisdiction wherein it is not so qualified, (B) consent to general service of process in any such jurisdiction or (C) subject itself to taxation in any jurisdiction where it would not otherwise be liable for such taxes; (v) promptly notify each Holder in writing during the Shelf Registration Period (A) of the happening of any event as a result of which the Prospectus included in the Shelf Registration Statement, as then in effect, includes as to Jarden an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and promptly prepare and furnish to the Holders a reasonable number of copies of a supplement to or an amendment of the Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, the Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, (B) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, and (C) of the receipt by Jarden of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threat of any proceeding for such purpose; (vi) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration Statement or any post-effective amendment thereto or any order suspending or preventing the use of any Prospectus or suspending the qualification of any Registrable Securities for sale in any jurisdiction, in each case as promptly as practicable; 5 (vii) comply in all material respects with the provisions of the 1933 Act applicable to Jarden with respect to the disposition of all of the Registrable Securities covered by the Shelf Registration Statement in accordance with the intended method or methods of disposition by the Holders; and (viii) use its commercially reasonable efforts to list (prior to the effective date of the Shelf Registration Statement, if necessary) all Registrable Securities covered by the Shelf Registration Statement, to the extent they are not already so listed, on the NYSE, or if Jarden Common Stock is not traded on the NYSE, the principal exchange on which Jarden Common Stock is traded. (b) In connection with the Shelf Registration Statement filed pursuant to Section 2.1 hereof, each Holder shall: (i) upon receipt of any notice from Jarden in accordance with Section 3.1(a)(v) hereof (but, with respect to clause (C) thereof, only with respect to the jurisdiction suspending qualification), immediately discontinue the offer and sale of Registrable Securities pursuant to the Prospectus until receipt by the Holders of copies of an amended or supplemented Prospectus or until Jarden notifies the Holders in writing that the applicable suspension has been removed; and, if so directed by Jarden, the Holders will deliver to Jarden all copies, other than permanent file copies then in the Holders' possession, of the most recent Prospectus at the time of receipt of such notice; (ii) cooperate with Jarden in connection with the preparation and filing of any Shelf Registration Statement and, upon written request from Jarden, each Holder shall promptly furnish in writing to Jarden such information regarding such Holder, the distribution of the Registrable Securities and other matters as may be required by applicable law, rule or regulation for inclusion in the Shelf Registration Statement (or any amendment or supplement thereto), it being agreed that the provision of such information by such Holder to Jarden shall be a condition precedent to Jarden's obligations under Sections 2.1 and 3.1 hereof with respect to the Registrable Securities held by such Holder; (iii) not during the Shelf Registration Period (A) effect any stabilization transactions or engage in any stabilization activity in connection with Jarden Common Stock or other equity securities of Jarden in contravention of Regulation M under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), or (B) permit any "Affiliated Purchaser" (as that term is defined in Regulation M under the 1934 Act) to bid for or purchase for any account in which such Holder has a beneficial interest, or attempt to induce any other Person to purchase, any shares of Jarden Common Stock or other equity securities of Jarden in contravention of Regulation M under the 1934 Act; and (iv) (A) offer to sell, sell or otherwise distribute the Registrable Securities in reliance upon the Shelf Registration Statement only after the Shelf Registration Statement has been declared effective under the 1933 Act, (B) distribute the Registrable Securities only in accordance with the manner of distribution contemplated by the Prospectus, 6 and (C) report to Jarden in writing when such Holder no longer holds any Registrable Securities. (c) Except as otherwise expressly provided herein, Jarden shall not be required to take any action or enter into any agreement with any Holder or any third party for or on behalf of any Holder in connection with the disposition of Registrable Securities (including, without limitation, underwriting agreements). SECTION 3.2 REGISTRATION EXPENSES. In connection with the Shelf Registration Statement, Jarden shall pay the following expenses incurred in connection with such registration: (i) registration and filing fees and expenses associated with filings required by the Commission and the NYSE, (ii) fees and expenses of compliance with federal or state securities or blue sky laws (including fees and disbursements of counsel for Jarden in connection with blue sky qualifications of the Registrable Securities), (iii) printing, messenger and delivery expenses, (iv) fees and expenses incurred in connection with the listing of the Registrable Securities in accordance with Section 3.1(a)(vii), (v) fees and expenses of counsel and independent certified public accountants for Jarden and (vi) the reasonable fees and expenses of any additional experts retained by Jarden in connection with such registration. In addition, Jarden shall reimburse the Holders for the reasonable fees and expenses of one counsel for all of the Holders incurred in connection with the Holders' cooperation with Jarden in the preparation and filing of the Shelf Registration Statement (regardless of whether such Shelf Registration Statement is declared effective).. SECTION 3.3 TERMINATION. This Agreement shall terminate and be of no further force or effect upon the first to occur of the following events (a) upon delivery by Jarden to the Holders of a written instrument satisfactory in form and substance to AMC that Jarden irrevocably waives its rights to deliver Jarden Common Stock to the Holders pursuant to Section 2.2 of the Purchase Agreement, (b) immediately following the consummation of the Contingent Consideration Closing Date (as defined in the Purchase Agreement) in which no shares of Jarden Common Stock are issued to the Holders, and (c) the expiration of the Shelf Registration Period; provided, however, that in the event this Agreement is terminated pursuant to Section 3.3(c), the provisions of Article IV hereof shall survive such termination. SECTION 3.4 INFORMATION BLACKOUT. (a) At any time when the Shelf Registration Statement is effective, upon written notice from Jarden to the Holders that the Board of Directors of Jarden, after consultation with counsel, has determined in good faith that the sale of Registrable Securities pursuant to the Shelf Registration Statement would significantly interfere with any material pending or contemplated financing, merger, sale or acquisition of assets, recapitalization or other material corporate action of Jarden, or would require Jarden to disclose any material non-public information that has not theretofore been disclosed and which disclosure would have a material adverse effect on Jarden, and it is therefore essential to suspend sales of Registrable Securities pursuant to the Shelf Registration Statement, Jarden's obligations under Section 3.1(a)(ii) hereof shall be suspended until the earlier of (i) sixty (60) days after Jarden notifies the Holders of such good faith determination, or (ii) such time as Jarden notifies the Holders that such material 7 information has been disclosed to the public or has ceased to be material or that sales pursuant to the Shelf Registration Statement may otherwise be resumed, such notification to be made promptly after Jarden has determined reasonably and in good faith that such material information has been disclosed to the public or has ceased to be material or that sales pursuant to the Shelf Registration Statement may otherwise be resumed (the number of days from such suspension of sales by the Holders until the day when such sales may be resumed hereunder is hereinafter called a "SALES BLACKOUT PERIOD"). The Holders shall suspend sales of the Registrable Securities pursuant to the Shelf Registration Statement during any Sales Blackout Period. (b) Jarden shall use its best efforts not to commence a Sales Blackout Period within sixty (60) days after (i) the First Registration Date or the Second Registration Date, as applicable, or (ii) the end of a Sales Blackout Period. Jarden shall not be permitted to commence more than three (3) Sales Blackout Periods during the Shelf Registration Period. (c) No Sales Blackout Period shall preclude any sales of Registrable Securities that any Holder may effect in compliance with Rule 144; provided that such Holder otherwise conforms with the requirements under the 1933 Act and the 1934 Act. (d) Each Holder agrees that, upon receipt of any notice from Jarden pursuant to this Section 3.4, such Holder will (i) keep confidential such notice, its content and any information provided by Jarden in connection therewith, and (ii) if so directed by Jarden, deliver to Jarden all copies then in such Holder's possession, other than permanent file copies, of the Prospectus relating to such Registrable Securities current at the time of receipt of such notice. ARTICLE IV INDEMNIFICATION AND CONTRIBUTION SECTION 4.1 INDEMNIFICATION BY JARDEN. Jarden agrees to indemnify and hold harmless each Holder and each Person, if any, who controls such Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act (each, an "indemnified party," as applicable) from and against any and all losses, claims, damages and liabilities, joint or several (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim, whether commenced or threatened, except as otherwise provided in Section 4.3 hereof), insofar as such losses, claims, damages or liabilities are caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement or the Prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in light of the circumstances under which they were made) not misleading, or (ii) any violation by Jarden of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state securities law in connection with the offering covered by the Shelf Registration Statement; provided, however, that Jarden shall not be liable insofar as such losses, claims, damages or liabilities are caused by (1) any such untrue statement or omission or alleged untrue statement or omission (a) made in reliance upon and in conformity with written information furnished to Jarden by any indemnified party for use in the Shelf Registration Statement or the Prospectus (or any amendment or supplement thereto) or the plan of distribution 8 furnished in writing to Jarden by or on behalf of such indemnified party expressly for use therein, or (b) that was corrected in an amendment or supplement to the Shelf Registration Statement or the Prospectus and Jarden had furnished copies thereof to each Holder prior to the relevant date of sale by the Holder to the Person asserting such loss, claim, damage or liability or (2) the breach by any Holder of the provisions of Section 3.1(b)(i) hereof. SECTION 4.2 INDEMNIFICATION BY THE HOLDERS. Each Holder severally and not jointly agrees to indemnify and hold harmless Jarden and each Person, if any, who controls Jarden within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, and any other holder of Registrable Securities selling securities under such Shelf Registration Statement (each, an "indemnified party," as applicable), from and against any and all losses, claims, damages and liabilities, joint or several (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim, except as otherwise provided in Section 4.3 hereof), insofar as such losses, claims, damages or liabilities are caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Shelf Registration Statement or the Prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in light of the circumstances under which they were made) not misleading, but only with reference to information furnished in writing by or on behalf of such Holder expressly for use in the Shelf Registration Statement or the Prospectus or any amendments or supplements thereto, or (ii) any violation by such Holder of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state securities law in connection with the offering covered by the Shelf Registration Statement. SECTION 4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Each party indemnified under Sections 4.1 or 4.2 above shall, promptly after receipt of notice of a claim or action against such indemnified party in respect of which indemnity may be sought hereunder, notify the indemnifying party in writing of the claim or action; provided, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party on account of the indemnity agreement contained in Sections 4.1 or 4.2 above except to the extent that the indemnifying party was actually prejudiced by such failure. If any such claim or action shall be brought against an indemnified party, and it shall have notified the indemnifying party thereof, unless in the indemnifying party's reasonable judgment a conflict of interest between such indemnified party and indemnifying party may exist in respect of such claim, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes to assume the defense thereof (with counsel that has been approved by the indemnified party (which approval shall not be unreasonably withheld, conditioned or delayed)). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that the indemnifying party shall pay such expense, to the extent reasonable, if representation of such indemnified party by counsel retained by the indemnifying party would be reasonably likely to result in a conflict of interest between the indemnified party and the indemnifying party. Any indemnifying party against whom indemnity may be sought under 9 Sections 4.1 or 4.2 shall not be liable to indemnify an indemnified party if such indemnified party settles such claim or action without the written consent of the indemnifying party. No indemnifying party shall consent to the entry of any judgment or enter into any settlement without the consent of the indemnified party which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party a release from all liabilities in respect of such claim or litigation and no indemnifying party may agree to any settlement of any such claim or action, other than solely for monetary damages for which the indemnifying party shall be responsible hereunder, the result of which shall be applied to or against the indemnified party, without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld, delayed or conditioned. In any action hereunder as to which the indemnifying party has assumed the defense thereof, the indemnified party shall continue to be entitled to participate in, but not control, the defense thereof, with counsel of its own choice, but, except as otherwise provided in the third sentence of this Section 4.3, the indemnifying party shall not be obligated hereunder to reimburse the indemnified party for the costs thereof. SECTION 4.4 LIMITATION ON INDEMNITY. (a) The indemnity provided for hereunder shall not inure to the benefit of any indemnified party to the extent that the claim is based on such indemnified party's failure to comply with the applicable prospectus delivery requirements of the 1933 Act as then applicable to the Person asserting the loss, claim, damage or liability for which indemnity is sought. (b) In no event shall the liability of any Holder under this Article IV, whether for indemnification or contribution, exceed the net proceeds received by the Holder from the sale of Registrable Securities pursuant to the Shelf Registration Statement. SECTION 4.5 CONTRIBUTION. If the indemnification provided for in this Article IV is held by a court of competent jurisdiction to be unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities referred to herein, then in lieu of such indemnification the indemnifying party shall, to the extent permitted by applicable law, contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on one hand or by or on behalf of the indemnified party on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Jarden and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 4.5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the 10 immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Neither Jarden nor any of the Holders shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. ARTICLE V MISCELLANEOUS SECTION 5.1 RULE 144. Jarden covenants that it shall timely file any reports required to be filed by it under the 1934 Act and shall at all times comply with the requirements under Rule 144(c) under the 1933 Act, as such rule may be amended from time to time, and take such further action as any Holder may reasonably request to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the 1933 Act within the limitations of the exemptions provided by Rule 144 under the 1933 Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission, including, but not limited to, furnishing an opinion of counsel to Jarden's transfer agent (if requested by such transfer agent) as to the transferability of such Registrable Securities and removal of any legends from the certificates representing the Registrable Securities so transferred. SECTION 5.2 EXPENSES. Except to the extent otherwise expressly provided in Section 3.2 hereof, each party shall pay its own expenses incident to the transactions contemplated hereby. SECTION 5.3 GOVERNING LAW. This Agreement shall be construed in accordance with and governed exclusively by the laws of the State of Delaware (without giving effect to any conflicts or choice of law provisions that would cause the application of the domestic substantive laws of any other jurisdiction). SECTION 5.4 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. SECTION 5.5 CONSENT TO EXCLUSIVE JURISDICTION OF THE COURTS OF DELAWARE. (a) Each of the parties hereto hereby consents to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of or in connection with this Agreement or any of the transactions contemplated hereby, including, without limitation, any 11 proceeding relating to ancillary measures in aid of arbitration, provisional remedies and interim relief, or any proceeding to enforce any arbitral decision or award. (b) Each of the parties hereto hereby expressly waives any and all rights to bring any suit, action or other proceeding in or before any court or tribunal other than the courts of the State of Delaware and the United States District Court for the District of Delaware and covenants that such party shall not seek in any manner to resolve any dispute other than as set forth herein or to challenge or set aside any decision, award or judgment obtained in accordance with the provisions hereof. (c) Each of the parties hereto hereby expressly waives any and all objections such party may have to venue in any of such courts, including, without limitation, the inconvenience of such forum. In addition, each of the parties hereto hereby consents to the service of process by personal service or any manner in which notices may be delivered hereunder in accordance with Section 5.6 and will not object to service of process before any of such courts to the extent so delivered. SECTION 5.6 NOTICES. All demands, notices, requests, consents and other communications required or permitted under this Agreement shall be by written notice and sent by (a) personal delivery, (b) facsimile machine, with a confirmation copy sent by one of the methods authorized in clauses (a), (c) or (d) hereof, (c) commercial (including Federal Express) or U.S. Postal Service overnight delivery service, or (d) deposit with the United States Postal Service mailed first class, registered or certified mail, postage prepaid to the Persons set forth on the signature page to this Agreement (and to such other Persons to be copied in connection with notices to such Person) as set forth on the signature page hereof (or on the signature page to any joinder to this Agreement). Notices shall be deemed delivered and to have been received upon the earliest to occur of (i) if sent by personal delivery, upon receipt by the party to whom such notice is directed; (ii) if sent by facsimile machine, the day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) such notice is sent if sent (as evidenced by the facsimile confirmed receipt) prior to 5:00 p.m. U.S. Eastern Time, or the day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) after which such notice is sent if sent after 5:00 p.m. U.S. Eastern Time; (iii) if sent by overnight delivery service, the first day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) following the day the same is deposited with the commercial carrier or United States Postal Service; or (iv) if sent by first class mail, registered or certified, postage prepaid, the fifth day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) following the day the same is deposited with the United States Postal Service. Each party, by notice duly given to each other party hereto, may specify a different address for the giving of any notice hereunder. SECTION 5.7 CUMULATIVE REMEDIES; FAILURE TO PURSUE REMEDIES. Except as otherwise provided in Section 2.1(c) hereof, the rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. Except where a time period is specified, no delay on the part of any party in the exercise of any right, power, privilege or remedy hereunder shall operate as a waiver thereof, nor shall any exercise or partial exercise of any such right, power, privilege or 12 remedy preclude any further exercise thereof or the exercise of any other right, power, privilege or remedy. SECTION 5.8 AMENDMENTS AND WAIVERS. Except as otherwise expressly provided herein, no provision of this Agreement may be amended or modified except upon the written consent of Jarden and the Holders holding a majority of the shares of Registrable Securities. Any amendment or modification so affected shall be binding upon Jarden and all of the Holders. Any provision of this Agreement may be waived by Jarden and any Holder to be bound by such waiver. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. SECTION 5.9 ASSIGNMENT; BINDING EFFECT. This Agreement may not be assigned, in whole or in part, by any party hereto without the prior written consent of Jarden and the Holders holding a majority of the shares of Registrable Securities; provided, however, that AMC shall be permitted to assign its rights hereunder to any assignee or designee of AMC's rights to receive Jarden Common Stock pursuant to Section 2.2 of the Purchase Agreement and to any Lehigh Manager to whom AMC assigns Jarden Common Stock received pursuant to Section 2.2 of the Purchase Agreement following the issuance thereof; provided that any such assignee, designee or Lehigh Manager executes a joinder to this Agreement reasonably satisfactory in form to Jarden and AMC. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereof or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. SECTION 5.10 SEVERABILITY. If any term or provision of this Agreement, or the application thereof to any Person or circumstance, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or application to other Persons or circumstances, shall not be affected thereby, and each term and provision of this Agreement is hereby declared to be separate and distinct and shall be enforced to the fullest extent permitted by law. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. If any provision of this Agreement is declared invalid or unenforceable for any reason other than overbreadth, the offending provision will be modified so as to maintain the essential benefits of the bargain among the parties to the maximum extent possible, consistent with applicable law and public policy. SECTION 5.11 COUNTERPARTS; SIGNATURES. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document, and all counterparts shall be construed together and shall constitute one instrument. A facsimile or photocopied signature shall be deemed to be the functional equivalent of an original for all purposes. SECTION 5.12 ENTIRE AGREEMENT. This Agreement constitutes the full and entire understanding and agreement between the parties with respect to the subject matter of this 13 Agreement and supersedes all prior agreements and understandings pertaining thereto, whether oral or written. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 14 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. JARDEN: ADDRESS: JARDEN CORPORATION 555 Theodore Fremd Avenue Rye, NY 10580 Attn: Martin E. Franklin By: /s/ Desiree DeStefano Fax: 914-867-9405 ---------------------------------- Name: Desiree DeStefano Title: Senior Vice President with a copy to (which shall not constitute notice): Kane Kessler, PC 1350 Avenue of the Americas New York, New York 10019 Attn: Robert L. Lawrence, Esq. Fax: 212-245-3009 AMC: ADDRESS: AMERICAN MANUFACTURING 555 Croton Road, Suite 300 COMPANY, INC. King of Prussia, PA 19406 Attn: President Fax: 610-962-3797 By: /s/ Robert H. Strouse --------------------------------- Name: Robert H. Strouse with a copy to (which Title: President shall not constitute notice): Drinker Biddle & Reath LLP 105 College Road East Princeton, NJ 08540 Attn: John E. Stoddard III, Esq. Fax: 609-799-7000 [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT] EX-10.3 5 file004.txt AMENDED AND RESTATED CREDIT AGREEMENT ================================================================================ AMENDED AND RESTATED CREDIT AGREEMENT Dated as of September 2, 2003 among JARDEN CORPORATION as the Borrower, BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, CANADIAN IMPERIAL BANK OF COMMERCE, as Syndication Agent, NATIONAL CITY BANK OF INDIANA and FLEET NATIONAL BANK, as Co-Documentation Agents and The Lenders Party Hereto BANC OF AMERICA SECURITIES LLC and CIBC WORLD MARKETS CORP., as Co-Lead Arrangers and Co-Book Managers =============================================================================== AMENDED AND RESTATED CREDIT AGREEMENT This AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is entered into as of September 2, 2003, among JARDEN CORPORATION, a Delaware corporation (the "Borrower"), each lender from time to time party hereto (collectively, the "Lenders" and individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, CANADIAN IMPERIAL BANK OF COMMERCE, as Syndication Agent, and NATIONAL CITY BANK OF INDIANA and FLEET NATIONAL BANK, as Co-Documentation Agents. WHEREAS, the Borrower (previously known as Alltrista Corporation), the Administrative Agent and certain of the Lenders are party to that certain Credit Agreement dated as of April 24, 2002 (as amended to (but excluding) the date hereof, the "Existing Agreement"), pursuant to which certain of the Lenders have agreed to make available to the Borrower a revolving credit facility in the maximum aggregate principal amount at any time outstanding of up to $70,000,000, including a letter of credit facility of up to $15,000,000 for the issuance of standby and commercial letters of credit and a swing line facility of up to $10,000,000, and have made available to the Borrower a term loan facility in the initial aggregate principal amount of $50,000,000, which was increased by an additional advance of $10,000,000 on the date of the Term Loan A Amendment (as defined below); and WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend and restate the Existing Agreement to (i) provide for a new term loan facility in an aggregate maximum principal amount of up to $150,000,000 (subject to further adjustment herein provided), the advance of which shall be made upon the occurrence of certain events described herein, and (ii) amend certain covenants therein and to make certain other amendments thereto; and WHEREAS, the parties hereto are willing to amend and restate the Existing Agreement and to make and continue to make certain term loan, revolving credit, letter of credit and swing line facilities available to the Borrower upon the terms and conditions set forth herein; NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01 AMENDMENT AND RESTATEMENT. (a) The Borrower, each Guarantor, the Administrative Agent and the Lenders hereby agree that upon the effectiveness of this Agreement, the terms and provisions of the Existing Agreement that in any manner govern or evidence the Obligations, the rights and interests of the Administrative Agent and the Lenders, in any of their respective capacities, and any terms, conditions or matters related to any thereof, shall be and hereby are amended and restated in their entirety by the terms, conditions and provisions of this Agreement, and the terms and provisions of the Existing Agreement, except as otherwise expressly provided herein, shall be superseded 3 by this Agreement; provided that all consents and waivers obtained in connection with the Existing Agreement shall continue in full force and effect and be applicable to this Agreement. (b) Notwithstanding this amendment and restatement of the Existing Agreement, including anything in this Section 1.01, and certain of the related "Loan Documents" as defined in the Existing Agreement (the "Prior Loan Documents"), (i) all of the indebtedness, liabilities and obligations owing by the Borrower under the Existing Agreement and other Prior Loan Documents shall continue as Obligations hereunder, (ii) each of this Agreement and the Notes and the other Loan Documents is given as a substitution or supplement of, as the case may be, and not as a payment of, the indebtedness, liabilities and obligations of the Borrower and the Guarantors under the Existing Agreement or any Prior Loan Document and is not intended to constitute a novation thereof or of any of the other Prior Loan Documents, and (iii) certain of the Prior Loan Documents will remain in full force and effect, as set forth in this Agreement. Upon the effectiveness of this Agreement, all Loans owing by the Borrower and outstanding under the Existing Agreement shall continue as Loans hereunder. Base Rate Loans under the Existing Agreement shall continue to accrue interest at the Base Rate hereunder and the parties hereto agree that the Interest Periods for all Eurodollar Rate Loans outstanding under the Existing Agreement on the Closing Date shall remain in effect without renewal, interruption or extension as Eurodollar Rate Loans under this Agreement and shall continue to accrue interest at the Eurodollar Rate plus the Applicable Margin hereunder. 1.02 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "Acquisition" means the acquisition of (i) a controlling equity or other ownership interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity or other ownership interest or upon exercise of an option or warrant for, or conversion of securities into, such equity or other ownership interest, or (ii) assets of another Person which constitute all or any material part of the assets of such Person or of a line or lines of business conducted by such Person. "Acquisition Adjustments" means the adjustments to certain financial terms and computations more particularly described in Section 1.04(c). "Administrative Agent" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent. "Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. A Person shall be deemed to be Controlled by 4 another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors or managing general partners. "Agent/Arranger Fee Letter" means that certain fee letter dated as of August 15, 2003 by and among Bank of America, the Arrangers and the Borrower relating to certain fees payable by the Borrower in connection with this Agreement and the transactions contemplated hereby, as amended. "Agent-Related Persons" means the Administrative Agent (including any successor administrative agent), together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, BAS), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Aggregate Commitments" means, as at the date of determination thereof, the sum of (a) the Aggregate Revolving Credit Commitments at such date plus (b) the Outstanding Amount with respect to the Term Loan A at such date, plus (c) the Outstanding Amount with respect to the Term Loan B at such date. "Aggregate Revolving Credit Commitments" means, as at the date of determination thereof, the sum of all Revolving Credit Commitments of all Revolving Lenders at such date. "Agreement" means this Credit Agreement. "Applicable Margin" means (a) 2.75% per annum with respect to Eurodollar Rate Segments of the Term Loan B, (b) 1.75% per annum with respect to Base Rate Segments of the Term Loan B, and (c) with respect to Revolving Loans, the Term Loan A and the Commitment Fee, from time to time, the following percentages per annum, based upon the Total Leverage Ratio as set forth below:
- --------------------------------------------------------------------------------------------------------------------- EURODOLLAR RATE LOANS AND LETTER COMMITMENT PRICING LEVEL TOTAL LEVERAGE RATIO OF CREDIT FEES BASE RATE LOANS FEE - ------------- -------------------- -------------- --------------- --- - --------------------------------------------------------------------------------------------------------------------- 1 Greater than 3.00 to 1.00 2.75% 1.50% 0.500% 2 Less than or equal to 3.00 to 1.00, but 2.50% 1.25% 0.500% greater than 2.50 to 1.00 3 Less than or equal to 2.50 to 1.00, but 2.25% 1.00% 0.500% greater than 2.00 to 1.00 4 Less than or equal to 2.00 to 1.00 2.00% 0.75% 0.375% - ---------------------------------------------------------------------------------------------------------------------
The Applicable Margin with respect to Revolving Loans, the Term Loan A and the Commitment Fee shall be established at the end of each fiscal quarter of the Borrower (each, a "Determination Date"). Any change in such Applicable Margin following each Determination Date shall be determined based upon the computation of the Total Leverage Ratio set forth in each Compliance Certificate furnished to the Administrative Agent pursuant to Section 6.02(b), 5 subject to review and approval of such computation by the Administrative Agent, and shall be effective commencing on the third Business Day following the date such Compliance Certificate is received until the third Business Day following the date on which a new Compliance Certificate is delivered or is required to be delivered, whichever shall first occur. From the Closing Date to the third Business Day following the date the Compliance Certificate for the fiscal period ended as at the first Determination Date is delivered or is required to be delivered (whichever shall first occur), the Applicable Margin with respect to Revolving Loans, the Term Loan A and the Commitment Fee shall be based on the Total Leverage Ratio in the Compliance Certificate delivered on the Closing Date in compliance with Section 4.01(a). Notwithstanding the provisions of the two preceding sentences, if the Borrower shall fail to deliver any such certificate within the time period required by Section 6.02(b), then the Applicable Margin shall be Pricing Level 1 from the date such certificate was due until the third Business Day following the date the appropriate Compliance Certificate is so delivered. "Approved Fund" has the meaning specified in Section 10.07(g). "Arrangers" means BAS and CIBC World Markets Corp., each in its respective capacity as co-lead arranger and co-book manager. "Asset Purchase Agreement" means that certain Asset Purchase Agreement dated as of March 28, 2002, by and among the Tilia Sellers, Andrew H. Schilling and the Borrower, including all exhibits and schedules thereto, as amended by Amendment No. 1 dated as of April 24, 2002. "Assignment and Assumption" means an Assignment and Assumption substantially in the form of Exhibit E. "Attorney Costs" means and includes all reasonable fees and disbursements of any law firm or other external counsel. "Attributable Indebtedness" means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease. "Audited Financial Statements" means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2002, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto. "Available Repurchase Amount" means, at any time of measurement thereof, (a) $10,000,000, minus (b) the aggregate amount of Bond Repurchases (as defined in Section 7.19) made during the then-current fiscal year of the Borrower pursuant to part (y) of the proviso to Section 7.19, minus (c) the aggregate amount of Restricted Payments made pursuant to Section 7.07(c) during the then-current fiscal year of the Borrower. 6 "Bank of America" means Bank of America, N.A. "BAS" means Banc of America Securities LLC. "Base Rate" means for any day a fluctuating rate per annum equal to the Applicable Margin plus the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." Such prime rate is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced prime rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan (including a Segment) bearing interest or to bear interest at the Base Rate. "Base Rate Segment" means a Segment bearing interest or to bear interest at the Base Rate. "Borrower" has the meaning set forth in the introductory paragraph hereto. "Borrowing" means any of (i) either borrowing under the Term Loan A Facility, (ii) the borrowing of the Term Loan B Facility, (iii) any subsequent Borrowing under either of the Term Loan Facilities pursuant to Section 2.15, (iv) a Revolving Borrowing or (v) a Swing Line Borrowing, as the context may require. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank market. "Capital Expenditures" means, with respect to the Borrower and its Subsidiaries, for any period the sum of (without duplication) (i) all expenditures (whether paid in cash or accrued as liabilities) by the Borrower or any Subsidiary during such period for items that are capitalized that would be classified as "property, plant or equipment" or comparable items on the consolidated balance sheet of the Borrower and its Subsidiaries, including without limitation all transactional costs incurred in connection with such expenditures provided the same have been capitalized, excluding, however, the amount of any Capital Expenditures paid for with proceeds of casualty insurance as evidenced in writing and submitted to the Administrative Agent together with any Compliance Certificate delivered pursuant to Section 6.02(b), and (ii) with respect to any Capital Lease entered into by the Borrower or its Subsidiaries during such period, the present value of the lease payments due under such Capital Lease over the term of such Capital Lease applying a discount rate equal to the interest rate provided in such lease (or in the absence of a stated interest rate, that rate used in the preparation of the financial statements described in Section 6.01), all the foregoing in accordance with GAAP. 7 "Capital Leases" means all leases which have been or should be capitalized in accordance with GAAP as in effect from time to time including Statement No. 13 of the Financial Accounting Standards Board and any successor thereof. "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the applicable L/C Issuer and the Revolving Lenders, as collateral for the L/C Obligations plus all fees accrued or to be incurred in connection therewith, cash, deposit accounts and all balances therein, in an amount not less than the sum of such L/C Obligations and fees and all proceeds of the foregoing pursuant to documentation in form and substance satisfactory to the Administrative Agent and the applicable L/C Issuer (which documents are hereby consented to by the Revolving Lenders) and to take all such other action as shall be necessary for the Administrative Agent to have "control" thereof within the meaning of the Uniform Commercial Code applicable thereto. Derivatives of such term shall have corresponding meaning. The Borrower hereby grants the Administrative Agent, for the benefit of the applicable L/C Issuer and the Revolving Lenders, a Lien on all such cash and deposit account balances. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America or other institutions satisfactory to it. "Change of Control" means, with respect to any Person, an event or series of events by which: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), but excluding (x) any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (y) Martin Franklin, Ian Ashken or any of them or any Person the Equity Securities of which are wholly owned by any of them (whether or not constituting a "group" for this purpose), becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 30% or more of the Equity Securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully diluted basis (i.e., taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (who qualify under any one of the following) (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or 8 (c) Martin Franklin and Ian Ashken cease to hold executive management positions with the Borrower, unless either or both of them has been replaced in any such executive management position with a Person approved by the Required Lenders (including any successive approved replacements). "Closing Date" means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the case of Section 4.01(b), waived by the Person entitled to receive the applicable payment). "Code" means the Internal Revenue Code of 1986, as amended, and all regulations issued pursuant thereto. "Collateral" means, collectively, all property of the Borrower, any Subsidiary or any other Person in which the Administrative Agent or any Lender is granted a Lien under any Security Instrument as security for all or any portion of the Obligations, any other obligation arising under any Loan Document or any other obligation or liability arising under any Related Swap Contract. "Commitment Fee" has the meaning specified in Section 2.10(a). "Compliance Certificate" means a certificate substantially in the form of Exhibit D. "Consolidated Current Assets" means all assets of the Borrower and its Subsidiaries (other than cash and cash equivalents) which would be classified as a current asset, all determined on a consolidated basis in accordance with GAAP. "Consolidated Current Liabilities" means all liabilities of the Borrower and its Subsidiaries which by their terms are payable within one year (but excluding all Consolidated Funded Indebtedness payable on demand or maturing not more than one year from the date of computation and the current portion of Indebtedness having a maturity date in excess of one year), all determined on a consolidated basis in accordance with GAAP. "Consolidated EBITDA" means, for any period, for the Borrower and its Subsidiaries, an amount equal to the sum of (a) Consolidated Net Income (net of up to $10,000,000 of nonrecurring gains not otherwise excluded in the calculation of Consolidated Net Income as used in this definition, and net of up to $6,000,000 of reorganization expenses incurred in connection with the Diamond Acquisition not otherwise excluded in the calculation of Consolidated Net Income as used in this definition), (b) Consolidated Interest Charges, (c) the amount of taxes, based on or measured by income, used or included in determining such Consolidated Net Income, (d) the amount of depreciation and amortization expense deducted in determining such Consolidated Net Income, (e) the amount of nonrecurring expenses incurred after the Original Closing Date and during such period not to exceed $10,000,000, to the extent such net expenses are deducted in determining Consolidated Net Income, (f) up to $5,000,000 of net non-recurring expenses incurred during such period in connection with (but not after) the consummation of the Lehigh Acquisition, to the extent such net expenses are deducted during such period in determining Consolidated Net Income, and (g) if Scheduled Acquisition B has occurred, up to $10,000,000 of net non-recurring expenses incurred during such period in connection with (but not after) the consummation of the Scheduled Acquisition B, to the extent such net expenses are 9 deducted during such period in determining Consolidated Net Income, all determined on a consolidated basis in accordance with GAAP, subject (in connection with the calculation of the Senior Leverage Ratio and the Total Leverage Ratio only) to Acquisition Adjustments. "Consolidated Fixed Charges" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the sum of, without duplication, (i) Consolidated Interest Charges, and (ii) scheduled payments of Consolidated Funded Indebtedness (including without limitation Consolidated Funded Indebtedness consisting of the Tilia Seller Note, but excluding the amortization payments of Term Loan B scheduled for September 30, 2007, December 31, 2007, March 31, 2008 or the Stated Term Loan B Maturity Date), all determined on a consolidated basis in accordance with GAAP. "Consolidated Funded Indebtedness" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the sum of, without duplication, (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments, including without limitation all direct or Contingent Obligations of such Person arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments, (b) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), (c) Attributable Indebtedness in respect of Capital Leases and Synthetic Lease Obligations, and (d) without duplication, all Contingent Obligations with respect to Indebtedness of the types specified in subsections (a), (b) and (c) above of Persons other than the Borrower or any Subsidiary, all of (a), (b), (c) and (d) above determined on a consolidated basis (as consolidated basis is determined in accordance with GAAP). For all purposes hereof, the Consolidated Funded Indebtedness of the Borrower or any Subsidiary shall include the foregoing Indebtedness in (a), (b), (c) and (d) above of any partnership or joint venture (other than a joint venture that is itself a corporation or a limited liability company) in which the Borrower or any Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary. "Consolidated Interest Charges" means, for any period, for the Borrower and its Subsidiaries, the sum of, without duplication, (a) all interest, premium payments, commissions, fees, charges and related expenses of the Borrower and its Subsidiaries in connection with Indebtedness (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) the portion of rent expense of the Borrower and its Subsidiaries with respect to such period under Capital Leases that is treated as interest in accordance with GAAP and (c) the amount of payments in respect of Synthetic Lease Obligations that are in the nature of interest, all of (a), (b) and (c) above determined on a consolidated basis (as consolidated basis is determined in accordance with GAAP). "Consolidated Net Income" means, for any period, for the Borrower and its Subsidiaries, the net income of the Borrower and its Subsidiaries from continuing operations without giving effect to extraordinary net gains (except for the purpose of determining Consolidated Net Income as used in the computation of Excess Cash Flow and the computation set 10 forth in Section 7.13(a)) or extraordinary net losses, but excluding from the determination of such net income (except for the purpose of determining Consolidated Net Income as used in the computation set forth in Section 7.13(a)) gains or losses from Dispositions of assets (other than in the ordinary course of business) whether or not extraordinary for that period, all determined on a consolidated basis in accordance with GAAP. "Consolidated Net Worth" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, Stockholders' Equity of the Borrower and its Subsidiaries on that date. "Consolidated Security Instrument Amendment" means that certain Consolidated Amendment to Guaranty, Security and Pledge Agreements dated as of the Closing Date, as from time to time amended, modified, amended and restated or replaced. "Consolidated Senior Indebtedness" means, as of any date on which the amount thereof is to be determined, the aggregate principal amount of all Consolidated Funded Indebtedness outstanding as of such date minus, to the extent otherwise included in Consolidated Funded Indebtedness, the aggregate principal amount of all Subordinated Indebtedness outstanding as of such date. "Consolidated Total Assets" means, as of any date on which the amount thereof is to be determined, the net book value of all assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP. "Consolidated Working Capital" means, as of any date on which the amount thereof is to be determined, the excess of Consolidated Current Assets over Consolidated Current Liabilities. "Contingent Obligation" means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guarantying any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring or holding harmless in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith. 11 "Continuation" and "Continue" mean, with respect to any Eurodollar Rate Loan, the continuation of such Eurodollar Rate Loan as a Eurodollar Rate Loan on the last day of the Interest Period for such Loan. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Conversion" and "Convert" mean the conversion of a Loan from one Type to another Type. "Cost of Acquisition" means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (i) the value of the capital stock, warrants or options to acquire capital stock of the Borrower or any Subsidiary to be transferred in connection therewith, (ii) the amount of any cash and fair market value of other property (excluding property described in clause (i) and the unpaid principal amount of any debt instrument) given as consideration, (iii) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Indebtedness incurred, assumed, acquired or repaid by the Borrower or any Subsidiary in connection with such Acquisition, (iv) all additional purchase price amounts in the form of earnouts and other contingent obligations that should be recorded on the balance sheet of the Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of covenants not to compete, consulting agreements that should be recorded on financial statements of the Borrower and its Subsidiaries in accordance with GAAP, (vi) the aggregate fair market value of all other consideration given by the Borrower or any Subsidiary in connection with such Acquisition, and (vii) out-of-pocket transaction costs for the services and expenses of attorneys, accountants and other consultants incurred in effecting such transaction, and other similar transaction costs so incurred and capitalized in accordance with GAAP. For purposes of determining the Cost of Acquisition for any transaction, the capital stock of the Borrower shall be valued (I) in the case of capital stock that is then designated as a national market system security by the National Association of Securities Dealers, Inc. ("NASDAQ") or is listed on a national securities exchange, the average of the last reported bid and ask quotations or the last prices reported thereon, and (II) with respect to any other shares of capital stock, as determined by the Board of Directors of the Borrower and, if requested by the Administrative Agent, determined to be a reasonable valuation by the independent public accountants referred to in Section 6.01(a). "Credit Extension" means each of a Borrowing or an L/C Credit Extension. "Debtor Relief Laws" means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. "Default" means any event or circumstance that, with the giving of any notice, the passage of time, or both, would be an Event of Default. 12 "Default Rate" means an interest rate equal to the Base Rate plus 2% per annum or, if lesser, the maximum rate permitted by applicable Laws; provided, however, that with respect to Eurodollar Rate Loans, until the end of the Interest Period during which the Default Rate is first applicable, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus 2% per annum, and thereafter, the Base Rate plus 2% per annum, or in each case if lesser, the maximum rate permitted by applicable Laws. "Defaulting Lender" means, at any time of determination thereof, any Lender that has failed to fund any portion of the Revolving Loans, the Term Loans, participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder, except to the extent that any such failure to fund is based on a good-faith dispute about such Lender's obligation so to fund, of which dispute the Administrative Agent has been informed in writing in reasonable detail. "Designated L/C Issuer" means, at any time, any Revolving Lender then designated by the Borrower pursuant to Section 2.04(l) to issue Letters of Credit. "Designated L/C Issuer Amount" means the maximum face amount of Letters of Credit to be issued by the Designated L/C Issuer (on the terms and conditions in this Agreement) and other L/C Obligations to be incurred in respect of such Letters of Credit, which shall be the lesser of the amount set forth in the notice with respect to such Designated L/C Issuer provided by the Borrower pursuant to Section 2.04(l) and the Letter of Credit Sublimit. "Diamond Acquisition" means the Acquisition by the Borrower and certain of its Subsidiaries of all or substantially all of the assets of Diamond Brands Operating Corp. and certain of its affiliates pursuant to that certain Asset Purchase Agreement dated as of November 27, 2002, by and among the Borrower, Diamond Brands, Inc., Diamond Brands Operating Corp., Diamond Brands Kansas, Inc. and Forster, Inc. "Direct Foreign Subsidiary" means a Subsidiary other than a Domestic Subsidiary a majority of whose Voting Securities, or a majority of whose Subsidiary Securities, are owned by the Borrower or a Domestic Subsidiary. "Disposition" or "Dispose" means the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. "Dollar" and "$" means lawful money of the United States of America. "Domestic Subsidiary" means any Subsidiary of the Borrower organized under the laws of the United States of America, any state or territory thereof or the District of Columbia. "Eligible Assignee" has the meaning specified in Section 10.07(g). "Eligible Securities" means the following obligations and any other obligations approved prior to their incurrence in writing by the Administrative Agent: 13 (a) Government Securities; (b) obligations of any corporation organized under the laws of any state of the United States of America or under the laws of any other nation, payable in the United States of America, expressed to mature not later than 92 days following the date of issuance thereof and rated in an investment grade rating category by S&P and Moody's; (c) interest bearing demand or time deposits issued by any Lender or certificates of deposit maturing within one year from the date of issuance thereof and issued by a bank or trust company organized under the laws of the United States or of any state thereof having capital surplus and undivided profits aggregating at least $400,000,000 and being rated "A" or better by S&P or "A" or better by Moody's; and (d) Repurchase Agreements. "Environmental Laws" means all Laws relating to environmental matters applicable to any property. "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "Equity Securities" means, with respect to any Person at any time, equity securities issued by such Person, including without limitation any security not constituting Indebtedness exchangeable, exercisable or convertible for or into equity securities of such Person both at the time of issuance of such equity security and at the time of each such exchange, exercise or conversion which results in the receipt of Net Proceeds therefrom by such Person. "ERISA" means the Employee Retirement Income Security Act of 1974 and all regulations issued pursuant thereto. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment 14 as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Rate" means for any Interest Period with respect to any Eurodollar Rate Loan, a rate per annum determined by Administrative Agent pursuant to the following formula: Interbank Offered Rate Eurodollar Rate = ---------------------------------------------- 1.00 - Eurodollar Reserve Percentage Where "Interbank Offered Rate" means, for such Interest Period: (i) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (ii) if the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (iii) if the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, Continued or Converted by Bank of America in its capacity as a Lender and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch or London Affiliate to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. "Eurodollar Rate Loan" means a Loan (including a Segment) bearing interest or to bear interest at the Eurodollar Rate. 15 "Eurodollar Rate Segment" means a Segment bearing interest or to bear interest at the Eurodollar Rate. "Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. The determination of the Eurodollar Reserve Percentage by the Administrative Agent shall be conclusive in the absence of manifest error. "Event of Default" means any of the events or circumstances specified in Article VIII. "Excess Cash Flow" means, with respect to the Borrower and its Subsidiaries for any fiscal year, the difference of (i) Consolidated EBITDA for such period (including therein any net gain or loss, as applicable, of an extraordinary nature otherwise excluded from the calculation thereof in the definition of "Consolidated Net Income"), minus (ii) the sum of (A) the change in Consolidated Working Capital as at the end of such fiscal year; provided the positive change in Consolidated Working Capital shall not exceed $10,000,000 for any fiscal year; plus (B) Capital Expenditures for such period plus (C) Consolidated Fixed Charges for such period plus (D) taxes paid in cash during such period plus (E) the aggregate amount of any optional prepayments made by the Borrower pursuant to Section 2.06 hereof during such period, the aggregate amount of prepayments made in connection with required reductions of the Aggregate Revolving Credit Commitment during such period and the aggregate amount of required repayments of principal of the Term Loans during such period. "Exchange Notes" has the meaning given to such term in the 2002 Indenture. "Exchange Offer" has the meaning given to such term in the 2002 Indenture. "Existing Agreement" has the meaning given thereto in the preamble to this Agreement. "Facility" means any one or more, as the context may require, of the Revolving Credit Facility, the Term Loan A Facility and the Term Loan B Facility. "Factoring Agreement" means an agreement by and between the Borrower or a Subsidiary and a Factoring Company pursuant to which the Borrower or such Subsidiary shall sell, transfer and assign its rights, title and interests in certain accounts receivable, specifically identified therein, to a Factoring Company, a copy of which has been provided to the Administrative Agent prior to its execution and delivery by all parties thereto and the terms of which are acceptable to the Administrative Agent in form and substance in its reasonable discretion. "Factoring Company" means that certain Person party to any Factoring Agreement to whom the Borrower or a Subsidiary sells, transfers and assigns its right, title and interests in certain accounts receivable pursuant to the terms of such Factoring Agreement. 16 "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Bank of America on such day on such transactions as determined by the Administrative Agent. "Fixed Charge Ratio" means, with respect to the Borrower and its Subsidiaries for any Four-Quarter Period ending on the date of computation thereof, the ratio of (i) Consolidated EBITDA minus (without duplication) Capital Expenditures minus (without duplication) taxes paid in cash for such period to (ii) Consolidated Fixed Charges for such period. "Fleet" means Fleet National Bank. "Foreign Lender" has the meaning specified in Section 10.15(a). "Four-Quarter Period" means a period of four full consecutive fiscal quarters of the Borrower and its Subsidiaries, taken together as one accounting period. "FRB" means the Board of Governors of the Federal Reserve System of the United States of America. "Fund" has the meaning specified in Section 10.07(g). "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied. "Government Securities" means direct obligations of, or obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by, the United States of America. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, and any corporation or other entity (other than one performing solely a commercial function) owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guarantors" means, collectively or individually as the context may indicate, each of the Domestic Subsidiaries of the Borrower at the Closing Date (after giving effect to the Lehigh 17 Acquisition) and each other Person who becomes a party to the Guaranty (including by execution of a Guaranty Joinder Agreement). "Guaranty" means that certain Guaranty Agreement dated as of the Original Closing Date among the Guarantors and the Administrative Agent substantially in the form of Exhibit F, as (i) amended by the Consolidated Security Instrument Amendment, (ii) supplemented from time to time by the execution and delivery of Guaranty Joinder Agreements pursuant to Section 4.01 or 6.14 or otherwise, and (iii) from time to time the same may be otherwise supplemented or amended, modified, amended and restated or replaced. "Guaranty Joinder Agreement" means each Guaranty Joinder Agreement, substantially in the form thereof attached to the Guaranty, executed and delivered by a Guarantor to the Administrative Agent pursuant to Section 4.01 or 6.14 or otherwise, in each case as amended, modified, supplemented, amended and restated or replaced. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature, the generation, handling, storage, transportation, disposal, treatment, release, discharge or emission of which is subject to any Environmental Law. "Honor Date" has the meaning set forth in Section 2.04(c)(i). "Immaterial Subsidiary" means any Domestic Subsidiary (but in all cases excluding the Lehigh Companies) that (i) has not become a party to a Guaranty or any Security Instrument (ii) has total assets (including equity interests in other Subsidiaries) of less than 1% of total domestic assets of the Borrower and its Subsidiaries and, when aggregated with the assets of all other Subsidiaries previously or substantially simultaneously to be designated "Immaterial Subsidiaries," of less than 5% of total domestic assets of the Borrower and its Subsidiaries (calculated as of the most recent fiscal period with respect to which the Administrative Agent shall have received financial statements required to be delivered pursuant to Sections 6.01(a) or (b)), and (iii) has revenues of less than 1% of the total revenues (on a consolidated basis) of the Borrower and its Domestic Subsidiaries and, when aggregated with the revenues of all other Subsidiaries previously or substantially simultaneously to be designated "Immaterial Subsidiaries," of less than 5% of total revenues of the Borrower and its Domestic Subsidiaries (calculated as of the most recent fiscal period with respect to which the Administrative Agent shall have received financial statements required to be delivered pursuant to Sections 6.01(a) or (b)). In the event that either of the aggregate tests above are not met, the Borrower may identify those Subsidiaries that will continue to constitute Immaterial Subsidiaries after meeting all requirements of this definition. "Indebtedness" means, as to any Person at a particular time, all of the following without duplication, whether or not included as indebtedness or liabilities in accordance with GAAP: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; 18 (b) all direct or Contingent Obligations of such Person arising under letters of credit (including standby and commercial), bankers' acceptances, bank guaranties, surety bonds and similar instruments; (c) net obligations under any Swap Contract in an amount equal to the Swap Termination Value thereof; (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business); (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) Capital Leases and Synthetic Lease Obligations; and (g) all Contingent Obligations of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. "Indemnified Liabilities" has the meaning set forth in Section 10.05. "Indemnitees" has the meaning set forth in Section 10.05. "Intellectual Property" means trademarks and service marks (whether registered or unregistered) and trade names; patents (including any continuations, continuations in part, renewals and applications for any of the foregoing); copyrights (including any registrations and applications therefor and whether registered or unregistered); computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, databases, including any and all collections of data, whether machine readable or otherwise (but excluding off-the-shelf software or software subject to shrink-wrap or click-wrap licenses); original works of authorship; mask works; technology; trade secrets, know how, proprietary processes, formulae, algorithms, models, user interfaces, inventions, discoveries, concepts, ideas, techniques, methods, source codes, object codes, methodologies and, with respect to all of the foregoing, related confidential data or information and any licenses of the foregoing; but excluding any limited copyright license or permission from authors, publishers or other parties to use material in the Borrower's or a Subsidiary's products that have no future payment obligations. 19 "Interbank Offered Rate" has the meaning therefor set forth in the definition of Eurodollar Rate. "Interest Payment Date" means, (a) as to any Eurodollar Rate Loan, the last day of the relevant Interest Period, any date that such Loan is prepaid or Converted, in whole or in part, and the Revolving Credit Maturity Date, the Term Loan A Maturity Date or the Term Loan B Maturity Date, as applicable; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, interest shall also be paid on the Business Day which falls every three months after the beginning of such Interest Period; and (b) as to any Base Rate Loan or Swing Line Loan, the last Business Day of each March, June, September and December and the Revolving Credit Maturity Date, the Term Loan A Maturity Date or the Term Loan B Maturity Date, as applicable; provided, further, that interest accruing at the Default Rate shall be payable from time to time upon demand of the Administrative Agent. "Interest Period" means, for each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or on the date any Loan is Continued as or Converted into a Eurodollar Rate Loan, and ending, in each case, on the date which is one, two, three or six months thereafter, as selected by the Borrower in its Revolving Loan Notice or Term Loan Interest Rate Selection Notice, provided that: (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period shall extend beyond the Stated Maturity Date or, with respect to any Segment of the Term Loan B, the Stated Term Loan B Maturity Date. "Intropack" means Intropack, a Korean corporation. "Intropack Agreement" means that certain Intellectual Property Assignment Agreement by and between Tilia International, Inc., Intropack, a Korean corporation, and Kyul Joo Lee, an individual, dated as of November 27, 2002, pursuant to which Tilia International, Inc., a Guarantor, has acquired, and will acquire, certain intellectual property useful in the business of the Borrower and its Subsidiaries. "Investment" means, as to any Person, any acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, guaranty of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment 20 shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment, but including subsequent amounts of Investments in the same Person at the time such amount is actually invested, whether pursuant to earnouts, working capital adjustments or other contractual obligations, or otherwise. "IP Security Agreement" means the Intellectual Property Security Agreement dated as of the Original Closing Date by the Borrower and one or more of the Guarantors to the Administrative Agent, as (i) amended by the Consolidated Security Instrument Amendment, (ii) supplemented from time to time by the execution and delivery of IP Security Joinder Agreements pursuant to Section 4.01 or 6.14 or otherwise, and (iii) otherwise supplemented or amended, modified, amended and restated or replaced. "IP Security Joinder Agreement" means each Intellectual Property Security Joinder Agreement, substantially in the form thereof attached to the IP Security Agreement, executed and delivered by a Guarantor or any other Person to the Administrative Agent pursuant to Section 4.01 or 6.14 or otherwise, in each case as amended, modified, supplemented, amended and restated or replaced. "IRS" means the United States Internal Revenue Service and any successor governmental agency performing a similar function. "Joinder Agreements" means, collectively, Guaranty Joinder Agreements, the Pledge Joinder Agreements, the IP Security Joinder Agreements and the Security Joinder Agreements. "Laws" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "L/C Advance" means, with respect to each Revolving Lender, such Revolving Lender's funding of its participation in any L/C Borrowing in accordance with its Pro Rata Revolving Share as set forth in Section 2.04(c). "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. "L/C Credit Extension" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof. "L/C Issuer" means each of Bank of America, Fleet and (upon designation pursuant to Section 2.04(l)) the Designated L/C Issuer, each in their capacity as issuers of Letters of Credit hereunder, or any successor to any of them as an issuer of Letters of Credit hereunder. 21 "L/C Obligations" means, as at any date of determination, the aggregate undrawn face amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. "Lehigh" means Lehigh Consumer Products Corporation, a Pennsylvania corporation. "Lehigh Acquisition" means the Acquisition by the Borrower and one or more of its Subsidiaries of the Lehigh Companies in accordance with the terms of the Lehigh Acquisition Documents. "Lehigh Acquisition Documents" means, individually or collectively as the context may indicate, (i) the Lehigh Stock Purchase Agreement, (ii) each document relating to the Lehigh Debt Assumption and/or Release, including all consents of creditors with respect thereto and all evidence that none of the Borrower, any Subsidiary of the Borrower or any Lehigh Company remains liable under any Lehigh Indebtedness being assumed pursuant to the Lehigh Debt Assumption and/or Release (after giving effect thereto), and (iii) each other material transaction document entered into or delivered by the Borrower, one or more Subsidiaries of the Borrower, the Lehigh Seller and the Lehigh Companies, or any of them, related to or in connection with the Lehigh Acquisition. "Lehigh Companies" means Lehigh and its Subsidiary to be acquired by the Borrower or one or more of its Subsidiaries in the Lehigh Acquisition, and including any Subsidiaries of the Borrower not historically a Subsidiary of Lehigh but created or acquired in order to consummate the Lehigh Acquisition, the legal name and jurisdiction of formation of which Persons are set forth on Schedule 1.02(b) hereto. "Lehigh Debt Assumption and/or Release" means either (a) the assumption, in connection with the Lehigh Acquisition and pursuant to one or more Lehigh Acquisition Documents effective on or before the Closing Date, by one or more Persons other than the Borrower, any Subsidiary of the Borrower or any Lehigh Company (with a full release of the applicable Lehigh Companies), of all of the Lehigh Indebtedness that is not being paid in full and terminated on the Closing Date in connection with the Lehigh Acquisition, or (b) the full release (effective on or before the Closing Date) of the Lehigh Companies from the Lehigh Indebtedness. "Lehigh Earn-Out" means the obligation of the Borrower or any of its Subsidiaries or Affiliates to pay, after the initial closing of the Lehigh Acquisition, any amount in the form or nature of post-closing contingent consideration to the Lehigh Seller (or any of their respective assignees), pursuant to Section 2.2 of the Lehigh Stock Purchase Agreement or any other provision of any Lehigh Acquisition Document. "Lehigh Financial Statements" means the audited consolidated balance sheet of Lehigh and its Subsidiaries as of December 31, 2002, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for the years ended December 31, 2002 and December 31, 2001, including in each case the notes thereto. "Lehigh Indebtedness" means all Indebtedness of any of the Lehigh Companies, all of which is either to be (a) paid in full and terminated on the Closing Date, or (b) assumed or released pursuant to the Lehigh Debt Assumption and/or Release. 22 "Lehigh Seller" means American Manufacturing Company, Inc. "Lehigh Stock Purchase Agreement" means that certain Stock Purchase Agreement dated as of August 15, 2003, by and among Lehigh American Company, Inc. and the Borrower, including all exhibits and schedules thereto. "Lender" has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the L/C Issuer and the Swing Line Lender. "Lending Office" means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent. "Letter of Credit" means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. "Letter of Credit Application" means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the applicable L/C Issuer. "Letter of Credit Expiration Date" means the day that is seven days prior to the Stated Maturity Date (or, if such day is not a Business Day, the next preceding Business Day). "Letter of Credit Fee" has the meaning specified in Section 2.04(i). "Letter of Credit Sublimit" means an amount equal to the lesser of the Aggregate Revolving Credit Commitments and $15,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Revolving Credit Commitments. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction) of or in property securing any obligation to, or a claim by a Person other than the owner of such property, whether statutory, by contract or otherwise, including the interest of a purchaser of accounts receivable. "Loan" means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Loan, a Term Loan or a Swing Line Loan, including any Segment. "Loan Documents" means this Agreement, each Note, the Guaranty (including the Guaranty Joinder Agreements), each Security Instrument, the Agent/Arranger Fee Letter, each Revolving Loan Notice, Term Loan Interest Rate Selection Notice, each Letter of Credit Application and each Compliance Certificate, and all other instruments and documents 23 heretofore or hereafter executed or delivered to or in favor of any Lender or the Administrative Agent in connection with the Loans made and transactions contemplated by this Agreement. "Loan Parties" means, collectively, the Borrower, each Guarantor and each other Person providing Collateral pursuant to any Security Instrument. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, condition (financial or otherwise), liabilities (actual or contingent) or prospects of the Borrower and its Subsidiaries taken as a whole (including giving effect to the Lehigh Acquisition); (b) a material impairment of (i) the ability of any Loan Party to pay or perform its obligations under any Loan Document to which it is a party or (ii) the ability of any party to any of the Lehigh Acquisition Documents to pay or perform its obligations thereunder; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability (i) against any Loan Party of any Loan Document to which it is a party, or (ii) against any party to any Lehigh Acquisition Document of such Lehigh Acquisition Document. "Maximum Increase Amount" means $75,000,000, provided that to the extent the Scheduled Acquisition B is consummated on or prior to January 31, 2004, the Maximum Increase Amount shall include an additional amount not to exceed $75,000,000 (for an aggregate amount not to exceed $150,000,000) so long as all of such additional amount is applied, on or prior to January 31, 2004, to pay the Cost of Acquisition of Scheduled Acquisition B. "Moody's" means Moody's Investors Service, Inc. and any successor thereto. "Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions. "Net Proceeds" means: (a) with respect to any Disposition by the Borrower or any Subsidiary, the excess, if any, of (i) the sum of cash and cash equivalents received in connection with such Disposition (including any cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by such asset and that is required to be repaid in connection with such Disposition (other than Indebtedness under the Loan Documents), (B) the out-of-pocket expenses incurred by the Borrower or any Subsidiary in connection with such Disposition and (C) all taxes required to be paid or accrued as a result of any gain recognized in connection therewith; (b) with respect to any public or private offering of any security, cash payments received by the Borrower or any Subsidiary therefrom as and when received, net of all legal, accounting, banking and underwriting fees and expenses, commissions, discounts and other issuance expenses incurred in connection therewith and all taxes required to be paid or accrued as a consequence of such issuance; and 24 (c) with respect to proceeds of insurance carried on Collateral pursuant to this Credit Agreement and the Security Agreement and the other Loan Documents, cash insurance payments received by the Borrower or any Subsidiary as and when received, net of all direct out of pocket costs and expenses incurred in the collection of claims, together with any taxes required to be paid or accrued as a consequence of the receipt of such insurance proceeds. "Non-Scheduled Acquisition B Equity Issuance" means the issuance of Equity Securities of the Borrower, other than a Scheduled Acquisition B Equity Issuance, within 180 days after the Closing Date; provided that no Scheduled Acquisition B occurs at any time before, on or after the date of such issuance. "Non-Exempt Net Proceeds" means the difference (but not less than $0) of (a) the aggregate Net Proceeds of the Non-Scheduled Acquisition B Equity Issuance, as reduced by the aggregate amount of such Net Proceeds utilized within 180 days of such issuance to pay Costs of Acquisition of consummated Permitted Acquisitions, minus (b) $50,000,000. "Notes" means, collectively, the Revolving Loan Notes, the Term Loan Notes and the Swing Line Note. "Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of the Borrower arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding. "Off-Balance Sheet Liabilities" means, with respect to any Person as of any date of determination thereof, without duplication and to the extent not included as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP: (a) with respect to any asset securitization transaction (including any accounts receivable purchase facility) (i) the unrecovered investment of purchasers or transferees of assets so transferred and (ii) any other payment, recourse, repurchase, hold harmless, indemnity or similar obligation of such Person or any of its Subsidiaries in respect of assets transferred or payments made in respect thereof, other than limited recourse provisions that are customary for transactions of such type and that neither (x) have the effect of limiting the loss or credit risk of such purchasers or transferees with respect to payment or performance by the obligors of the assets so transferred nor (y) impair the characterization of the transaction as a true sale under applicable Laws (including Debtor Relief Laws); (b) the monetary obligations under any financing lease or so-called "synthetic," tax retention or off-balance sheet lease transaction which, upon the application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as indebtedness; (c) the monetary obligations under any sale and leaseback transaction which does not create a liability on the consolidated balance sheet of such Person and its Subsidiaries; or (d) any other monetary obligation arising with respect to any other transaction which (i) upon the application of any Debtor Relief Law to such Person or any of its Subsidiaries, would be characterized as indebtedness or (ii) is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheet of such Person and its Subsidiaries (for purposes of this clause (d), any transaction 25 structured to provide tax deductibility as interest expense of any dividend, coupon or other periodic payment will be deemed to be the functional equivalent of a borrowing). "Organization Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the state of its formation and all certificates and articles issued thereto by such secretary of state or other department, in each case as amended from time to time. "Organizational Action" means with respect to any corporation, limited liability company, partnership, limited partnership, limited liability partnership or other legally authorized incorporated or unincorporated entity, any corporate, organizational or partnership action (including any required shareholder, member or partner action), or other similar official action, as applicable, taken by such entity. "Original Closing Date" means the first date all the conditions precedent in Section 4.01 of the Existing Agreement were satisfied or waived in accordance with Section 4.01 of the Existing Agreement (or, in the case of Section 4.01(b) of the Existing Agreement, waived by the Person entitled to receive the applicable payment), which date occurred on April 24, 2002. "Other Taxes" has the meaning therefor set forth in Section 3.01(b). "Outstanding Amount" means (i) with respect to any Term Loan on any date, the aggregate outstanding principal amount thereof after giving effect to the Borrowing of such Term Loan (whether on the Original Closing Date or at another time) and any prepayments or repayments of such Term Loan (or any Segment) occurring on such date, (ii) with respect to Revolving Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Loans and Swing Line Loans, as the case may be, occurring on such date; and (iii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes to the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. "OWD Acquisition" means the Acquisition by the Borrower and one or more Subsidiaries of O.W.D., Incorporated and its subsidiaries and of Tupper Lakes Plastics, Incorporated and its subsidiaries. "Participant" has the meaning specified in Section 10.07(d). "PBGC" means the Pension Benefit Guaranty Corporation. "Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA 26 and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. "Permitted Acquisition" means any Acquisition that is permitted by the terms of Section 7.14 (but expressly excluding the Lehigh Acquisition and the Scheduled Acquisition B). "Permitted Acquisition Documents" means, individually or collectively as the context may indicate, with respect to any Permitted Acquisition, (i) an acquisition agreement, sale agreement or other similar agreement evidencing the obligations of the parties to enter into such Acquisition transaction, and (ii) any other material transaction document relating to such Acquisition. "Permitted Acquisition Earn-Out" means the obligation of the Borrower or any of its Subsidiaries or Affiliates to pay, after the initial closing of any Permitted Acquisition, any amount in the form or nature of post-closing contingent consideration to any seller under such Acquisition transaction (or any of its assignees), pursuant to any provision of the respective Permitted Acquisition Documents. "Permitted Business" means any business in which (a) the Borrower and its Subsidiaries, or (b) the Lehigh Companies were engaged on the Closing Date, any other business in the consumer products industry, including without limitation food products, and any business reasonably related or complementary thereto. "Permitted Liens" has the meaning set forth in Section 7.01. "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Borrower or any ERISA Affiliate. "Pledge Agreement" means that certain Securities Pledge Agreement dated as of the Original Closing Date among the Borrower, certain Guarantors and the Administrative Agent, as (i) amended by the Consolidated Security Instrument Amendment, (ii) supplemented from time to time by the execution and delivery of Pledge Joinder Agreements pursuant to Section 4.01 or 6.14 or otherwise, and (iii) otherwise supplemented (including by Pledge Agreement Supplement) or amended, modified, amended and restated or replaced. "Pledge Agreement Supplement" means the Pledge Agreement Supplement in the form affixed as an exhibit to the Pledge Agreement. "Pledged Interests" means (a) with respect to Direct Foreign Subsidiaries, 65% of the Voting Securities (or if the Borrower and its Subsidiaries shall own less than 65%, then all of the Voting Securities owned by them), and 100% of all other Subsidiary Securities, of each Direct Foreign Subsidiary, and (b) with respect to Domestic Subsidiaries, all of the Subsidiary Securities of each Domestic Subsidiary. 27 "Pledge Joinder Agreement" means each Pledge Joinder Agreement, substantially in the form thereof attached to the Pledge Agreement, executed and delivered by a Guarantor to the Administrative Agent pursuant to Section 4.01 or 6.14 or otherwise, in each case as amended, modified, supplemented, amended and restated or replaced. "Post-Closing Agreement" has the meaning set forth in Section 4.01(a). "Pro Rata Revolving Share" means, with respect to each Revolving Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Revolving Credit Commitment of such Revolving Lender at such time and the denominator of which is the amount of the Aggregate Revolving Credit Commitments at such time; provided that if the Aggregate Revolving Credit Commitments have been terminated at such time, then the Pro Rata Revolving Share of each Revolving Lender shall be (x) with respect to the distribution of payments to such Revolving Lender, the percentage (carried out to the ninth decimal place) of the aggregate Outstanding Amount that is held by such Revolving Lender (with the aggregate amount of each Revolving Lender's funded participations in L/C Obligations and Swing Line Loans being deemed "held" by such Revolving Lender for this purpose), and (y) for all other purposes, determined based on the Pro Rata Revolving Share of such Revolving Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to Section 10.07. The Pro Rata Revolving Share of each Revolving Lender as of the Closing Date is set forth opposite the name of such Revolving Lender on Schedule 1.02(a) or in the Assignment and Assumption pursuant to which such Revolving Lender becomes a party hereto, as applicable. "Pro Rata Term A Share" means, with respect to each Term Loan A Lender, the percentage (carried out to the ninth decimal place) of the principal amount of the Term Loan A funded (including fundings pursuant to Section 2.15) by such Term Loan A Lender as of the date of measurement thereof, after giving effect to any subsequent assignments made pursuant to Section 10.07. The Pro Rata Term A Share of each Term Loan A Lender as of the Closing Date is set forth opposite the name of such Term Loan A Lender on Schedule 1.02(a) or in the Assignment and Assumption pursuant to which such Term Loan A Lender becomes a party hereto, as applicable. "Pro Rata Term B Share" means, with respect to each Term Loan B Lender at any time, the percentage (carried out to the ninth decimal place) of the principal amount of the Term Loan B funded (including fundings pursuant to Section 2.15) or committed to be funded, or both, by such Term Loan B Lender as of the date of measurement thereof, after giving effect to any subsequent assignments made pursuant to Section 10.07. The initial Pro Rata Term B Share of each Term Loan B Lender is set forth opposite the name of such Term Loan B Lender on Schedule 1.02(a) or in the Assignment and Assumption pursuant to which such Term Loan B Lender becomes a party hereto, as applicable. "Quarterly Fee Calculation Date" shall mean the last Business Day of each March, June, September and December. "Quarterly Fee Payment Date" means, with respect to any Quarterly Fee Calculation Date, the date that is five (5) Business Days after such Quarterly Fee Calculation Date. 28 "Register" has the meaning set forth in Section 10.07(c). "Related Swap Contract" means all Swap Contracts which are entered into or maintained with a Lender or Affiliate of a Lender in connection with Indebtedness of the Borrower arising under the Loan Documents or the Subordinated Indenture and which are not prohibited by the express terms of the Loan Documents. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived. "Repurchase Agreement" means a repurchase agreement entered into with (i) any financial institution whose debt obligations are rated "A" by either of S&P or Moody's or whose commercial paper is rated "A-1" by S&P or "P-1" by Moody's, or (ii) any Lender. "Required Lenders" means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, at any time after the Aggregate Revolving Credit Commitments have been terminated, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Revolving Lender's risk participations and funded participations in L/C Obligations and Swing Line Loans being deemed "held" by such Revolving Lender for purposes of this definition); provided that the portion of the Aggregate Commitments of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders. "Required Revolving Lenders" means, as of any date of determination, Revolving Lenders with Revolving Credit Commitments that total more than 50% of the Aggregate Revolving Credit Commitments or, at any time after the Aggregate Revolving Credit Commitments have been terminated, Revolving Lenders holding in the aggregate more than 50% of the Outstanding Amount of the Revolving Loans (with the aggregate amount of each Revolving Lender's risk participations and funded participations in L/C Obligations and Swing Line Loans being deemed "held" by such Revolving Lender for purposes of this definition); provided that the portion of the Aggregate Revolving Credit Commitments of, and the portion of the Outstanding Amount of the Revolving Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Revolving Lenders. "Required Term Loan A Lenders" means, as of any date of determination, Term Loan A Lenders having more than 50% of the Outstanding Amount of the Term Loan A; provided that the portion of the Outstanding Amount of the Term Loan A held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Term Loan A Lenders. "Required Term Loan B Lenders" means, as of any date of determination, Term Loan B Lenders whose Pro Rata Term B Shares of the Outstanding Amount of the Term Loan B total more than 50% of the aggregate Outstanding Amount of the Term Loan B; provided that the Outstanding Amount of the Term Loan B held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Required Term Loan B Lenders. 29 "Responsible Officer" means the chief executive officer, president, senior vice president, chief operating officer, vice president, chief financial officer or treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate and/or other action of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest. "Revolving Borrowing" means a borrowing consisting of simultaneous Revolving Loans of the same Type and, as to Eurodollar Rate Loans, having the same Interest Period made by each of the Revolving Lenders pursuant to Section 2.02. "Revolving Credit Commitment" means, as to each Revolving Lender, its obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.02, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Lender's name on Schedule 1.02(a), as such amount may be reduced or adjusted from time to time in accordance with this Agreement. "Revolving Credit Facility" means the facility described in Section 2.02 providing for Revolving Loans to the Borrower by the Revolving Lenders in the maximum aggregate principal amount at any time outstanding of $70,000,000, as reduced from time to time pursuant to the terms of this Agreement. "Revolving Credit Maturity Date" means (a) the Stated Maturity Date, or (b) such earlier date upon which the Aggregate Revolving Credit Commitments may be terminated in accordance with the terms hereof. "Revolving Lender" means each Lender that has a Revolving Credit Commitment or, following termination of the Revolving Credit Commitments, has Revolving Loans outstanding or participations in an outstanding Letter of Credit or Swing Line Loan. "Revolving Loan" means a Base Rate Loan or a Eurodollar Rate Loan made to the Borrower by a Revolving Lender in accordance with its Pro Rata Revolving Share pursuant to Section 2.02, except as otherwise provided herein. "Revolving Loan Note" means a promissory note made by the Borrower in favor of a Revolving Lender evidencing Revolving Loans made by such Revolving Lender, substantially in the form of Exhibit C-2. 30 "Revolving Loan Notice" means a notice of (a) a Revolving Borrowing, (b) a Conversion of Revolving Loans, or (c) a Continuation of Revolving Loans as the same Type, pursuant to Section 2.03(a), which, if in writing, shall be substantially in the form of Exhibit A-1. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. "Same Day Funds" means immediately available funds. "Scheduled Acquisition A" means the Acquisition, if consummated, by the Borrower and one or more of its Subsidiaries of the entity, or of all or substantially all of the assets of the entity, set forth on Schedule 1.02(c). "Scheduled Acquisition B" means the Acquisition, if consummated, by the Borrower and one or more of its Subsidiaries of the entity, or of all or substantially all of the assets of the entity, and on the terms set forth on Schedule 1.02(d). "Scheduled Acquisition B Earn-Out" means the obligation of the Borrower or any of its Subsidiaries or Affiliates to pay, after the initial closing of Scheduled Acquisition B, any amount in the form or nature of post-closing contingent consideration to any of the sellers of Scheduled Acquisition B (or any of the their respective assignees), pursuant to any provision of any Scheduled Acquisition B document and in accordance with the provisions of Schedule 1.02(d). "Scheduled Acquisition B Equity Issuance" means the issuance of common stock of the Borrower on or prior to the date of consummation of Scheduled Acquisition B (but not later than January 31, 2004), the Net Proceeds of which are used exclusively to consummate Scheduled Acquisition B. "Secured Parties" means, collectively, with respect to each of the Security Instruments, the Administrative Agent, the Lenders and such other Persons for whose benefit the Lien thereunder is conferred, as therein provided. "Security Agreement" means the Security Agreement dated as of the Original Closing Date by the Borrower and one or more of the Guarantors to the Administrative Agent for the benefit of the Secured Parties, as (i) amended by the Consolidated Security Instrument Amendment, (ii) supplemented from time to time by the execution and delivery of Security Joinder Agreements pursuant to Section 4.01 or 6.14 or otherwise, and (iii) otherwise supplemented or amended, modified, amended and restated or replaced. "Security Instruments" means, collectively or individually as the context may indicate, the Pledge Agreement (including the Pledge Joinder Agreements and the Pledge Agreement Supplements), the Security Agreement (including the Security Joinder Agreements), the IP Security Agreement (including the IP Security Joinder Agreements), the Consolidated Security Instrument Amendment, and all other agreements (including control agreements), instruments and other documents, whether now existing or hereafter in effect, pursuant to which the Borrower or any Subsidiary or other Person shall grant or convey to the Administrative Agent or the Lenders a Lien in, or any other Person shall acknowledge any such Lien in, property as security for all or any portion of the Obligations, any other obligation under any Loan Document 31 and any obligation or liability arising under any Related Swap Contract, as any of them may be amended, modified or supplemented from time to time. "Security Joinder Agreement" means each Security Joinder Agreement, substantially in the form thereof attached to the Security Agreement, executed and delivered by a Guarantor or any other Person to the Administrative Agent pursuant to Section 4.01 or 6.14 or otherwise, in each case as amended, modified, supplemented, amended and restated, or replaced. "Segment" means a portion of any Term Loan (or all thereof) with respect to which a particular interest rate is (or is proposed to be) applicable. "Senior Leverage Ratio" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Senior Indebtedness as of such date to (b) Consolidated EBITDA for the Four-Quarter Period ending on or most recently ended prior to such date. "Solvent" means, when used with respect to any Person, that at the time of determination: (a) the fair value of its assets (both at fair valuation and at present fair saleable value on an orderly basis) is in excess of the total amount of its liabilities, including Contingent Obligations; and (b) it is then able and expects to be able to pay its debts as they mature; and (c) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. "Stated Maturity Date" means April 24, 2007. "Stated Term Loan B Maturity Date" means April 24, 2008. "Stockholders' Equity" means, as of any date of determination for the Borrower and its Subsidiaries on a consolidated basis, stockholders' equity as of that date determined in accordance with GAAP. "Subordinated Indebtedness" means, without duplication, (i) all obligations of the Borrower and its Subsidiaries with respect to the Subordinated Notes as set forth therein and in the applicable Subordinated Indenture, and (ii) all obligations of the Borrower and its Subsidiaries with respect to the Tilia Seller Note as set forth therein. "Subordinated Indenture" means, collectively, (i) that certain Indenture dated as of April 24, 2002 between the Borrower and The Bank of New York, as Trustee, as amended from time to time in accordance with its terms and the terms of this Agreement (the "2002 Indenture"), and (ii) that certain Indenture dated as of January 29, 2003, as supplemented by a first Supplemental Indenture dated as of May 8, 2003, each between the Borrower and The Bank of New York, as Trustee, as amended or further supplemented from time to time in accordance with its terms and the terms of this Agreement. 32 "Subordinated Notes" has the meaning given the term "Notes" in each Subordinated Indenture, including the Exchange Notes. "Subsidiary" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Securities" means the shares of capital stock or the other equity interests issued by or equity participations in any Subsidiary, whether or not constituting a "security" under Article 8 of the Uniform Commercial Code as in effect in any jurisdiction. "Swap Contract" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement. "Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender). "Swing Line" means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.05. "Swing Line Borrowing" means a borrowing of a Swing Line Loan pursuant to Section 2.05. 33 "Swing Line Lender" means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder. "Swing Line Loan" has the meaning specified in Section 2.05(a). "Swing Line Revolving Loan Notice" means a notice of a Swing Line Borrowing pursuant to Section 2.05(b), which, if in writing, shall be substantially in the form of Exhibit B. "Swing Line Note" means a promissory note made by the Borrower in favor of the Swing Line Lender evidencing Swing Line Loans made by such Lender, substantially in the form of Exhibit C-3. "Swing Line Sublimit" means an amount equal to the lesser of the Aggregate Revolving Credit Commitments and $10,000,000. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Revolving Credit Commitments. "Syndication Agent" means Canadian Imperial Bank of Commerce, in its capacity as syndication agent under any of the Loan Documents, or any successor syndication agent. "Synthetic Lease Obligation" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). "Taxes" has the meaning therefor set forth in Section 3.01(a). "Term Loan" or "Term Loans" means, individually or collectively as the context may indicate, each of the Term Loan A and Term Loan B, as the case may be. "Term Loan A" means the Term Loan made pursuant to the Term Loan A Facility, as described in Section 2.01(a). "Term Loan A Amendment" means that certain Amendment No. 3 to Credit Agreement and Waiver, dated as of January 31, 2003, which amended the Existing Agreement. "Term Loan A Facility" means, subject to any increase pursuant to Section 2.15, the facility described in Section 2.01(a) consisting of the Term Loan (in this instance, as defined in the Existing Agreement) previously advanced to the Borrower by the Term Loan A Lenders, the original principal amount of $50,000,000 of which was advanced on the Original Closing Date, and the increased principal amount of $10,000,000 of which was advanced at the closing of the Term Loan A Amendment. "Term Loan A Lender" means each Lender that has a portion of the Term Loan A outstanding under the Term Loan A Facility. "Term Loan A Maturity Date" means (a) the Stated Maturity Date, or (b) such earlier date upon which the Outstanding Amounts under the Term Loan A, including all accrued and 34 unpaid interest, are either due and payable or are otherwise paid in full in accordance with the terms hereof. "Term Loan A Note" means a promissory note made by the Borrower in favor of a Term Loan A Lender evidencing the portion of the Term Loan A made by such Term Loan A Lender, substantially in the form of Exhibit C-1. "Term Loan B" means the Term Loan made pursuant to the Term Loan B Facility in accordance with Section 2.01(b). "Term Loan B Facility" means, subject to any increase pursuant to Section 2.15, the facility described in Section 2.01(b) providing for a Term Loan to the Borrower by the Term Loan B Lenders on the Closing Date in a maximum principal amount of $150,000,000. "Term Loan B Lender" means each Lender that has a portion of the Term Loan B outstanding under the Term Loan B Facility. "Term Loan B Maturity Date" means (a) the Stated Term Loan B Maturity Date, or (b) such earlier date upon which the Outstanding Amounts under the Term Loan B, including all accrued and unpaid interest, are either due and payable or are otherwise paid in full in accordance with the terms hereof. "Term Loan B Note" means a promissory note made by the Borrower in favor of a Term Loan B Lender evidencing the portion of the Term Loan B made by such Term Loan B Lender, substantially in the form of Exhibit C-4. "Term Loan Facilities" means the Term Loan A Facility and the Term Loan B Facility. "Term Loan Interest Rate Selection Notice" means the written notice delivered by a Responsible Officer of the Borrower in connection with the election of a subsequent Interest Period for any Eurodollar Rate Segment or the Conversion of any Eurodollar Rate Segment into a Base Rate Segment or the Conversion of any Base Rate Segment into a Eurodollar Rate Segment, substantially in the form of Exhibit A-2. "Term Loan Notes" means the Term Loan A Notes and the Term Loan B Notes. "Threshold Amount" means $10,000,000. "Tilia Earn-Out" means the obligation of the Borrower or any of its Subsidiaries or Affiliates to pay, after the initial closing of the Transaction, any amount in the form or nature of post-closing contingent consideration to the Tilia Sellers or Xeme Capital Corporation, a Cook Islands entity (or any of their respective assignees), pursuant to Section 3.2 of the Asset Purchase Agreement or any other provision of any Transaction Document. "Tilia Escrow Agreement" means, individually or collectively as the context may indicate, such of the Long Term Escrow Agreement (as defined in the Asset Purchase Agreement) and the Sellers' Escrow Agreement (as defined in the Asset Purchase Agreement), each of which was executed in connection with, and attached as Exhibit B-2 and Exhibit B-1 respectively to, the Asset Purchase Agreement, as remains in effect. 35 "Tilia Seller Note" means that certain promissory note by the Borrower in favor of Tilia International, Inc. dated as of April 24, 2002 in the aggregate initial principal amount of $5,000,000, which is due on April 24, 2004. "Tilia Sellers" means, collectively or individually as the context may indicate, Tilia International, Inc., a Cook Islands company, Tilia, Inc., a California company, and Tilia Canada, Inc., a Canadian company, or their successors, being the sellers of the Tilia business assets under the Transaction Documents. "Total Leverage Ratio" means, as of any date of determination, for the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the Four-Quarter Period ending on or most recently ended prior to such date. "Total Outstandings" means, at any date of determination thereof, the aggregate of the Outstanding Amount of (a) the Term Loan A, (b) the Term Loan B, (c) Revolving Loans, (d) L/C Obligations and (e) Swing Line Loans. "Transaction" means the Acquisition by the Borrower and its Subsidiaries of all or substantially all of the assets of Tilia International, Inc., a Cook Islands corporation, and its Subsidiaries in accordance with the terms of the Transaction Documents. "Transaction Documents" means, individually or collectively as the context may indicate, (i) the Asset Purchase Agreement, (ii) the Tilia Seller Note, (iii) the Tilia Escrow Agreement, and (iv) each other document entered into or delivered by the Borrower and the Tilia Sellers, or any of them, related to or in connection with the Transaction. "2002 Indenture" has the meaning set forth in the definition of Subordinated Indenture. "Type" means with respect to a Revolving Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan. "Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "Unreimbursed Amount" has the meaning set forth in Section 2.04(c)(i). "Voting Securities" means shares of capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 1.03 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. 36 (b) (i) The words "herein" and "hereunder" and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof. (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears. (iii) The term "including" is by way of example and not limitation. (iv) The term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form. (c) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including;" the words "to" and "until" each mean "to but excluding;" and the word "through" means "to and including." (d) Each reference to "basis points" or "bps" shall be interpreted in accordance with the convention that 100 bps = 1.0%. (e) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. 1.04 ACCOUNTING TERMS. (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. (c) With respect to any Acquisition consummated on or after the Closing Date or during any Four-Quarter Period that includes the Closing Date, including the Lehigh Acquisition, Scheduled Acquisition A (if consummated) and Scheduled Acquisition B (if consummated), the following shall apply: 37 (i) Commencing on the first fiscal quarter end of the Borrower next following the date of each Acquisition, for each of the next four periods of four fiscal quarters of the Borrower, Consolidated EBITDA with respect to the Total Leverage Ratio and the Senior Leverage Ratio shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments, including such adjustments as are permitted under Regulation S-X of the Securities and Exchange Commission, as in each case are reasonably satisfactory to the Administrative Agent; (ii) Commencing on the first fiscal quarter end of the Borrower next following the date of each Acquisition, for each of the next four periods of four fiscal quarters of the Borrower, Consolidated Interest Charges as a component of Consolidated EBITDA with respect to the Total Leverage Ratio and the Senior Leverage Ratio shall include the results of operations of the Person or assets so acquired, which amounts shall be determined on a historical pro forma basis; provided, however, Consolidated Interest Expense shall be adjusted on a historical pro forma basis to (i) eliminate interest expense accrued during such period on any Indebtedness repaid in connection with such Acquisition and (ii) include interest expense on any Indebtedness (including Indebtedness hereunder) incurred, acquired or assumed in connection with such Acquisition ("Incremental Debt") calculated (A) as if all such Incremental Debt had been incurred as of the first day of such Four-Quarter Period and (B) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto as at the end of each affected period of such four fiscal quarters, as the case may be; provided that, notwithstanding anything to the contrary set forth herein, (A) in making the Acquisition Adjustments described above, the Borrower may elect to exclude any adjustment to Consolidated EBITDA arising from any Acquisition having a Cost of Acquisition not in excess of $2,500,000, and (B) for each business or entity acquired by the Borrower or its Subsidiaries that has not historically reported financial results on a quarterly or monthly basis (or such quarterly or monthly results are not available to the Borrower or its Subsidiaries) the Borrower shall provide its reasonable estimate as to the quarterly or monthly results based on available financial results and the books and records of the acquired business or entity for the purposes of providing any historical pro forma data required to be delivered pursuant to this Agreement, including such supplementary information pertaining thereto as the Administrative Agent may reasonably request. 1.05 ROUNDING. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.06 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly provided herein, (a) references to agreements (including the Loan Documents) and other contractual 38 instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS 2.01 TERM LOANS. (a) Term Loan A. The Borrower hereby acknowledges that each Term Loan A Lender has previously advanced its Pro Rata Term A Share of the Term Loan A in Dollars to the Borrower, whether on the Original Closing Date or on the date of the Term Loan A Amendment, and that Schedule 1.02(a) sets forth the Outstanding Amount of the Term Loan A and each Term Loan A Lender's Pro Rata Term A Share as of the Closing Date. The principal amount of each Segment of the Term Loan A outstanding hereunder from time to time shall bear interest and the Term Loan A shall be repayable as herein provided. No amount of the Term Loan A repaid or prepaid by the Borrower may be reborrowed hereunder, and (except as provided pursuant to Section 2.15) no additional Borrowing under the Term Loan A Facility shall be allowed or is contemplated by this Agreement. (b) Term Loan B. Subject to the terms and conditions of this Agreement, each Term Loan B Lender severally agrees to make an advance of its Pro Rata Term B Share of the Term Loan B Facility in Dollars to the Borrower on the Closing Date. The principal amount of each Segment of the Term Loan B outstanding hereunder from time to time shall bear interest and the Term Loan B shall be repayable as herein provided. No amount of the Term Loan B repaid or prepaid by the Borrower may be reborrowed hereunder, and (except as provided pursuant to Section 2.15) no Borrowing under the Term Loan B Facility shall be allowed other than the advance set forth in the first sentence of this Section 2.01(b). Each Term Loan B Lender shall, pursuant to the terms and subject to the conditions of this Agreement, make available by wire transfer to the Administrative Agent not later than 2:30 P.M. New York time on the Closing Date, the amount of its Pro Rata Term B Share of the Term Loan B Facility. Each such wire transfer shall be directed to the Administrative Agent at the Administrative Agent's Office and shall be in the form of Same Day Funds in Dollars. The amounts so received by the Administrative Agent shall, subject to the terms and conditions of this Agreement, including without limitation the satisfaction of all applicable conditions in Sections 4.01 and 4.02, be made available to the Borrower by delivery of the proceeds thereof as shall be directed by the Responsible Officer of the Borrower and reasonably acceptable to the Administrative Agent. The initial Borrowing of the Term Loan B Facility on the Closing Date may be a Eurodollar Rate Segment, a Base Rate Segment, or both; provided that (i) notwithstanding anything to the contrary in Section 2.03 or otherwise, any Eurodollar Rate Segment to be a portion of the initial Borrowing of the Term Loan B Facility, and each Conversion to or Continuation of a Eurodollar Rate Segment made during the period of fourteen days after the Closing Date, may only be for a period beginning on the date such Eurodollar Rate Segment is initially advanced, or on the date any Segment is Continued as or Converted into a Eurodollar Rate Segment, and ending on the date that is one week thereafter, and (ii) if the Borrower desires that any portion of the initial 39 Borrowing of the Term Loan B Facility is advanced as a Eurodollar Rate Segment, the Administrative Agent shall make such Borrowing as a Eurodollar Rate Segment only if, not later than three Business Days prior to the date that is then anticipated to be the Closing Date, the Administrative Agent has received from the Borrower a Term Loan Interest Rate Selection Notice with respect thereto, together with the Borrower's written acknowledgement in form and substance satisfactory to the Administrative Agent that the provisions of Section 3.05 hereof shall apply to any failure by the Borrower to borrow on the date set forth in such Term Loan Interest Rate Selection notice any or all of the amounts specified in such Term Loan Interest Rate Selection Notice. 2.02 REVOLVING LOANS. Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make, Convert and Continue Revolving Loans in Dollars to the Borrower from time to time on any Business Day during the period from the Closing Date to the Revolving Credit Maturity Date; provided, however, that after giving effect to any Revolving Borrowing, (i) the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations shall not exceed the Aggregate Revolving Credit Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Revolving Lender, plus such Revolving Lender's Pro Rata Revolving Share of the aggregate Outstanding Amount of all L/C Obligations, plus such Revolving Lender's Pro Rata Revolving Share of the aggregate Outstanding Amount of all Swing Line Loans, shall not exceed such Revolving Lender's Revolving Credit Commitment. Within the limits of each Revolving Lender's Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.02, prepay under Section 2.06, and reborrow under this Section 2.02. Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein. 2.03 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF REVOLVING LOANS; CONVERSIONS AND CONTINUATIONS OF SEGMENTS OF THE TERM LOANS. (a) Each Revolving Borrowing, each Conversion of Revolving Loans or Segments of either Term Loan, and each Continuation of Revolving Loans or Segments of either Term Loan shall be made upon the Borrower's irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 12:00 noon, New York time, (i) three Business Days prior to the requested date of any Borrowing of, Conversion to or Continuation of Eurodollar Rate Loans, and (ii) on the requested date of any Borrowing of, or Conversion to, Base Rate Loans. Each such telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a written Revolving Loan Notice or Term Loan Interest Rate Selection Notice, appropriately completed and signed by a Responsible Officer (unless such Revolving Loan Notice is being delivered by the Swing Line Lender pursuant to Section 2.05(c) or by the Administrative Agent on behalf of the L/C Issuer pursuant to Section 2.04(c)(i)); provided that the lack of such prompt confirmation shall not affect the conclusiveness or binding effect of such telephonic notice. Each Borrowing of, Conversion to or Continuation of Eurodollar Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof. Except as provided in Sections 2.04(c) and 2.05(c), each Borrowing of or Conversion to Base Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof. Each Revolving Loan Notice (whether telephonic or written) shall be substantially in the form of Exhibit A-1 attached hereto, and each Term Loan Interest Rate Selection Notice (whether telephonic or written) shall 40 be substantially in the form of Exhibit A-2 attached hereto. If the Borrower fails to specify a Type of Revolving Loan in a Revolving Loan Notice or Type of Segment in a Term Loan Interest Rate Selection Notice, or if the Borrower fails to give a timely notice requesting a Conversion or Continuation, then the applicable Revolving Loans and Segments of the applicable Term Loan shall, subject to the last sentence of this Section 2.03(a), be made or Continued as, or Converted to, Base Rate Loans. Any such automatic Conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect. If no timely notice of a Conversion or Continuation is provided by the Borrower, the Administrative Agent shall notify each applicable Lender of the details of any automatic Conversion to Base Rate Loans. If the Borrower requests a Borrowing of, Conversion to, or Continuation of Eurodollar Rate Loans in any such Revolving Loan Notice or Term Loan Interest Rate Selection Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (b) Following receipt of a Revolving Loan Notice, the Administrative Agent shall promptly notify each Revolving Lender of its Pro Rata Revolving Share of the applicable Revolving Loans. Each Revolving Lender shall make the amount of its Revolving Loan available to the Administrative Agent in Same Day Funds in Dollars at the Administrative Agent's Office not later than (x) 2:00 p.m., New York time, on the date of a Revolving Borrowing for the account of the L/C Issuer pursuant to Section 2.04(c)(ii), or (y) 3:00 p.m., New York time, in all other cases, on the Business Day specified in the applicable Revolving Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower. (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be Continued or Converted only on the last day of the Interest Period for such Eurodollar Rate Loan. During the existence of a Default or Event of Default, (i) no Revolving Loan may be requested as, Converted into or Continued as a Eurodollar Rate Loan without the consent of the Required Revolving Lenders, and the Required Revolving Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be Converted immediately to Base Rate Loans, (ii) no Segment of the Term Loan A may be Converted into or Continued as a Eurodollar Rate Segment without the consent of the Required Term Loan A Lenders, and the Required Term Loan A Lenders may demand that any or all of the then outstanding Eurodollar Rate Segments be Converted immediately to Base Rate Segments, and (iii) no Segment of the Term Loan B may be Converted into or Continued as a Eurodollar Rate Segment without the consent of the Required Term Loan B Lenders, and the Required Term Loan B Lenders may demand that any or all of the then outstanding Eurodollar Rate Segments be Converted immediately to Base Rate Segments. (d) The Administrative Agent shall promptly notify the Borrower and the applicable Lenders of the interest rate applicable to any Eurodollar Rate Loan upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. 41 (e) After giving effect to all Revolving Borrowings, all Conversions of Revolving Loans from one Type to the other, and all Continuations of Revolving Loans as the same Type, there shall not be more than five Interest Periods in effect with respect to Revolving Loans. (f) After giving effect to the Borrowing under the Term Loan A Facility, all Conversions of Segments of the Term Loan A from one Type to the other, and all Continuations of Segments of the Term Loan A as the same Type, there shall not be more than five Interest Periods in effect with respect to Segments of the Term Loan A. (g) After giving effect to the Borrowings under the Term Loan B Facility that have been made as of such date, all Conversions of Segments of the Term Loan B from one Type to the other, and all Continuations of Segments of the Term Loan B as the same Type, there shall not be more than four Interest Periods in effect with respect to Segments of the Term Loan B. 2.04 LETTERS OF CREDIT. (a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set forth herein (including, with respect to the Designated L/C Issuer, the last sentence of this Section 2.04(a)(i)), (A) each L/C Issuer agrees, in reliance upon the agreements of the other Revolving Lenders set forth in this Section 2.04, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit in Dollars for the account of the Borrower, and to renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit previously issued by it; and (B) the Revolving Lenders severally agree to risk participate in Letters of Credit issued for the account of the Borrower; provided that no L/C Issuer shall be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Revolving Lender shall be obligated to risk participate in, any Letter of Credit if as of the date of such L/C Credit Extension, (x) the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations would exceed the Aggregate Revolving Credit Commitments, (y) the aggregate Outstanding Amount of the Revolving Loans of any Revolving Lender, plus such Revolving Lender's Pro Rata Revolving Share of the Outstanding Amount of all L/C Obligations, plus such Revolving Lender's Pro Rata Revolving Share of the Outstanding Amount of all Swing Line Loans, would exceed such Revolving Lender's Revolving Credit Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. Notwithstanding the foregoing, however, in no event shall the Designated L/C Issuer be obligated to make any L/C Credit Extension with respect to any Letter of Credit if after the making of such L/C Credit Extension the Outstanding Amount of the L/C Obligations of the Designated L/C Issuer with respect to Letters of Credit issued by it would exceed the Designated L/C Issuer Amount. 42 (ii) No L/C Issuer shall be under any obligation to issue any Letter of Credit if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing such Letter of Credit, or any Law applicable to such L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Original Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Original Closing Date and which such L/C Issuer in good faith deems material to it; (B) subject to Section 2.04(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last renewal, unless the Required Revolving Lenders have approved such expiry date; (C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Revolving Lenders have approved such expiry date; or (D) the issuance of such Letter of Credit would violate one or more policies of such L/C Issuer. (iii) No L/C Issuer shall be under any obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer. Such L/C Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 1:00 p.m., New York time, at least two Business Days (or such later time on such date as such L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the 43 documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the applicable L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as such L/C Issuer may reasonably require. (ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the applicable L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted under Section 2.04(a)(i) in terms of any additional L/C Obligations created thereby, then, subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with such L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Revolving Lender's Pro Rata Revolving Share times the amount of such Letter of Credit. (iii) If the Borrower so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter of Credit must permit the applicable L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "Nonrenewal Notice Date") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required to make a specific request to such L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Revolving Lenders shall be deemed to have authorized (but may not require) the applicable L/C Issuer to permit the renewal of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that such L/C Issuer shall not permit any such renewal if (A) such L/C Issuer would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is two Business Days before the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Revolving Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Revolving Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied. Notwithstanding anything to the contrary contained herein, the applicable L/C Issuer shall have no 44 obligation to permit the renewal of any Auto-Renewal Letter of Credit at any time, and in no event shall the expiry date of any Auto-Renewal Letter of Credit after any renewal as described herein occur after the Letter of Credit Expiration Date, unless all the Revolving Lenders have approved such expiry date. (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. (c) Drawings and Reimbursements; Funding of Participations. (i) Upon any drawing under any Letter of Credit, the applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 11:00 a.m., New York time, on the date of any payment by an L/C Issuer under a Letter of Credit (each such date, an "Honor Date"), the Borrower shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing in Dollars in Same Day Funds. If the Borrower fails to so reimburse such L/C Issuer by such time, the Administrative Agent shall promptly notify each Revolving Lender of the Honor Date, the amount of the unreimbursed drawing (the "Unreimbursed Amount"), such Revolving Lender's Pro Rata Revolving Share thereof and, in accordance with the following sentence and Section 2.04(c)(ii), whether a Swing Line Borrowing or a Revolving Borrowing will be made to repay the Unreimbursed Amount or whether, pursuant to Section 2.04(c)(iii), an L/C Borrowing in the amount of the Unreimbursed Amount shall be deemed incurred by the Borrower and that each Revolving Lender shall participate in such L/C Borrowing in accordance with its Pro Rata Revolving Share. In such event, the Borrower shall be deemed to have requested a Swing Line Borrowing, without regard to the minimum and multiples and times of day for notice specified in Section 2.05, or, if the Unreimbursed Amount is greater than the amount available for Swing Line Borrowings under the Swing Line Sublimit, a Revolving Borrowing, without regard to the minimum and multiples and times of day for notice specified in Section 2.03, to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, but subject, in each case, to the amount of the unutilized portion of the Aggregate Revolving Credit Commitments, and the conditions set forth in Section 4.02 (other than the delivery of a Revolving Loan Notice). Any notice given by an L/C Issuer or the Administrative Agent pursuant to this Section 2.04(c)(i) shall constitute a notice under Section 2.05(b) or a Revolving Loan Notice, respectively, and may be given by telephone if promptly confirmed in writing; provided that the lack of such prompt confirmation shall not affect the conclusiveness or binding effect of such notice. (ii) The Swing Line Lender, if a Swing Line Borrowing can be made as determined by the Administrative Agent pursuant to Section 2.05, shall make funds available to the Administrative Agent for the account of the applicable L/C Issuer at the Administrative Agent's Office in an amount equal to the Unreimbursed Amount, not later than 3:00 p.m., New York time, on the Business Day specified in such notice by the Administrative Agent. In the event the Administrative Agent determines that a Swing Line Borrowing is not so available and, in the alternative, pursuant to Section 2.04(c)(i), a Revolving Borrowing or an L/C Borrowing is to be made, each Revolving Lender 45 (including the Revolving Lender acting as the L/C Issuer with respect to such Letter of Credit) shall upon receipt of any notice from the Administrative Agent pursuant to Section 2.04(c)(i) make funds in Dollars available to the Administrative Agent for the account of the applicable L/C Issuer at the Administrative Agent's Office in the amount equal to its Pro Rata Revolving Share of the Unreimbursed Amount not later than 3:00 p.m., New York time, on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.04(c)(iii), each Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received from either the Swing Line Lender or the Revolving Lenders, as applicable, to the applicable L/C Issuer. (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced by a Borrowing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Revolving Lender's payment to the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in respect of its risk participation in such L/C Borrowing and shall constitute an L/C Advance from such Revolving Lender in satisfaction of its risk participation obligation in such L/C Borrowing under this Section 2.04. (iv) Until each Revolving Lender funds its Revolving Loan or L/C Advance pursuant to Section 2.04(c)(ii) to reimburse the applicable L/C Issuer for any Unreimbursed Amount drawn under any Letter of Credit or to fund its participation therein, as the case may be, interest in respect of such Revolving Lender's Pro Rata Revolving Share of such amount shall be solely for the account of such L/C Issuer. (v) Each Revolving Lender's obligation to make Revolving Loans or L/C Advances to reimburse the applicable L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.04(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against such L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default or Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Revolving Lender's obligation to make Revolving Loans, and the Swing Line Lender's obligation to make Swing Line Loans, pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 (other than the delivery of a Revolving Loan Notice or Swing Line Revolving Loan Notice). Any such reimbursement with the proceeds of Revolving Loans or L/C Advances shall not relieve or otherwise impair the obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein. 46 (vi) If any Revolving Lender fails to make available to the Administrative Agent for the account of an L/C Issuer any amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(ii), the applicable L/C Issuer shall be entitled to recover from such Revolving Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such L/C Issuer at a rate per annum equal to the applicable Federal Funds Rate for three (3) Business Days and thereafter at a rate per annum equal to the Default Rate. A certificate of the applicable L/C Issuer submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.04(c) shall be conclusive absent manifest error. (d) Repayment of Participations. (i) At any time after an L/C Issuer has made a payment under any Letter of Credit and has received from any Revolving Lender such Revolving Lender's L/C Advance in respect of such payment in accordance with Section 2.04(c), if the Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), or any payment of interest thereon, the Administrative Agent will distribute to such Revolving Lender the amount of its Pro Rata Revolving Share thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by the Administrative Agent. (ii) If any payment received by the Administrative Agent for the account of an L/C Issuer in respect of any drawing on any Letter of Credit is required to be returned (including pursuant to any settlement entered into by the Administrative Agent or such L/C Issuer in its discretion), each Revolving Lender shall pay to the Administrative Agent for the account of the applicable L/C Issuer its Pro Rata Revolving Share of such amount on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Revolving Lender, at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect, and such payment by each Revolving Lender shall be deemed to be its L/C Advance in such amount pursuant to Section 2.04(c)(iii). (e) Obligations Absolute. The obligation of the Borrower to reimburse each L/C Issuer for each drawing under each Letter of Credit, and to repay each L/C Borrowing, shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following: (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; (ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee 47 may be acting), the applicable L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit; (iv) any payment by the applicable L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the applicable L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower. The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower's instructions or other irregularity, the Borrower will immediately notify the applicable L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against an L/C Issuer and its correspondents unless such notice is given as aforesaid. (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no L/C Issuer shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. Neither any L/C Issuer, any Agent-Related Person nor any of the respective correspondents, participants or assignees of any L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders, Revolving Lenders, Required Revolving Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. Neither any L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of any L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.04(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against 48 an L/C Issuer, and such L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential, special, punitive or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such L/C Issuer's willful misconduct or gross negligence or such L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, any L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no L/C Issuer shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. (g) Cash Collateral. Upon the request of the Administrative Agent, (i) if an L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date or the Revolving Credit Maturity Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the Outstanding Amount of all L/C Obligations plus the Letter of Credit fees payable with respect to such Letter of Credit (calculated at the Applicable Margin with respect to Revolving Loans that are Eurodollar Rate Loans then in effect for the period from the date of such cash collateralization until the expiry date of such Letter of Credit). (h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each commercial Letter of Credit. (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender in accordance with its Pro Rata Revolving Share a Letter of Credit fee (for each day such Letter of Credit remains in effect) for each Letter of Credit equal to the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans multiplied by the daily maximum amount available to be drawn under such Letter of Credit (each such Letter of Credit fee being referred to herein as a "Letter of Credit Fee"). Such fee for each Letter of Credit shall be calculated as of each Quarterly Fee Calculation Date, commencing with the first such date to occur after the issuance of such Letter of Credit, and on the Letter of Credit Expiration Date, and shall be due and payable on the respective Quarterly Fee Payment Date for each such Quarterly Fee Calculation Date and on the Letter of Credit Expiration Date. If there is any change in the Applicable Margin with respect to Revolving Loans that are Eurodollar Rate Loans during any quarter, the actual daily amount of each Letter of Credit shall be computed and multiplied by the Applicable Margin with respect to Revolving Loans that are Eurodollar Rate Loans separately for each period during such quarter that such Applicable Margin was in effect. 49 (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the applicable L/C Issuer for its own account a fronting fee (for each day such Letter of Credit remains in effect) for each Letter of Credit in an amount equal to 1/8 of 1% per annum on the daily maximum amount available to be drawn thereunder, due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, and on the Letter of Credit Expiration Date. In addition, the Borrower shall pay directly to the applicable L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such fees and charges are due and payable on demand and are nonrefundable. (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control. (l) Designation of Designated L/C Issuer. From time to time, so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may designate one Designated L/C Issuer, provided that (i) a written notice of such designation in form and substance reasonably satisfactory to the Administrative Agent is delivered by the Borrower to the Administrative Agent not less than three (3) Business Days prior to the effectiveness of such designation, which notice shall at a minimum (A) identify the Revolving Lender to be the Designated L/C Issuer, (B) identify the then-existing Designated L/C Issuer being replaced, if any, (C) set forth the Designated L/C Issuer Amount, and (D) contain the express consent of the identified Designated L/C Issuer to such designation, and its acceptance of the terms and conditions of this Agreement with respect to Letters of Credit and the issuance of Letters of Credit by the Designated L/C Issuer, and (ii) as of any date of determination, there shall not be more than one Designated L/C Issuer. Without limiting the provisions of Section 10.07(h), any Designated L/C Issuer so designated hereunder shall continue in such capacity until (A) it shall, by written notice delivered to the Administrative Agent and the Borrower, terminate its status as Designated L/C Issuer, or (B) the Borrower shall revoke its designation as Designated L/C Issuer by notice delivered to the Administrative Agent and the Designated L/C Issuer (any such notice shall be effective three (3) Business Days following receipt by the Administrative Agent of such notice or such later date as may be specified in such notice); provided that no such termination or revocation of designation described herein shall be permitted or effective until all Letters of Credit issued by such Designated L/C Issuer shall have expired or otherwise terminated, or been Cash Collateralized, and all other L/C Obligations with respect to Letters of Credit issued by such Designated L/C Issuer shall have been paid and satisfied in full. (m) On (i) the last Business Day of each calendar month, and (ii) each date that an L/C Credit Extension occurs with respect to any Letter of Credit of such L/C Issuer, each L/C Issuer shall deliver to the Administrative Agent a report in the form of Exhibit G hereto, appropriately completed with the respective information for every Letter of Credit of such L/C Issuer. 2.05 SWING LINE LOANS. (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees to make loans (each such loan, a "Swing Line Loan") in Dollars, to the 50 Borrower from time to time on any Business Day during the period from the Closing Date to the Revolving Credit Maturity Date in an aggregate amount not to exceed the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the aggregate Outstanding Amount of Revolving Loans and Pro Rata Revolving Share of L/C Obligations of the Swing Line Lender in its capacity as a Revolving Lender, may exceed the amount of such Swing Line Lender's Revolving Credit Commitment; provided, however, that after giving effect to any Swing Line Loan, (i) the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations shall not exceed the Aggregate Revolving Credit Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Revolving Lender other than the Swing Line Lender, plus such Revolving Lender's Pro Rata Revolving Share of the Outstanding Amount of all L/C Obligations, plus such Revolving Lender's Pro Rata Revolving Share of the Outstanding Amount of all Swing Line Loans shall not exceed such Revolving Lender's Revolving Credit Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.05, prepay under Section 2.06, and reborrow under this Section 2.05. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Revolving Lender's Pro Rata Revolving Share times the amount of the Swing Line Loan. (b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Borrower's irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 4:00 p.m., New York time on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000 and integral multiples of $25,000 in excess thereof, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Revolving Loan Notice, appropriately completed and signed by a Responsible Officer. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Revolving Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Revolving Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Revolving Lender) prior to (x) 1:00 p.m., New York time, in the case of Swing Line Loans to reimburse an L/C Issuer in respect of drawings under Letters of Credit, or (y) 4:30 p.m., New York time, in all other cases, on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.05(a), or (B) that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than (x) 3:00 p.m., New York time, in the case of Swing Line Loans to reimburse an L/C Issuer in respect of drawings under Letters of Credit, or (y) 5:00 p.m., New York time, in all other cases, on the borrowing date specified in such Swing Line Revolving Loan Notice, make the amount of its Swing Line Loan available to the Borrower by crediting the account of the Borrower on the books of the Swing Line Lender with the amount of such funds, in accordance 51 with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower. (c) Refinancing of Swing Line Loans. (i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that a Revolving Loan be made in an amount equal to the amount of Swing Line Loans then outstanding, and such request by the Swing Line Lender shall constitute a Revolving Loan Notice. Such request shall be made in accordance with the requirements of Section 2.03, without regard to the minimum and multiples specified therein for the principal amount of Revolving Loans, but subject to the unutilized portion of the Aggregate Revolving Credit Commitments, and the conditions set forth in Section 4.02. Each Revolving Lender shall make an amount equal to its Pro Rata Revolving Share of the amount specified in such Revolving Loan Notice available to the Administrative Agent in Same Day Funds for the account of the Swing Line Lender at the Administrative Agent's Office not later than 2:00 p.m., New York time, on the Business Day specified in such Revolving Loan Notice, whereupon, subject to Section 2.05 (c)(ii), each Revolving Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received from the Revolving Lenders to the Swing Line Lender. The Administrative Agent shall promptly notify the Borrower of the making of a Revolving Loan pursuant to this Section 2.05(c)(i), provided that the lack of such prompt notification shall in no way affect the making, validity or status of such Revolving Loan. (ii) If for any reason any Revolving Borrowing cannot be requested in accordance with Section 2.05(c)(i) or any Swing Line Loan cannot be refinanced by such a Revolving Borrowing, the Revolving Loan Notice submitted by the Swing Line Lender shall be deemed to be a request by the Swing Line Lender that each of the Revolving Lenders fund its risk participation in the amount of the relevant Swing Line Loan and each Revolving Lender's payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such risk participation in the amount of such Swing Line Loan. (iii) If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this Section 2.05(c) by the time specified in Section 2.05(c)(i), the Swing Line Lender shall be entitled to recover from such Revolving Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Federal Funds Rate for three (3) Business Days and thereafter at a rate per annum equal to the Default Rate. A certificate of the Swing Line Lender submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this Section 2.05(c) shall be conclusive absent manifest error. 52 (iv) Each Revolving Lender's obligation to make Revolving Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or Event of Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Revolving Lender's obligation to make Revolving Loans pursuant to this Section 2.05(c) is subject to the conditions set forth in Section 4.02 (other than the delivery by the Borrower of a Revolving Loan Notice). Any such purchase of risk participations by each Revolving Lender from the Swing Line Lender shall not relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein. (d) Repayment of Participations. (i) At any time after any Revolving Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute in Dollars to such Revolving Lender its Pro Rata Revolving Share of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Revolving Lender's risk participation was outstanding and funded). (ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender, each Revolving Lender shall pay to the Swing Line Lender in Dollars its Pro Rata Revolving Share of such amount on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), at a rate per annum equal to the applicable Federal Funds Rate. The Administrative Agent will make such demand only upon the request of the Swing Line Lender. (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Revolving Lender funds its Revolving Loan or risk participation pursuant to this Section 2.05, interest in respect of such Revolving Lender's Pro Rata Revolving Share shall be solely for the account of the Swing Line Lender. (f) Payments Directly to Swing Line Lender. The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender. 53 2.06 PREPAYMENTS. (a) The Borrower may, upon irrevocable notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 12:00 noon, New York time, (A) one Business Day prior to any date of prepayment of Eurodollar Rate Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Revolving Loans to be prepaid. The Responsible Officer of the Borrower shall provide the Administrative Agent written confirmation of each such telephonic notice but failure to provide such confirmation shall not affect the validity of such telephonic notice. The Administrative Agent will promptly notify each Revolving Lender of its receipt of each such notice, and of such Revolving Lender's Pro Rata Revolving Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Revolving Loans of the Revolving Lenders in accordance with their respective Pro Rata Revolving Shares. (b) In addition to the required payments of principal of the Term Loans set forth in Section 2.08(c) and (d) and any mandatory prepayments of principal of the Term Loans effected under subsection (e) below, the Borrower may, upon irrevocable notice to the Administrative Agent, voluntarily prepay the Term Loans in whole or in part from time to time on any Business Day, without penalty or premium; provided that (i) such notice must be received by the Administrative Agent not later than 12:00 noon, New York time, three Business Days prior to any date of prepayment of such Loans, (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof (or in the entire remaining principal balance of the Term Loans), (iii) any prepayment of Base Rate Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof (or in the entire remaining principal balance of the Term Loans), and (iv) any such prepayment will be applied pro rata between Term Loan A and Term Loan B (and, within the share allocated to Term Loan B, pro rata among the Segments of such Term Loan), and (within the share allocated to Term Loan A or Term Loan B) pro rata among the Lenders in such Term Loan; provided further that any Term Loan B Lender may (by written notice received by the Administrative Agent not less than one Business Day prior to the date of such prepayment) decline to accept any such prepayment in whole (but not in part), and thereupon such amount will be applied to the Outstanding Amount of the Term Loan A (pro rata among the Term Loan A Lenders) until the Term Loan A is paid in full, after which no Term Loan B Lender shall have any further such option to decline a prepayment under this subsection (b), it being understood that if the aggregate amount declined by all Term Loan B Lenders with respect to any one prepayment exceeds the Outstanding Amount of the Term Loan A (after giving effect to the amount of such prepayment to be applied directly to the Term Loan A), the excess will be applied to reduce the Outstanding Amount of the Term Loan B pro rata among the Term Loan B Lenders. Each such notice shall specify the date and amount of such prepayment and the 54 Type(s) of Segment to be prepaid. The Responsible Officer of the Borrower shall provide the Administrative Agent written confirmation of each such telephonic notice but failure to provide such confirmation shall not affect the validity of such telephonic notice. The Administrative Agent will promptly notify each applicable Lender of its receipt of each such notice, and such Lender's pro rata share of such prepayment (calculated in accordance with the first sentence of this subsection (b)). If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. All prepayments of principal under this Section 2.06(b) shall be applied to installments of principal of the Term Loan A and of the Term Loan B, respectively, in inverse order of their maturities. (c) The Borrower may, upon irrevocable notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 4:00 p.m., New York time, on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $50,000 or a whole multiple of $10,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. (d) If for any reason the Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations at any time exceeds the Aggregate Revolving Credit Commitments then in effect, the Borrower shall immediately prepay Revolving Loans and/or Swing Line Loans, and/or Cash Collateralize the L/C Obligations, as it shall select, in an aggregate amount equal to such excess. (e) In addition to the required payments of principal of the Term Loans set forth in Section 2.08(c) and (d) and any optional payments of principal of the Term Loans and the Revolving Loans effected under subsections (a) and (b) above, the Borrower shall make the following required prepayments of the Term Loans and the Revolving Loans, each such payment to be made to the Administrative Agent for the benefit of the Lenders within the time period specified below. (i) In the event that the Total Leverage Ratio is greater than 3.00 to 1.00 as of the end of any fiscal year of the Borrower, beginning with the fiscal year ending December 31, 2004, the Borrower shall make a prepayment in an amount equal to fifty percent (50%) of the amount of Excess Cash Flow, each such prepayment to be made on the date financial statements of the Borrower and its Subsidiaries for such fiscal year are required to be delivered (or if earlier, the date such financial statements are delivered) pursuant to Section 6.01, which payment shall be accompanied by a certificate of a Responsible Officer of the Borrower (which may be incorporated within the Compliance Certificate otherwise required to be delivered under Section 6.02(b)) setting forth in reasonable detail the calculations utilized in computing Excess Cash Flow and the amount of such prepayment. 55 (ii) The Borrower shall make, or shall cause each applicable Subsidiary to make, a prepayment with respect to each private or public offering of Equity Securities of the Borrower or any Subsidiary (other than the Scheduled Acquisition B Equity Issuance and Equity Securities issued to the Borrower or a Guarantor) in an amount equal to fifty percent (50%) of the Net Proceeds of each issuance of Equity Securities of the Borrower or any Subsidiary (or, in the case of the Non-Scheduled Acquisition B Equity Issuance, (A) one hundred percent (100%) of the first $50,000,000 of the Non-Exempt Net Proceeds thereof and (B) fifty percent (50%) of any remaining Non-Exempt Net Proceeds thereof), each such prepayment to be made within ten (10) Business Days of receipt of such proceeds (or, in the case of Non-Exempt Net Proceeds, within ten (10) Business Days of the expiration of the 180-day period following the initial Non-Scheduled Acquisition B Equity Issuance) and upon not less than five (5) Business Days' prior written notice to the Administrative Agent, which notice shall include a certificate of a Responsible Officer of the Borrower setting forth in reasonable detail the calculations utilized in computing the Net Proceeds of such issuance and the amount of such prepayment; provided that no prepayment shall be required hereunder of the first $20,000,000 of Net Proceeds in each fiscal year of the Borrower realized from (x) the issuance of Equity Securities in connection with the exercise of any option, warrant or other convertible security of the Borrower or any Subsidiary or (y) the issuance, award or grant of Equity Securities to eligible participants under a stock plan of the Borrower. (iii) Subject to the proviso in Section 7.05(f), the Borrower shall make, or shall cause each applicable Subsidiary to make, a prepayment in an amount equal to one hundred percent (100%) of the Net Proceeds from each Disposition other than Dispositions permitted under Section 7.05(a), (b), (c), (d) and (e), each such prepayment to be made within ten (10) Business Days of receipt of the Net Proceeds thereof and upon not less than five (5) Business Days' prior written notice to the Administrative Agent, which notice shall include a certificate of a Responsible Officer of the Borrower setting forth in reasonable detail the calculations utilized in computing the Net Proceeds of such Disposition and the amount of such prepayment; provided, that despite the application of this Section 2.06(e)(iii) to any Disposition that is not otherwise permitted under this Agreement, nothing in this Section 2.06(e)(iii) shall be deemed to permit any Disposition not expressly permitted under this Agreement or to constitute a waiver or cure of any Default or Event of Default that arises as a result of a Disposition that is not permitted under this Agreement. (iv) In the event that the Net Proceeds received from insurance carried with respect to the Collateral pursuant to this Credit Agreement and the Security Agreement and the other Loan Documents is not completely and fully utilized for the repair or replacement of Collateral as provided in the Security Agreement or any other Loan Document, the Borrower shall make, or shall cause each applicable Subsidiary to make, a prepayment in an amount equal to one hundred percent (100%) of the Net Proceeds received with respect to such insurance that is not so utilized. Prepayments made under this Section 2.06(e) shall be applied (a) first, subject to the first proviso to this sentence, to outstanding principal of the Term Loan A and Term Loan B, pro rata between the Term Loans (and, within the share allocated to Term Loan B, pro rata among the 56 Segments of such Term Loan) and (within the share allocated to Term Loan A or Term Loan B) pro rata among the Lenders in such Term Loan, and (b) then, upon payment in full of all Outstanding Amounts under the Term Loans, to repay the Outstanding Amount under the Revolving Credit Facility, with a permanent reduction in the Aggregate Revolving Credit Commitment in the amount of such prepayment required under this Section 2.06(e) after payment in full of the Term Loans, notwithstanding the Outstanding Amount under the Revolving Credit Facility, and corresponding permanent reductions in each Revolving Lender's Revolving Credit Commitment; provided that any Term Loan B Lender may (by written notice received by the Administrative Agent not less than one Business Day prior to the date of such prepayment) decline to accept any prepayment provided for in this Section 2.06(e) in whole (but not in part), and thereupon such amount will be applied to installments of principal of the Term Loan A (pro rata among the Term Loan A Lenders) until the Term Loan A is paid in full, after which no Term Loan B Lender shall have any further such option to decline a prepayment under this Section 2.06(e), it being understood that if the aggregate amount declined by all Term Loan B Lenders with respect to any one prepayment exceeds the Outstanding Amount of the Term Loan A (after giving effect to the amount of such prepayment to be applied directly to the Term Loan A), the excess will be applied to reduce the Outstanding Amount of the Term Loan B pro rata among the Term Loan B Lenders; provided, further, that after determining the pro rata allocations (pursuant to clause (a) above) of any prepayment under this Section 2.06(e), such allocated amounts shall be applied in each case to the outstanding installments of the respective Term Loan (as set forth in Section 2.08) in inverse order of maturity; and provided further that in the event of a prepayment pursuant to Section 2.06(e)(ii), so long as all Outstanding Amounts under the Term Loans have been paid in full, no prepayment made under subpart (b) of this sentence shall include any associated permanent reduction in either the Aggregate Revolving Credit Commitment or the Revolving Credit Commitment of any Revolving Lender so long as, both before and after giving effect to such prepayment, (x) no Default or Event of Default shall have occurred and be continuing, (y) the Total Leverage Ratio shall be less than 2.25 to 1.00, and (z) the Senior Leverage Ratio shall be less than 0.75 to 1.00. 2.07 REDUCTION OR TERMINATION OF REVOLVING CREDIT COMMITMENTS. The Borrower may, upon irrevocable notice to the Administrative Agent, terminate the Aggregate Revolving Credit Commitments, or permanently reduce the Aggregate Revolving Credit Commitments to an amount not less than the then aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m., New York time, five Business Days prior to the date of termination or reduction, and (ii) any such partial reduction shall be in an aggregate amount of $2,500,000 or any whole multiple of $500,000 in excess thereof. The Responsible Officer of the Borrower shall provide the Administrative Agent written confirmation of each such telephonic notice but failure to provide such confirmation shall not affect the validity of such telephonic notice. The Administrative Agent shall promptly notify the Revolving Lenders of any such notice of reduction or termination of the Aggregate Revolving Credit Commitments. Once reduced in accordance with this Section 2.07, the Aggregate Revolving Credit Commitments may not be increased. Any reduction of the Aggregate Revolving Credit Commitments shall be applied to the Revolving Credit Commitment of each Revolving Lender according to its Pro Rata Revolving Share. All Commitment Fees accrued until the effective date of any termination of the Aggregate Revolving Credit Commitments shall be paid on the effective date of such termination. 57 2.08 REPAYMENT OF LOANS. The Borrower shall repay: (a) to the Revolving Lenders on the Revolving Credit Maturity Date the aggregate principal amount of Revolving Loans outstanding on such date; (b) each Swing Line Loan on the earlier to occur of (i) demand (by telephonic or written notice) by the Administrative Agent and (ii) the Revolving Credit Maturity Date; and (c) the Term Loan A in quarterly installments on the dates (or, in the event that the date set forth below is not a Business Day, on the immediately preceding Business Day) and in the amounts set forth below, subject to adjustments (i) for prepayments made pursuant to Section 2.06 and (ii) as specified in Section 2.15:
Date Amount ---- ------ September 30, 2003 $2,269,736.84 December 31, 2003 $2,269,736.84 March 31, 2004 $2,269,736.84 June 30, 2004 $2,269,736.84 September 30, 2004 $3,026,315.79 December 31, 2004 $3,026,315.79 March 31, 2005 $3,026,315.79 June 30, 2005 $3,026,315.79 September 30, 2005 $3,782,894.74 December 31, 2005 $3,782,894.74 March 31, 2006 $3,782,894.74 June 30, 2006 $3,782,894.74 September 30, 2006 $4,539,473.68 December 31, 2006 $4,539,473.68 March 31, 2007 $4,539,473.68 Stated Maturity Date All remaining Outstanding Amounts of the Term Loan A
(d) the Term Loan B in quarterly installments on the dates (or, in the event that the date set forth below is not a Business Day, on the immediately preceding Business Day) and in the amounts determined at each such date as the percentage set forth below of the original Outstanding Amount of the Term Loan B on the Closing Date (adjusted for any increase in the Term Loan B pursuant to Section 2.15), subject to adjustments for prepayments made pursuant to Section 2.06: 58
Date Percentage of Outstanding ---- Amount of Term Loan B --------------------- December 31, 2003 0.25% March 31, 2004 0.25% June 30, 2004 0.25% September 30, 2004 0.25% December 31, 2004 0.25% March 31, 2005 0.25% June 30, 2005 0.25% September 30, 2005 0.25% December 31, 2005 0.25% March 31, 2006 0.25% June 30, 2006 0.25% September 30, 2006 0.25% December 31, 2006 0.25% March 31, 2007 0.25% June 30, 2007 0.25% September 30, 2007 24.00% December 31, 2007 24.00% March 31, 2008 24.00% Stated Term Loan B Maturity Date All remaining Outstanding Amounts of the Term Loan B
2.09 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate. (b) If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times until paid equal to the Default Rate. Furthermore, while any Event of Default exists or after acceleration, the Borrower shall pay interest on the principal amount of all outstanding Obligations at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. 59 Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 2.10 FEES. In addition to certain fees described in subsections (i) and (j) of Section 2.04: (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender in accordance with its Pro Rata Revolving Share, a commitment fee (the "Commitment Fee") equal to the Applicable Margin times the actual daily amount by which the Aggregate Revolving Credit Commitments exceed the sum of (i) the Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount of L/C Obligations. The Commitment Fee shall accrue at all times from the Closing Date until the Revolving Credit Maturity Date and shall be calculated as of each Quarterly Fee Calculation Date, commencing with the first such date to occur after the Closing Date, and shall be due and payable on the respective Quarterly Fee Payment Date for each such Quarterly Fee Calculation Date, and on the Revolving Credit Maturity Date. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. The Commitment Fee shall accrue at all times, including at any time during which one or more of the conditions in Article IV is not met. (b) Other Fees. (i) The Borrower shall pay (i) to the Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Agent/Arranger Fee Letter, and (ii) to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. All such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. 2.11 COMPUTATION OF INTEREST AND FEES. Interest on Base Rate Loans determined by reference to the Bank of America prime rate shall be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Computation of all other types of interest and all fees shall be calculated on the basis of a year of 360 days and the actual number of days elapsed, which results in a higher yield to the payee thereof than a method based on a year of 365 or 366 days. Interest shall accrue on each Loan for the day on which the Loan is made, and, subject to Section 2.13(a), shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day. 2.12 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each 60 Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, such Lender's Loans shall be evidenced by a Revolving Loan Note, a Term Loan A Note, a Term Loan B Note and/or a Swing Line Note, as applicable, in addition to such accounts or records. Each Lender may attach schedules to its Note(s) and endorse thereon the date, Type (if applicable), amount and maturity of the applicable Loans and payments with respect thereto. (b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent, in the absence of manifest error, shall control. 2.13 PAYMENTS GENERALLY. (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent's Office in Dollars and in Same Day Funds not later than 2:00 p.m., New York time, on the date specified herein. The Administrative Agent will promptly distribute to each such Lender its Pro Rata Revolving Share, its Pro Rata Term A Share or its Pro Rata Term B Share, as applicable, of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m., New York time, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall in each case continue to accrue. (b) Subject to the definition of "Interest Period," if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (c) Unless the Borrower or any Lender has notified the Administrative Agent prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in Same Day Funds, then: 61 (i) if the Borrower failed to make such payment, each applicable Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in Same Day Funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in Same Day Funds, at the applicable Federal Funds Rate from time to time in effect; and (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in Same Day Funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the "Compensation Period") at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Revolving Credit Commitment or its obligation to fund its Pro Rata Term A Share of the Term Loan A or its Pro Rata Term B Share of the Term Loan B Facility or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error. (d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent, except to the extent such funds do not constitute the funding of a risk participation under Article II, shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (e) The obligations of the Revolving Lenders hereunder to make Revolving Loans and to fund participations in Letters of Credit and Swing Line Loans are several and not joint. The failure of any Revolving Lender to make any Revolving Loan or to fund any risk participations in Letters of Credit and Swing Line Loans on any date required hereunder shall not relieve any other Revolving Lender of its corresponding obligation to do so on such date, and no Revolving Lender shall be responsible for the failure of any other Revolving Lender so to make its Revolving Loan or to purchase its risk participations in Letters of Credit and Swing Line Loans. (f) The obligations of the Term Loan B Lenders to fund each of their respective Pro Rata Term B Shares of the Term Loan B Facility are several and not joint. The failure of any 62 Term Loan B Lender to fund its Pro Rata Term B Share of the Term Loan B Facility on the Closing Date shall not relieve any other Term Loan B Lender of its corresponding obligation to do so on the Closing Date, and no Term Loan B Lender shall be responsible for the failure of any other Term Loan B Lender so to fund its Pro Rata Term B Share of the Term Loan B Facility. (g) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. 2.14 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Revolving Loans or portion of the Term Loans made by it or the risk participations in L/C Obligations or in Swing Line Loans held by it (but not including any amounts applied by the Swing Line Lender to outstanding Swing Line Loans prior to the funding of risk participations therein), any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other applicable Lenders such participations in the Revolving Loans and/or portion of the applicable Term Loans made by them and/or such subparticipations in the risk participations in L/C Obligations or Swing Line Loans held by them, as the case may be, as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Revolving Loans, Term Loans or such risk participations, as the case may be, pro rata with the Revolving Lenders, Term Loan A Lenders or Term Loan B Lenders, as applicable; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender (including pursuant to any settlement entered into by the Administrative Agent or any Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender receiving any payment relating to such excess payment shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off), but subject to Section 10.09, with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section 2.14 and will in each case notify the applicable Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. 2.15 INCREASE IN COMMITMENTS. (a) Provided there exists no Default or Event of Default and prior to the date thereof the Borrower has not made any voluntary reduction of the Aggregate Revolving Credit Commitments, upon not less than five Business Days' prior notice to the Administrative Agent 63 (which shall promptly notify the Lenders), the Borrower may, on a one-time basis on any Business Day prior to the date that is the second anniversary of the Closing Date, increase the Aggregate Commitments by a principal amount not exceeding the Maximum Increase Amount, provided that such increase with respect to any Facility must be made in a minimum amount of $5,000,000 or integral multiples of $1,000,000 in excess thereof. Such notice shall indicate (i) the amount of such increase, (ii) whether such increase is to be to the Revolving Credit Facility, the Term Loan A Facility, the Term Loan B Facility, or a specified combination thereof (and if to more than one Facility, the amount of the aggregate increase to be allocated to each such Facility), (iii) the identity of those Persons, each of whom meets the definition of an Eligible Assignee (the Borrower's approval being deemed given by inclusion of such Person in such notice), who will be accepting the increase in the Aggregate Commitments (the "Increase Lenders"), (iv) the Facility and the amount of each such Person's commitment, and (v) the proposed effective date of such increase (all of which must occur on the same date, the "Increase Effective Date"). The Borrower may, but is not required to, offer the existing Lenders an opportunity to commit to any such increase, it being understood that no existing Lender will have any obligation to commit to any such increase. In the event that the aggregate commitments from the Increase Lenders exceed either the aggregate proposed increase or the proposed increase for any Facility, the Borrower and the Administrative Agent will mutually determine the identity of those Persons who will become Increase Lenders and the final allocation to each of them. Each Increase Lender that is not a Lender hereunder prior to such time will become a Lender hereunder pursuant to a joinder agreement in form and substance satisfactory to the Administrative Agent and its counsel. The Credit Extension of any increase in the Term Loan A Facility or the Term Loan B Facility hereunder will be made in a manner, and upon the satisfaction of conditions, reasonably similar to those required for the Credit Extension of the Term Loan B Facility with appropriate adjustments, determined by the Administrative Agent in its reasonable judgment. (b) As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (i) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (ii) in the case of the Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no Default or Event of Default exists or would result from such increase (giving pro forma effect thereto). (c) Upon the exercise of this Section 2.15, and as conditions to the effectiveness thereof, (i) a revised Schedule 1.02(a) will be provided reflecting such exercise (and all assignments since the Closing Date), (ii) each Increase Lender will make those representations and warranties made by an Eligible Assignee in connection with an assignment pursuant to Section 10.07, in a manner acceptable to the Administrative Agent, (iii) each Guarantor will reaffirm its obligations under the applicable Guaranty in connection with the increased principal 64 amount of the applicable Facilities, and (iv) the amortization of the Term Loan A Facility pursuant to Section 2.08 will be adjusted as necessary to provide at each date set forth therein for a payment of principal in an amount which is a percentage of the Outstanding Amount of the Term Loan A after its increase as provided in this Section 2.15 that is equal to the ratio determined by the payment set forth opposite such date as of the Closing Date to the Outstanding Amount of the Term Loan A on the Closing Date. (d) In the event that any amount of the increase in the Aggregate Commitments is to be to the Term Loan B Facility (the "TLB Increase Amount"), the Applicable Margin for Eurodollar Rate Segments and Base Rate Segments of the TLB Increase Amount shall be equivalent to the Applicable Margin then applicable to Eurodollar Rate Segments and Base Rate Segments of the initial Term Loan B advanced on the Closing Date; provided, however, in the event the Applicable Margin required successfully to arrange the TLB Increase Amount (the "TLB Increase Amount Applicable Margin") is greater than the Applicable Margin then applicable to the Term Loan B, then the Applicable Margin with respect to the entire Term Loan B, including the TLB Increase Amount, shall be increased to equal the TLB Increase Amount Applicable Margin effective as of the effective date of the TLB Increase Amount; provided further that if the TLB Increase Amount is issued at a discount or with payment of fees, the Term Loan B Lenders of the initial Term Loan B advanced on the Closing Date shall be compensated in an economically equivalent manner. It is understood that any increase in the Applicable Margin pursuant to the first proviso in the preceding sentence and any compensation to be made in connection with a discount or fee paid with respect to the TLB Increase Amount shall only apply to the Term Loan B Facility on and after the Increase Effective Date. (e) This Section 2.15 shall supersede any provisions in Sections 2.14 or 10.01 to the contrary. 2.16 REVOLVING LOAN RATABILITY; CERTAIN COSTS. On both the Closing Date and on the Increase Effective Date, the Borrower shall prepay to certain Revolving Lenders an Outstanding Amount of such Revolving Loans outstanding (including any additional amounts required pursuant to Section 3.05) as are necessary so that, after giving effect to such prepayments and any Borrowings on each such date of all or any portion of the relevant increase of the Aggregate Revolving Credit Commitments, the Outstanding Amount of all Revolving Loans owing to each Revolving Lender is equivalent to its Pro Rata Revolving Share of the Aggregate Revolving Credit Commitment after giving effect to any nonratable increase in the Aggregate Revolving Credit Commitments resulting from either (a) the upsize of the Revolving Credit Facility from the Existing Agreement as of the Closing Date, or (b) the exercise of the increase option pursuant to Section 2.15. Upon the increase of either the Term Loan A Facility or the Term Loan B Facility, or both, pursuant to Section 2.15, if necessary the Outstanding Amounts of each such Facility will be adjusted among the Term Loan A Lenders or Term Loan B Lenders, as applicable, such that the Outstanding Amounts of all such Lenders are pro rata across the Segments of the Term Loan A or the Term Loan B, as applicable, and the Borrower shall pay any amounts required pursuant to Section 3.05 in connection therewith. ARTICLE II A SECURITY 65 2A.01 SECURITY. As security for the full and timely payment and performance of all Obligations, any other obligation arising under any Loan Document and any obligation or liability arising under any Related Swap Contract, the Borrower shall, and shall cause all other Loan Parties (including the Lehigh Companies) to, on or before the Closing Date, do or cause to be done all things reasonably necessary in the opinion of the Administrative Agent and its counsel to grant to the Administrative Agent for the benefit of the Secured Parties a duly perfected first priority security interest in all Collateral subject to no prior Lien or other encumbrance or restriction on transfer except as expressly permitted hereunder. Without limiting the foregoing, to the extent not previously delivered in connection with the Existing Agreement in the Administrative Agent's reasonable judgment, on the Closing Date the Borrower shall deliver, and shall cause each Guarantor (including the Lehigh Companies on and after the date of the consummation of the Lehigh Acquisition) to deliver, to the Administrative Agent, in form and substance reasonably acceptable to the Administrative Agent, (a) in the event such Guarantor has rights in any Subsidiary Securities of a Domestic Subsidiary or Direct Foreign Subsidiary, (i) the Pledge Agreement (or Pledge Joinder Agreement) which shall pledge to the Administrative Agent for the benefit of the Secured Parties the Pledged Interests of each Domestic Subsidiary and Direct Foreign Subsidiary, (ii) if such Pledged Interests are in the form of certificated securities, such certificated securities, together with undated stock powers or other appropriate transfer documents endorsed in blank pertaining thereto, (b) the Security Agreement (or Security Joinder Agreement) and the IP Security Agreement (or IP Security Joinder Agreement), (c) Uniform Commercial Code financing statements in form, substance and number as requested by the Administrative Agent, reflecting the Lien in favor of the Secured Parties on the Pledged Interests and all other Collateral, (d) documents in form, substance and number as requested by the Administrative Agent for filing with the Federal Patent and Trademark Office, the Federal Copyright Office, or such other places as requested by the Administrative Agent, reflecting the Lien in favor of the Secured Parties in the Intellectual Property, and (e) Qualifying Control Agreements (as defined in the Security Agreement) as provided in the Security Agreement. In addition, and without limiting the foregoing, the Borrower shall take and cause the Guarantors to take such further action, and deliver or cause to be delivered such further documents, as required by the Security Instruments or otherwise as the Administrative Agent may reasonably request to effect the transactions contemplated by this Article IIA and each of the Security Instruments. The Borrower shall also, and shall cause each Subsidiary to also, pledge to the Administrative Agent for the benefit of the Secured Parties (and as appropriate to reaffirm its prior pledge of) all of the Pledged Interests of any Domestic Subsidiary or Direct Foreign Subsidiary acquired or created on or after the Closing Date (including the Lehigh Companies), or otherwise acquired by any Subsidiary and not theretofore pledged to the Administrative Agent for the benefit of the Secured Parties, and to deliver to the Administrative Agent all of the documents and instruments in connection therewith as are required pursuant to the terms of Section 6.14 and of the Security Instruments. 2A.02 FURTHER ASSURANCES. At the request of the Administrative Agent from time to time, the Borrower will or will cause all other Loan Parties, as the case may be, to execute, by their respective Responsible Officers, alone or with the Administrative Agent, any certificate, instrument, financing statement, control agreement, statement or document, or to procure any such certificate, instrument, statement or document, or to take such other action (and pay all connected costs) which the Administrative Agent reasonably deems necessary from time to time to create, continue or preserve the Liens in Collateral (and the perfection and priority thereof) of 66 the Administrative Agent contemplated hereby and by the other Loan Documents and specifically including all Collateral acquired by the Borrower or other Loan Party after the Closing Date and all Collateral moved to or from time to time located at locations owned by third parties, including without limitation all leased locations, bailees, warehousemen and third party processors. The Administrative Agent is hereby irrevocably authorized to execute and file or cause to be filed, with or if permitted by applicable law without the signature of the Borrower or any Loan Party appearing thereon, all Uniform Commercial Code financing statements reflecting the Borrower or any other Loan Party as "debtor" and the Administrative Agent as "secured party", and continuations thereof and amendments thereto, as the Administrative Agent reasonably deems necessary or advisable to give effect to the transactions contemplated hereby and by the other Loan Documents. 2A.03 INFORMATION REGARDING COLLATERAL. The Borrower represents, warrants and covenants that: (a) the exact legal name, jurisdiction of formation and chief executive office of the Borrower and each other Person providing Collateral pursuant to a Security Instrument (each, a "Grantor") at the Closing Date (after giving effect to the Lehigh Acquisition), along with each location in which goods constituting Collateral are located as of the Closing Date, whether owned, leased or third-party locations (together with the name of each owner of the property located at such address if not the applicable Grantor, and a summary description of the relationship between the applicable Grantor and such Person), are specified on Schedule 2A.03; (b) other than as provided in (a) above, with respect to each Grantor Schedule 2A.03 contains a true and complete list as of the Closing Date of (i) each exact legal name, jurisdiction of formation, and each location of the chief executive office of such Grantor at any time since April 1, 1997, (ii) each location owned or leased by a Grantor in which goods constituting Collateral having an aggregate value in excess of $100,000 are or have been located since August 1, 2002 (together with the name of each owner of the property located at such address if not the applicable Grantor), and (iii) each trade name, trademark or other trade style used by such Grantor on the Closing Date since April 1, 2001 and the purposes for which it was used; and (c) with respect to each Person (other than a Grantor) that has effected any merger or consolidation with a Grantor or contributed or transferred to a Grantor (including by virtue of the Transaction or the Lehigh Acquisition) any property constituting Collateral at any time from August 1, 1998 to the Closing Date (excluding Persons making sales in the ordinary course of their businesses to a Grantor of property constituting inventory in the hands of such seller), Schedule 2A.03 contains a true and complete list of the exact legal name, jurisdiction of formation, and chief executive office, and each address where Collateral was located, of each such Person at the time such merger, consolidation, contribution or transfer occurred. The Borrower further covenants that it shall not change, and shall not permit any other Grantor to change, its name, type of entity, jurisdiction of formation (whether by reincorporation, merger or otherwise), the location of its chief executive office, or use or permit any other Grantor to use, 67 any additional trade name, trademark or other trade style, except upon giving not less than fifteen (15) days' prior written notice to the Administrative Agent and taking or causing to be taken all such action at Borrower's or such other Grantor's expense as may be reasonably requested by the Administrative Agent to perfect or maintain the perfection of the Lien of the Administrative Agent in Collateral. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 TAXES. (a) Any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such additional amount that such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) such Lender would have received if such Taxes or Other Taxes had not been imposed. 68 (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the applicable Lender or the Administrative Agent makes a demand therefor together with appropriate supporting documentation. 3.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans as it would otherwise be obligated hereunder to make, maintain or fund, or materially restricts the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable Eurodollar interbank market, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation existing hereunder of such Lender to make or Continue Eurodollar Rate Loans or to Convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, Convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or Conversion, the Borrower shall also pay accrued interest on the amount so prepaid or Converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. 3.03 INABILITY TO DETERMINE RATES. If the Administrative Agent or the Required Lenders determine in connection with any request for a Eurodollar Rate Loan or a Conversion to or Continuation thereof that (a) deposits in Dollars are not being offered to banks in the London eurodollar interbank market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for such Eurodollar Rate Loan, or (c) the Eurodollar Base Rate for such Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Eurodollar Rate Loan, the Administrative Agent (following notice from the Required Lenders if they make such determination) will promptly notify the Borrower and all Lenders. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing, Conversion or Continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein. 3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY; RESERVES ON EURODOLLAR RATE LOANS. 69 (a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, or such Lender's compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements utilized, as to Eurodollar Rate Loans, in the determination of the Eurodollar Rate), then from time to time upon demand of such Lender together with appropriate supporting documentation (with a copy of such demand and documentation to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender together with appropriate supporting documentation (with a copy of such demand and documentation to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction. 3.05 FUNDING LOSSES. Upon demand of any Lender together with appropriate supporting documentation (with a copy of such demand and documentation to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: (a) any Continuation, Conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, Continue or Convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Interbank Offered Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the applicable Eurodollar interbank market for Dollars 70 for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. 3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth with specificity the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods. 3.07 SURVIVAL. All of the Borrower's obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all Obligations. ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 4.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each Term Loan B Lender to make any Credit Extension hereunder, of each Revolving Lender to continue to make Credit Extensions hereunder, and of each Lender to execute and deliver this Agreement are all subject to satisfaction of the following conditions precedent (in addition to any applicable conditions precedent contained in Section 4.02): (a) Unless either (x) waived by (A) the Administrative Agent with respect to immaterial matters or items specified in clause (iv) or (xvii) below with respect to which the Borrower has given assurances satisfactory to the Administrative Agent that such items shall be delivered promptly following the Closing Date, or (B) all the Lenders in all other cases, or (y) deferred to a reasonable later date after the Closing Date at the reasonable discretion of the Administrative Agent pursuant to the post-closing agreement (the "Post-Closing Agreement") entered into between the Borrower and the Administrative Agent as of the Closing Date, a copy of which will be delivered to each of the Lenders, the Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and its legal counsel: (i) executed counterparts of (A) this Agreement, (B) a Guaranty Joinder Agreement from each Lehigh Company that is (after giving effect to the Lehigh Acquisition) a Domestic Subsidiary, (C) a Security Joinder Agreement from each Lehigh Company that is (after giving effect to the Lehigh Acquisition) a Domestic Subsidiary, (D) a Pledge Joinder Agreement from each Lehigh Company that is (after giving effect to the Lehigh Acquisition) a Domestic Subsidiary and owns Pledged Interests, (E) a Pledge Agreement Supplement or Pledge Joinder Agreement, as applicable, from the Borrower and each Domestic Subsidiary not described in clause (D) that owns any Subsidiary Securities of any Lehigh Company that is (after giving effect to the Lehigh Acquisition) a Domestic Subsidiary or a Direct Foreign Subsidiary, (F) the Consolidated Security Instrument Amendment, (G) an IP Security Joinder Agreement from each Lehigh 71 Company that is (after giving effect to the Lehigh Acquisition) a Domestic Subsidiary and owns any Intellectual Property, and (H) each other Security Instrument required to be delivered in connection herewith, in each case sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower; (ii) (A) Revolving Loan Notes executed by the Borrower in favor of each Revolving Lender requesting such a Note or to whom a Revolving Loan Note (in this instance, as defined in the Existing Agreement) was issued under the Existing Agreement (in substitution thereof in such case), (B) if requested by the Swing Line Lender, a Swing Line Note executed by the Borrower in favor of the Swing Line Lender in substitution of the Swing Loan Note (as defined in the Existing Agreement) issued to the Swing Line Lender under the Existing Agreement, (C) Term Loan A Notes executed by the Borrower in favor of each Tem Loan A Lender requesting such a Note or to whom a Term Loan Note (in this instance, as defined in the Existing Agreement) was issued under the Existing Agreement (in substitution thereof in such case), and (D) Term Loan B Notes executed by the Borrower in favor of each Term Loan B Lender requesting such a Note; (iii) such certificates of resolutions or other Organizational Action, incumbency certificates (including specimen signatures) and/or other certificates of Responsible Officers of the signing Loan Parties as the Administrative Agent may reasonably require to evidence the identities of and the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; (iv) with respect to each of the Loan Parties (determined after giving effect to the Lehigh Acquisition and the Closing Date), such documents and certifications as the Administrative Agent may reasonably require to evidence that each such Loan Party is duly organized or formed, validly existing, in good standing in its jurisdiction of formation and (with respect to the Lehigh Company that is a Loan Party) qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, including certified copies of each such Loan Parties' Organization Documents, certificates of good standing and/or qualification to engage in business; (v) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, (B) that there is no event, circumstance, action, suit, investigation or proceeding pending or, to the best of the Borrower's knowledge, threatened in any court or before any arbitrator or Governmental Authority since the date of the Audited Financial Statements which has or could reasonably be expected to have a Material Adverse Effect, (C) that (I) the Lehigh Acquisition has been consummated, or is being consummated substantially simultaneously herewith, in accordance in all material respects with the terms of the Lehigh Acquisition Documents and in material compliance with applicable law and regulatory approvals, (II) all material governmental, shareholder, director and third party consents and approvals necessary in connection with the Lehigh Acquisition shall have been obtained, (III) all such consents and approvals shall be in force and effect, (IV) all applicable waiting periods shall have expired (including the expiration or early 72 termination of any Hart-Scott-Rodino waiting period) without any action being taken by any Governmental Authority that could restrain, prevent or impose any material adverse conditions on the Lehigh Acquisition or that could seek or threaten any of the foregoing, (V) the Lehigh Debt Assumption and/or Release has been successfully consummated or is being consummated substantially simultaneously herewith, including the receipt of all necessary releases of the appropriate Lehigh Companies and consents from creditors of such Lehigh Indebtedness with respect thereto, (VI) all Lehigh Indebtedness not subject to the Lehigh Debt Assumption and/or Release has been paid in full and terminated or is being paid in full and terminated substantially simultaneously herewith, (VII) the aggregate purchase price of the Lehigh Acquisition does not exceed the sum of (x) $155,000,000 (including any amounts deposited into any escrow account for payment of indemnities or other amounts under any of the Lehigh Acquisition Documents, but excluding the Lehigh Earn-Out and transaction expenses), and (y) the Lehigh Earn-Out (which shall not exceed $25,000,000 in the aggregate), and (VIII) except those conditions set forth on Schedule 5.17(b), each of which is subject to the terms of the Post-Closing Agreement, all conditions precedent to the consummation of the Lehigh Acquisition have been satisfied without waiver (except to the extent such waiver is not material or detrimental to the Lenders, or is set forth on Schedule 5.17(a)), (D) as to the matters described in Section 4.01(d), (E) that as of the Closing Date the Consolidated EBITDA of the Borrower and its Subsidiaries (computed pro forma for the consummation of the Lehigh Acquisition and all prior acquisitions included in the relevant period and adjusted to exclude up to $5,000,000 of net non-recurring expenses associated with the Lehigh Acquisition) for the most recently ended Four-Quarter Period of the Borrower is not less than $120,000,000, (F) the person to whom the Lehigh Indebtedness is owed, the amount thereof, and whether such portion of the Lehigh Indebtedness is to be paid in full and terminated or assumed or released pursuant to the Lehigh Debt Assumption and/or Release, and (G) after giving effect to the Lehigh Acquisition, the payment in full or full assignment of all amounts owing under the Lehigh Indebtedness (such that none of the Borrower, any of its Subsidiaries or any Lehigh Company is obligated on any such Lehigh Indebtedness), the occurrence of the Closing Date and all Credit Extensions to be made on the Closing Date, and the repayment of all Loans repaid on the Closing Date, (W) the Borrower and each of its Subsidiaries (other than Immaterial Subsidiaries) shall be Solvent, both individually and collectively, (X) the difference of the Aggregate Revolving Credit Commitments over the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations is not less than $30,000,000, and (Y) Consolidated Net Worth is not less than the amount set forth in Section 7.13(a)(A), together with such other evidence of or documentation relating to any matters described in (A) through (G) above as the Administrative Agent may request; (vi) an opinion or opinions of counsel to each Loan Party in form and substance satisfactory to the Administrative Agent; (vii) with respect to each opinion delivered in connection with the Lehigh Acquisition, either (A) reliance letters from applicable counsel to the Lehigh Companies or the Lehigh Seller or both, as applicable, or the Borrower entitling the Administrative Agent and the Lenders to rely on such opinion, or (B) inclusion of the Administrative Agent and the Lenders as reliance parties in such opinion; 73 (viii) (A) the consolidated financial statements of Lehigh and its Subsidiaries for the fiscal years ended December 31, 2001 and 2002, including balance sheets and related statements of income, stockholders' equity and comprehensive income, and cash flows, all audited and opined on by PriceWaterhouseCoopers LLP and prepared in conformity with GAAP, (B) interim quarterly financial statements of the Borrower and its subsidiaries, and of Lehigh and its subsidiaries, respectively, dated the end of the most recent fiscal quarter for which financial statements are available, (C) a balance sheet of the Borrower and its Subsidiaries, prepared by management of the Borrower on a pro forma combined basis for the consummation of the Lehigh Acquisition and the occurrence of the Closing Date, as of June 30, 2003, (D) income statements of the Borrower and its Subsidiaries, prepared by management of the Borrower on a pro forma combined basis for the consummation of the Lehigh Acquisition and the occurrence of the Closing Date, for the fiscal year ended December 31, 2002, for the six-month period ended June 30, 2003 and for the Four-Quarter Period most recently ended prior to the Closing Date, (E) projected balance sheets, income statements and cash flow statements of the Borrower and its Subsidiaries prepared on a quarterly basis through December 31, 2004 and annually for the four fiscal years thereafter, (F) such other financial information and information relating to the Lehigh Acquisition as the Administrative Agent may reasonably request, and (G) a Compliance Certificate for the Borrower and its subsidiaries, prepared as of the last day of the fiscal quarter most recently ended prior to the Closing Date, pro forma for the Lehigh Acquisition and all prior acquisitions included in the relevant period and the occurrence of the Closing Date; (ix) evidence of all insurance required by the Loan Documents on the Closing Date; (x) a Revolving Loan Notice or Swing Line Revolving Loan Notice, or both, if any; (xi) an initial Term Loan Interest Rate Selection Notice with respect to the Term Loan B Facility; (xii) certified copies of each of the Lehigh Acquisition Documents (executed, if applicable), with all amendments thereto, each of which shall be in form and substance satisfactory to the Administrative Agent and shall not have been amended, altered or otherwise changed or supplemented from the drafts thereof most recently delivered to and reviewed by the Administrative Agent, except as the Administrative Agent may consent (such consent not to be unreasonably withheld); (xiii) to the extent not previously delivered in connection with the Existing Agreement, delivery of Uniform Commercial Code financing statements suitable in form and substance for filing in all places required by applicable law to perfect the Liens of the Administrative Agent under the Security Instruments as a first priority Lien as to items of Collateral in which a security interest may be perfected by the filing of financing statements, including, if applicable, amendments to Uniform Commercial Code financing statements previously filed, and such other documents and/or evidence of other actions as may be necessary under applicable law to perfect the Liens of the Administrative Agent under the Security Instruments as a first priority Lien in and to such other Collateral as 74 the Administrative Agent may require, including without limitation the delivery by the Borrower of all documents required under Article IIA and certificates evidencing Pledged Interests, accompanied in each case by duly executed stock powers (or other appropriate transfer documents) in blank affixed thereto; (xiv) evidence of payment in full of all of the Lehigh Indebtedness not subject to the Lehigh Debt Assumption and/or Release, including payoff letters, UCC-3 Termination Statements, and all other evidence of cancellation of all liens and all such Lehigh Indebtedness and termination of the related credit facilities as the Administrative Agent may request; (xv) Uniform Commercial Code search results with respect to the Lehigh Companies showing only those Liens as are acceptable to the Lenders; (xvi) to the extent not previously delivered in connection with the Existing Agreement, waivers with respect to the Collateral and such other matters as the Administrative Agent may require, in form and substance satisfactory to the Administrative Agent, executed by (A) the owner of each location required by the Administrative Agent leased by the Borrower or any Loan Party, and (B) the owner or operator, as applicable, of each location required by the Administrative Agent at which Collateral is located (including without limitation each independent warehouse) but which is neither owned nor leased by any Loan Party; (xvii) a certificate of the chief financial officer or other Responsible Officer of the Borrower, or such other Person as is permitted under the terms of the Subordinated Indenture and the Subordinated Notes, certifying that the Obligations qualify as "Senior Debt" and "Designated Senior Debt" (each as defined in the Subordinated Indenture); (xviii) a waiver and consent with respect to intellectual property collateral as the Administrative Agent may require, in form and substance satisfactory to the Administrative Agent, executed by each Person who licenses intellectual property to any Loan Party; and (xix) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuers, the Swing Line Lender or the Required Lenders reasonably may require. (b) (i) Any fees required to be paid on or before the Closing Date shall have been paid; and (ii) (A) all Commitment Fees accrued through the Closing Date, (B) all Letter of Credit Fees accrued through the Closing Date and (C) all interest accrued on Loans through the Closing Date shall, in each case, have been paid on the Closing Date (regardless of whether such Commitment Fees, Letter of Credit Fees or interest would otherwise be payable on such date). (c) Unless waived by the Administrative Agent, the Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing 75 Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent). (d) In the good faith judgment of the Administrative Agent and the Lenders: (i) there shall not have occurred or become known to the Administrative Agent or the Lenders any event, condition, situation or status since the date of the Audited Financial Statements that has had or could reasonably be expected to result in a Material Adverse Effect; (ii) there shall not exist (A) any order, decree, judgment, ruling or injunction which restrains the consummation of the Lehigh Acquisition in the manner contemplated by the Lehigh Acquisition Documents, or (B) any pending or, to the knowledge of the Borrower or any Guarantor or to the Administrative Agent, threatened action, suit, investigation or other arbitral, administrative or judicial proceeding, which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; and (iii) the Borrower shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate those transactions contemplated hereby to be consummated on the Closing Date without the occurrence of any default under, conflict with or violation of (A) any applicable law, rule, regulation, order or decree of any Governmental Authority or arbitral authority or (B) any agreement, document or instrument to which the Borrower or any Subsidiary is a party or by which any of them or their properties is bound. 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS AND CONVERSIONS AND CONTINUATIONS. The obligation of each applicable Lender to honor any Revolving Loan Notice, Swing Line Revolving Loan Notice or Term Loan Interest Rate Selection Notice (other than a Revolving Loan Notice or Term Loan Interest Rate Selection Notice requesting only a Conversion of Eurodollar Rate Loans to Base Rate Loans) is subject to the following conditions precedent: (a) The representations and warranties of the Borrower contained in Article V or in any other Loan Documents shall be true and correct on and as of the date of such Credit Extension, Conversion or Continuation, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date. (b) No Default or Event of Default shall exist, or would result from such proposed Credit Extension, Conversion or Continuation. (c) The Administrative Agent and, if applicable, the applicable L/C Issuer or the Swing Line Lender shall have received a Revolving Loan Notice, Swing Line Revolving Loan Notice, a Letter of Credit Application or a Term Loan Interest Rate Selection Notice, as applicable, in accordance with the requirements hereof. 76 (d) The Administrative Agent shall have received, in form and substance reasonably satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as the Administrative Agent or the Required Lenders reasonably may require. Each Revolving Loan Notice, Swing Line Revolving Loan Notice, Letter of Credit Application and Term Loan Interest Rate Selection Notice submitted by the Borrower under this Section 4.02 shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension. ARTICLE V REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants (each of such representations and warranties as made or reaffirmed as of and at all times after the Closing Date to be deemed made giving effect to the Lehigh Acquisition) to the Administrative Agent and the Lenders that: 5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party (a) is a corporation, limited partnership, partnership or limited liability company duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute and deliver, and perform its obligations under, the Transaction Documents, the Lehigh Acquisition Documents and the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except where the failure so to qualify or be licensed could not reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Laws, except to the extent any non-compliance could not reasonably be expected to have a Material Adverse Effect. 5.02 AUTHORIZATION; NO CONTRAVENTION. (a) Except as set forth on Schedule 5.02(a), the execution, delivery and performance by each Loan Party of each Lehigh Acquisition Document to which such Person is party, have been duly authorized by all necessary corporate or other Organizational Action, and do not and will not (i) contravene the terms of any of the Person's Organization Documents; (ii) conflict with or result in any breach or contravention of, or the creation or imposition of any Lien (other than Permitted Liens) under, any material Contractual Obligation to which the Person is a party or any order, injunction, writ or decree of any Governmental Authority or arbitral award to which such Person or its property is subject, except any Liens in favor of the Administrative Agent and the Lenders created by the Loan Documents; or (iii) violate any Law the violation of which could reasonably be expected to have a Material Adverse Effect. (b) The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary 77 corporate or other Organizational Action, and do not and will not (i) contravene the terms of any of the Person's Organization Documents; (ii) conflict with or result in any breach or contravention of, or the creation or imposition of any Lien under, any Contractual Obligation to which the Person is a party or any order, injunction, writ or decree of any Governmental Authority or arbitral award to which such Person or its property is subject, except any Liens in favor of the Administrative Agent and the Lenders created by the Loan Documents; or (iii) violate any Law. 5.03 GOVERNMENTAL AND THIRD-PARTY AUTHORIZATION. No further approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement, any other Loan Document or any Lehigh Acquisition Document which has not been obtained or effected or with respect to which the failure so to obtain or effect could not reasonably be expected to have a Material Adverse Effect. 5.04 BINDING EFFECT. This Agreement, each Transaction Document and each Lehigh Acquisition Document has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement, each Transaction Document and each Lehigh Acquisition Document constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and other similar Laws relating to or affecting creditors' rights generally and by the application of general equitable principles (whether considered in proceedings at law or in equity). 5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. (a) Each of the Audited Financial Statements (i) was prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries, including liabilities for taxes, material commitments and Indebtedness to the extent disclosure of the same (including disclosure in the notes to financial statements) would be required to be disclosed under GAAP. (b) Each of the Lehigh Financial Statements (i) was prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of Lehigh and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Lehigh and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness to the extent disclosure of the same (including disclosure in the notes to financial statements) would be required to be disclosed under GAAP. 78 (c) (i) The financial reports delivered pursuant to Sections 4.01(a)(viii)(B) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and except, in the case of the interim financial statements provided therewith, no footnoted disclosures required by GAAP were provided; and (ii) each of the pro forma balance sheet and the pro forma income statement, giving effect to the Lehigh Acquisition, delivered pursuant to Section 4.01(a)(viii)(C) and (D) (I) fairly presents in all material respects the pro forma financial condition of the Borrower and its Subsidiaries as of the date thereof on a pro forma basis, and (II) shows all direct, non-contingent material indebtedness and other liabilities of the Borrower and its Subsidiaries as of the date thereof, including direct, non-contingent liabilities for taxes, material commitments and Indebtedness, pro forma for the Lehigh Acquisition. (d) Since the date of the Audited Financial Statements, there has been no event or circumstance that has had or could reasonably be expected to have a Material Adverse Effect. 5.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower or any of the Guarantors, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document, any Transaction Document or any Lehigh Acquisition Document, or the Transaction, the Lehigh Acquisition or any of the transactions contemplated hereby, or (b) if determined adversely, could reasonably be expected to have a Material Adverse Effect. 5.07 NO DEFAULT. Neither the Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document. 5.08 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. As of the Closing Date, and giving effect to the application of the proceeds of the Subordinated Notes, the Tilia Seller Note, the Term Loans and any Revolving Loans made or outstanding on the Closing Date, and the consummation of the Lehigh Acquisition as of the Closing Date, the property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01. 5.09 ENVIRONMENTAL COMPLIANCE. (a) The Borrower and each Subsidiary is in compliance in all material respects with all applicable Environmental Laws and has been issued and currently maintains all required federal, state and local permits, licenses, certificates and approvals, except to the extent the failure to have so been issued and maintain any such permit, license, certificate or approval could not reasonably be expected to have a Material Adverse Effect, and (b) neither the Borrower nor any Subsidiary has been notified of any pending or threatened action, suit, proceeding or investigation, and neither the Borrower nor any Subsidiary is aware of any facts, which (i) calls into question, or could reasonably be expected to call into 79 question, compliance by the Borrower or any Subsidiary with any Environmental Laws, (ii) seeks, or could reasonably be expected to form the basis of a meritorious proceeding, to suspend, revoke or terminate any license, permit or approval necessary for the operation of the Borrower's or any Subsidiary's business or facilities or for the generation, handling, storage, treatment or disposal of any Hazardous Materials, or (iii) seeks to cause, or could reasonably be expected to form the basis of a meritorious proceeding to cause, any property of the Borrower or any Subsidiary or other Loan Party to be subject to any restrictions on ownership, use, occupancy or transferability under any Environmental Law, any of which could reasonably be expected to have a Material Adverse Effect. 5.10 INSURANCE. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or its Subsidiaries operate. In addition to, and without being limited by, the foregoing, the Borrower and its Subsidiaries are currently maintaining the insurance required by each of the Security Instruments, and all premiums payable in respect of such insurance are current and all such insurance is in force. 5.11 TAXES. The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. After giving effect to the issuance of the Subordinated Notes, the Tilia Seller Note and (if it occurs) the Scheduled Acquisition B Equity Issuance, there is no proposed tax assessment against the Borrower or any Subsidiary, including any such assumed by any Loan Party under the Transaction Documents or the Lehigh Acquisition Documents, that would, if made, have a Material Adverse Effect. 5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws, except for any required amendment for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no 80 prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. 5.13 SUBSIDIARIES. The Borrower (i) has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 (prepared giving effect to the Lehigh Acquisition) and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 6.14; and (ii) has no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13 and additional equity investments made after the Closing Date in accordance with the terms of this Agreement. 5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. (b) None of the Borrower, any Person controlling the Borrower, or any Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940. 5.15 DISCLOSURE. No statement, information, report, representation, or warranty made by any Loan Party in any Loan Document or furnished to the Administrative Agent or any Lender by or on behalf of any Loan Party in connection with any Loan Document (a) except with respect to financial projections concerning the Borrower and its Subsidiaries, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or (b) in the case of financial projections concerning the Borrower and its Subsidiaries, have been prepared in good faith based upon assumptions the Borrower believes to be reasonable. 5.16 INTELLECTUAL PROPERTY; LICENSES, ETC. The Borrower and its Subsidiaries own, or possess the right to use, all Intellectual Property that is currently used for the operation of their respective businesses, without known conflict with the rights of any other Person. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, 81 substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Borrower, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 5.17 CONSUMMATION OF THE LEHIGH ACQUISITION. (a) The Lehigh Acquisition has been consummated as of, or is being consummated substantially simultaneously with, the Closing Date in accordance in all material respects with the terms of the Lehigh Acquisition Documents and in material compliance with applicable law and regulatory approvals. (b) As of the Closing Date, all conditions to the consummation of the Lehigh Acquisition have been satisfied, including the obtaining of all material governmental, shareholder and third party consents and approvals necessary in connection with the Lehigh Acquisition, and all such consents and approvals are in full force and effect, except (i) as set forth in Schedule 5.17(a), each of which closing conditions has been waived by the parties to the Lehigh Acquisition, and (ii) as set forth on Schedule 5.17(b), each of which closing conditions is subject to the terms of the Post-Closing Agreement. (c) As of the Closing Date, all applicable waiting periods with respect to the Lehigh Acquisition have expired (including the expiration or early termination of any Hart-Scott Rodino waiting period) without any action being taken by any authority that could restrain, prevent or impose any material adverse conditions on the Lehigh Acquisition. (d) The aggregate purchase price of the Lehigh Acquisition (including any amounts deposited into any escrow account for payment of indemnities or other amounts under any of the Lehigh Acquisition Documents, but excluding the Lehigh Earn-Out and assumed liabilities and transaction expenses), does not exceed $155,000,000. (e) Assuming the occurrence of the Closing Date, (i) each of the agreements, documents and instruments evidencing or governing the Lehigh Indebtedness has either been terminated or assumed (or the Lehigh Companies have been released from all obligations thereunder) pursuant to the Lehigh Debt Assumption and/or Release, (ii) all indebtedness and obligations of the Lehigh Companies incurred thereunder, and under the other documents executed and delivered in connection therewith, have either been repaid, assumed or released pursuant to the Lehigh Debt Assumption and/or Release, (iii) each of the Lehigh Companies has been released from all liability thereunder, and (iv) all Liens on any assets of any of the Lehigh Companies securing obligations under the Lehigh Indebtedness have been released. (f) On the Closing Date only, the excess of the Aggregate Revolving Credit Commitment over the aggregate Outstanding Amount of Revolving Loans, Swing Line Loans and L/C Obligations is not less than $30,000,000, computed after giving effect to (i) the occurrence of the Closing Date, (ii) the consummation of the Lehigh Acquisition, (iii) all Credit Extensions on the Closing Date, (iv) the Lehigh Debt Assumption and/or Release, (v) the repayment of all Revolving Loans and Swing Line Loans on the Closing Date, and (vi) the 82 payment in full of all amounts owing under, and the cancellation of, all Lehigh Indebtedness not assumed pursuant to the Lehigh Debt Assumption and/or Release. 5.18 SOLVENCY. On and after the Closing Date, the Borrower and each of the Subsidiaries (other than Immaterial Subsidiaries, as to which no representation is made) are Solvent, both individually and collectively, measured after giving effect to (i) the consummation of the Lehigh Acquisition (ii) the Credit Extension of the Term Loan B Facility hereunder on the Closing Date, (iii) all other Borrowings and repayments of the Revolving Credit Facility and the Term Loans on the Closing Date, (iv) the Lehigh Debt Assumption and/or Release, and (v) the payment in full of all amounts owing under, and the cancellation of, all Lehigh Indebtedness not assumed (or released) pursuant to the Lehigh Debt Assumption and/or Release. 5.19 OFF-BALANCE SHEET LIABILITIES. Neither the Borrower nor any Subsidiary has any Off-Balance Sheet Liabilities. 5.20 TAX SHELTER REGULATIONS. The Borrower does not intend to treat the Revolving Loans, the Swing Line Loans, the Term Loans and/or the Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that one or more of the Lenders may treat its Revolving Loans, its Pro Rata Term A Share of the Term Loan A, its Pro Rata Term B Share of the Term Loan B, and/or its interest in Swing Line Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. ARTICLE VI AFFIRMATIVE COVENANTS So long as any Lender shall have any Revolving Credit Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than contingent Obligations consisting of continuing indemnities and other contingent Obligations of the Borrower or any Guarantor that may be owing to the Lenders pursuant to the Loan Documents and expressly survive termination of this Agreement), the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to: 6.01 FINANCIAL STATEMENTS. Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, cash flows and (as to consolidated statements only) stockholders' equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with 83 GAAP, and (except with respect to consolidating balance sheets and related consolidating statements) audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any qualifications or exceptions as to the scope of the audit or the going concern status of the Borrower nor to any other qualifications and exceptions not reasonably acceptable to the Required Lenders; and (b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, cash flows and (as to consolidated statements only) stockholders' equity for such fiscal quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal, recurring year end audit adjustments and the absence of footnotes. 6.02 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders: (a) concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default under the financial covenants set forth herein or, if any such Default or Event of Default shall exist, stating the nature and status of such event; (b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower; (c) concurrently with the delivery of the financial statements referred to in Sections 6.01(a), quarterly projected financial statements, and quarterly projected working capital detail, for the next fiscal year of the Borrower, all prepared by management of the Borrower. (d) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them; (e) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the Securities and Exchange Commission under 84 Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto; (f) promptly after the Borrower has notified the Administrative Agent of any intention by the Borrower to treat the Revolving Loans, the Swing Line Loans, the Term Loans and/or the Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form; and (g) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary as the Administrative Agent, at the reasonable request of any Lender, may from time to time request. Each document required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(e) shall be deemed to have been delivered on the date on which the Borrower posts such document on the Borrower's website on the Internet at the website address listed on Schedule 10.02 hereof, or when such document is posted on the Securities and Exchange Commission's website at www.sec.gov (the "SEC Website") or on an Internet website established by the Administrative Agent with Intralinks, Inc. or other similarly available electronic media (each of the foregoing an "Informational Website"); provided that (i) the Borrower shall deliver paper copies of all such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies until a request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Administrative Agent and each Lender shall be notified by electronic mail of the applicable Informational Website and of the posting of each such document. The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above in this paragraph, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 6.03 NOTICES. Promptly notify the Administrative Agent and each Lender: (a) of the occurrence of any Default or Event of Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, any of the Transaction Documents, the Lehigh Acquisition Documents or any other Contractual Obligation of the Borrower or any Subsidiary; or (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; (c) of any litigation, investigation or proceeding affecting the Borrower or any Subsidiary in which the amount involved (excluding amounts covered by applicable insurance as to which no reservation of rights is in effect) exceeds the Threshold Amount, or in which injunctive relief or similar relief is sought, which relief, if granted, could reasonably be expected to have a Material Adverse Effect; (d) of the occurrence of any material ERISA Event; 85 (e) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary; and (f) of any (i) violation or alleged violation by the Borrower or any Subsidiary of any applicable Environmental Laws; (ii) release or threatened release by the Borrower or any Subsidiary, or by any Person handling, transporting or disposing of any Hazardous Materials on behalf of the Borrower or any Subsidiary, or at any facility or property owned or leased or operated by the Borrower or any Subsidiary, of any Hazardous Materials, except where occurring legally; (iii) liability or alleged liability of the Borrower or any Subsidiary for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials; or (iv) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws except to the extent such litigation or proceeding could not reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto, and with respect to matters in subsection (f), copies of all related notices, complaints, orders, directives, claims and citations. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement or other Loan Document that have been breached. 6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien (other than during the period in which such Lien may be a Permitted Lien) upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary and foreclosure or other enforcement of such Liens in respect of the Collateral have not commenced or have been effectively stayed; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness and subject to any provision of this Agreement. 6.05 PRESERVATION OF EXISTENCE, ETC. Except in a transaction permitted by Section 7.04 or 7.05, preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization; take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, and preserve or renew all of its registered Intellectual Property, except in each case to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and 86 renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.07 MAINTENANCE OF INSURANCE. In the event compliance with the insurance requirements set forth in the Security Instruments does not satisfy the following requirements, maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance. 6.08 COMPLIANCE WITH LAWS AND CONTRACTUAL OBLIGATIONS. (a) Comply in all material respects with the requirements of all Laws (including Environmental Laws) and Contractual Obligations applicable to it or to its business or property, except (other than with respect to those matters covered in subsection (b) below) in such instances in which (i) such requirement of Law or Contractual Obligation is being contested in good faith by appropriate proceedings diligently conducted or a bona fide dispute exists with respect thereto; or (ii) with respect to Contractual Obligations only, the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. (b) In addition to the foregoing, if the Borrower or any Subsidiary shall receive any letter, notice, complaint, order, directive, claim or citation alleging that the Borrower or any Subsidiary has violated any Environmental Law, has released any Hazardous Material, or is liable for the costs of cleaning up, removing, remediating or responding to a release of Hazardous Materials, the Borrower and any Subsidiary shall, within the time period permitted and to the extent required by applicable Laws or the Governmental Authority responsible for enforcing such Environmental Law, remove or remedy, or cause the applicable Subsidiary to remove or remedy, such violation or release or satisfy such liability unless such requirement is being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary and such contest effectively stays any requirement to effect such removal or remedy. 6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be. 6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at reasonable times during normal business hours as often as may be reasonably desired, and upon reasonable advance notice to the Borrower, and (subject to the following 87 proviso) (a) at the expense of the Borrower one time per year in the case of inspection by the Administrative Agent or such other Lender as it may designate, and (b) otherwise at the expense of the Lenders; provided, however, that when a Default or Event of Default has occurred and is continuing the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the sole expense of the Borrower at any time during normal business hours and without advance notice. 6.11 COMPLIANCE WITH ERISA. Do, and cause each of its ERISA Affiliates to do, each of the following: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code. 6.12 USE OF PROCEEDS. Use the proceeds of the Credit Extensions (i) for working capital, Capital Expenditures, and other general corporate purposes of the Borrower and its Subsidiaries not in contravention of any Law or of any Loan Document, and (ii) with respect only to the Term Loan B Facility, together with available cash, to pay the cash portion of the purchase price of the Lehigh Acquisition, and to pay fees and expenses incurred in connection with the Lehigh Acquisition. 6.13 MAINTAIN PRINCIPAL LINE OF BUSINESS. Continue at all times to conduct its business and engage principally in the Permitted Business. 6.14 NEW SUBSIDIARIES AND PLEDGORS. (a) As soon as practicable but in any event within 30 days following the acquisition or creation of any Subsidiary that is a Domestic Subsidiary or Direct Foreign Subsidiary, but excluding the Lehigh Acquisition (with respect to which the provisions of Section 4.01 will govern and must be satisfied as of the Closing Date), cause to be delivered to the Administrative Agent each of the following: (i) if such Subsidiary is a Domestic Subsidiary, a Guaranty Joinder Agreement duly executed by such Subsidiary; (ii) if such Subsidiary is a Domestic Subsidiary, a Security Joinder Agreement duly executed by such Subsidiary (with all schedules thereto appropriately completed); (iii) if such Subsidiary is a Domestic Subsidiary or a Direct Foreign Subsidiary, and any of the Subsidiary Securities issued by such Subsidiary are owned by a Subsidiary who has not then executed and delivered to the Administrative Agent the Pledge Agreement or a Pledge Joinder Agreement granting a Lien to the Administrative Agent, for the benefit of the Secured Parties, in such Pledged Interests, a Pledge Joinder Agreement (with all schedules thereto appropriately completed) duly executed by the Subsidiary that directly owns such Pledged Interest (and, as to Pledged Interests issued by any Direct Foreign Subsidiary, a pledge agreement or comparable document pursuant to the laws of the jurisdiction of formation of such Subsidiary in form and substance acceptable to the Administrative Agent, unless otherwise agreed to by the Administrative Agent in its sole discretion); 88 (iv) if such Subsidiary is a Domestic Subsidiary or a Direct Foreign Subsidiary, and any of the Subsidiary Securities issued by such Subsidiary are owned by the Borrower or a Subsidiary who has previously executed a Pledge Agreement or a Pledge Joinder Agreement, a Pledge Agreement Supplement by each Borrower and Subsidiary that owns any of such Pledged Interests with respect to such Pledged Interests in the form required by the Pledge Agreement; (v) if the Pledged Interests issued or owned by such Subsidiary constitute securities under Article 8 of the Uniform Commercial Code (A) the certificates representing 100% of such Pledged Interests and (B) duly executed, undated stock powers or other appropriate powers of assignment in blank affixed thereto; (vi) if such Subsidiary is a Domestic Subsidiary and itself owns any Subsidiary Securities issued by any Subsidiary that is, or after such acquisition or transaction will be, a Domestic Subsidiary or Direct Foreign Subsidiary, a Pledge Joinder Agreement (with all schedules thereto appropriately completed) duly executed by such Subsidiary (and, as to Pledged Interests issued by any Direct Foreign Subsidiary, a pledge agreement or comparable document pursuant to the laws of the jurisdiction of formation of such Subsidiary in form and substance reasonably acceptable to the Administrative Agent, unless otherwise agreed to by the Administrative Agent in its sole discretion); (vii) if such Subsidiary is a Domestic Subsidiary and owns any Intellectual Property, (A) an IP Security Joinder Agreement duly executed by such Subsidiary (with all schedules thereto appropriately completed) and (B) with respect to any Intellectual Property owned by the Borrower or a Domestic Subsidiary that is registered in a jurisdiction outside the United States, to the extent deemed necessary by the Administrative Agent in its reasonable discretion, an intellectual property security agreement or comparable document pursuant to the laws of the jurisdiction in which such Intellectual Property is registered, in form and substance reasonably acceptable to the Administrative Agent; (viii) with respect to any Person that has executed a Pledge Joinder Agreement, a Pledge Agreement Supplement, a Security Joinder Agreement or an IP Security Joinder Agreement hereunder, Uniform Commercial Code financing statements naming such Person as "Debtor" and naming the Administrative Agent for the benefit of the Secured Parties as "Secured Party," in form, substance and number sufficient in the reasonable opinion of the Administrative Agent and its special counsel to be filed in all Uniform Commercial Code filing offices and in all jurisdictions in which filing is necessary or advisable to perfect in favor of the Administrative Agent for the benefit of the Secured Parties the Lien on the Collateral conferred under such Security Instrument to the extent such Lien may be perfected by Uniform Commercial Code filing; (ix) unless the Administrative Agent expressly waives such requirement, an opinion or opinions of counsel to each Subsidiary executing any Joinder Agreement or Pledge Supplement, and the Borrower if it executes a Pledge Supplement, provided for in this Section 6.14 dated as of the date of delivery of such applicable Joinder Agreements (and other Loan Documents) provided for in this Section 6.14 and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to 89 the Administrative Agent, each of which opinions may be in form and substance, including assumptions and qualifications contained therein, substantially similar to those opinions of counsel delivered pursuant to Section 4.01(a)). (x) current copies of the Organizational Documents and Operating Documents of each such Subsidiary that is a Domestic Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the Board of Directors, partners, or appropriate committees thereof (and, if required by such Organizational Documents, Operating Documents or applicable law, of the shareholders, members or partners) of such Domestic Subsidiary authorizing the actions and the execution and delivery of documents described in this Section 6.14, all certified by the applicable Governmental Authority or appropriate officer as the Administrative Agent may elect. (b) As soon as practicable but in any event within 30 days following the acquisition of any Pledged Interests by any Subsidiary who has not theretofore executed the Pledge Agreement or a Pledge Joinder Agreement and who is not required to deliver a Pledge Joinder Agreement pursuant to the preceding provisions of this Section 6.14, cause to be delivered to the Administrative Agent a Pledge Joinder Agreement (with all schedules thereto appropriately completed) duly executed by the Subsidiary (and, as to Pledged Interests issued by any Direct Foreign Subsidiary, a pledge agreement or comparable document pursuant to the laws of the jurisdiction of formation of such Subsidiary in form and substance reasonably acceptable to the Administrative Agent, unless otherwise agreed to by the Administrative Agent in its sole discretion), and the documents, stock certificates, stock powers, financing statements, opinions, Organizational Documents, Operating Documents, and Organizational Action relating thereto and to the pledge contained therein and described in clauses (v), (viii), (ix) and (x) of Section 6.14(a). (c) Notwithstanding anything contained in Sections 6.14(a) and (b), so long as no Default or an Event of Default has occurred and is continuing, nothing contained in Section 6.14(a) or (b) shall apply to any Immaterial Subsidiary (or to the pledge of Pledged Interests of any Direct Foreign Subsidiary that would be an Immaterial Subsidiary if it were a Domestic Subsidiary) acquired or created after the Closing Date, provided that in the event any Subsidiary ceases at any time to be an Immaterial Subsidiary (or as to any Direct Foreign Subsidiary whose Pledged Interests have not been pledged by virtue of the preceding sentence, such Subsidiary would no longer be an Immaterial Subsidiary if it were a Domestic Subsidiary) it shall, not later than thirty days after ceasing to be an Immaterial Subsidiary, comply with the provisions of Section 6.14(a) and (b). 6.15 FURTHER ASSURANCES. At the Borrower's cost and expense, upon request of the Administrative Agent, duly execute and deliver or cause to be duly executed and delivered, to the Administrative Agent such further instruments, documents, certificates, financing and continuation statements, and do and cause to be done such further acts that may be reasonably necessary or advisable in the reasonable opinion of the Administrative Agent to carry out more effectively the provisions and purposes of this Agreement, the Guaranty, the Security Instruments and the other Loan Documents. 6.16 TILIA SELLER NOTE. 90 (a) Determine and take all actions necessary to provide at all times that the Administrative Agent and the Lenders are the "senior most Designated Senior Debt" under the terms of the Tilia Seller Note. (b) Provide written notice to the payee of the Tilia Seller Note, on the same Business Day on which a Responsible Officer has knowledge, of any subordination and prohibition of any payment under the Tilia Seller Note. (c) Take all commercially reasonable action to provide that the payee of the Tilia Seller Note (i) will not declare a default under or in connection with the Tilia Seller Note or take, sue for, ask or demand from the Borrower payment of all or any portion of the Tilia Seller Note unless at least 10 days' prior written notice of such action is given to the Administrative Agent and (ii) will not commence, or join with any creditor other than the Lenders and the Administrative Agent in commencing, directly or indirectly, or cause the Borrower to commence, or assist the Borrower in commencing, any proceeding referred to in Section 4.2(a) of each Seller Note. 6.17 ACCOUNTS RECEIVABLE PURCHASE AGREEMENT AND WILBERT NOTE. All obligations of any Person under the Accounts Receivable Purchase Agreement and all obligations of any Person under the Wilbert Note have been paid in full, and each of the Accounts Receivable Purchase Agreement and the Wilbert Note has been terminated. ARTICLE VII NEGATIVE COVENANTS So long as any Lender shall have any Revolving Credit Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied (other than contingent Obligations consisting of continuing indemnities and other contingent Obligations of the Borrower or any Guarantor that may be owing to the Lenders pursuant to the Loan Documents and expressly survive termination of this Agreement), or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly: 7.01 LIENS. Create, incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following (collectively, the "Permitted Liens"): (a) Liens created or arising pursuant to the Security Instruments or any other Loan Document; (b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.03(b); (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; 91 (d) statutory Liens of landlords who are not subject to a Landlord Waiver, carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, or arising as a result of process payments under government contracts to the extent required or imposed by applicable Laws, all to the extent incurred in the ordinary course of business; (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; (h) Liens securing judgments for the payment of money in an aggregate amount not in excess of the Threshold Amount (except to the extent covered by independent third-party insurance as to which the insurer has acknowledged in writing its obligation to cover), unless any such judgment remains undischarged for a period of more than 30 consecutive days during which execution is not effectively stayed; (i) Liens securing Indebtedness of any Subsidiary that is not a Guarantor to the Borrower or any Subsidiary; (j) Liens securing Indebtedness permitted under Section 7.03(e); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby (x) is not less than 75% of the cost of property acquired on the date of acquisition and (y) does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; and (k) Liens on assets other than equity interests in any Subsidiary securing Indebtedness (including Indebtedness committed to the Borrower or any Subsidiary but not advanced) in aggregate outstanding principal amount not to exceed $10,000,000 at any time. 7.02 INVESTMENTS. Make any Investments, except: (a) Investments that are existing on the date hereof and listed on Schedule 7.02, including the Tilia Seller Note and any Investment in connection with the Tilia Escrow Agreement; 92 (b) Investments held by the Borrower or such Subsidiary in the form of Eligible Securities and cash equivalents; (c) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes; (d) Investments of (i) any Subsidiary in the Borrower, (ii) of the Borrower or any Subsidiary in a Guarantor, (iii) of any Subsidiary that is not a Guarantor in another Subsidiary that is not a Guarantor, or (iv) of the Borrower or any Guarantor in any Subsidiary that is not a Guarantor in an amount not to exceed $11,000,000 in the aggregate at any time outstanding; (e) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; (f) Investments permitted by Section 7.04; (g) Permitted Acquisitions, the Lehigh Acquisition and, so long as all other provisions of this Agreement with respect thereto are satisfied, the Scheduled Acquisition B; and (h) other Investments in aggregate outstanding principal amount not to exceed, at any time, $5,000,000. 7.03 INDEBTEDNESS. Allow or permit any Subsidiary to create, incur, assume or suffer to exist any Indebtedness other than: (a) Indebtedness under the Loan Documents; (b) Indebtedness outstanding on the date hereof under the Subordinated Notes and the Tilia Seller Note, and any refinancings, refundings, renewals or extensions thereof; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to the fees and expenses reasonably incurred in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder, (ii) none of the instruments and agreements evidencing or governing such Indebtedness shall be amended, modified or supplemented after the Closing Date, including in connection with any refinancing, refunding, renewal or extension, to change any terms of subordination, repayment or rights of enforcement, conversion, put or exchange, or to make any covenants or events of default materially more restrictive or in any event more restrictive than as set forth herein, from such terms and rights as in effect on the Closing Date; (c) Contingent Obligations of (i) the Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of the Borrower or any Guarantor, (ii) any Subsidiary that is not a Guarantor in respect of Indebtedness otherwise permitted hereunder of any Subsidiary, provided that with respect to each of (i) and (ii) such Contingent Obligations with respect to Indebtedness that is subordinated to the Obligations shall be subordinated to the same or greater extent, and (iii) the Borrower or any Subsidiary in the form of customary and 93 commercially reasonable indemnification obligations incurred in good faith in connection with the Lehigh Acquisition, the Scheduled Acquisition B or any Permitted Acquisition; (d) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; (e) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(j); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $10,000,000; (f) Indebtedness (i) of the Borrower or any Guarantor owing to the Borrower or any Guarantor, (ii) of any Subsidiary that is not a Guarantor owing to the Borrower or any Subsidiary, and (iii) of the Borrower or any Guarantor owing to any Subsidiary that is not a Guarantor in an aggregate principal amount not to exceed $10,000,000 at any time outstanding for all such Indebtedness permitted under this subclause (iii); (g) Unsecured Indebtedness (i) of the Borrower and the Guarantors in an aggregate principal amount not to exceed $10,000,000 at any time outstanding, and (ii) of Subsidiaries that are not Guarantors in an aggregate principal amount not to exceed $5,000,000 at any time outstanding; (h) Unsecured Indebtedness subordinated in payment to the Obligations hereunder in an aggregate principal amount not to exceed $100,000,000 at any time outstanding, the terms and conditions of which Indebtedness are acceptable to the Administrative Agent; and (i) the Tilia Earn-Out, the Lehigh Earn-Out, the Scheduled Acquisition B Earn-Out and any Permitted Acquisition Earn-Out. 7.04 FUNDAMENTAL CHANGES. Merge, consolidate with or into, or convey, transfer, lease or otherwise Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default or Event of Default exists or would result therefrom and subject to Section 7.20: (a) any Subsidiary may merge with or transfer substantially all its assets (upon voluntary liquidation or otherwise) to any Guarantor, provided that, if a merger, the applicable Guarantor shall be the continuing or surviving Person, and provided further that if a transfer of assets in the form of a sale by a Subsidiary that is not a Guarantor, the sale shall be at fair market value and the aggregate amount of all such sales shall not exceed $10,000,000; 94 (b) any Subsidiary substantially all of whose assets consist of Subsidiary Securities or other Equity Securities in any Person may merge with or transfer substantially all its assets (upon voluntary liquidation or otherwise) to the Borrower, provided that, if a merger, the Borrower shall be the continuing or surviving Person, and provided further that if a transfer of assets in the form of a sale by a Subsidiary that is not a Guarantor, the sale shall be at fair market value and the aggregate amount of all such sales shall not exceed $10,000,000; (c) any Subsidiary that is not a Guarantor may merge with or sell substantially all its assets (upon voluntary liquidation or otherwise) to any one or more Subsidiaries that is not a Guarantor; and (d) any Subsidiary may, upon not less than fifteen (15) days prior written notice to the Administrative Agent, be reincorporated in another jurisdiction or reorganized as a limited liability company, provided that the Borrower shall, and shall cause the applicable Subsidiary to (i) provide appropriate supplements to the information furnished with respect to such Subsidiary and otherwise comply with the requirements of Section 2A.03, and (ii) provide such further agreements, documents and assurances, and take such other action, as may be reasonably requested by the Administrative Agent to perfect or maintain the perfection and priority (and receive assurances thereof) of the Lien of the Administrative Agent in the Collateral; provided, however, no Domestic Subsidiary may reincorporate to a jurisdiction that would render it not a Domestic Subsidiary. 7.05 DISPOSITIONS. In each case subject to Section 7.20, make any Disposition or enter into any agreement to make any Disposition, except: (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business; (b) Dispositions of inventory in the ordinary course of business; (c) Dispositions by the Borrower or any Subsidiary of equipment or real property which is replaced by equipment or real property of substantially equivalent or greater utility and value within ninety (90) days of the date of disposition thereof, provided that if the fair market value of the property so disposed of is greater than $6,000,000, the Administrative Agent shall have received notice of such disposition from the Borrower not less than twenty (20) days prior to the consummation of such disposition; (d) Dispositions of property (i) by any Subsidiary to a Guarantor, (ii) by the Borrower or any Guarantor to any Guarantor, and (iii) by any Subsidiary that is not a Guarantor to any other Subsidiary that is not a Guarantor; and (e) Dispositions permitted by Section 7.04; and (f) Dispositions not otherwise permitted by (a) through (e) above, so long as the aggregate fair market value of all such property so disposed in any fiscal year of the Borrower does not exceed $50,000,000 and the Net Proceeds therefrom are applied as provided in Section 2.06(e); provided that, without increasing the $50,000,000 limit provided in this Section 7.05(f), the first $3,000,000 of aggregate Net Proceeds in each fiscal year of the Borrower realized from 95 the Disposition of Excluded Accounts (as defined in the Security Agreement) under all Factoring Agreements shall not be required to be applied as a prepayment as would otherwise be required under Section 2.06(e). 7.06 LEASE OBLIGATIONS. Create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except: (a) leases in existence on the date hereof and listed on Schedule 7.06, and any renewal, refunding, extension or refinancing thereof; provided that with respect to Capital Leases and Synthetic Leases (i) the amount of such Capital Lease or Synthetic Lease is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to the fees and expenses reasonably incurred in connection with such refinancing, and (ii) none of the instruments and agreements evidencing or governing such Capital Lease or Synthetic Lease shall be amended, modified or supplemented after the Closing Date, including in connection with any refinancing, refunding, renewal or extension, to change any terms of subordination, repayment or rights of enforcement, conversion, put, exchange or other rights, or to make any covenants or events of default materially more restrictive or in any event more restrictive than as set forth herein, from such terms and rights as in effect on the Closing Date; and (b) operating leases (other than those constituting Synthetic Lease Obligations) entered into or assumed by the Borrower or any Subsidiary after the date hereof in the ordinary course of business. 7.07 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that: (a) (i) each Guarantor may make Restricted Payments to the Borrower and to other Guarantors, and (ii) each Subsidiary that is not a Guarantor may make Restricted Payments to other Subsidiaries and the Borrower; (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock of such Person; and (c) the Borrower may repurchase shares of its own stock at any time so long as both immediately before and after the making of any such repurchase, and pro forma for each such stock repurchase, (i) the Available Repurchase Amount is not less than $0, (ii) the Total Leverage Ratio is less than or equal to 1.75 to 1.00, (iii) the excess of the Aggregate Revolving Credit Commitments over the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations shall equal or exceed $15,000,000, and (iv) no Default or Event of Default shall have occurred and be continuing. 7.08 ERISA. At any time engage in a transaction which could be subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt "prohibited transaction" (as defined in Section 4975 of the Code); (b) fail to comply with ERISA or any other applicable Laws; or (c) incur any material "accumulated funding deficiency" (as defined in Section 302 of ERISA), which, with respect to each event listed above, could reasonably be expected to have a Material Adverse Effect. 96 7.09 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business other than the Permitted Business. 7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of the Borrower, other than for compensation and upon fair and reasonable terms with Affiliates in transactions that are otherwise permitted hereunder no less favorable to the Borrower or Subsidiary than would be obtained in a comparable arm's-length transaction with a Person other than an Affiliate. 7.11 BURDENSOME AGREEMENTS. Enter into any Contractual Obligation that limits the ability (a) of any Subsidiary to make Restricted Payments, loans or advances to the Borrower or any Guarantor or to otherwise transfer property to the Borrower or any Guarantor, or (b) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person, other than standard and customary negative pledge provisions in property acquired with the proceeds of any Capital Lease or purchase money financing that extend and apply only to such acquired property. 7.12 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose, provided that to the extent permitted by Section 7.07(c), the proceeds of one or more Credit Extensions may be used by the Borrower to purchase stock of the Borrower so long as such purchase is made in compliance with Regulation U of the FRB and all other applicable Laws. 7.13 FINANCIAL COVENANTS. (a) Consolidated Net Worth. Permit Consolidated Net Worth of the Borrower at any time to be less than the sum of (A) $62,000,000, (B) an amount equal to 50% of the Consolidated Net Income earned in each fiscal quarter ending after June 30, 2003 (with no deduction for a net loss in any such fiscal quarter) and (C) an amount equal to 100% of the aggregate increases in Stockholders' Equity of the Borrower and its Subsidiaries after the date hereof by reason of the issuance and sale of capital stock of the Borrower (including upon any conversion of debt securities of the Borrower into such capital stock). (b) Total Leverage Ratio. At any time permit the Total Leverage Ratio as of the end of any Four-Quarter Period of the Borrower to be greater than the ratio set forth below opposite such Four-Quarter Period:
- --------------------------------------------------------------------------------------------------------------------- Four-Quarter Period ending closest to: Maximum Total Leverage Ratio - -------------------------------------- ---------------------------- - --------------------------------------------------------------------------------------------------------------------- June 30, 2003; September 30, 2003; December 31, 2003; 3.50 to 1.00 March 31, 2004; June 30, 2004; and - ---------------------------------------------------------------------------------------------------------------------
97
- --------------------------------------------------------------------------------------------------------------------- September 30, 2004 - --------------------------------------------------------------------------------------------------------------------- December 31, 2004; March 31, 2005; June 30, 2005; and 3.25 to 1.00 September 30, 2005 - --------------------------------------------------------------------------------------------------------------------- December 31, 2005 and thereafter 3.00 to 1.00 - ---------------------------------------------------------------------------------------------------------------------
(c) Senior Leverage Ratio. At any time permit the Senior Leverage Ratio as of the end of any Four-Quarter Period of the Borrower to be greater than the ratio set forth below opposite such Four-Quarter Period:
- --------------------------------------------------------------------------------------------------------------------- Four-Quarter Period ending closest to: Maximum Senior Leverage Ratio - -------------------------------------- ----------------------------- - --------------------------------------------------------------------------------------------------------------------- June 30, 2003; September 30, 2003; December 31, 2003; March 31, 2004; June 30, 2004; and 2.25 to 1.00 September 30, 2004 - --------------------------------------------------------------------------------------------------------------------- December 31, 2004; March 31, 2005; 2.00 to 1.00 June 30, 2005; and September 30, 2005 - --------------------------------------------------------------------------------------------------------------------- December 31, 2005 and thereafter 1.75 to 1.00 - ----------------------------------------------------------- ---------------------------------------------------------
(d) Fixed Charge Ratio. Permit the Fixed Charge Ratio as of the end of any applicable period of the Borrower to be less than 1.25 to 1.00. 7.14 ACQUISITIONS. Enter into any agreement, contract, binding commitment or other arrangement providing for any Acquisition, or take any action to solicit the tender of securities or proxies in respect thereof in order to effect any Acquisition, other than the Lehigh Acquisition (which shall not be subject to the terms of this Section 7.14), unless (i) the Person to be (or whose assets are to be) acquired does not oppose such Acquisition and the line or lines of business of the Person to be acquired are a Permitted Business, (ii) no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such Acquisition and, if the Cost of Acquisition is in excess of $25,000,000, the Borrower shall have furnished to the Administrative Agent (A) pro forma historical financial statements as of the end of the most recently completed fiscal year of the Borrower and most recent interim fiscal quarter, if applicable giving effect to such Acquisition and (B) a certificate in the form of Exhibit D prepared on a historical pro forma basis as of the date of the Audited Financial Statements or, if later, as of the most recent date for which financial statements have 98 been furnished pursuant to Section 6.01(a) or (b) giving effect to such Acquisition, which certificate shall demonstrate that no Default or Event of Default would exist immediately after giving effect thereto, (iii) the Person acquired shall be a wholly-owned Subsidiary, or be merged into a wholly-owned Subsidiary, immediately upon consummation of the Acquisition (or if assets are being acquired, the acquiror shall be a wholly-owned Subsidiary), (iv) after the consummation of the Acquisition each Subsidiary that is a Domestic Subsidiary or Direct Foreign Subsidiary shall have complied with the provisions of Section 6.14, including with respect to any new assets acquired, and (v) after giving effect to such Acquisition, the aggregate Costs of Acquisition incurred in any fiscal year (on a noncumulative basis, with the effect that amounts not incurred in any fiscal year may not be carried forward to a subsequent period), together with the aggregate amount of cash payments during such fiscal year in respect of Permitted Acquisition Earn-Outs (which, for the avoidance of doubt, does not include the Lehigh Earn-Out or the Scheduled Acquisition B Earn-Out), shall not exceed in the aggregate $50,000,000; provided that, (x) from the Closing Date through December 31, 2003, the "$50,000,000" in subpart (v) above shall be deemed to read "$25,000,000," and (y) so long as all other provisions of this Section 7.14 are satisfied with respect thereto, the Cost of Acquisition of Scheduled Acquisition B, up to $30,000,000 of the Cost of Acquisition of Scheduled Acquisition A, and up to $15,500,000 of the Cost of Acquisition of the OWD Acquisition shall not count against the annual aggregate limit set forth in subpart (v) above. 7.15 CAPITAL EXPENDITURES. Make or become legally obligated to make Capital Expenditures which exceed in the aggregate in any fiscal year of the Borrower described below, the amount set forth opposite each such period:
- --------------------------------------------------------------------------------------------------------------------- Fiscal Year Ending Maximum Capital Expenditures - ------------------ ---------------------------- - --------------------------------------------------------------------------------------------------------------------- December 31, 2003 $24,000,000 - --------------------------------------------------------------------------------------------------------------------- December 31, 2004 $26,000,000 - --------------------------------------------------------------------------------------------------------------------- December 31, 2005 $28,000,000 - --------------------------------------------------------------------------------------------------------------------- December 31, 2006 and 2007 $30,000,000 - ---------------------------------------------------------------------------------------------------------------------
; provided that (i) up to $5 million of the amount of Capital Expenditures permitted but not used in any fiscal year (without regard to any carryover from the preceding fiscal year) may be carried forward to the immediately succeeding fiscal year, (ii) Capital Expenditures made by any of Diamond Brands, Inc., Diamond Brands Operating Corp., Diamond Brands Kansas, Inc. and Forster, Inc. on or after January 1, 2003 but prior to the consummation of the Diamond Brands Acquisition, with respect to assets acquired by the Borrower or one of its Subsidiaries pursuant to the Diamond Acquisition, shall constitute Capital Expenditures made by the Borrower and its Subsidiaries in the fiscal year of the Borrower ending December 31, 2003, and (iii) Capital Expenditures made by any of the Lehigh Companies on or after January 1, 2003 but prior to the Closing Date shall constitute Capital Expenditures made by the Borrower and its Subsidiaries in the fiscal year of the Borrower in which such Capital Expenditures were made. 7.16 CHANGE IN FISCAL YEAR. Change its fiscal year. 99 7.17 LIMITATION ON CASH PAYMENT OF EARN-OUTS. Pay any Tilia Earn-Out, any Lehigh Earn-Out, any Scheduled Acquisition B Earn-Out or any other Permitted Acquisition Earn-Out in cash, including any such payment into escrow, unless both before and after the payment of such Tilia Earn-Out, Lehigh Earn-Out, Scheduled Acquisition B Earn-Out or Permitted Acquisition Earn-Out in cash (a) no Default or Event of Default shall have occurred and be continuing, (b) the Borrower is in pro forma compliance with the terms of the Credit Agreement, including the financial covenants in Section 7.13, after giving effect thereto, (c) the excess of (i) the Aggregate Revolving Credit Commitments over (ii) the Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations, shall not be less than $20,000,000, and (d) the Borrower delivers to the Administrative Agent and the Lenders a certificate certifying as to the matters in (a), (b) and (c) above, and setting forth the pro forma calculation of each of the financial covenants in Section 7.13 in substantially the same manner as set forth in a Compliance Certificate. 7.18 FOREIGN SUBSIDIARIES. Permit more than ten percent (10%) of Consolidated Total Assets, in the aggregate, either to be owned by the Subsidiaries of the Borrower that are not Domestic Subsidiaries or to be located outside of the United States. 7.19 SUBORDINATED INDEBTEDNESS. Unless consented to by the Required Lenders: (a) prepay, redeem, purchase, repurchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Subordinated Indebtedness, in each case including pursuant to any change of control, sale of assets, issuance of any equity or otherwise as may be set forth in the terms therefor or available to the Borrower at its option, except such actions taken with respect to the Tilia Seller Note to the extent specifically required by the terms thereof (subject to the subordination terms thereof); or (b) amend, modify or change in any manner any term or condition of any Subordinated Indebtedness (including without limitation any of the documents evidencing such Subordinated Indebtedness) so that the terms and conditions thereof are less favorable to the Administrative Agent and the Lenders than the terms and conditions of such Indebtedness as of the Original Closing Date; provided that (x) to the extent the issuance of the Exchange Notes in accordance with the terms of the Subordinated Indenture would otherwise violate any part of Section 7.19(a) or (b) above, such issuance of the Exchange Notes in accordance with the terms of the Subordinated Indenture is expressly permitted, and (y) at any time the Borrower may prepay, redeem, purchase, repurchase, defease or otherwise satisfy prior to the scheduled maturity thereof (each such event a "Bond Repurchase") a principal amount of Subordinated Indebtedness so long as both immediately before and after the making of any such Bond Repurchase, and pro forma for each such Bond Repurchase, (i) the Available Repurchase Amount is not less than $0, (ii) the Total Leverage Ratio is less than or equal to 1.75 to 1.00, (iii) the excess of the Aggregate Revolving Credit Commitments over the aggregate Outstanding Amount of all Revolving Loans, Swing Line Loans and L/C Obligations shall equal or exceed $15,000,000, and (iv) no Default or Event of Default shall have occurred and be continuing. 100 7.20 STATUS OF BORROWER. The Borrower shall not at any time operate any of its lines of business other than through its Subsidiaries, or own any assets other than (i) equity interests in Subsidiaries, (ii) cash and cash equivalents and investments permitted under Sections 7.02(b), (c) and (d), and (iii) such other property consistent with its sole function as a holding company. 7.21 INTROPACK AGREEMENT. Make payments in excess of $7,500,000 in the aggregate pursuant to Section 2.2 of the Intropack Agreement (excluding any payments made prior to this Section 7.21 becoming an effective part of the Credit Agreement); provided that so long as such payments do not exceed $7,500,000 in the aggregate over the life of the Intropack Agreement (excluding any payments made prior to this Section 7.21 becoming an effective part of the Credit Agreement), such payments shall be deemed permitted under this Agreement and shall not be deemed to be Investments or Capital Expenditures hereunder. 7.22 IMMATERIAL SUBSIDIARIES. Permit any Immaterial Subsidiary to own any Subsidiary Securities. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES 8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default: (a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or any L/C Obligation, or (ii) within three days after the same becomes due interest on any Loan or on any L/C Obligation, or any commitment or other fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement (i) contained in any of Section 6.05, 6.10, 6.12, 6.13 or 6.16 or Article VII, or (ii) contained in any of Section 6.01, 6.02 or 6.03 and such failure continues for 5 days; or (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or (e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Contingent Obligation (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such 101 Indebtedness or Contingent Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Contingent Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased or redeemed (automatically or otherwise) prior to its stated maturity, or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) there occurs any Event of Default under the Subordinated Notes, Subordinated Indenture or Tilia Seller Note; or (iv) the Borrower becomes obligated to prepay any Seller Note prior to its maturity for any reason, including the occurrence of any Change of Control or Leverage Ratio greater than 3.5 to 1.0, each as defined and calculated in the Tilia Seller Note; or (f) Insolvency Proceedings, Etc. The Borrower or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or (h) Judgments. There is entered against the Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding $3,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any non-monetary final judgment that has, or could reasonably be expected to have, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in 102 an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than the agreement of all the Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or (k) Change of Control. There occurs any Change of Control with respect to the Borrower. 8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, (a) declare the commitment of each Lender to make Loans, the commitment of the Swing Line Lender to make Swing Line Loans, and any obligation of any L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof) plus the Letter of Credit fees payable with respect to such Letter of Credit (calculated at the Applicable Margin with respect to Revolving Loans that are Eurodollar Rate Loans then in effect for the period from the date of such cash collateralization until the expiry date of such Letter of Credit); and (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; provided, however, that upon the occurrence of any event specified in subsection (f) of Section 8.01, the obligation of each Revolving Lender to make Revolving Loans and any obligation of any L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender. 8.03 APPLICATION OF FUNDS. After the exercise of any rights or remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the 103 proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order: First, to the reasonable expenses incurred in connection with retaking, holding, preserving, processing, maintaining or preparing for sale, lease or other disposition of, any Collateral, including reasonable attorney's fees and legal expenses pertaining thereto; Second, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such; Third, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Third payable to them; Fourth, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and L/C Borrowings, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth payable to them; Fifth, ratably among the Lenders in proportion to the respective amounts described in this clause Fifth held by them, to (i) the payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, (ii) the Administrative Agent for the account of the L/C Issuers to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; provided that if the amounts available are insufficient to make all payments provided for in this clause Fifth, that portion allocable to clause (ii) shall be applied first to pay Outstanding Amounts of Loans and L/C Borrowings under clause (i) before being utilized to Cash Collateralize L/C Obligations and (iii) to the payment of Swap Termination Values owing to any Lender or any Affiliate of any Lender arising under Related Swap Contracts that shall have been terminated and as to which the Administrative Agent shall have received notice of such termination and the Swap Termination Value thereof from the applicable Lender or Affiliate of a Lender; Sixth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Document that are due and payable to the Administrative Agent and the other Secured Parties, or any of them, on such date, ratably based on the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law. Subject to Section 2.04(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. 104 ARTICLE IX ADMINISTRATIVE AGENT 9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. (a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article IX with respect to any acts taken or omissions suffered by such L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the Letter of Credit Applications pertaining to such Letters of Credit as fully as if the term "Administrative Agent" as used in this Article IX and in the definition of "Agent-Related Person" included such L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to any L/C Issuer. 9.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. 9.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, 105 enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof. 9.04 RELIANCE BY ADMINISTRATIVE AGENT. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater or other number or group of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and participants. (b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto. 9.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the Required Lenders (or such greater or other number or group of Lenders as may be expressly required hereby in any instance) in accordance with Article VIII; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders. 106 9.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person. 9.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person's own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders (or such greater or other number or group of Lenders as may be expressly required hereby in any instance) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section; provided further, however, that to the extent any L/C Issuer is entitled to indemnification under this Section 9.07, to the extent such indemnification relates solely to such L/C Issuer's acting in such capacity the indemnification provided for in this Section 9.07 will be the obligation solely of the Revolving Lenders. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs and the costs and expenses incurred in connection with the use of Intralinks, Inc. or other comparable information transmission systems in connection with this Agreement) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal 107 proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the Aggregate Commitments, the payment of all Obligations hereunder and the resignation of the Administrative Agent. 9.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent or an L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or an L/C Issuer, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity. 9.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as an L/C Issuer and as the Swing Line Lender. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent, including its rights and powers as an L/C Issuer and as the Swing Line Lender, and the respective terms "Administrative Agent," "L/C Issuer" and "Swing Line Lender" shall mean or include, as applicable, such successor administrative agent, Letter of Credit issuer and swing line lender, and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer's and Swing Line Lender's rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring L/C Issuer or Swing Line Lender or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 108 If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 9.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.04(i) and (j), 2.10 and 10.04) allowed in such judicial proceeding; and (b) to collect and receive any monies 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 Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.10 and 10.04. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. 9.11 COLLATERAL AND GUARANTY MATTERS. The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, (a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or 109 under any other Loan Document, or (iii) subject to Section 10.01, if approved, authorized or ratified in writing by the Required Lenders; (b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(j); and (c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.11. 9.12 OTHER AGENTS; LEAD MANAGERS. None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a "syndication agent," "documentation agent," "co-agent," "book manager," "lead manager," "arranger," "lead arranger" or "co-arranger" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE X MISCELLANEOUS 10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent: (a) shall waive any condition set forth in Section 4.01(a) without the written consent of each Lender except to the extent otherwise provided for in Section 4.01(a); (b) shall extend or increase (i) the Revolving Credit Commitment (or reinstate any Revolving Credit Commitment terminated pursuant to Section 2.06 or 8.02) of any Revolving Lender without the written consent of such Revolving Lender, (ii) the Pro Rata Term A Share (measured in Dollars) of the Outstanding Amount of the Term Loan A of any Term Loan A Lender without the written consent of such Term Loan A Lender, or (iii) the Pro Rata Term B Share (measured in Dollars) of the Outstanding Amount of the Term Loan B of any Term Loan B Lender without the written consent of such Term Loan B Lender; 110 (c) shall waive or postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to the Lenders (or any of them) or any scheduled or mandatory reduction of the Aggregate Revolving Credit Commitments hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to waive or extend or postpone the date fixed for any mandatory prepayment or reduction of the Aggregate Revolving Credit Commitments required under Section 2.06(e); (d) shall reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of the Borrower to pay interest at the Default Rate; (e) shall change Section 2.14 or Section 8.03 in a manner that would alter the sharing of payments required thereby without the written consent of each Lender directly affected thereby; (f) shall change any provision of this Section 10.01, the definition of any of "Required Lenders," "Required Revolving Lenders," "Required Term Loan A Lenders" or "Required Term Loan B Lenders," or any other provision hereof, in each case to the extent such change would alter the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender directly affected thereby; (g) shall change the allocation between the Term Loan A Lenders and the Term Loan B Lenders of the mandatory and optional prepayments of the Term Loan A and the Term Loan B contained in Sections 2.06(b) and (e) without the written consent of both the Required Term Loan B Lenders and the Required Term Loan A Lenders, or change the right of the Term Loan B Lenders to decline prepayments pursuant to Section 2.06(b) or (e) without the consent of the Required Term Loan B Lenders; (h) which has the effect of enabling the Borrower to satisfy any condition to a Borrowing contained in Section 4.02 hereof which, but for such amendment, waiver or consent would not otherwise be satisfied, shall be effective to require the Revolving Lenders, the Swing Line Lender or any L/C Issuer to make any additional Revolving Loan or Swing Line Loan, or to issue any additional or renew any existing Letter of Credit, unless and until the Required Revolving Lenders shall consent thereto; (i) shall release all or substantially all of the Guarantors from the Guaranty without the written consent of each Lender, except to the extent such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder, in which case such release may be made by the Administrative Agent acting alone as provided in Section 9.11(c); or (j) shall release all or substantially all of the Collateral without the written consent of each Lender, except to the extent such Collateral is sold or to be sold as part of or in connection 111 with any sale permitted hereunder or under any other Loan Document, in which case such release may be made by the Administrative Agent acting alone as provided in Section 9.11(a); and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by each L/C Issuer in addition to the Lenders otherwise required under this Section 10.01, affect the rights or duties of the L/C Issuers under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by any of them; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders otherwise required under this Section 10.01, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders otherwise required under this Section 10.01, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) Section 10.07(h) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification; (v) the Agent/Arranger Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the respective parties thereto and; (vi) notwithstanding subsections (e) and (f) above, Sections 2.14, 8.03, 10.01 and the definitions of "Required Lenders," "Required Revolving Lenders," "Required Term Loan A Lenders" and "Required Term Loan B Lenders," and other related provisions, may be changed in connection with, and to the extent necessary to accommodate comparable voting and other rights with the existing Lenders with respect to, the addition of a new facility or tranche under this Agreement by a vote of the Required Lenders, and such new facility or tranche may be guaranteed by the Guarantors and be secured by the Collateral by a vote of the Required Lenders notwithstanding subsections (i) and (j) above. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that (A) the Revolving Credit Commitment of such Lender may not be increased or extended without the consent of such Lender, and (B) the pro rata portion (measured in Dollars) of the Outstanding Amount of any Term Loan of such Lender may not be increased without the consent of such Lender. 10.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission) and mailed, faxed or delivered, to the address, facsimile number or (subject to subsection (c) below) electronic mail address specified for notices on Schedule 10.02; or, in the case of the Borrower, the Administrative Agent, each L/C Issuer or the Swing Line Lender, to such other address as shall be designated by such party in a notice to the other parties, and in the case of any other party, to such other address as shall be designated by such party in a notice to the Borrower, the Administrative Agent, each L/C Issuer and the Swing Line Lender. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the intended recipient and (ii) (A) if delivered by hand or by courier, when signed for by the intended recipient (which need not be any natural person to whose attention such communication is directed, in the case of communications to Persons other than natural Persons); (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed; and (D) if delivered by 112 electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent, any L/C Issuer and the Swing Line Lender pursuant to Article II shall not be effective until actually received by such Person. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified on Schedule 10.02, or to such other number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, each L/C Issuer and the Swing Line Lender, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 6.02, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Revolving Loan Notices, Swing Line Revolving Loan Notices and Term Loan Interest Rate Selection Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Borrower agrees (a) to pay or reimburse the Administrative Agent, the Arrangers and the Syndication Agent for all reasonable costs and expenses incurred in connection with the development, due diligence, preparation, negotiation, syndication and execution of this Agreement and the other Loan Documents and any 113 amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs of the Administrative Agent and the costs and expenses incurred in connection with the use of Intralinks, Inc. or other similar information transmission systems in connection with this Agreement, and (b) to pay or reimburse the Administrative Agent, the Arrangers, the Syndication Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs of each of them. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 10.04 shall be payable within ten Business Days after demand therefor. The agreements in this Section 10.04 shall survive the termination of the Aggregate Commitments and repayment of all other Obligations. 10.05 INDEMNIFICATION BY THE BORROWER; LIMITATION OF LIABILITY. Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold harmless each Agent-Related Person, the Arrangers, each Lender and their respective Affiliates, directors, officers, employees, counsel, agents, trustees, advisors and attorneys-in-fact (collectively the "Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document, any Transaction Document, any Lehigh Acquisition Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, including the Transaction and the Lehigh Acquisition, (b) any Revolving Credit Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), including any proposed use or use to consummate the Transaction or the Lehigh Acquisition or to repay any indebtedness in connection with the Transaction or the Lehigh Acquisition (including without limitation the Tilia Indebtedness and the Lehigh Indebtedness), (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in any way to the Borrower, any Subsidiary or any other Loan Party, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such 114 liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and non-appealable judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee. The Borrower agrees that no Indemnitee shall have any liability (whether direct or indirect, in contract or tort or otherwise) to it or any of its Subsidiaries, security holders or creditors as a result for any action taken or not taken by it arising out of, related to or taken in connection with any Loan Document or the consummation of the transactions contemplated hereby or the actual or proposed use of Loan or Letter of Credit proceeds, except to the extent that such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have directly resulted from the gross negligence or willful misconduct of such Indemnitee, and in no event shall any Indemnitee be liable thereto for special, consequential, punitive or indirect damages. Without limitation of the foregoing, no Indemnitee shall be liable for any damages arising from the use by others of information or other materials obtained through Intralinks or other comparable electronic transmission systems utilized in connection with the credit facilities provided hereunder. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations. All amounts due under this Section 10.05 shall be payable within ten Business Days after demand therefor. 10.06 PAYMENTS SET ASIDE. To the extent that the Borrower makes a payment to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, or realizes or receives any proceeds of security or from enforcement action or otherwise, and such payment or proceeds or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver, agent or any other Person, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, including all Indebtedness of the Borrower hereunder, shall be revived, reinstated, outstanding and continue in full force and effect as if such payment had not been made or such set-off, enforcement or realization of security had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or paid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Federal Funds Rate from time to time in effect. 10.07 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (i) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) of this Section (and any other attempted 115 assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and the Revolving Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it, of its Pro Rata Term A Share of the Term Loan A, or of its Pro Rata Term B Share of the Term Loan B at the time owing to it (such Lender's portion of Loans, commitments and risk participations with respect to each of the Revolving Credit Facility, the Term Loan A Facility and the Term Loan B Facility (each, an "Applicable Facility") being referred to in this Section 10.07 as its "Applicable Share"); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Applicable Share of the Applicable Facility or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Applicable Share with respect to each Applicable Facility of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if a "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $1,000,000 unless each of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed), (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Applicable Facility, except that this clause (ii) shall not (x) apply to rights in respect of Swing Line Loans or (y) prohibit any Lender from assigning all or a portion of its rights and obligations among the Applicable Facilities on a non-pro rata basis, (iii) any assignment of a Revolving Credit Commitment must be approved by the Administrative Agent, each L/C Issuer and the Swing Line Lender unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Revolving Lender, Term Loan A Lender or Term Loan B Lender, as applicable, under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, the Borrower (at its expense) shall execute and deliver new or replacement Notes to the assigning Lender and the assignee Lender, and any assigning Lender that shall cease to be a Lender as a result of such assignment shall return its 116 Notes to the Borrower, if any. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and (in each case, as applicable) the Revolving Credit Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and/or the Loans (including such Lender's participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.14 as though it were a Lender. (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 10.15 as though it were a Lender. 117 (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) As used herein, the following terms have the following meanings: "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, each L/C Issuer (only with respect to assignments of the Revolving Credit Facility) and the Swing Line Lender (only with respect to assignments of the Revolving Credit Facility), and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any of the Borrower's Affiliates or Subsidiaries. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. (h) Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower (an "SPC") the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrower under this Agreement (including its obligations under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the Lender of record hereunder. The making of a Revolving Loan by an SPC hereunder shall utilize the Revolving Credit Commitment of the Granting Lender to the same extent, and as if, such Revolving Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. 118 Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and with the payment of a processing fee of $1,000, assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or guarantee or credit or liquidity enhancement to such SPC. (i) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the advances owing to it and the Note or Notes, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 10.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise. (j) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Credit Commitment and Loans (including its pro rata share of the Term Loan A and the Term Loan B, if any) and its participations in the L/C Obligations or any L/C Borrowing pursuant to subsection (b) above, Bank of America may, (i) upon 30 days' notice to the Borrower and the Lenders, resign as an L/C Issuer and/or (ii) upon five Business Days' notice to the Borrower, resign as Swing Line Lender. In the event of any such resignation as an L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as an L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as an L/C Issuer, it shall retain all the rights and obligations of an L/C Issuer hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Swing Line Lender to make Swing Line Loans or the Lenders to make Revolving Loans or fund participations in the manner set forth in Section 2.04(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such termination, including the right to require the Lenders to make Revolving Loans or fund participations in outstanding Swing Line Loans in the manner set forth in Section 2.05(c). (k) Notwithstanding anything to the contrary contained herein, if at any time Fleet assigns all of its Revolving Credit Commitment and Loans (including its pro rata share of the Term Loan A and the Term Loan B, if any) and its participations in the L/C Obligations or any L/C Borrowing pursuant to subsection (b) above, Fleet may, upon 30 days' notice to the Borrower, the Lenders and the Administrative Agent, resign as an L/C Issuer. In the event of any such resignation as an L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Fleet as an L/C Issuer. Fleet shall retain all the rights and obligations of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an L/C Issuer and all L/C 119 Obligations with respect thereto (including the right to require the Swing Line Lender to make Swing Line Loans or the Lenders to make Revolving Loans or fund participations in the manner set forth in Section 2.04(c)). 10.08 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations; (g) with the consent of the Borrower; or (h) to the extent such Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower (unless such information became available from such source in violation of a confidentiality obligation of such source with respect to such Information, of which obligation the Administrative Agent or applicable Lender was aware). In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Aggregate Commitments, and the Credit Extensions. For the purposes of this Section, "Information" means all information received from any Loan Party relating to any Loan Party or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party; provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, "Information" shall not include, and the Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby) and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or 120 similar item that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby. 10.09 SET-OFF. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 10.10 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations. 10.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 10.12 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 10.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and 121 delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. 10.14 SEVERABILITY. Any provision of this Agreement and the other Loan Documents to which the Borrower is a party that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10.15 TAX FORMS. (a) Each Lender that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Person and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Person by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Person by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Person is entitled to an exemption from, or reduction of, U.S. withholding tax. Thereafter and from time to time, each such Person shall (i) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Person by the Borrower pursuant to this Agreement, (ii) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (iii) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Person. If such Person fails to deliver the above forms or other documentation, then the Administrative Agent may withhold from any interest payment to such Person an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. (b) Upon the request of the Administrative Agent, each Lender that is a "United States person" within the meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction. 122 (c) If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Aggregate Commitments, repayment of all Obligations and the resignation of the Administrative Agent. 10.16 CONSENT OF THE GUARANTORS. Each Guarantor party hereto (each of which was a guarantor under the Existing Agreement) hereby executes and delivers this Agreement as a consent, acknowledgement and agreement hereto (including its amendment and restatement of the Existing Agreement), and does hereby so consent, acknowledge and agree to this Agreement and the provisions and terms contained herein, and hereby confirms and ratifies in all respects the Guaranty to which such Guarantor is a party (including without limitation the continuation of such Guarantor's payment and performance obligations thereunder upon and after the effectiveness of this Agreement) and the enforceability of such Guaranty and all other Loan Documents to which such Guarantor is a party against such Guarantor in accordance with its terms. 10.17 GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE PARTIES HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 10.18 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT 123 OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY 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 ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 10.19 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. [Signatures on following pages.] 124 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. BORROWER: JARDEN CORPORATION By: /s/ Desiree DeStefano ---------------------------- Name: Desiree DeStefano ---------------------------- Title: Senior Vice President ---------------------------- GUARANTORS: ---------- HEARTHMARK, INC., an Indiana corporation ALLTRISTA PLASTICS CORPORATION, an Indiana corporation ALLTRISTA NEWCO CORPORATION, an Indiana corporation TILIA, INC. (successor by name change to Alltrista Acquisition I, Inc.), a Delaware corporation TILIA DIRECT, INC. (successor by name change to Alltrista Acquisition II, Inc.), a Delaware corporation TILIA INTERNATIONAL, INC. (successor by name change to Alltrista Acquisition III, Inc.), a Delaware corporation QUOIN CORPORATION, a Delaware corporation By: /s/ Desiree DeStefano ---------------------------------------------- Name: Desiree DeStefano ---------------------------------------------- Title: Vice President ---------------------------------------------- ALLTRISTA ZINC PRODUCTS, L.P., an Indiana limited partnership By: Alltrista Newco Corporation, a Indiana corporation, its general partner By: /s/ Desiree DeStefano ------------------------------------- Name: Desiree DeStefano ------------------------------------- Title: Vice President ------------------------------------- BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Kimberly D. Williams -------------------------------------- Name: Kimberly D. Williams Title: Vice President BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender By: /s/ Timothy Cassidy -------------------------------------- Name: Timothy E. Cassidy Title: Vice President CIBC INC. By: /s/ Dean J. Decker -------------------------------------- Name: Dean J. Decker Title: Managing Director NATIONAL CITY BANK OF INDIANA By: /s/ David McNeely -------------------------------------- Name: David G. McNeely Title: Assistant Vice President THE BANK OF NEW YORK By: /s/ Maurice Campbell -------------------------------------- Name: Maurice A. Campbell -------------------------------------- Title: Vice President -------------------------------------- FLEET NATIONAL BANK By: /s/ W. Lincoln Schoff Jr. -------------------------------------- Name: W. Lincoln Schoff Jr. -------------------------------------- Title: Senior Vice President -------------------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ Kirby Law -------------------------------------- Name: Kirby Law -------------------------------------- Title: Vice President -------------------------------------- U.S. BANK NATIONAL ASSOCIATION By: /s/ Daniel R. Kraus -------------------------------------- Name: Daniel R. Kraus -------------------------------------- Title: Assistant Vice President -------------------------------------- SUNTRUST BANK By: /s/ Heidi M. Khambatta -------------------------------------- Name: Heidi M. Khambatta -------------------------------------- Title: Vice President -------------------------------------- TRANSAMERICA BUSINESS CAPITAL CORPORATION By: /s/ Robert Capasso -------------------------------------- Name: Robert Capasso -------------------------------------- Title: Senior Vice President -------------------------------------- UNION FEDERAL BANK OF INDIANAPOLIS By: /s/ Julie C. Kitcoff -------------------------------------- Name: Julie C. Kitcoff -------------------------------------- Title: Vice President -------------------------------------- EX-10.4 6 file005.txt CONSOLIDATED AMENDMENT CONSOLIDATED AMENDMENT TO GUARANTY AND SECURITY INSTRUMENTS This Consolidated Amendment to Guaranty and Security Instruments (this "Amendment") dated as of September 2, 2003 is made by and among JARDEN CORPORATION, a Delaware corporation (the "Borrower"), and EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE BORROWER (each a "Guarantor" and a "Grantor", collectively with the Borrower, the "Grantors"), and BANK OF AMERICA, N.A., a national banking association, as Administrative Agent (the "Administrative Agent") for each of the lenders (the "Lenders" and collectively with the Administrative Agent and certain other Persons parties to Related Swap Contracts, the "Secured Parties"), now or hereafter party to the Credit Agreement (as defined below). All capitalized terms used but not otherwise defined herein shall have the respective meanings assigned thereto in the Credit Agreement (as defined below). W I T N E S S E T H: WHEREAS, the Borrower (previously known as Alltrista Corporation), the Administrative Agent, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana, as Documentation Agent and the Lenders have agreed to amend and restate that certain Credit Agreement dated as of April 24, 2002, as amended prior to the date hereof (the "Existing Credit Agreement"), in order to, among other things, add a new term loan B facility to the Existing Credit Agreement pursuant to that certain Amended and Restated Credit Agreement dated as of the date hereof by and among the Borrower, the Administrative Agent, Canadian Imperial Bank of Commerce, as Syndication Agent and National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents and the Lenders (as from time to time further amended, modified, supplemented, restated, or amended and restated, the "Credit Agreement"); and WHEREAS, each of the Guarantors has entered (either initially or by a Guaranty Joinder Agreement) into that certain Guaranty Agreement dated April 24, 2003 (the "Guaranty") in favor of the Administrative Agent on behalf of the Lenders pursuant to which each Guarantor has guaranteed the payment and performance of the obligations of the Borrower under the Credit Agreement and the other Loan Documents; and WHEREAS, each of the Grantors has entered into one or more various Loan Documents (either initially or by a Security Joinder Agreement, IP Security Joinder Agreement or Pledge Joinder Agreement, as applicable), dated April 24, 2002, with the Administrative Agent as set forth in Schedule I hereto (as amended, restated, modified, supplemented or amended and restated prior to the date hereof, collectively, the "Security Instruments"); and WHEREAS, the Grantors and the Administrative Agent desire to amend, and it is necessary to amend, certain provisions of the Guaranty and the Security Instruments as set forth below to conform to the Credit Agreement; NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. AMENDMENTS TO THE GUARANTY AND SECURITY INSTRUMENTS. Subject to the terms and conditions set forth herein, the Guaranty and Security Instruments are hereby amended as follows: (a) Defined Terms. (i) All references to "Credit Agreement" (unless specified otherwise) in each of the Guaranty and the Security Instruments shall hereby refer to that certain Amended and Restated Credit Agreement, by and among the Borrower, the Administrative Agent, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents and the Lenders, dated as of September___, 2003, as from time to time further amended, modified, supplemented, restated, or amended and restated. (ii) All references to "Alltrista Corporation" (unless specified otherwise) in each place it appears throughout each of the Guaranty and the Security Instruments is hereby deleted and replaced with the words "Jarden Corporation" in each instance. (iii) All references to "Secured Parties" or "Secured Party" in each of the Guaranty and the Security Instruments shall hereby refer to, collectively or individually as the context may require, each Lender, the Administrative Agent and each other Person party to a Related Swap Contract. (iv) The definition of "Non-Material Accounts" in the Security Agreement is hereby deleted in its entirety and replaced as follows: " "Non-Material Accounts" means all Deposit Accounts and securities accounts with respect to which the sum of (a) the amounts on deposit in all such Deposit Accounts, plus (b) the value of the securities entitlements in all such securities accounts, does not exceed $2,000,000." (v) A new definition of "Non-Material Locations" shall be added to Section 1 of the Security Agreement, to read in its entirety as follows: " "Non-Material Locations" means those leased or other third-party locations at which tangible personal property Collateral is located, where the aggregate value of all Collateral located at all such locations is less than three percent (3%) of Consolidated Current Assets." (vi) A new definition of "Non-Material Domain Names" shall be added to Section 1 of the Security Agreement, to read in its entirety as follows: 2 " "Non-Material Domain Names" means those domain names registered to any Grantor which, in the aggregate for all such domain names, account for or are used in connection with less than one percent (1%) of the consolidated annual sales of Borrower and its Subsidiaries." (b) Recitals. (i) The first paragraph of each Witnesseth section in the Guaranty and each Security Instrument is hereby deleted in its entirety and restated as follows: "WHEREAS, the Borrower, the Administrative Agent, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents and the Lenders are party to that certain Credit Agreement dated as of April 24, 2002 (as amended up to (but excluding) September ___, 2003, the "Existing Credit Agreement"), pursuant to which the Lenders have made available to the Borrower a term loan facility and a revolving credit facility with a letter of credit sublimit and a swing line facility; and" (ii) The following paragraph shall be added as the second paragraph of the Witnesseth section of the Guaranty and each Security Instrument, to read in its entirety as follows: "WHEREAS, the parties have amended and restated the Existing Credit Agreement in order to, among other things, add a new term loan B facility to the Existing Credit Agreement pursuant to that certain Amended and Restated Credit Agreement dated as of September __, 2003 by and among the Borrower, the Administrative Agent, Canadian Imperial Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet National Bank, as Co-Documentation Agents and the Lenders (as from time to time further amended, revised, modified, supplemented, amended and restated or replaced, renewed, refunded or refinanced, the "Credit Agreement"); and" (c) Rules of Interpretation. The references to "Sections 1.02 and 1.05" or "Sections 1.02 through 1.05" in the first sentence of each of Section 27 of the Security Agreement, Section 31 of the IP Security Agreement, Section 16 of the Guaranty and Section 24 of the Pledge Agreement is hereby deleted and replaced with "Sections 1.03 and 1.06." (d) Related Swap Contracts. (i) Section 17 of the Pledge Agreement is hereby deleted in its entirety and restated as follows: "17. RELATED SWAP CONTRACTS. All obligations of each Pledgor under or in respect of Related Swap Contracts (which are not prohibited under the terms of the Credit Agreement) to which any Lender or any Affiliate of any Lender is a party, shall be deemed to be Secured Obligations secured hereby, and each Lender or Affiliate of a Lender party to any such Related Swap Contract shall be deemed to be a Secured Party hereunder with respect to such Secured Obligations; provided, however, that such 3 obligations shall cease to be Secured Obligations at such time, prior to the Facility Termination Date, as such Person (or Affiliate of such Person) shall cease to be a "Lender" under the Credit Agreement. No Person who obtains the benefit of any Lien by virtue of the provisions of this Section shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and only to the extent expressly provided in the Loan Documents. Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Pledge Agreement by virtue of the provisions of this Section shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each Agent-Related Person shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement." (ii) Section 21 of the Security Agreement and Section 26 of the IP Security Agreement are hereby deleted in their entirety and restated as follows (with the appropriate section number at the start of each section): "[21][26]. RELATED SWAP CONTRACTS. All obligations of each Grantor under or in respect of Related Swap Contracts (which are not prohibited under the terms of the Credit Agreement) to which any Lender or any Affiliate of any Lender is a party, shall be deemed to be Secured Obligations secured hereby, and each Lender or Affiliate of a Lender party to any such Related Swap Contract shall be deemed to be a Secured Party hereunder with respect to such Secured Obligations; provided, however, that such obligations shall cease to be Secured Obligations at such time, prior to the Facility Termination Date, as such Person (or Affiliate of such Person) shall cease to be a "Lender" under the Credit Agreement. No Person who obtains the benefit of any Lien by virtue of the provisions of this Section shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and only to the extent expressly provided in the Loan Documents. Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Security Agreement by virtue of the provisions of this Section shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each Agent-Related Person shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement." (iii) Section 19 of the Guaranty is hereby deleted in its entirety and restated as follows: 4 "19. RELATED SWAP CONTRACTS. All obligations of the Borrower under Related Swap Contracts to which any Lender or its Affiliates are a party shall be deemed to be Borrower's Liabilities, and each Lender or Affiliate of a Lender party to any such Swap Contract shall be deemed to be a Secured Party hereunder with respect to such Borrower's Liabilities; provided, however, that such obligations shall cease to be Borrower's Liabilities at such time, prior to the Facility Termination Date, as such Person (or Affiliate of such Person) shall cease to be a "Lender" under the Credit Agreement. No Person who obtains the benefit of this Guaranty Agreement by virtue of the provisions of this Section shall have, prior to the Facility Termination Date, any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Guarantors' Obligations (including the release or modification of any Guarantors' Obligations or security therefor) other than in its capacity as a Lender and only to the extent expressly provided in the Loan Documents. Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Guaranty Agreement by virtue of the provisions of this Section shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each Agent-Related Person shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement." (e) Section 7 of the Security Agreement. (i) Section 7(e) is hereby deleted in its entirety and restated as follows: "(e) Upon and after the filing of certain UCC termination statements and related releases or amendments obtained (i) on or about April 24, 2002 in connection with the closing of the Transaction (including the payoff of Union Bank of California's credit facility with the Tilia Sellers) and the termination of that certain Credit Agreement dated as of April 26, 1999, among the Borrower, the lenders named therein and Bank One Indiana, N.A. (as successor by merger to NBD Bank, N.A.), as agent; and (ii) on or about September ___, 2003 in connection with the closing of the Lehigh Acquisition and the payment in full and termination or assignment and assumption of all the Lehigh Indebtedness, and the acceptance and filing of such UCC termination statements, UCC amendments and related releases by the appropriate jurisdictions and Governmental Authorities, no effective financing statement securing a valid security interest or other Perfection Document securing a valid security interest similar in effect, nor any other Perfection Action securing a valid security interest, covering all or any part of the Collateral purported to be granted or taken by or on behalf of such Grantor (or by or on behalf of any other Person and which remains effective as against all or any part of the Collateral) will be on file or in any recording office or will have been delivered to another Person for filing (whether upon the occurrence of a contingency or otherwise), or otherwise taken, as the case may be, except such as pertain to Permitted Liens and such 5 as may have been filed for the benefit of, delivered to, or taken in favor of, the Administrative Agent for the benefit of the Secured Parties in connection with the security interests conferred hereunder." (ii) Section 7(h) of the Security Agreement is hereby amended to add the following proviso at the end of such Section: "provided, however, that the Grantor shall not be required to deliver a Qualifying Control Agreement with respect to any Non-Material Location." (iii) Section 7(i) of the Security Agreement is hereby amended to add the following proviso at the end of such Section: "provided, however, that the lessor of any Non-Material Location shall not be required to acknowledge the Lien in favor of the Administrative Agent for the benefit of the Secured Parties or waive its statutory and consensual liens and rights with respect to the Collateral at such Non-Material Location." (f) Section 9 of the Security Agreement. Section 9(j) of the Security Agreement is hereby amended as follows: (i) Subsection (i) is amended to add the following at the end of clause (t) therein: "other than Non-Material Domain Names". (i) Subsection (ii) is hereby deleted in its entirety and restated to read as follows: "(ii) Such Grantor shall cause to be delivered to the Administrative Agent at or prior to the Closing Date with respect to each internet domain name registered to such Grantor, other than Non-Material Domain Names, an undated transfer document, duly executed in blank by such Grantor and in the form required by the applicable internet domain name registrar, sufficient to effect the transfer of each internet domain name to the transferee thereof named in such transfer form upon delivery to such registrar. Without limiting the generality of the foregoing, no Grantor shall acquire any rights to any internet domain name not listed on Schedule 9(j) attached hereto (other than a Non-Material Domain Name) except in each case upon giving not less than thirty (30) days' prior written notice thereof to the Administrative Agent, which notice shall be accompanied by an appropriate supplement to Schedule 9(j) reflecting such additional name, the delivery of additional executed internet domain name transfer documents executed in blank with respect thereto, and taking or causing to be taken at such Grantor's expense all such Perfection Action, including the delivery of such Perfection Documents, as may be reasonably requested by the Administrative Agent to perfect or protect, or maintain the perfection and priority of, the Lien of the Administrative Agent for the benefit of the Secured Parties in Collateral contemplated hereunder. Without limiting the foregoing, each Grantor shall furnish to the Administrative Agent and the Lenders such supplements to Schedule 9(j) from time to time as shall be necessary to keep such Schedule true and complete at all times." 6 (g) Section 11 of the Security Agreement. The last paragraph of Section 11 of the Security Agreement is hereby amended to replace the reference to "Section 2.13" therein with "Section 8.03." (h) Section 5 of the IP Security Agreement. Section 5(e) of the IP Security Agreement is hereby deleted in its entirety and restated to read as follows: "(e) Each Grantor agrees that, should it have or obtain an ownership interest in any United States patent or patent application that is not now identified on Schedule I, any trademark or trademark application that is not now identified on Schedule II or any copyright registration or copyright application that is not now identified on Schedule III: (i) the provisions of this IP Security Agreement shall automatically apply to such item, and such item shall automatically become part of the Collateral; (ii) such Grantor shall, within one month after acquiring or becoming aware of such ownership interest, (A) give written notice thereof to the Administrative Agent (unless such item is a Non-Material Patent or Non-Material Trademark (as each such term is defined below), (B) take all commercially reasonable and appropriate steps to protect such Patents, Trademarks and Copyrights, as, for example, by filing applications for their registration with the Patent and Trademark Office or the Copyright Office, as applicable, and (C) with respect to such Patents and Trademarks (other than Non-Material Patents and Non-Material Trademarks) and Copyrights, prepare, execute and file in the Patent and Trademark Office or the Copyright Office, as applicable, within the requisite time period, all documents that are known by such Grantor to be necessary or that the Administrative Agent, on behalf of the Secured Parties, reasonably requests in order to perfect the Security Interest of the Administrative Agent, on behalf of the Secured Parties, therein, including delivery to the Administrative Agent of an executed IP Assignment. Each Grantor authorizes the Administrative Agent, on behalf of the Secured Parties, to execute and file (subject in the case of the filing of IP Assignments, to the limitation contained in Section 4 above) such a document in the name of such Grantor if such Grantor fails to do so." (i) Section 7 of the IP Security Agreement. Sections 7(a) and (b) of the IP Security Agreement are hereby deleted in its entirety and restated to read as follows: "(a) It is the sole, legal and beneficial owner of the entire right, title and interest in and to the Patents purported to be granted by it hereunder, free and clear of any Lien, security interest, option, charge, pledge, registered user agreement, assignment (whether conditional or not), or covenant, or any other encumbrance, except for non-exclusive licenses as to which such Grantor is the licensor, Permitted Liens, and the Security Interests created by this IP Security Agreement. Upon and after the filing of certain UCC termination statements and related releases or amendments obtained (i) on or about April 24, 2002 in connection with the closing of the Transaction (including the payoff of Union Bank of California's credit facility with the Tilia Sellers) and the termination of that certain Credit Agreement dated as of April 26, 1999, among the Borrower, the lenders named therein and Bank One Indiana, N.A. (as successor by merger to NBD Bank, N.A.), as agent, and (ii) on or about September 2, 2003 in connection with the closing of the Lehigh Acquisition and the payment in full and termination or assignment and assumption of all the Lehigh Indebtedness, and the 7 acceptance and filing of such UCC termination statements, UCC amendments and related releases by the appropriate jurisdictions and Governmental Authorities, no effective financing statement securing a valid security interest or other instrument similar in effect covering all or any part of the Patents purported to be granted by such Grantor hereunder shall be on file in any recording office, including, without limitation, the Patent and Trademark Office, except such as may have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties. (b) Set forth on Schedule I is a list of all of the Patents (other than those Patents which, when aggregated with the Non-Material Trademarks (as defined below) account for or are connected with less than one percent (1%) of consolidated sales of the Borrower and its Subsidiaries (the "Non-Material Patents") owned by such Grantor and utilized in the conduct of its business as currently conducted and material in such Grantor's operations or in the selling or marketing of such Grantor's products or services." (j) Section 8 of the IP Security Agreement. Sections 8(a) and (b) of the IP Security Agreement is hereby deleted in its entirety and restated to read as follows: "(a) It is the sole, legal and beneficial owner of the entire right, title and interest in and to the Trademarks purported to be granted by it hereunder, free and clear of any Lien, security interest, option, charge, pledge, registered user agreement, assignment (whether conditional or not), or covenant, or any other encumbrance, except for non-exclusive licenses as to which such Grantor is the licensor, Permitted Liens, and the Security Interests created by this IP Security Agreement. Upon and after the filing of certain UCC termination statements and related releases or amendments obtained (i) on or about April 24, 2002 in connection with the closing of the Transaction (including the payoff of Union Bank of California's credit facility with the Seller) and the termination of that certain Credit Agreement dated as of April 26, 1999, among the Borrower, the lenders named therein and Bank One Indiana, N.A. (as successor by merger to NBD Bank, N.A.), as agent, and (ii) on or about September 2, 2003 in connection with the closing of the Lehigh Acquisition and the payment in full and termination or assignment and assumption of all the Lehigh Indebtedness, and the acceptance and filing of such UCC termination statements, UCC amendments and related releases by the appropriate jurisdictions and Governmental Authorities, no effective financing statement securing a valid security interest or other instrument similar in effect covering all or any part of the Trademarks purported to be granted by such Grantor hereunder shall be on file in any recording office, including, without limitation, the Patent and Trademark Office, except such as may have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties. (b) Set forth on Schedule II is a list of all of the Trademarks (other than those Trademarks which, when aggregated with the Non-Material Patents, account for or are connected with less than one percent (1%) of consolidated sales of the Borrower and its Subsidiaries (the "Non-Material Trademarks") owned by such Grantor and utilized in the conduct of its business as currently conducted and material in such Grantor's operations or in the selling or marketing of such Grantor's products or services." 8 (k) Section 9 of the IP Security Agreement. Section 9(a) of the IP Security Agreement is hereby deleted in its entirety and restated to read as follows: "(a) It is the sole, legal and beneficial owner of the entire right, title and interest in and to the Copyrights purported to be granted by it hereunder, free and clear of any Lien, security interest, option, charge, pledge, registered user agreement, assignment (whether conditional or not), or covenant, or any other encumbrance, except for the Permitted Liens, Security Interests created or permitted by this IP Security Agreement or the Credit Agreement. Upon and after the filing of certain UCC termination statements and related releases or amendments obtained (i) on or about April 24, 2002 in connection with the closing of the Transaction (including the payoff of Union Bank of California's credit facility with the Seller) and the termination of that certain Credit Agreement dated as of April 26, 1999, among the Borrower, the lenders named therein and Bank One Indiana, N.A. (as successor by merger to NBD Bank, N.A.), as agent, and (ii) on or about September 2, 2003 in connection with the closing of the Lehigh Acquisition and the payment in full and termination or assignment and assumption of all the Lehigh Indebtedness, and the acceptance and filing of such UCC termination statements, UCC amendments and related releases by the appropriate jurisdictions and Governmental Authorities, no effective financing statement securing a valid security interest or other instrument similar in effect covering all or any part of the Copyrights purported to be granted by such Grantor hereunder shall be on file in any recording office, including, without limitation, the Copyright Office, except such as may have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties." (l) Section 15 of the IP Security Agreement. Section 15(c) of the IP Security Agreement is hereby amended to replace the reference to "Section 2.13" therein with "Section 8.03." (m) Section 5 of the Pledge Agreement. Section 5 of the Pledge Agreement is hereby amended to replace the reference to "Section 2.13" therein with "Section 8.03." (n) Section 22 of the Guaranty. The reference to "Facility Guaranty" in the first sentence of Section 22 is hereby deleted and replaced by a reference to "Guaranty". 2. RELEASE OF IMMATERIAL SUBSIDIARIES. The Borrower hereby represents and warrants that the Grantors listed on Schedule 2 qualify as Immaterial Subsidiaries as determined in accordance with the definition thereof in the Credit Agreement. In reliance thereon and subject to the provisions of Section 6.14 of the Credit Agreement, the Administrative Agent hereby releases (i) any Lien conferred by each such Immaterial Subsidiary under any Security Instrument to which such Immaterial Subsidiary is a party, and (ii) each such Immaterial Subsidiary from any and all obligations and liabilities under each of the Security Agreement, IP Security Agreement, Guaranty or any other Loan Document to which it is a party, except to the extent that such obligation or liability specifically survives termination in accordance with the terms of such applicable Loan Document. 3. CONSENT OF THE GUARANTORS. Each Guarantor hereby consents, acknowledges and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects the Guaranty to which such Guarantor is a party (including without limitation the continuation of such 9 Guarantor's payment and performance obligations thereunder upon and after the effectiveness of this Amendment and the amendments contemplated hereby) and the enforceability of such Guaranty against such Guarantor in accordance with its terms. 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Administrative Agent and the Lenders to enter into this Amendment, the Borrower represents and warrants to the Administrative Agent and the Lenders as follows: (a) The representations and warranties made by the Borrower in Article V of the Credit Agreement and in each of the other Loan Documents to which it is a party are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date; (b) Since the execution of the Credit Agreement, no act, event, condition or circumstance has occurred or arisen which, singly or in the aggregate with one or more other acts, events, occurrences or conditions (whenever occurring or arising), has had or could reasonably be expected to have a Material Adverse Effect; (c) The Persons appearing as Guarantors on the signature pages to this Amendment constitute all Persons who are required to be Guarantors pursuant to the terms of the Credit Agreement and the other Loan Documents, including without limitation all Persons who became Subsidiaries or were otherwise required to become Guarantors after the Closing Date, and each of such Persons has become and remains a party to a Guaranty as a Guarantor; (d) This Amendment has been duly authorized, executed and delivered by the Borrower and Guarantors party hereto and constitutes a legal, valid and binding obligation of such parties, except as may be limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally; and (e) After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. 5. ENTIRE AGREEMENT. This Amendment, together with all the Loan Documents (collectively, the "Relevant Documents"), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other. None of the terms or conditions of this Amendment may be changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with Section 10.01 of the Credit Agreement. 10 6. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby specifically amended, modified or supplemented, the Credit Agreement and all other Loan Documents are hereby confirmed and ratified in all respects and shall be and remain in full force and effect according to their respective terms. 7. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. 8. GOVERNING LAW. This Amendment shall in all respects be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed and to be performed entirely within such State, and shall be further subject to the provisions of Sections 10.17(b) and 10.18 of the Credit Agreement. 9. ENFORCEABILITY. Should any one or more of the provisions of this Amendment be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 10. REFERENCES. All references in the Credit Agreement or any of the Loan Documents to the "Guaranty" or any "Security Instrument" shall mean the Guaranty and each Security Instrument, as amended hereby. 11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each of the Guarantors and Lenders, and their respective successors, legal representatives, and assignees to the extent such assignees are permitted assignees as provided in Section 10.07 of the Credit Agreement. [SIGNATURE PAGES FOLLOW.] 11 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written. BORROWER: JARDEN CORPORATION (successor by name change to Alltrista Corporation) By: /s/ Desiree DeStefano ------------------------------------- Name: Desiree DeStefano ----------------------------------- Title: Senior Vice President ---------------------------------- GUARANTORS: HEARTHMARK, INC., an Indiana corporation ALLTRISTA PLASTICS CORPORATION, an Indiana corporation ALLTRISTA NEWCO CORPORATION, an Indiana corporation TILIA, INC. (successor by name change to Alltrista Acquisition I, Inc.), a Delaware corporation TILIA DIRECT, INC. (successor by name change to Alltrista Acquisition II, Inc.), a Delaware corporation TILIA INTERNATIONAL, INC. (successor by name change to Alltrista Acquisition III, Inc.), a Delaware corporation QUOIN CORPORATION, a Delaware corporation By: /s/ Desiree DeStefano ---------------------------------- Name: Desiree DeStefano ---------------------------------- Title: Vice President ---------------------------------- ALLTRISTA ZINC PRODUCTS, L.P., an Indiana limited partnership By: Alltrista Newco Corporation, a Indiana corporation, its general partner By: /s/ Desiree DeStefano -------------------------------------- Name: Desiree DeStefano ------------------------------------ Title: Vice President ---------------------------------- ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT By: /s/ Timothy Cassidy -------------------------------------- Name: Timothy E. Cassidy ------------------------------------ Title: Vice President ----------------------------------- Schedule 1 Intellectual Property Security Agreement dated as of April 24, 2002, by and among the Borrower, one or more of the Guarantors and the Administrative Agent (as supplemented by the execution and delivery of IP Security Joinder Agreements). Securities Pledge Agreement dated as of April 24, 2002, by and among the Borrower, certain Guarantors and the Administrative Agent (as supplemented by the execution and delivery of Pledge Joinder Agreements and Pledge Agreement Supplements). Security Agreement dated as of April 24, 2002, by and among the Borrower, each Guarantors and the Administrative Agent (as supplemented by the execution and delivery of Security Joinder Agreements). Schedule 2 Immaterial Subsidiaries Trienda Corporation (f/k/a TriEnda Newco, Inc.) O.W.D., Incorporated Tupper Lake Plastics, Incorporated EX-10.9 7 file006.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of August 4, 2003 is entered into between Jarden Corporation, a Delaware corporation (the "Company") and James E. Lillie, (the "Employee"). WITNESSETH: WHEREAS, the Company desires to employ and to be assured of Employee's services on the terms and conditions hereinafter set forth; and WHEREAS, the Employee is willing to begin employment on such terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows: 1. Employment. The Company hereby employs the Employee as Chief Operating Officer of the Company, and the Employee accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. Notwithstanding the foregoing, it is understood and agreed that the Employee from time to time may (a) be appointed to additional offices or to different offices than those set forth above provided they are within a fifty mile radius of the current Rye, New York, location, (b) perform such duties other than those set forth above, and/or (c) relinquish one or more of such offices or other duties, as may be mutually agreed by and between the Company and the Employee; and, that no such action shall be deemed or construed to otherwise amend or modify any of the remaining terms or conditions of this Agreement. 2. Term. The term of this Agreement shall be two (2) years, commencing on the date hereof and ending on the second anniversary of such date (the "Initial Term"), subject to earlier termination pursuant to the provisions of Section 10. The employment of the Employee shall automatically continue hereunder following the Initial Term for the successive one (1) year periods (the "Renewal Terms") unless the Company or the Employee gives written notice to the other at least (90) ninety days prior to the end of the Initial Term. Subsequent to the Initial Term, the employment of the Employee hereunder may be terminated at the end of any Renewal Term by delivery by either the Employee or the Company of a written notice to the other part at least (90) ninety days prior to the end of any Renewal Term. 3. Duties. During the term of this Agreement, the Employee shall, subject to the provisions of Section 1 above, serve as Chief Operating Officer of the Company and shall perform all duties commensurate with his position that may be assigned to him by the Chief Executive Officer of the Company and/or by the Board of Directors of the Company consistent with such position. The Employee shall devote substantially all of his time and energies to the business and affairs of the Company and shall use his best efforts, skills and abilities to promote the interests of the Company as necessary to diligently and competently perform the duties of his position. 4. Compensation and Benefits.During the term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation for the performance of services under this Agreement and the Employee's observance and performance of all of the provisions hereof, a salary of $375,000 per year (the "Base Compensation"). The Base Compensation shall be reviewed annually and shall be increased by a minimum of the Consumer Price Index. In addition, the Employee shall be eligible for a bonus package based on performance. The decision as to whether to pay the Employee a bonus, as well as the amounts and terms of any such bonus package, shall be determined by the Compensation Committee of the Board of Directors as part of its annual budget review process. Starting on January 1, 2004 the bonus program shall give the Employee the opportunity to earn up to 50% of Base Compensation each year for achieving the Company's EBITDA and earnings per share budget and up to 100% of Base Compensation for achieving EBITDA 10% higher than budget and EPS 10% higher than budget. Each will be given a 50% percent weight in the bonus calculation. The Employees bonus for 2003 will be calculated on a pro rata basis using the principle outlined above. The Employee's salary shall be payable in accordance with the normal payroll practices of the Company and shall be subject to withholding for applicable taxes and other amounts. During the term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility and other provisions thereof, such medical, insurance, and other fringe benefit plans or policies as the Company may make available to, or have in effect for, its personnel with commensurate duties from time to time. The Company retains the rights to terminate or alter any such plans or policies from time to time. The Employee shall also be immediately entitled to four weeks of vacations as well as sick leave and other similar benefits in accordance with policies of the Company from time to time in effect for personnel with commensurate duties. The company will purchase a term life insurance policy, or other similar insurance vehicle, for the benefit of the employee in the amount of one million dollars. In addition to the benefits noted above the employee shall receive a grant of 35,000 restricted shares of the Company's common stock (the "Restricted Stock") on August 4, 2003, as well as 100,000 stock options with the Option Price being the closing price of Jarden Corporation common stock on the same date, such option granted to be covered in a separate stock option agreement. Regarding the Restricted Stock, which will be memorialized in a separate restricted stock agreement, the restrictions shall lapse upon the earlier of (i) the date that the stock price of the common stock of the Company equal or exceeds forty dollars ($40.00) or (ii) the date there is a change of control (as defined in the Jarden Corporation 2003 Stock Incentive Plan) of the Corporation. 5. Reimbursement of Business Expenses. During the term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation satisfactory to the Company and in specific accordance with such guidelines as may be established from time to time by the Company, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Employer in connection with the performance of services under this Agreement. 6. Representation of Employee. Except as set forth in Paragraph 3 hereof, the Employee represents and warrants that that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or non compete covenants, which in the future may have a possibility of adversely affecting the business of the Company or the performance by the Employee of his material duties under this Agreement. 7. Confidentiality. (For purposes of this Section 7, all references to the Company shall be deemed to include the Company's subsidiary corporations.) (a) Confidential Information. The Employee acknowledges that he will have knowledge of, and access to, proprietary and confidential information of the Company, including, without limitation, inventions, trade secrets, technical information, know-how, plans, specifications, methods of operations, financial and marketing information and the identity of customers and suppliers (collectively, the "Confidential Information"), and that such information, even though it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, either during or subsequent to the term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company and who have a need for such information for purposes in the best interests of the Company, and except for such information which is or becomes of general public knowledge from authorized sources other than the Employee. The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company. (b) Return of Confidential Information. Upon the termination of Employee's employment with the Company, the Employee shall promptly deliver to the Company all drawings, manuals, letters, notes, notebooks, reports and copies thereof and all other materials relating to the Company's business. 8. Noncompetition. (For purposes of this Section 8, all references to the Company shall be deemed to include the Company's subsidiary corporations). During the term set forth below, the Employee will not utilize his special knowledge of the business of the Company and his relationships with customers and suppliers of the Company to compete with the Company. During the term of this Agreement and for a period of twelve (12) months after the expiration or termination of this Agreement, the Employee shall not engage, directly or indirectly or have an interest, directly or indirectly, anywhere in the United States of America or any other geographic area where the Company does business or in which its products are marketed, alone or in association with others, as principal, officer, agent, employee, capital, lending of money or property, rendering of services or otherwise, in any business directly competitive with or similar to that engaged in by the Company (it being understood hereby, that the ownership by the Employee of 2% or less of the stock of any company listed on a national securities exchange shall not be deemed a violation of this Section 8). During the same period, the Employee shall not, and shall not permit any of his employees, agents or others under his control to, directly or indirectly, on behalf of himself or any other person, (i) call upon, accept business from, or solicit the business of any person who is, or who had been at any time during the preceding two years, a customer of the Company or any successor to the business of the Company, or otherwise divert or attempt to divert any business from the Company or any such successor, or (ii) directly or indirectly recruit or otherwise solicit or induce any person who is an employee of, or otherwise engaged by, the Company or any successor to the business of the Company to terminate his or her employment or other relationship with the Company or such successor. 9. Remedies. The restrictions set forth in Section 7 and 8 are considered by the parties to be fair and reasonable. The Employee acknowledges that the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breech of the provisions of Section 7 or 8. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company, the Company shall be entitled to seek injunctive and other equitable relief to secure the enforcement of these provisions. If any provisions of Sections 7, 8 or 9 relating to the time period, scope of activities or geographic area of restrictions is declared by a court of competent jurisdiction to exceed the maximum permissible time period, scope of activities or geographic area, as the case may be, shall be provisions of Section 7, 8 or 9 other than those described in the preceding sentence are adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render them enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties. 10. Termination. This Agreement may be terminated prior to the expiration of the term set forth in Section 2 upon the occurrence of any of the events set forth in, and subject to the terms of, this Section 10. (a) Death. This Agreement will terminate immediately and automatically upon the death of the Employee. (b) Disability. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, if the Employee shall suffer a permanent disability. For the purpose of this Agreement, the term "permanent disability" shall mean the Employee's inability to perform his duties under this Agreement for a period of 120 consecutive days or for an aggregate of 180 days, whether or not consecutive, in any twelve month period, due to illness, accident or any other physical or mental incapacity, as reasonably determined by the Board of Directors of the Company. In the event of termination for disability, the Employee will also be entitled to receive medical benefits generally available to other disabled employees of the Company. (c) Cause. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, upon: (i) breach by the Employee of any material provision of this Agreement not cured within ten (10) days after written notice of such breach is given by the Company to the Employee; (ii) gross negligence or willful misconduct of the Employee in connection with the performance of his duties under this Agreement, or Employee's willful refusal to perform any of his duties or responsibilities required pursuant to this Agreement; or (iii) fraud, criminal conduct or embezzlement by the Employee. (d) Without Cause. This Agreement may be terminated pursuant to the terms of Section 2 or on thirty (30) days written notice (the thirtieth day following such notice being herein sometimes called the "Termination Date") by the Company without cause, subject to the following provision. If the Employee's employment is terminated by the Company without Cause, or upon Disability, the Employee shall receive an amount (the "Severance Amount") equal to the sum of the following: (i) eighteen months Base Compensation; plus (ii) continuation of health insurance and other benefits for eighteen months at the expense of Company. If the Employee has completed at least six months of service in addition to the above he will also receive: (i) eighteen months target bonus which Employee would have been entitled to receive for achieving budget for the year in which Employee's employment was terminated; (ii) plus full vesting of any outstanding stock options and the lapsing of any restrictions over any restricted shares owned by the Employee. The cash portion of the Severance Amount shall be paid to the Employee as promptly as practicable after the date of Termination and in no event later than ten (10) days after termination. Payment of the Severance Amount shall be in lieu of all other financial obligations of the Company to the Employee and all other benefits in this Agreement shall cease as of the date of termination. The Employee shall have no obligation to seek other employment or otherwise mitigate damages hereunder. For the avoidance of doubt, it is understood that the Company will pay all amounts owed to Employee prior to the date of termination, including incentive compensation earned up through the date of termination in the same manner as all other plan participants. Notwithstanding anything in the incentive compensation plan, Employee need not be employed at the date the incentive payments are made to be eligible for this payment. The employee and the company shall enter into a mutual release of claims against one another following the termination of employment. 11. Miscellaneous. (a) Survival. The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement. (b) Entire Agreement.This Agreement sets forth the entire understanding of the parties and merges and supersedes any prior or contemporaneous agreements between the parties pertaining to the subject matter hereof. (c) Modification. This Agreement may not be modified or terminated orally; and no modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced; provided, however, that the Employee's compensation may be increased at any time by the Company without in any way affecting any of the other terms and conditions of this Agreement, which in all other respects shall remain in full force and effect. (d) Waiver. Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the obligations hereof shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity of this Agreement or such party's right thereafter to enforce any provision of this Agreement, not to preclude such party from taking any other action at any time which it would legally be entitled to take. (e) Successors and Assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without the consent of the other party. (f) Communications. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given at the time personally delivered or when mailed in any United States post office enclosed in a registered or certified postage prepaid envelope and addressed to the recipient's address set forth below, or to such other address as any party may specify by notice to the other party; provided, however, that any notice of change of address shall be effective only upon receipt. To the Company: Jarden Corporation Suite B-302 555 Theodore Fremd Avenue Rye, New York 10580 Attention: Chief Executive Officer To the Employee: Mr. James E. Lillie 49 Powder Horn Hill Road Wilton, CT 06897 (g) Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Agreement and the provision held to be invalid or unenforceable shall be enforced as nearly as possible according to its original terms and intent to eliminate such invalidity or unenforceability. (h) Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of New York County, New York. Any breach of any provision of this Agreement shall be deemed to be a breach occurring in the State of New York and the parties irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of New York or the Federal Courts having concurrent geographic jurisdiction, for the purpose of resolving any disputes among them relating to this Agreement or the transactions contemplated by this Agreement. (i) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, each of the parties hereto have duly executed this Agreement as of the date set forth above. JARDEN CORPORATION By: /s/ Ian Ashken ---------------------------- Ian Ashken Its: Vice President and Secretary ---------------------------- /s/ James Lillie --------------------------------- James E. Lillie EX-23.1 8 file007.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in Registration Statement on Form S-8 (No. 33-60622) dated March 31, 1993, Registration Statement on Form S-8 (No. 33-60730) dated March 31, 1993, Registration Statement on Form S-8 (No. 333-27459) dated May 20, 1997, Registration Statement on Form S-8 (No. 333-27461) dated May 20, 1997, Registration Statement on Form S-8 (No. 333-67033) dated November 10, 1998, Registration Statement on Form S-8 (No. 333-87996) dated May 10, 2002, Registration Statement on Form S-4/A (No. 333-89862) dated October 24, 2002, Registration Statement on Form S-3/A (No. 333-102387) dated January 29. 2003, and Registration Statement on Form S-8 (No. 333-105081) dated May 8, 2003 of our report dated April 17, 2003, except as to the Subsequent Event described in Note 11 which is as of September 2, 2003, relating to the financial statements of Lehigh Consumer Products Corporation as of December 31, 2002 and for the year then ended, which appear in the Current Report on Form 8-K dated September 5, 2003. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania September 5, 2003 EX-99.1 9 file008.txt PRESS RELEASE FOR: Jarden Corporation CONTACT: Martin E. Franklin Chairman and Chief Executive Officer Jarden Corporation 914-967-9400 Investor Relations: Cara O'Brien/Melissa Myron Press: Evan Goetz/Jennifer McCullam Financial Dynamics 212-850-5600 FOR IMMEDIATE RELEASE JARDEN CORPORATION COMPLETES LEHIGH ACQUISITION RYE, NEW YORK - SEPTEMBER 2, 2003 - JARDEN CORPORATION (NYSE: JAH) today announced it has completed the acquisition of Lehigh Consumer Products Corporation ("Lehigh"), previously announced on August 18, 2003, for approximately $155 million in cash. The transaction was financed through borrowings under the Company's amended and restated credit facility. Lehigh is the largest supplier of rope, cord and twine for the U.S. consumer marketplace and is a leader in innovative storage and organization products for the home and garage as well as products in the security door and fencing market. The addition of Lehigh expands the Company's presence in the home improvement and do-it-yourself markets and provides significant potential cross-selling opportunities with Jarden's established retail customer base. Lehigh continues the Company's strategy to grow and diversify its portfolio of niche consumer products used in and around the home. Martin E. Franklin, Chairman and Chief Executive Officer, said, "The acquisition of Lehigh marks a significant step in our strategy to selectively but aggressively expand our product and customer base. We intend to provide the resources to maximize the growth potential of Lehigh, while maintaining its historically strong profitability. We remain confident that the transaction will be accretive to earnings during fiscal 2003 and beyond." Jarden Corporation is a leading provider of niche consumer products used in and around the home under well-known brand names including Ball(R), Bernardin(R), Crawford(R), Diamond(R), FoodSaver(R), Forster(R), Kerr(R), Lehigh(R) and Leslie-Locke(R). In North America, Jarden is the market leader in several consumer categories, including home canning, home vacuum packaging, kitchen matches, branded retail plastic cutlery, toothpicks, and rope, cord and twine. Jarden also manufactures zinc strip and a wide array of plastic products for third party consumer product and medical companies, as well as its own businesses. Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements regarding the outlook for Jarden's markets and the demand for its products. These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's periodic and other reports filed with the Securities and Exchange Commission. ### -----END PRIVACY-ENHANCED MESSAGE-----