Exhibit 10.1
 
EXECUTION VERSION
 
CITIGROUP GLOBAL MARKETS INC.
390 Greenwich Street
New York, New York  10013
MORGAN STANLEY SENIOR FUNDING, INC.
1585 Broadway
New York, New York 10036
   
ROYAL BANK OF CANADA
One Liberty Plaza
New York, New York 10006

 
CONFIDENTIAL
 
December 20, 2011
 
Prestige Brands Holdings, Inc.
90 North Broadway
Irvington, New York 10533
Attention:  Ron Lombardi

 
Project Prism
Commitment Letter
 
Ladies and Gentlemen:
 
You have advised Citi (as defined below), Morgan Stanley Senior Funding, Inc.
(“MSSF”), Royal Bank of Canada (“Royal Bank”) and RBC Capital Markets1 (“RBCCM”
and, together with Citi and MSSF, “we” and “us” or the “Commitment Parties”)
that Prestige Brands Holdings, Inc. (“Holdings” or “you”), Prestige Brands, Inc.
(the “Borrower”) and/or one or more of its subsidiaries intends to acquire (the
“Acquisition”), directly or indirectly, a business previously identified to us
by you as “Prism” (“Prism”).  You have further advised us that, in connection
with the foregoing, you intend to consummate the other Transactions described in
the Transaction Description attached hereto as Exhibit A (the “Transaction
Description”).  Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Transaction Description, the Summary of
Principal Terms and Conditions attached hereto as Exhibit B (the “Senior Term
Sheet”),  the Summary of Principal Terms and Conditions attached hereto as
Exhibit C (the “Unsecured Bridge Term Sheet”, and collectively with the Senior
Term Sheet, the “Term Sheets”; this commitment letter, the Transaction
Description, the Term Sheets and the Summary of Additional Conditions attached
hereto as Exhibit D, collectively, the “Commitment Letter”).
  

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1 RBC Capital Markets is a marketing name for the investment banking activities
of Royal Bank of Canada.

 
 

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For purposes of this Commitment Letter, “Citi” shall mean Citigroup Global
Markets Inc., Citibank, N.A., Citigroup USA, Inc., Citicorp North America, Inc.
and/or any of their affiliates as Citi shall determine to be appropriate to
provide the services contemplated herein.
 
1.           Commitments.
 
In connection with the Transactions, each of Citi, MSSF and Royal Bank (together
with any other initial lender that becomes a party hereto, each an “Initial
Lender” and, collectively, the “Initial Lenders”) is pleased to advise you of
its commitment to, severally and not jointly, provide45%, 45% and 10%,
respectively, of the entire aggregate principal amount of each of the Credit
Facilities, subject only to the satisfaction of the conditions set forth herein,
in the sections entitled “Conditions to All Borrowings” in Exhibit B and Exhibit
C hereto (limited on the Closing Date (as defined below) as indicated therein)
and in Exhibit D hereto.
 
2.           Titles and Roles.
 
It is agreed that (i) Citi, MSSF and RBCCM will act as joint lead arrangers and
joint bookrunners for each of the Credit Facilities (collectively, the “Lead
Arranger” or the “Lead Arrangers”), (ii) Citi will act as administrative agent
and collateral agent (in such capacity, the “Senior Administrative Agent”) for
the Senior Secured Credit Facilities, (iii) MSSF will act as administrative
agent (in such capacity, the “Unsecured Bridge Administrative Agent” and,
collectively with the Senior Administrative Agent, the “Administrative Agent”)
for the Unsecured Bridge Facility and (iv) RBCCM will act as documentation agent
for each of the Credit Facilities.  It is further agreed that (i) in any
Information Materials (as defined below) and all other offering or marketing
materials in respect of the Senior Secured Credit Facilities, (x) Citi shall
have “left side” designation and shall appear on the top left and shall hold the
leading role and responsibility customarily associated with such “top left”
placement and (y) MSSF will be placed immediately to the right of Citi and (ii)
in any Information Materials (as defined below) and all other offering or
marketing materials in respect of the Unsecured Bridge Facility, (x) MSSF shall
have “left side” designation and shall appear on the top left and shall hold the
leading role and responsibility customarily associated with such “top left”
placement and (y) Citi will be placed immediately to the right of MSSF.  You
agree that no other agents, co-agents, arrangers or bookrunners will be
appointed, no other titles will be awarded and no compensation (other than
compensation expressly contemplated by this Commitment Letter and the Fee Letter
referred to below) will be paid to any Lender (as defined below) in order to
obtain its commitment to participate in the Credit Facilities unless you and we
shall so agree.
 

 
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3.           Syndication.
 
The Lead Arranger reserves the right, prior to or after the Closing Date (as
defined below), to syndicate all or a portion of the Initial Lenders’ respective
commitments hereunder to a group of banks, financial institutions and other
institutional lenders and investors (together with the Initial Lenders, the
“Lenders”) identified by the Lead Arranger in consultation with you and, with
respect to the Revolving Facility only, reasonably acceptable to the Lead
Arranger and you (your consent not to be unreasonably withheld or delayed), and
you agree to use commercially reasonable efforts to provide the Initial Lenders
with a period of 15 consecutive business days commencing on or after January 3,
2012 following the receipt of the Information Memorandum (as defined below) in a
form customarily delivered in connection with senior secured bank financings and
senior unsecured bridge financings and prior to the Closing Date to syndicate
the Credit Facilities; provided that (a) we agree not to syndicate our
commitments to (i) certain banks, financial institutions and other institutional
lenders (“Disqualified Institutions”) that have been specified to us by you or
the Borrower in writing prior to the date hereof and (ii) competitors of you,
Prism and your and its respective subsidiaries that have been specified to us by
you or the Borrower in writing prior to the date hereof (“Disqualified
Competitors” and, together, with Disqualified Institutions, “Disqualified
Lenders”) and (b) notwithstanding the Lead Arranger’s right to syndicate the
Credit Facilities and receive commitments with respect thereto, (i) no Initial
Lender shall be relieved, released or novated from its obligations hereunder
(including its obligation to fund the Credit Facilities on the date of the
consummation of the Acquisition with the proceeds of the initial funding under
the Credit Facilities (the date of such funding, the “Closing Date”)) in
connection with any syndication, assignment or participation of the Credit
Facilities, including its commitments in respect thereof, until after the
Closing Date has occurred, (ii) no assignment or novation by any Initial Lender
shall become effective as between you and the Initial Lenders with respect to
all or any portion of any Initial Lender’s commitments in respect of the Credit
Facilities until the initial funding of the Credit Facilities and (iii) unless
you otherwise agree in writing, each Initial Lender shall retain exclusive
control over all rights and obligations with respect to its commitments in
respect of the Credit Facilities, including all rights with respect to consents,
modifications, supplements, waivers and amendments, until the Closing Date has
occurred.
 

 
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Without limiting your obligations to assist with syndication efforts as set
forth herein, it is understood that the Initial Lenders’ commitments hereunder
are not conditioned upon the syndication of, or receipt of commitments in
respect of, the Credit Facilities and in no event shall the commencement or
successful completion of syndication of the Credit Facilities constitute a
condition to the availability of the Credit Facilities on the Closing Date.  The
Lead Arranger may commence syndication efforts promptly upon the execution of
this Commitment Letter and as part of their syndication efforts, it is their
intent to have Lenders commit to the Credit Facilities prior to the Closing Date
(subject to the limitations set forth in the preceding paragraph).  Until the
earlier of Successful Syndication (as defined in the Fee Letter) and the day
that is 90 days following the Closing Date, you agree actively to assist (and
use commercially reasonable efforts to cause Prism to assist) the Lead Arranger
in completing a timely syndication that is reasonably satisfactory to us and
you.  Such assistance shall include, without limitation, (a) your using
commercially reasonable efforts to ensure that any syndication efforts benefit
materially from your existing lending and investment banking relationships and,
to the extent practical and appropriate, Prism’s existing lending and investment
banking relationships, (b) direct contact between senior management, certain
representatives and certain advisors of you, on the one hand, and the proposed
Lenders, on the other hand, (and your using commercially reasonable efforts to
ensure such contact between senior management of Prism, on the one hand, and the
proposed Lenders, on the other hand), in all such cases at times mutually agreed
upon, (c) your assistance (including the use of commercially reasonable efforts
to cause Prism to assist) in the preparation and delivery, prior to the date
that is 15 consecutive business days prior to the Closing Date ending on the
third business day prior to the Closing Date  of the Information Materials (as
defined below) and other customary offering and marketing materials to be used
in connection with the syndication, (d) using your commercially reasonable
efforts to procure, at your expense, prior to the date that is 15 consecutive
business days prior to the Closing Date ending on the third business day prior
to the Closing Date, ratings for the Credit Facilities and the Unsecured Notes
from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors
Service, Inc. (“Moody’s”), and a public corporate credit rating and a public
corporate family rating in respect of the Borrower after giving effect to the
Transactions from each of S&P and Moody’s, respectively, (e) the hosting, with
the Lead Arranger, of a reasonable number of meetings to be mutually agreed upon
of prospective Lenders at times and locations to be mutually agreed upon (and
your using commercially reasonable efforts to cause the officers of Prism to be
available for such meetings), (f) your using commercially reasonable efforts to
provide prior to the date that is (i) 15 consecutive business days prior to the
Closing Date ending on the third business day prior to the Closing Date,
customary pro forma financial statements of the Borrower after giving effect to
the Transactions (but excluding the impacts of any purchase accounting
adjustments) and (ii) 15 consecutive business days prior to the Closing Date
ending on the third business day prior to the Closing Date, customary forecasts
of financial statements of the Borrower for each quarter for the first twenty
four months following the Closing Date and for each year commencing with the
first fiscal year following the Closing Date for the term of the Credit
Facilities and (g) at any time prior to the earlier of Successful Syndication
(as defined in the Fee Letter) or 90 days following the Closing Date, ensuring
(or, in the case of Prism, your using commercially reasonable efforts to ensure)
that there are no competing issues, offerings, placements or arrangements of
debt securities or commercial bank or other credit facilities by or on behalf of
you, Prism or any of your or its respective subsidiaries being offered, placed
or arranged (other than the Unsecured Notes or debt securities issued in lieu of
the Unsecured Notes) without the consent of the Lead Arranger, if such issuance,
offering, placement or arrangement would materially impair the primary
syndication of the Credit Facilities.  Notwithstanding anything to the contrary
contained in this Commitment Letter or the Fee Letter or any other letter
agreement or undertaking concerning the financing of the Transactions to the
contrary, your obligations to assist in syndication efforts as provided herein
(including the obtaining of the ratings referenced above) shall not constitute a
condition to the commitments hereunder or the funding of the Credit Facilities
on the Closing Date.
 
The Lead Arranger, in its capacities as such, will manage, in consultation with
you, all aspects of any syndication of the Credit Facilities, including
decisions as to the selection of institutions (which, in the case of the
Revolving Facility, shall be reasonably acceptable to you (your consent not to
be unreasonably withheld or delayed)) to be approached and when they will be
approached, when their commitments will be accepted, which institutions will
participate (subject to your consent rights set forth in the second preceding
paragraph and excluding Disqualified Lenders), the allocation of the commitments
among the Lenders and the amount and distribution of fees among the Lenders.  To
assist the Lead Arranger in its syndication efforts, you agree to promptly
prepare and provide (and to use commercially reasonable efforts to cause Prism
to provide) to us all customary information with respect to you, Prism and each
of your and its respective subsidiaries and the Transactions, including all
financial information and projections prepared by you (including financial
estimates, financial models, forecasts and other forward-looking information,
the “Projections”), as the Lead Arranger may reasonably request in connection
with the structuring, arrangement and syndication of the Credit Facilities.  For
the avoidance of doubt, you will not be required to provide any information to
the extent that the provision thereof would violate any law, rule or regulation,
or any obligation of confidentiality binding on you, Prism or your or its
respective affiliates; provided that you shall use commercially reasonable
efforts to obtain the relevant consents under such obligations of
confidentiality to allow for the provision of such information.
 

 
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You hereby acknowledge that (a) the Lead Arranger will make available
Information (as defined below), Projections and other offering and marketing
material and presentations, including confidential information memoranda to be
used in connection with the syndication of the Credit Facilities (collectively,
the “Information Memorandum”) (such Information, Projections, other offering and
marketing material and the Information Memorandum, collectively, with the Term
Sheets, the “Information Materials”) on a confidential basis to the proposed
syndicate of Lenders by posting the Information Materials on Intralinks, Debt X,
SyndTrak Online or by similar electronic means and (b) certain of the Lenders
may be “public side” Lenders (i.e. Lenders that do not wish to receive material
non-public information (“MNPI”) with respect to you, your affiliates, Prism or
your or its respective securities and who may be engaged in investment and other
market related activities with respect to you, Prism or your or its respective
securities) (each, a “Public Sider” and each Lender that is not a Public Sider,
a “Private Sider”).  You will be solely responsible for the contents of the
Information Materials and each of the Commitment Parties shall be entitled to
use and rely upon the information contained therein without responsibility for
independent verification thereof.
 
At the request of the Lead Arranger, you agree to assist (and to use
commercially reasonable efforts to cause Prism to assist) us in preparing an
additional version of the Information Materials to be used in connection with
the syndication of the Credit Facilities that consists exclusively of
information that is publicly available and/or does not include MNPI with respect
to you, Prism or any of your or its respective subsidiaries for the purpose of
United States federal and state securities laws to be used by Public Siders.  It
is understood that in connection with your assistance described above, customary
authorization letters will be included in any Information Materials that
authorize the distribution thereof to prospective Lenders, represent that the
additional version of the Information Materials does not include any MNPI and
exculpate you, Prism and us with respect to any liability related to the use of
the contents of such Information Materials or related offering and marketing
materials by the recipients thereof.  Before distribution of any Information
Materials, you agree to use commercially reasonable efforts to identify that
portion of the Information Materials that may be distributed to the Public
Siders as “Public Information”, which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof.  By marking
Information Materials as “PUBLIC”, you shall be deemed to have authorized the
Commitment Parties and the proposed Lenders to treat such Information Materials
as not containing any MNPI (it being understood that you shall not be under any
obligation to mark the Information Materials “PUBLIC”).
 
You acknowledge and agree that the following documents, without limitation, may
be distributed to both Private Siders and Public Siders, unless you advise the
Lead Arranger in writing (including by email) within a reasonable time prior to
their intended distribution that such materials should only be distributed to
Private Siders:  (a) administrative materials prepared by the Lead Arranger for
prospective Lenders (such as a lender meeting invitation, bank allocation, if
any, and funding and closing memoranda), (b) term sheets and notification of
changes in the Credit Facilities’ terms and conditions, (c) drafts and final
versions of the Facilities Documentation and (d) publicly filed financial
statements of you and your subsidiaries and financial statements of Prism and
its subsidiaries of a type that would be publicly filed if Prism was a public
reporting company.  If you advise us in writing (including by email), within a
reasonable period of time prior to dissemination, that any of the foregoing
should be distributed only to Private Siders, then Public Siders will not
receive such materials without your consent.

 
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4.           Information.
 
You hereby represent and warrant that (with respect to Information and
Projections relating to Prism and its subsidiaries, to your knowledge) (a) all
material written information and written data, other than the Projections and
other than information of a general economic or industry specific nature (the
“Information”), that has been or will be made available to any Commitment Party,
directly or indirectly, by you or by any of your representatives on your behalf
in connection with the transactions contemplated hereby, when taken as a whole,
is or will be, when furnished, correct in all material respects and does not or
will not, when furnished, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made (giving effect to all supplements and updates
thereto) and (b) the Projections contained in the Information Memorandum will be
prepared in good faith based upon assumptions that are believed by you to be
reasonable at the time such Projections are so furnished; it being understood
that the Projections are as to future events and are not to be viewed as facts,
the Projections are subject to significant uncertainties and contingencies, many
of which are beyond your control, that no assurance can be given that any
particular Projections will be realized and that actual results during the
period or periods covered by any such Projections may differ significantly from
the projected results and such differences may be material.  You agree that, if
at any time prior to the earlier of Successful Syndication (as defined in the
Fee Letter) or 90 days following the Closing Date, you become aware that any of
the representations and warranties in the preceding sentence would be incorrect
in any material respect if the Information and the Projections contained in the
Information Memorandum were being furnished, and such representations were being
made, at such time, then you will (or, prior to the Closing Date, with respect
to the Information and such Projections relating to Prism, will use commercially
reasonable efforts to) promptly supplement the Information and such Projections
such that (with respect to Information and Projections relating to Prism and its
subsidiaries, to your knowledge) such representations and warranties are correct
in all material respects under those circumstances.  In arranging and
syndicating the Credit Facilities, each of the Commitment Parties will be
entitled to use and rely primarily on the Information and the Projections
contained in the Information Memorandum without responsibility for independent
verification thereof or for the accuracy or completeness of the Information or
the Projections.
 
5.           Fees.
 
As consideration for the commitments of the Initial Lenders hereunder and for
the agreement of the Lead Arranger to perform the services described herein, you
agree to pay (or cause to be paid) the fees set forth in the Term Sheets and in
the Fee Letter dated the date hereof and delivered herewith with respect to the
Credit Facilities (the “Fee Letter”).  Once paid, such fees shall not be
refundable except as otherwise agreed in writing.

 
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6.           Conditions.
 
The commitments of the Initial Lenders hereunder to fund the Credit Facilities
on the Closing Date and the agreements of the Lead Arranger to perform the
services described herein are subject solely to (a) the conditions set forth in
the sections entitled “Conditions to All Borrowings” in Exhibit B hereto and
Exhibit C hereto and (b) the conditions set forth in Exhibit D hereto, upon
satisfaction (or waiver by all Commitment Parties) of such conditions, the
initial funding of the Credit Facilities shall occur.
 
Notwithstanding anything in this Commitment Letter (including each of the
exhibits attached hereto), the Fee Letter, the Facilities Documentation or any
other letter agreement or other undertaking concerning the financing of the
Transactions to the contrary, (i) the only representations relating to you, the
Borrower, the Guarantors, Prism, your and their respective subsidiaries and your
and their respective businesses the accuracy of which shall be a condition to
the availability and funding of the Credit Facilities on the Closing Date shall
be (A) such of the representations made by Prism with respect to Prism in the
Acquisition Agreement as are material to the interests of the Lenders, but only
to the extent that you or the Borrower have the right to terminate your or its
obligations under the Acquisition Agreement as a result of a breach of such
representations in the Acquisition Agreement (to such extent, the “Specified
Acquisition Agreement Representations”) and (B) the Specified Representations
(as defined below) made by you and the Borrower in the Facilities Documentation
and (ii) the terms of the Facilities Documentation shall be in a form such that
they do not impair the availability or funding of the Credit Facilities on the
Closing Date if the conditions set forth in the sections entitled “Conditions to
All Borrowings” in Exhibit B and Exhibit C hereto and the conditions set forth
in Exhibit D hereto are satisfied (it being understood that, to the extent any
security interest in any Collateral (as defined in the Senior Term Sheet) is not
or cannot be provided and/or perfected on the Closing Date (other than the
pledge and perfection of the security interest in the equity interests of the
Borrower and each of its material direct wholly-owned domestic restricted
subsidiaries and other assets pursuant to which a lien may be perfected by the
filing of a financing statement under the Uniform Commercial Code) after your
use of commercially reasonable efforts to do so or without undue burden or
expense, then the provision and/or perfection of a security interest in such
Collateral shall not constitute a condition precedent to the availability of the
Credit Facilities on the Closing Date, but instead shall be required to be
delivered after the Closing Date pursuant to arrangements and timing to be
mutually agreed by the Senior Administrative Agent and the Borrower acting
reasonably.  For purposes hereof, “Specified Representations” means the
representations and warranties of the Borrower and the Guarantors (after giving
effect to the Acquisition) set forth in the Facilities Documentation relating to
organizational status, power and authority, due authorization, execution and
delivery, enforceability and no conflicts with or consent under material law or
charter documents, in each case, related to, the incurrence of the Loans, the
provision of the Guarantees and the granting of security interests in the
Collateral to secure the Credit Facilities; solvency as of the Closing Date
(after giving effect to the Transactions) of the Borrower and its subsidiaries
on a consolidated basis; Federal Reserve margin regulations; the Investment
Company Act; anti-terrorism laws and PATRIOT Act; subject to the parenthetical
in the immediately preceding sentence, creation, validity and perfection of
security interests in the Collateral; and the status of the Senior Secured
Credit Facilities and the guaranties thereof as senior debt.  This paragraph,
and the provisions herein, shall be referred to as the “Certain Funds
Provisions”.

 
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7.           Indemnity.
 
To induce the Commitment Parties to enter into this Commitment Letter and the
Fee Letter and to proceed with the documentation of the Credit Facilities, you
agree (a) to indemnify and hold harmless each Commitment Party, their respective
affiliates and the respective officers, directors, employees, agents, advisors
and other representatives of each of the foregoing (each, an “Indemnified
Person”), from and against any and all losses, claims, damages and liabilities
of any kind or nature and reasonable and documented or invoiced out-of-pocket
fees and expenses, joint or several, to which any such Indemnified Person may
become subject to the extent arising out of, resulting from or in connection
with, this Commitment Letter (including the Term Sheets), the Fee Letter, the
Transactions or any related transaction contemplated hereby, the Credit
Facilities or any use of the proceeds thereof or any claim, litigation,
investigation or proceeding (including any inquiry or investigation) relating to
any of the foregoing (any of the foregoing, a “Proceeding”), regardless of
whether any such Indemnified Person is a party thereto, whether or not such
Proceedings are brought by you, Prism, your or Prism’s equity holders,
affiliates, creditors or any other third person, and to reimburse each such
Indemnified Person upon demand for any reasonable and documented or invoiced
out-of-pocket legal expenses of one firm of counsel for all such Indemnified
Persons, taken as a whole and, if necessary, of a single local counsel in each
appropriate jurisdiction (which may include a single special counsel acting in
multiple jurisdictions) for all such Indemnified Persons, taken as a whole, and,
solely in the case of a conflict of interest, one additional counsel in each
applicable material jurisdiction to the affected Indemnified Persons) or other
reasonable and documented or invoiced out-of-pocket fees and expenses incurred
in connection with investigating or defending any of the foregoing; provided
that the foregoing indemnity will not, as to any Indemnified Person, apply to
losses, claims, damages, liabilities or related expenses to the extent that they
have resulted from (i) the willful misconduct, bad faith or gross negligence of
such Indemnified Person or any of such Indemnified Person’s controlled
affiliates or any of its or their respective officers, directors, employees,
agents, advisors or other representatives, in each case who are involved in or
aware of the Transactions (as determined by a court of competent jurisdiction in
a final and non-appealable decision), (ii) a material breach of the obligations
of such Indemnified Person or any of such Indemnified Person’s  affiliates under
this Commitment Letter, the Term Sheets, the Fee Letter or the Facilities
Documentation or (iii) disputes between and among Indemnified Persons to the
extent such disputes do not arise from any act or omission of you, Prism or any
of your or Prism’s affiliates (other than claims against an Indemnified Person
acting in its capacity as an agent or arranger or similar role hereunder or
under the Credit Facilities unless such claims arise from the gross negligence,
bad faith or willful misconduct of such Indemnified Person) and (b) to the
extent that the Closing Date occurs, to reimburse each Commitment Party from
time to time, upon presentation of a summary statement, for all reasonable and
documented or invoiced out-of-pocket expenses (including but not limited to
expenses of each Commitment Party’s consultants’ fees (to the extent any such
consultant has been retained with your prior written consent (such consent not
to be unreasonably withheld or delayed)), syndication expenses, travel expenses
and reasonable fees, disbursements and other charges of a single counsel to the
Commitment Parties identified in the Term Sheets and of a single local counsel
to the Commitment Parties in each appropriate jurisdiction (which may include a
single special counsel acting in multiple jurisdictions) and of such other
counsel retained with your prior written consent (such consent not to be
unreasonably withheld or delayed)), in each case incurred in connection with the
Credit Facilities and the preparation, negotiation and enforcement of this
Commitment Letter, the Fee Letter, the Facilities Documentation and any security
arrangements in connection therewith (collectively, the “Expenses”).  You
acknowledge that we may receive a benefit, including without limitation, a
discount, credit or other accommodation, from any of such counsel based on the
fees such counsel may receive on account of their relationship with us
including, without limitation, fees paid pursuant hereto.  The foregoing
provisions in this paragraph shall be superseded in each case, to the extent
covered thereby, by the applicable provisions contained in the Facilities
Documentation upon execution thereof and thereafter shall have no further force
and effect.

 
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Notwithstanding any other provision of this Commitment Letter, (i) no
Indemnified Person shall be liable for any damages arising from the use by
others of information or other materials obtained through internet, electronic,
telecommunications or other information transmission systems, except to the
extent that such damages have resulted from the willful misconduct or gross
negligence of such Indemnified Person or any of such Indemnified Person’s
controlled affiliates or any of its or their respective officers, directors,
employees, agents, advisors or other representatives, in each case who are
involved in or aware of the Transactions as determined by a final,
non-appealable judgment of a court of competent jurisdiction and (ii) without in
any way limiting the indemnification obligations set forth above, none of us,
you, Prism or any Indemnified Person shall be liable for any indirect, special,
punitive or consequential damages (including, without limitation, any loss of
profits, business or anticipated savings) in connection with this Commitment
Letter, the Fee Letter, the Transactions (including the Credit Facilities and
the use of proceeds thereunder), or with respect to any activities related to
the Credit Facilities, including the preparation of this Commitment Letter, the
Fee Letter and the Facilities Documentation.
 
You shall not be liable for any settlement of any Proceeding effected without
your written consent (which consent shall not be unreasonably withheld,
conditioned or delayed), but if settled with your written consent or if there is
a final and non-appealable judgment by a court of competent jurisdiction for the
plaintiff in any such Proceeding, in each case, you agree to indemnify and hold
harmless each Indemnified Person from and against any and all losses, claims,
damages, liabilities and expenses by reason of such settlement or judgment in
accordance with and to the extent provided in the other provisions of this
Section 7.
 
You shall not, without the prior written consent of any Indemnified Person
(which consent shall not be unreasonably withheld or delayed), effect any
settlement of any pending or threatened proceedings in respect of which
indemnity could have been sought hereunder by such Indemnified Person unless
such settlement (i) includes an unconditional release of such Indemnified Person
in form and substance reasonably satisfactory to such Indemnified Person from
all liability or claims that are the subject matter of such proceedings and (ii)
does not include any statement as to or any admission of fault, culpability,
wrong doing or a failure to act by or on behalf of any Indemnified Person.
 
8.           Sharing of Information, Absence of Fiduciary Relationships,
Affiliate Activities.
 
You acknowledge that the Commitment Parties and their affiliates may be
providing debt financing, equity capital or other services (including, without
limitation, financial advisory services) to other persons in respect of which
you, Prism and your and its respective affiliates may have conflicting interests
regarding the transactions described herein and otherwise. None of the
Commitment Parties or their affiliates will use confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or their other relationships with you in connection with the performance
by them or their affiliates of services for other persons, and none of the
Commitment Parties or their affiliates will furnish any such information to
other persons, except to the extent permitted below.  You also acknowledge that
none of the Commitment Parties or their affiliates has any obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained by them from other persons.

 
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As you know, certain of the Commitment Parties may be full service securities
firms engaged, either directly or through their affiliates, in various
activities, including securities trading, commodities trading, investment
management, financing and brokerage activities and financial planning and
benefits counseling for both companies and individuals.  In the ordinary course
of these activities, certain of the Commitment Parties and their respective
affiliates may actively engage in commodities trading or trade the debt and
equity securities (or related derivative securities) and financial instruments
(including bank loans and other obligations) of you, Prism and other companies
which may be the subject of the arrangements contemplated by this letter for
their own account and for the accounts of their customers and may at any time
hold long and short positions in such securities.  Certain of the Commitment
Parties or their affiliates may also co-invest with, make direct investments in,
and invest or co-invest client monies in or with funds or other investment
vehicles managed by other parties, and such funds or other investment vehicles
may trade or make investments in securities of you, Prism or other companies
which may be the subject of the arrangements contemplated by this Commitment
Letter or engage in commodities trading with any thereof.
 
The Commitment Parties and their respective affiliates may have economic
interests that conflict with those of you or Prism.  You agree that the
Commitment Parties will act under this letter as independent contractors and
that nothing in this Commitment Letter or the Fee Letter will be deemed to
create an advisory, fiduciary or agency relationship or fiduciary or other
implied duty between the Commitment Parties and you, Prism, your and its
respective equity holders or your and their respective affiliates.  You
acknowledge and agree that (i) the transactions contemplated by this Commitment
Letter and the Fee Letter are arm’s-length commercial transactions between the
Commitment Parties and, if applicable, their affiliates, on the one hand, and
you, on the other, (ii) in connection therewith and with the process leading to
such transaction each Commitment Party and its applicable affiliates (as the
case may be) is acting solely as a principal and not as agents or fiduciaries of
you, Prism, your and its management, equity holders, creditors, affiliates or
any other person, (iii) the Commitment Parties and their applicable affiliates
(as the case may be) have not assumed an advisory or fiduciary responsibility or
any other obligation in favor of you or your affiliates with respect to the
transactions contemplated hereby or the process leading thereto (irrespective of
whether the Commitment Parties or any of their respective affiliates have
advised or are currently advising you or Prism on other matters) except the
obligations expressly set forth in this Commitment Letter and the Fee Letter and
(iv) you have consulted your own legal and financial advisors to the extent you
deemed appropriate.  You further acknowledge and agree that you are responsible
for making your own independent judgment with respect to such transactions and
the process leading thereto.  You agree that you will not claim that the
Commitment Parties or their applicable affiliates, as the case may be, have
rendered advisory services of any nature or respect, or owe a fiduciary or
similar duty to you or your affiliates, in connection with such transaction or
the process leading thereto.

 
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9.           Confidentiality.
 
You agree that you will not disclose, directly or indirectly, the Fee Letter and
the contents thereof or, prior to your acceptance hereof, this Commitment
Letter, the Term Sheets, the other exhibits and attachments hereto and the
contents of each thereof, or the activities of any Commitment Party pursuant
hereto or thereto, to any person or entity without prior written approval of the
Lead Arranger (such approval not to be unreasonably withheld or delayed), except
(a) to your officers, directors, agents, employees, attorneys, accountants,
advisors, controlling persons or equity holders on a confidential and
need-to-know basis, (b) if the Commitment Parties consent in writing to such
proposed disclosure or (c) pursuant to the order of any court or administrative
agency in any pending legal, judicial or administrative proceeding, or otherwise
as required by applicable law or compulsory legal process or to the extent
requested or required by governmental and/or regulatory authorities, in each
case based on the reasonable advice of your legal counsel (in which case you
agree, to the extent practicable and not prohibited by applicable law, to inform
us promptly thereof prior to disclosure); provided that (i) you may disclose
this Commitment Letter (but not the Fee Letter) and the contents hereof to the
holders of Prism’s capital stock, Prism, its subsidiaries and their respective
officers, directors, agents, employees, attorneys, accountants or advisors, on a
confidential and need-to-know basis, (ii) you may disclose the Commitment Letter
and its contents (but not the Fee Letter) in any syndication or other marketing
materials in connection with the Credit Facilities or in connection with any
public filing relating to the Transactions, (iii) you may disclose the Term
Sheets and the contents thereof, to potential Lenders and to rating agencies in
connection with obtaining ratings for the Borrower and the Credit Facilities,
(iv) you may disclose the aggregate fee amount contained in the Fee Letter as
part of Projections, pro forma information or a generic disclosure of aggregate
sources and uses related to fee amounts related to the Transactions to the
extent customary or required in offering and marketing materials for the Credit
Facilities or in any public filing relating to the Transactions and (v) to the
extent portions thereof have been redacted in a manner to be reasonably agreed
by us (including the portions thereof addressing fees payable to the Commitments
Parties and/or the Lenders, marketing flex, caps and the securities demands),
you may disclose the Fee Letter and the contents thereof to the holders of
Prism’s capital stock, Prism, its subsidiaries and their respective officers,
directors, agents, employees, attorneys, accountants or advisors on a
confidential and need-to-know basis.

 
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The Commitment Parties and their affiliates will use all confidential
information provided to them or such affiliates by or on behalf of you hereunder
or in connection with the Acquisition and the related Transactions solely for
the purpose of providing the services which are the subject of this Commitment
Letter and shall treat confidentially all such information and shall not
publish, disclose or otherwise divulge, such information; provided that nothing
herein shall prevent the Commitment Parties and their affiliates from disclosing
any such information (a) pursuant to the order of any court or administrative
agency or in any pending legal, judicial or administrative proceeding, or
otherwise as required by applicable law or compulsory legal process or to the
extent required by governmental and/or regulatory authorities, in each case,
based on the advice of counsel (in which case the Commitment Parties agree
(except with respect to any audit or examination conducted by bank accountants
or regulatory authority exercising examination or regulatory authority), to the
extent practicable and not prohibited by applicable law, to inform you promptly
thereof prior to disclosure), (b) upon the request or demand of any regulatory
authority having jurisdiction over the Commitment Parties or any of their
respective affiliates (in which case the Commitment Parties agree (except with
respect to any audit or examination conducted by bank accountants or any
regulatory authority exercising examination or regulatory authority), to the
extent practicable and not prohibited by applicable law, to inform you promptly
thereof prior to disclosure), (c) to the extent that such information becomes
publicly available other than by reason of improper disclosure by the Commitment
Parties or any of their affiliates or any related parties thereto in violation
of any confidentiality obligations owing to you, Prism or any of your or its
respective affiliates (including those set forth in this paragraph), (d) to the
extent that such information is or was received by the Commitment Parties from a
third party that is not, to the Commitment Parties’ knowledge, subject to
contractual or fiduciary confidentiality obligations owing to you, Prism or any
of your or its respective affiliates or related parties, (e) to the extent that
such information is independently developed by the Commitment Parties, (f) to
the Commitment Parties’ affiliates and to its and their respective directors,
officers, employees, legal counsel, independent auditors, professionals and
other experts or agents who need to know such information in connection with the
Transactions and who are informed of the confidential nature of such information
and are or have been advised of their obligation to keep information of this
type confidential, (g) to potential or prospective Lenders, participants or
assignees and to any direct or indirect contractual counterparty to any swap or
derivative transaction relating to you or any of your subsidiaries, in each case
who agree to be bound by the terms of this paragraph (or language substantially
similar to this paragraph), (h) for purposes of establishing a “due diligence”
defense, (i) to ratings agencies, in connection with obtaining the ratings
described above in this letter, in consultation and coordination with you or (j)
to the extent you shall have consented to such disclosure in writing; provided
that the disclosure of any such information to any Lenders or prospective
Lenders or participants or prospective participants referred to above shall be
made subject to the acknowledgment and acceptance by such Lender or prospective
Lender or participant or prospective participant that such information is being
disseminated on a confidential basis (on substantially the terms set forth in
this paragraph or as is otherwise reasonably acceptable to you and each
Commitment Party, including, without limitation, as agreed in any Information
Materials or other marketing materials) in accordance with the standard
syndication processes of such Commitment Party or customary market standards for
dissemination of such type of information.  The Commitment Parties’ and their
affiliates’, if any, obligations under this paragraph shall terminate
automatically and be superseded by the confidentiality provisions in the
definitive documentation relating to the Credit Facilities upon the initial
funding thereunder.  The provisions of this paragraph shall terminate on the
second anniversary of the date hereof.

 
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10.         Miscellaneous.
 
This Commitment Letter and the commitments hereunder shall not be assignable by
any party hereto (other than by (i) subject to the limitations set forth in
paragraph 3 above, an Initial Lender to any Lender or (ii) you, on or after the
Closing Date, to the Borrower) without the prior written consent of each other
party hereto (such consent not to be unreasonably withheld or delayed) (and any
attempted assignment without such consent shall be null and void). This
Commitment Letter and the commitments hereunder are intended to be solely for
the benefit of the parties hereto (and Indemnified Persons) and are not intended
to confer any benefits upon, or create any rights in favor of, any person other
than the parties hereto (and Indemnified Persons to the extent expressly set
forth herein).  Subject to the limitations set forth in Section 3 above, the
Commitment Parties reserve the right to employ the services of their affiliates
or branches in providing services contemplated hereby and to allocate, in whole
or in part, to their affiliates or branches certain fees payable to the
Commitment Parties in such manner as the Commitment Parties and their affiliates
or branches may agree in their sole discretion and, to the extent so employed,
such affiliates and branches shall be entitled to the benefits and protections
afforded to, and subject to the provisions governing the conduct of, the
Commitment Parties hereunder.  This Commitment Letter may not be amended or any
provision hereof waived or modified except by an instrument in writing signed by
each of the Commitment Parties and you.  This Commitment Letter may be executed
in any number of counterparts, each of which shall be deemed an original and all
of which, when taken together, shall constitute one agreement.  Delivery of an
executed counterpart of a signature page of this Commitment Letter by facsimile
transmission or other electronic transmission (i.e., a “pdf” or “tif”) shall be
effective as delivery of a manually executed counterpart hereof.  This
Commitment Letter (including the exhibits hereto), together with the Fee Letter
dated the date hereof, (i) are the only agreements that have been entered into
among the parties hereto with respect to the Credit Facilities and (ii)
supersede all prior understandings, whether written or oral, among us with
respect to the Credit Facilities and sets forth the entire understanding of the
parties hereto with respect thereto.  THIS COMMITMENT LETTER AND ANY CLAIM,
CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMMITMENT LETTER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; provided, however, that the interpretation of any provision of the
Acquisition Agreement referred to in this Commitment Letter including the
determination of the accuracy of any Specified Acquisition Agreement
Representation shall be governed by, and construed in accordance with, English
law, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
 
Each of the parties hereto agrees that (i) this Commitment Letter is a binding
and enforceable agreement with respect to the subject matter contained herein,
notwithstanding that the availability and funding of the Credit Facilities is
subject to conditions precedent, including the good faith negotiation of the
Facilities Documentation by the parties hereto in a manner consistent with this
Commitment Letter and (ii) the Fee Letter is a legally valid and binding
agreement of the parties thereto with respect to the subject matter set forth
therein.
 
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY
RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE FEE LETTER OR THE
PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.

 
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Each of the parties hereto hereby irrevocably and unconditionally (a) submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
County, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Commitment Letter, the Fee Letter or the
transactions contemplated hereby or thereby, or for recognition or enforcement
of any judgment, and agrees that all claims in respect of any such action or
proceeding shall only be heard and determined in such New York State court or,
to the extent permitted by law, in such Federal court, and further agrees to not
commence any such suit, action or proceeding other than in such New York State
court or, to the extent permitted by law, in such Federal court, (b) waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Commitment Letter, the Fee Letter
or the transactions contemplated hereby in any New York State or in any such
Federal court, (c) waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court and (d) agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Each of the
parties hereto agrees that service of process, summons, notice or document by
registered mail addressed to you or us at the addresses set forth above shall be
effective service of process for any suit, action or proceeding brought in any
such court.
 
We hereby notify you that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT
Act”), each of us and each of the Lenders may be required to obtain, verify and
record information that identifies the Borrower and the Guarantors, which
information may include their names, addresses, tax identification numbers and
other information that will allow each of us and the Lenders to identify the
Borrower and the Guarantors in accordance with the PATRIOT Act.  This notice is
given in accordance with the requirements of the PATRIOT Act and is effective
for each of us and the Lenders.
 
The indemnification, compensation (if applicable), reimbursement (if
applicable), jurisdiction, governing law, venue, waiver of jury trial,
syndication and confidentiality provisions contained herein and in the Fee
Letter shall remain in full force and effect regardless of whether Facilities
Documentation shall be executed and delivered and notwithstanding the
termination or expiration of this Commitment Letter or the Initial Lenders’
commitments hereunder; provided that your obligations under this Commitment
Letter (other than your obligations with respect to (a) assistance to be
provided in connection with the syndication thereof (including supplementing
and/or correcting Information and Projections) prior to the Closing Date and (b)
confidentiality of the Fee Letter and the contents thereof) shall automatically
terminate and be superseded by the provisions of the Facilities Documentation to
the extent covered thereby upon the initial funding thereunder, and you shall
automatically be released from all liability in connection therewith at such
time.  You may terminate this Commitment Letter and/or the Initial Lenders’
commitments with respect to the Credit Facilities (or portion thereof) hereunder
at any time subject to the provisions of the preceding sentence.
 
Section headings used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Commitment Letter.
 
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms of this Commitment Letter and of the Fee Letter by
returning to the Commitment Parties, executed counterparts hereof and of the Fee
Letter not later than 5:00 p.m., New York City time, on December 20, 2011
(together with an executed copy of the Acquisition Agreement).  The Initial
Lenders’ respective commitments and the obligations of the Lead Arranger
hereunder will expire at such time in the event that the Commitment Parties have
not received such executed counterparts in accordance with the immediately
preceding sentence.  If you do so execute and deliver to us this Commitment
Letter and the Fee Letter, we agree to hold our commitment available for you
until the earliest of (i) after execution of the Acquisition Agreement and prior
to the consummation of the Transactions, the termination of the Acquisition
Agreement in accordance with its terms, (ii) the consummation of the Acquisition
with or without the funding of the Credit Facilities and (iii) 5:00 p.m., New
York City time, on April 30, 2012 (such earliest time, the “Expiration
Date”).  Upon the occurrence of any of the events referred to in the preceding
sentence, this Commitment Letter and the commitments of each of the Commitment
Parties hereunder and the agreement of the Lead Arranger to provide the services
described herein shall automatically terminate unless the Commitment Parties
shall, in their discretion, agree to an extension in writing.
 
[Remainder of this page intentionally left blank]

 
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We are pleased to have been given the opportunity to assist you in connection
with the financing for the Transactions.
 

 
Very truly yours,
     
CITIGROUP GLOBAL MARKETS INC.
     
By:
/s/ Caesar Wyszomirski
 
 
Name:  Caesar Wyszomirski
 
 
Title:    Director

 
[Signature Page to Commitment Letter]
 

 
 

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MORGAN STANLEY SENIOR FUNDING, INC.
     
By:
/s/ Paul Fossati
   
Name:  Paul Fossati
   
Title:    Vice President

[Signature Page to Commitment Letter]

 
 

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ROYAL BANK OF CANADA
     
By:
/s/ James S. Wolfe
   
Name:  James S. Wolfe
   
Title:    Managing Director
   
             Head of US Leveraged Finance

 
[Signature Page to Commitment Letter]

 
 

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Accepted and agreed to as of
 
the date first above written:
     
PRESTIGE BRANDS HOLDINGS, INC.
       
By:
/s/ Ron Lombardi
   
Name:   Ron Lombardi
   
Title:     CFO
 

[Signature Page to Commitment Letter]

 
 

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EXHIBIT A
Project Prism
Transaction Description

Capitalized terms used but not defined in this Exhibit A shall have the meanings
set forth in the other Exhibits to the Commitment Letter to which this Exhibit A
is attached (the “Commitment Letter”) or in the Commitment Letter.  In the case
of any such capitalized term that is subject to multiple and differing
definitions, the appropriate meaning thereof in this Exhibit A shall be
determined by reference to the context in which it is used.
 
Prestige Brands Holdings, Inc. (“Holdings”), a company organized under the laws
of the State of Delaware, Prestige Brands, Inc. (the “Borrower”), a company
organized under the laws of the State of Delaware, and/or one or more of its
subsidiaries intend to acquire (the “Acquisition”), directly or indirectly, a
business previously identified to the Commitment Parties by you as “Prism”
(“Prism”).In connection with the foregoing, it is intended that the following
transactions shall be consummated substantially contemporaneously:
 
a)
Pursuant to a business sale and purchase agreement, dated as of the date hereof,
in relation to certain over-the-counter consumer healthcare brands and
supporting business (together with all exhibits, schedules, and disclosure
letters thereto, collectively, the “Acquisition Agreement”) entered into with
Prism’s owners, Holdings (provided that on or prior to the Closing Date,
Holdings will either (i) assign its rights and obligations under the Acquisition
Agreement to the Borrower or a subsidiary Guarantor or (ii) contribute Prism to
the Borrower or a subsidiary Guarantor) will acquire Prism (the “Acquisition”)
through a sale and purchase transaction in accordance with the terms of the
Acquisition Agreement.

 
b)
The Borrower will (i) obtain the senior secured credit facilities described in
Exhibit B to the Commitment Letter (the “Senior Secured Credit Facilities”) and
(ii) issue up to $290 million in senior unsecured notes (the “Unsecured Notes”)
in a Rule 144A offering (with back-end registration), or in the event the
Unsecured Notes cannot be issued on the Closing Date or less than $290 million
of Unsecured Notes are issued on the Closing Date, obtain the senior unsecured
bridge facility described in Exhibit C to the Commitment Letter (the “Unsecured
Bridge Facility” and, together with the Senior Secured Credit Facilities, the
“Credit Facilities”).

 
c)
The proceeds of the Credit Facilities (and/or the Unsecured Notes) on the
Closing Date will be applied (i) to pay the consideration in connection with the
Acquisition, (ii) to pay the fees and expenses incurred in connection with the
Transactions (such fees and expenses, the “Transaction Costs”) and (iii) to
refinance all of the existing indebtedness for borrowed money of the Borrower
and its subsidiaries under that certain Credit Agreement (as amended, restated,
supplemented or otherwise modified, the “Existing Credit Agreement”), dated as
March 24, 2010, Prestige Brands, Inc., Prestige Brands Holdings, Inc. the
Lenders and Issuers party thereto, Bank of America, N.A., as Administrative
Agent, and the other agents party thereto  (such refinancing of the Existing
Credit Agreement, the “Refinancing”) (the amounts set forth in clauses (i)
through (iii) above, collectively, the “Acquisition Costs”).

 
The transactions described above (including the payment of Transaction Costs)
are collectively referred to herein as the “Transactions”.

 
A-1

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EXHIBIT B
 
Project Prism
Senior Secured Credit Facilities
Summary of Principal Terms and Conditions2

 
Borrower:
 
Prestige Brands, Inc. (the “Borrower”).
     
Transactions:
 
As set forth in Exhibit A to the Commitment Letter.
     
Administrative Agent and Collateral Agent:
 
Citi will act as sole administrative agent and sole collateral agent (in such
capacities, the “Administrative Agent”) for a syndicate of banks, financial
institutions and other entities arranged by the Lead Arranger (as defined below)
in consultation with the Borrower, and, in the case of the Revolving Facility,
reasonably acceptable to the Borrower (excluding any Disqualified Lender) with
respect to each of the Senior Secured Credit Facilities (together with the
Initial Lenders, the “Lenders”), and will perform the duties customarily
associated with such roles.
     
Lead Arranger and Bookrunner:
 
Citi, MSSF and RBCCM will act as joint lead arrangers and joint bookrunners for
the Senior Secured Credit Facilities (collectively, the “Lead Arranger”), and
will perform the duties customarily associated with such role.
     
Syndication Agent:
 
MSSF will act as syndication agent for the Senior Secured Credit Facilities.
     
Documentation Agent:
 
RBCCM will act as documentation agent for the Senior Secured Credit Facilities.
     
Senior Secured Credit Facilities:
 
(A)         A senior secured term loan facility (the “Term Facility”) in an
aggregate principal amount of $620 million plus, at the Borrower’s election, an
amount sufficient to fund any original issue discount (“OID”) or upfront fees
required to be funded in connection with (x) the “flex” provisions in the Fee
Letter or (y) the issuance of the Unsecured Notes or any other debt securities
pursuant to any offering by Holdings or any of its direct or indirect
subsidiaries undertaken to finance the Acquisition (the “Securities”) (the loans
thereunder, the “Term Loans”).  The Term Loans will be offered with 200 basis
points OID or upfront fees on the amount thereof.

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2           All capitalized terms used but not defined herein shall have the
meaning given them in the Commitment Letter to which this Term Sheet is
attached, including Exhibit A thereto.

 
B-1

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(B)          A senior secured revolving credit facility (the “Revolving
Facility” and, together with the Term Facility, the “Senior Secured Credit
Facilities”) in an aggregate principal amount equal to $50 million.  Lenders
with commitments under the Revolving Facility are collectively referred to as
“Revolving Lenders” and the loans thereunder, together with (unless the context
otherwise requires) the swingline borrowings referred to below, are collectively
referred to as “Revolving Loans”; and together with the Term Loans, the “Senior
Secured Loans”.  The Revolving Facility will be offered with 100 basis points of
upfront fees on the commitments on the Closing Date.
     
Swingline Loans:
 
In connection with the Revolving Facility, the Administrative Agent (in such
capacity, the “Swingline Lender”) will make available to the Borrower a
swingline facility under which the Borrower may make short-term borrowings in
dollars upon same-day notice (in minimum amounts to be mutually agreed upon and
integral multiples to be agreed upon) of up to an amount to be agreed.  Except
for purposes of calculating the commitment fee described below, any such
swingline borrowings will reduce availability under the Revolving Facility on a
dollar-for-dollar basis.
         
Upon notice from the Swingline Lender, the Revolving Lenders will be
unconditionally obligated to purchase participations in any swingline loan pro
rata based upon their commitments under the Revolving Facility.
         
If any Revolving Lender becomes a “defaulting Lender”, then the swingline
exposure of such defaulting Lender will automatically be reallocated among the
non-defaulting Lenders pro rata in accordance with their commitments under the
Revolving Facility up to an amount such that the revolving credit exposure of
such non-defaulting Lender does not exceed its commitments.  In the event such
reallocation does not fully cover the exposure of such defaulting Lender, the
Swingline Lender may require the Borrower to repay such “uncovered” exposure in
respect of the swingline loans and will have no obligation to make swingline
loans to the extent such swingline loans would exceed the commitments of the
non-defaulting Revolving Lenders.

 
B-2

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Incremental Facilities:
 
The Senior Secured Credit Facilities will permit the Borrower to add one or more
incremental term loan facilities to the Senior Secured Credit Facilities (each,
an “Incremental Term Facility”) and/or increase commitments under the Revolving
Facility (any such increase, an “Incremental Revolving Increase”) and/or add one
or more incremental revolving credit facility tranches (each an “Incremental
Revolving Facility”; the Incremental Term Facilities, the Incremental Revolving
Increases and the Incremental Revolving Facilities are collectively referred to
as “Incremental Facilities”) in an aggregate amount of up to the greater of
(a)(i) $220 million plus (ii) all voluntary prepayments and commitment
reductions of the Senior Secured Credit Facilities prior to such time minus
(iii) amounts incurred pursuant to clause (iii) of the third paragraph under
Negative Covenants and (b) the amount that would not, on a pro forma basis after
giving effect to the incurrence of any such Incremental Facility (assuming (x)
the full amount thereof is drawn and the commitments thereunder are fully
utilized and (y) net cash proceeds of any loans under any Incremental Facility
are not netted from indebtedness for purposes of calculating the Consolidated
First Lien Net Leverage Ratio (as defined below)) and after giving effect to any
acquisition consummated in connection therewith and all other appropriate pro
forma adjustments, cause the Consolidated First Lien Net Leverage Ratio (to be
defined in a manner consistent with the Documentation Principles (as defined
below)) to exceed 4.00:1.00, subject solely to the following terms and
conditions: (i) the Incremental Facilities will have the same guarantees as, and
be secured on a pari passu basis by the same collateral securing, the Senior
Secured Credit Facilities, (ii) the representations and warranties in the Credit
Facilities Documentation shall be true and correct in all material respects on
and as of the date of the incurrence of the Incremental Facilities (although any
representations and warranties which expressly relate to a given date or period
shall be required only to be true and correct in all material respects as of the
respective date or for the respective period, as the case may be), subject to
customary “Sungard” limitations to the extent the proceeds of any Incremental
Facility are being used to finance an acquisition, (iii) no existing Lender will
be required to participate in any such Incremental Facility without its consent,
(iv) no default or event of default under the Senior Secured Credit Facilities
would exist after giving effect thereto, (v) the maturity date of any such
Incremental Term Facility or Incremental Revolving Facility shall be no earlier
than the maturity date of the Term Facility or the Revolving Facility,
respectively, and, in the case of the Incremental Term Facility only, the
weighted average life of such Incremental Term Facility shall be not shorter
than the then remaining weighted average life of the Term Facility, (vi) in the
case of an Incremental Revolving Increase, the maturity date of such Incremental
Revolving Increase shall be the same as the maturity date of the Revolving
Facility, such Incremental Revolving Increase shall require no scheduled
amortization or mandatory commitment reduction prior to the final maturity of
the Revolving Facility and the Incremental Revolving Increase shall be on the
exact same terms and pursuant to the exact same documentation applicable to the
Revolving Facility, (vii) the interest rate margins and (subject to clauses (v)
and (vi), as appropriate) amortization schedule applicable to any Incremental
Term Facility or Incremental Revolving Facility shall be determined by the
Borrower and the lenders thereunder; provided that in the event that the
interest rate margins for any Incremental Term Facility or Incremental Revolving
Facility are higher than the interest rate margins for the Term Loans or the
Revolving Facility by more than (in either case) 50 basis points, then the
interest rate margins for the Term Loans or Revolving Commitments, as the case
may be, shall be increased to the extent necessary so that such interest rate
margins are equal to the interest rate margins for such Incremental Term
Facility or Incremental Revolving Facility, as the case may be, minus 50 basis
points; provided further that, in determining the interest rate margins
applicable to the Incremental Term Facility and the Term Loans or the
Incremental Revolving Facility and the Revolving Facility, (x) customary
arrangement or commitment fees payable to the Lead Arranger (or its affiliates)
in connection with the Term Loans or the Revolving Facility or to one or more
arrangers (or their affiliates) of any Incremental Term Facility or Incremental
Revolving Facility shall be excluded, (y) OID and upfront fees paid to the
lenders thereunder shall be included (with OID being equated to interest based
on assumed four-year life to maturity or, if shorter, the actual weighted
average life to maturity) and (z) if the Incremental Facilities include an
interest rate floor greater than the applicable interest rate floor under the
existing Senior Secured Credit Facilities, such differential between interest
rate floors shall be equated to the applicable interest rate margin for purposes
of determining whether an increase to the interest rate margin under the
existing Senior Secured Credit Facilities shall be required, but only to the
extent an increase in the interest rate floor in the existing Senior Secured
Credit Facilities would cause an increase in the interest rate then in effect
thereunder, and in such case the interest rate floor (but not the interest rate
margin) applicable to the existing Senior Secured Credit Facilities shall be
increased to the extent of such differential between interest rate floors  (all
adjustments made pursuant to this clause (vii), the “MFN Adjustments”), (viii)
any Incremental Term Facility or Incremental Revolving Facility shall be on
terms and pursuant to documentation to be determined; provided that, to the
extent such terms and documentation are not consistent with the Term Facility or
the Revolving Facility, as the case may be (except to the extent permitted by
clause (v) or (vii) above), they shall be reasonably satisfactory to the
Administrative Agent and provided, further that (x) in no event shall any
Incremental Term Facilities be permitted to be voluntarily or mandatorily
prepaid prior to the repayment in full of the Term Loans, unless any such
prepayment is accompanied by a ratable prepayment of Term Loans and (y) any
Incremental Revolving Facility will be subject to pro rata borrowing, letter of
credit participation and prepayment and commitment reduction provisions with the
Revolving Facility and any other revolving facility under the Senior Secured
Credit Facilities (the “Revolver Ratability Requirements”), (ix) each
Incremental Facility shall be in such minimum amounts and subject to such notice
provisions and other mechanics as are consistent with the Documentation
Principles and (x) after giving effect to the incurrence of any Incremental
Facilities, the Borrower shall be in pro forma compliance with the Financial
Covenants referred to below for the most recently ended fiscal quarter of the
Borrower for which financial statements were delivered.
 

 
B-3

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Refinancing Facilities:
 
The Credit Facilities Documentation will permit the Borrower to refinance loans
under the Term Facility (or any Incremental Term Facility) or commitments under
the Revolving Facility (or any Incremental Revolving Facility) from time to
time, in whole or part, with one or more new term facilities (each, a
“Refinancing Term Facility”) or new revolving credit facilities (each, a
“Refinancing Revolving Facility”; the Refinancing Term Facilities and the
Refinancing Revolving Facilities are collectively referred to as “Refinancing
Facilities”), respectively, under the Credit Facilities Documentation with the
consent of the Borrower, the Administrative Agent and the institutions providing
such Refinancing Term Facility or Refinancing Revolving Facility or with one or
more additional series of senior, senior subordinated or subordinated unsecured
notes or loans or senior secured notes or loans that will be secured by the
Collateral on a pari passu or junior basis with the Senior Secured Credit
Facilities (and such notes or loans, “Refinancing Notes”), subject solely to the
following terms and conditions: (i) customary intercreditor agreements are
entered into, (ii) any Refinancing Term Facility or Refinancing Notes does not
mature prior to the maturity date of, or have a shorter weighted average life
than, loans under the Term Facility being refinanced, (iii) any Refinancing
Revolving Facility does not mature (or require commitment reductions or
amortization) prior to the maturity date of the revolving commitments being
refinanced, (iv) none of the Borrower’s restricted subsidiaries is a borrower or
guarantor with respect to any Refinancing Facility unless such restricted
subsidiary is a Guarantor which shall have previously or substantially
concurrently Guaranteed the Borrower Obligations, (v) the other terms and
conditions of such Refinancing Term Facility, Refinancing Revolving Facility or
Refinancing Notes (excluding pricing, fees, rate floors and optional prepayment
or redemption terms) reflect market terms and conditions at the time of
incurrence or issuance; provided that if any such Refinancing Term Facility,
Refinancing Revolving Facility or Refinancing Notes contains any financial
maintenance covenants, such covenants shall not be tighter than (or in addition
to) those contained in the Credit Facilities Documentation, (vi) delivery of
certificates and information consistent with the Documentation Principles, and
(vii) the proceeds of such Refinancing Facilities shall be applied,
substantially concurrently with the incurrence thereof, to the pro rata
prepayment of outstanding loans (and, in the case of the Revolving Facility, pro
rata commitment reductions) under the applicable Senior Secured Credit Facility
being so refinanced; provided that (x) in no event shall Refinancing Term
Facilities be permitted to be voluntarily or mandatorily prepaid prior to the
repayment in full of the Term Loans, unless any such prepayment is accompanied
by a ratable prepayment of Term Loans and (y) any Refinancing Revolving Facility
will be subject to the Revolver Ratability Requirements.
     
Purpose:
 
(A)         The proceeds of borrowings under the Term Facility will be used by
the Borrower on the Closing Date, together with the proceeds from borrowings
under the Revolving Facility, the proceeds from the Unsecured Bridge Facility
and/or the Unsecured Notes and cash on hand at the Borrower and Prism, solely to
pay the Acquisition Costs.

 

 
B-4

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(B)         The letters of credit and proceeds of Revolving Loans (except as set
forth below) will be used by the Borrower and its subsidiaries for working
capital and other general corporate purposes, including the financing of
permitted acquisitions, and, subject to the limitation below under
“Availability”, to finance a portion of the Acquisition Costs.
      
Availability:
 
(A)         The Term Facility will be available in a single drawing on the
Closing Date.  Amounts borrowed under the Term Facility that are repaid or
prepaid may not be reborrowed.
         
(B)         The Revolving Facility (exclusive of letter of credit usage) will be
made available on and after the Closing Date (i) in an aggregate principal
amount up to $15 million (a) to finance the Transactions and the Acquisition
Costs (including to fund OID or upfront fees in connection with the Senior
Secured Credit Facilities other than as required to be funded under the flex
provisions of the Fee Letter) and (b) for working capital needs, (ii) to fund
any or all OID or upfront fees in connection with the Senior Secured Credit
Facilities required to be funded under the flex provisions in the Fee Letter or
in connection with the issuance of the Unsecured Notes, or any other Securities
on the Closing Date and (iii) to backstop, replace or cash collateralize
existing letters of credit.  Additionally, letters of credit may be issued on
the Closing Date in order to, among other things, backstop or replace letters of
credit outstanding on the Closing Date under facilities no longer available at
Prism or its subsidiaries as of the Closing Date.  Otherwise, subject to the
terms of the Credit Facilities Documentation, letters of credit and Revolving
Loans will be available at any time prior to the final maturity of the Revolving
Facility, in minimum principal amounts to be agreed upon.  Amounts repaid under
the Revolving Facility may be reborrowed.
     
Interest Rates and Fees:
 
As set forth on Annex I hereto.
     
Default Rate:
 
With respect to overdue principal, the applicable interest rate plus 2.00% per
annum, and with respect to any other overdue amount (including overdue
interest), the interest rate applicable to ABR loans (as defined in Annex I)
plus 2.00% per annum and in each case, shall be payable on demand.

 
 
B-5

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Letters of Credit:
 
An aggregate amount to be agreed upon of the Revolving Facility will be
available to the Borrower for the purpose of issuing letters of credit
denominated in dollars.  Letters of credit under the Revolving Facility will be
issued by the Administrative Agent and/or other Revolving Lenders reasonably
acceptable to the Borrower and the Administrative Agent (each an “Issuing
Bank”).  Each letter of credit shall expire not later than the earlier of (a) 12
months after its date of issuance and (b) the fifth business day prior to the
final maturity of the Revolving Facility; provided that any letter of credit may
provide for renewal thereof for additional periods of up to 12 months (which in
no event shall extend beyond the date referred to in clause (b) above).  The
face amount of any outstanding letter of credit (and, without duplication, any
unpaid drawing in respect thereof) will reduce availability under the Revolving
Facility on a dollar-for-dollar basis.

         
Drawings under any letter of credit shall be reimbursed by the Borrower (whether
with its own funds or with the proceeds of loans under the Revolving Facility)
within one business day after notice of such drawing is received by the Borrower
from the relevant Issuing Bank.  The Revolving Lenders will be irrevocably and
unconditionally obligated to acquire participations in each letter of credit,
pro rata in accordance with their commitments under the Revolving Facility, and
to fund such participations in the event the Borrower does not reimburse an
Issuing Bank for drawings within the time period specified above.
         
If any Revolving Lender becomes a “defaulting Lender”, then the letter of credit
exposure of such defaulting Lender will automatically be reallocated among the
non-defaulting Lenders pro rata in accordance with their commitments under the
Revolving Facility up to an amount such that the revolving credit exposure of
such non-defaulting Lender does not exceed its commitments.  In the event that
such reallocation does not fully cover the exposure of such defaulting Lender,
the applicable Issuing Bank may require the Borrower to cash collateralize such
“uncovered” exposure in respect of each outstanding letter of credit and will
have no obligation to issue new letters of credit, or to extend, renew or amend
existing letters of credit to the extent letter of credit exposure would exceed
the commitments of the non-defaulting Revolving Lenders, unless such “uncovered”
exposure is cash collateralized to the Issuing Bank’s reasonable satisfaction.

 
 
B-6

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Final Maturity and Amortization:
 
(A)           Term Facility
 
The Term Facility will amortize in equal quarterly installments in aggregate
annual amounts equal to 1% of the original principal amount of the Term
Facility, with the balance payable on the maturity date thereof.  The Term
Facility will mature on the date that is seven years after the Closing Date;
provided that the Credit Facilities Documentation shall provide the right for
individual Lenders to agree to extend the maturity date of the outstanding Term
Loans upon the request of the Borrower and without the consent of any other
Lender (it being understood that each Lender under a tranche of Term Loans that
is being extended shall have the opportunity to participate in such extension on
the same terms and conditions as each other Lender under such tranche).
  
(B)           Revolving Facility
 
The Revolving Facility will mature, and lending commitments thereunder will
terminate, on the date that is five years after the Closing Date; provided that
the Credit Facilities Documentation shall provide the right of individual
Lenders to agree to extend the maturity of their Revolving Commitments upon the
request of the Borrower and without the consent of any other Lender (it being
understood that each Revolving Lender under a tranche of Revolving Commitments
that is being extended shall have the opportunity to participate in such
extension on the same terms and conditions as each other Revolving Lender under
such tranche).

     
Guarantees:
 
All obligations of the Borrower (the “Borrower Obligations”) under the Senior
Secured Credit Facilities and under any interest rate protection or other swap
or hedging arrangements or cash management arrangements entered into with a
Lender, the Administrative Agent or any affiliate of a Lender or the
Administrative Agent (“Hedging /Cash Management Arrangements”) will be
unconditionally guaranteed jointly and severally on a senior secured basis (the
“Guarantees”) by Holdings and each existing and subsequently acquired or
organized direct or indirect wholly-owned domestic restricted subsidiary of the
Borrower (the “Guarantors”), provided that Guarantors shall not include,(a) any
domestic subsidiary of a foreign subsidiary, (b) any domestic subsidiary that is
a disregarded entity for U.S. federal income tax purposes substantially all of
whose assets consist of capital stock and/or indebtedness of one or more foreign
subsidiaries and any other assets incidental thereto, (c) unrestricted
subsidiaries, (d) captive insurance companies, (e) not-for-profit subsidiaries,
(f) special purpose entities, (g) immaterial subsidiaries (defined in a manner
to be agreed) and (h) to the extent a guarantee is prohibited or restricted by
applicable law whether on the Closing Date or thereafter or contract existing on
the Closing Date or, with respect to subsidiaries acquired after the Closing
Date, contract existing when such subsidiary was acquired (including any
requirement to obtain governmental authority or third party consent) or would
result in material adverse tax consequences as reasonably determined by Borrower
in consultation with the Administrative Agent .

 

 
B-7

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Notwithstanding the foregoing, subsidiaries may be excluded from the guarantee
requirements in circumstances where the Borrower and the Administrative Agent
reasonably agree that the cost of providing such a guarantee is excessive in
relation to the value afforded thereby.
     
Security:
 
Subject to the limitations set forth below in this section and subject to the
Certain Funds Provision, the Borrower Obligations, the Guarantees and the
Hedging/Cash Management Arrangements will be secured by: (a) perfected pledge of
all the capital stock of the Borrower and a perfected pledge of all the capital
stock in material wholly-owned restricted subsidiaries directly held by the
Borrower or any Guarantor (which pledge, in the case of the capital stock of any
foreign subsidiary of a domestic entity or of a domestic entity that is
disregarded entity for U.S. federal income tax purposes substantially all of
whose assets consist of capital stock and/or indebtedness of one or more foreign
subsidiaries and any other assets incidental thereto, shall be limited to 65% of
the stock of such foreign subsidiary or such domestic entity, as the case may
be) and (b) perfected first priority security interests in, and mortgages on,
substantially all tangible and intangible personal property and fee-owned real
property of the Borrower and each subsidiary Guarantor (including but not
limited to accounts receivable, inventory, equipment, general intangibles
(including contract rights), investment property, intellectual property,
intercompany notes in excess of an amount to be agreed and proceeds of the
foregoing) (the items described in clauses (a) and (b) above, but excluding the
Excluded Assets (as defined below), collectively, the “Collateral”).

 
 
B-8

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Notwithstanding anything to the contrary, the Collateral shall exclude
(including from any applicable security documents) the following:  (i) any
immaterial fee-owned real property and any leasehold interest (with no
requirement to obtain landlord waivers, estoppels or collateral access letters),
(ii) perfection of any motor vehicles and other assets subject to certificates
of title, (iii) all commercial tort claims, (iv) any governmental licenses or
state or local franchises, charters and authorizations to the extent security
interest is prohibited thereby, (v) pledges and security interests prohibited or
restricted by applicable law (including any requirement to obtain the consent of
any governmental authority or third party), (vi) margin stock and equity
interests in any person other than material wholly-owned restricted subsidiaries
(other than immaterial and other excluded subsidiaries (to be defined consistent
with the Documentation Principles), (vii) any lease, license or agreement or any
property subject to a purchase money security interest or similar arrangement to
the extent that a grant of a security interest therein would violate or
invalidate such lease, license or agreement or purchase money arrangement or
create a right of termination in favor of any other party thereto after giving
effect to the applicable anti-assignment provisions of the Uniform Commercial
Code or other applicable law, other than proceeds and receivables thereof, the
assignment of which is expressly deemed effective under the Uniform Commercial
Code or other applicable law notwithstanding such prohibition, (viii) any assets
to the extent a security interest in such assets would result in material
adverse tax consequences as reasonably determined by the Borrower, in
consultation with the Administrative Agent, (ix) letter of credit rights, except
to the extent constituting a support obligation for other Collateral as to which
perfection of the security interest in such other Collateral is accomplished
solely by the filing of a UCC financing statement (it being understood that no
actions shall be required to perfect a security interest in letter of credit
rights, other than the filing of a Uniform Commercial Code financing statement),
(x) cash and cash equivalents (other than proceeds of Collateral as to which
perfection of the security interest in such proceeds is accomplished solely by
the filing of a UCC financing statement), deposit and securities accounts
(including securities entitlements and related assets) and (xi) any
intent-to-use application trademark application prior to the filing of a
“Statement of Use” or “Amendment to Allege Use” with respect thereto, to the
extent, if any, that, and solely during the period, if any, in which, the grant
of a security interest therein would impair the validity or enforceability of
such intent-to-use trademark application under applicable federal law (the
foregoing described in clauses (i) through (xi) are, collectively, the “Excluded
Assets”).
         
Notwithstanding the foregoing, assets will be excluded from the Collateral in
circumstances where the cost of obtaining a security interest in such assets
exceeds the practical benefit to the Lenders afforded thereby as reasonably
determined by the Administrative Agent (in consultation with the Borrower).

 
B-9

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Notwithstanding anything to the contrary, the Borrower and the subsidiary
Guarantors shall not be required, nor shall the Administrative Agent be
authorized, (i) to perfect the above-described pledges, security interests and
mortgages by any means other than by (A) filings pursuant to the Uniform
Commercial Code in the office of the secretary of state (or similar central
filing office) of the relevant State(s) and filings in the applicable real
estate records with respect to mortgaged properties or any fixtures relating to
mortgaged properties, (B) filings in United States government offices with
respect to intellectual property as expressly required in the Credit Facilities
Documentation, (C) mortgages in respect of fee-owned real property with a fair
market value in excess of an amount to be agreed or (D) delivery to the
Administrative Agent to be held in its possession of all Collateral consisting
of intercompany notes, stock certificates of the Borrower and its subsidiaries
and instruments, in each case as expressly required in the Credit Facilities
Documentation, (ii) to enter into any control agreements with respect to assets
requiring perfection through control agreements or perfection by “control”
(other than in respect of certificated equity interests in the Borrower and
material wholly-owned restricted subsidiaries otherwise required to be pledged)
(including without limitation deposit accounts and other bank or securities
accounts) or (iii) to take any action in any non-U.S. jurisdiction in order to
create any security interests in assets located or titled outside of the U.S. or
to perfect any security interests in such assets, including any intellectual
property registered in any non-U.S. jurisdiction (it being understood that,
other than pledge agreements with respect to the equity interests of certain
material foreign subsidiaries to be mutually agreed upon, there shall be no
security agreements or pledge agreements governed under the laws of any non-U.S.
jurisdiction).
         
All the above-described pledges, security interests and mortgages shall be
created on terms to be set forth in the Credit Facilities Documentation, and
none of the Collateral shall be subject to other pledges, security interests or
mortgages (except permitted liens and other exceptions and baskets to be set
forth in the Credit Facilities Documentation).
         
The liens on the Collateral securing the Senior Secured Credit Facilities will
be pari passu with the liens on the Collateral securing the Borrower’s existing
8.25% Senior Notes due 2018 (the “Existing Notes”).  The priority of the
security interests and related creditor rights between the Senior Secured Credit
Facilities and the Existing Notes will be set forth in a customary intercreditor
agreement (the “Intercreditor Agreement”) on terms and conditions to be mutually
agreed.

 

 
B-10

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Mandatory Prepayments:
 
Loans under the Term Facility shall be prepaid with:
         
(a)          Commencing with the fiscal year ending March 31, 2013, 50% of
Excess Cash Flow (to be defined consistent with the Documentation Principles)
with step-downs 25% and 0% based upon the achievement of Consolidated First Lien
Net Leverage Ratio levels to be agreed; provided that, (i) in any fiscal year,
any voluntary prepayments of loans under the Term Facility and loans under the
Revolving Facility to the extent commitments thereunder are permanently reduced
by the amount of such prepayments, other than prepayments funded with the
proceeds of incurrences of indebtedness or from any Specified Equity
Contribution, shall be credited against Excess Cash Flow prepayment obligations
on a dollar-for-dollar basis for such fiscal year; provided that, in the case of
Term Loans prepaid at a discount to par, any such reduction of the amount of
Excess Cash Flow prepayments shall be equal to the amount spent to make such
prepayment (as opposed to the face amount of the Term Loans so prepaid) and (ii)
Excess Cash Flow shall be reduced for, among other things, cash used for capital
expenditures, permitted investments, permitted acquisitions and certain
restricted payments to be agreed, in each case, to the extent financed with
internally generated funds and made during such fiscal year;
         
(b)          100% of the net cash proceeds of all non-ordinary course asset
sales or other dispositions of property by the Borrower and its restricted
subsidiaries (including insurance and condemnation proceeds and sale leaseback
proceeds) in excess of an amount to be agreed, subject to exceptions to be
agreed and subject to the right to reinvest 100% of such proceeds if such
proceeds are reinvested (or committed to be reinvested) in the business (other
than working capital, except for short term capital assets), including in
permitted acquisitions or capital expenditures,  within 12 months and, if so
committed to be reinvested, so long as such reinvestment is actually completed
within 180 days after of the end of such 12 month period, and other exceptions
to be set forth in the Credit Facilities Documentation; and

 

 
B-11

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(c)          100% of the net cash proceeds of issuances of debt obligations of
the Borrower and its restricted subsidiaries after the Closing Date (excluding
debt permitted under the Credit Facilities Documentation but including
Refinancing Facilities and Refinancing Notes).
         
In addition, in the event certain brands previously identified to the Lead
Arranger (the “Split Brands”) are not acquired on or prior to the six month
anniversary of the Closing Date, the Borrower shall within 5 business days of
such anniversary (or such later date as is the end of the next concluding
interest period) prepay Term Loans in an aggregate principal amount (the
“Prepayment Amount”) of $45,000,000, or such lesser amount as constitutes the
ratable portion of such $45,000,000 allocable as of the date hereof to such
brand(s) not purchased based on a customary economic metric to be agreed.
         
Mandatory prepayments shall be applied, without premium or penalty, subject to
reimbursement of the Lenders’ redeployment costs in the case of a prepayment of
Adjusted LIBOR borrowings other than on the last day of the relevant interest
period, on a pro rata basis to the Term Facility and any Incremental Term
Facility under the Credit Facilities Documentation and to scheduled amortization
payments thereof in direct order of maturity.
         
Any Lender under the Term Facility may elect not to accept its pro rata portion
of any mandatory prepayment under clauses (a) and (b) above (each a “Declining
Lender”).  Any prepayment amount declined by a Declining Lender may be retained
by the Borrower.
         
The loans under the Revolving Facility shall be prepaid and the letters of
credit cash collateralized to the extent such extensions of credit exceed the
amount of the commitments under the Revolving Facility.
         
Prepayments from subsidiaries’ Excess Cash Flow and asset sale proceeds will be
limited under the Credit Facilities Documentation to the extent such prepayments
(including the repatriation of cash in connection therewith) would (a) be
prohibited or delayed by applicable law; provided that the Borrower and its
restricted subsidiaries shall take all commercially reasonable actions available
under local law to permit such repatriation or (b) result in material adverse
tax consequences; provided that, if not previously repatriated and applied to
such prepayment within 12 months, an amount equal to the affected portion of
Excess Cash Flow or asset sale proceeds (less the amount of additional taxes
that would have been payable or reserved against if such amount had been
repatriated) shall be applied to prepay the Term Facility or to other local
indebtedness of restricted subsidiaries organized in the relevant jurisdiction.

 

 
B-12

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Voluntary Prepayments and Reductions in Commitments:
 
Voluntary reductions of the unutilized portion of the Revolving Facility
commitments and voluntary prepayments of borrowings under the Senior Secured
Credit Facilities will be permitted at any time in minimum principal amounts to
be agreed upon, without premium or penalty (except as provided below), subject
to reimbursement of the Lenders’ redeployment costs in the case of a prepayment
of Adjusted LIBOR borrowings other than on the last day of the relevant interest
period.
         
All voluntary prepayments of the Term Facility and any Incremental Term Facility
will be applied to the remaining amortization payments under the Term Facility
or such Incremental Term Facility, as applicable, and may be applied to any of
the Term Facility or any Incremental Term Facility, in any case, as directed by
the Borrower (and absent such direction, in direct order of maturity thereof).
     
Documentation:
 
The definitive documentation for the Senior Secured Credit Facilities (the
“Credit Facilities Documentation”) shall be negotiated in good faith to finalize
the Credit Facilities Documentation, giving effect to the Certain Funds
Provision, as promptly as reasonably practicable, shall be based on the
definitive documentation for Emdeon with changes determined to be reasonably
necessary by the Lead Arrangers in light of market conditions at the time of
syndication (provided that such modifications shall not be in contravention of
any of the terms and conditions set forth in this Exhibit B), shall contain the
terms and conditions set forth in this Exhibit B and, to the extent any terms
are not set forth in this Exhibit B, shall otherwise be usual and customary for
transactions of this kind, reflecting the operational and strategic requirements
of the Borrower and its subsidiaries in light of their size, industries,
practices and the Borrower’s proposed business plan (collectively, the
“Documentation Principles”).  The Credit Facilities Documentation shall contain
only those payments, conditions to borrowing, mandatory prepayments,
representations, warranties, covenants and events of default expressly set forth
in this Exhibit B, and with standards, qualifications, thresholds, exceptions,
“baskets” and grace and cure periods consistent with the Documentation
Principles as applied to transactions of this kind.

 

 
B-13

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Representations and Warranties:
 
Limited to the following (to be applicable to Holdings, the Borrower and their
restricted subsidiaries only): organization; existence, qualification and power;
compliance with laws; authorization; no contravention with respect to the Credit
Facilities Documentation; governmental authorization; binding effect of the
Credit Facilities Documentation; financial statements; no material adverse
effect (after the Closing Date); litigation; labor matters; ownership of
property; environmental matters; taxes; ERISA compliance; subsidiaries; margin
regulations; investment company act; disclosure; intellectual property;
projections; creation, validity, perfection and priority of security interests
in the Collateral (subject to permitted liens and the Certain Funds Provisions);
status of the Senior Secured Credit Facilities as senior debt; no material
undisclosed liabilities; anti-terrorism laws (including PATRIOT Act); and
consolidated Closing Date solvency of the Borrower and its subsidiaries,
subject, in the case of each of the foregoing representations and warranties, to
customary qualifications and limitations for materiality to be provided in the
Credit Facilities Documentation.
     
Conditions to Initial Borrowing:
 
The availability of the initial borrowing and other extensions of credit under
the Senior Secured Credit Facilities on the Closing Date will be subject solely
to the applicable conditions set forth in the “Conditions to All Borrowings”
section below and in Exhibit D to the Commitment Letter.
     
Conditions to All Borrowings:
 
The making of each extension of credit under the Senior Secured Credit
Facilities shall be conditioned upon (a) delivery of a customary borrowing
notice, (b) the accuracy of representations and warranties in all material
respects (subject, on the Closing Date, to the Certain Funds Provisions) and (c)
after the Closing Date, the absence of defaults or events of default at the time
of, or after giving effect to the making of, such extension of credit.
 

 

 
B-14

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Affirmative Covenants:
 
Limited to the following (to be applicable to Holdings, the Borrower and their
restricted subsidiaries only): quarterly and annual financial statements (with
annual financial statements accompanied by an opinion of an independent
accounting firm (which opinion shall not contain any going concern
qualification)); certificates; other information; notices; payment of taxes;
preservation of existence; maintenance of properties; maintenance of insurance;
compliance with laws; books and records; inspection rights; covenant to
guarantee obligations and give security; further assurances as to security;
compliance with environmental laws; annual budget; material changes in nature of
business; use of proceeds; and designation of subsidiaries; commercially
reasonable efforts to maintain a corporate credit rating from S&P and a
corporate family rating from Moody’s, in each case with respect to the Borrower
and a rating of each of the Senior Secured Credit Facilities by each of S&P and
Moody’s (with no requirement to maintain any minimum ratings); subject, in the
case of each of the foregoing covenants, to exceptions and qualifications to be
provided in the Credit Facilities Documentation.
     
Negative Covenants:
 
Limited to the following (to be applicable to Holdings, the Borrower and their
restricted subsidiaries and, in the case of the passive holding company covenant
set forth below, Holdings) limitations on: liens (which shall permit liens
securing any Refinancing Facilities and any Incremental Facilities); investments
(including acquisitions, loans, etc.); debt (which shall permit any Refinancing
Facilities and any Incremental Facilities); limitation on changes in fiscal year
of Holdings and the Borrower; fundamental changes; dispositions; restricted
payments; transactions with affiliates; restrictions on negative pledge clauses;
prepaying and amending subordinated debt, the Unsecured Bridge Facility, the
Unsecured Notes, unsecured Ratio Indebtedness (as defined below) and permitted
refinancings of any of the foregoing; and Holdings incurring material
liabilities, owning material assets or conducting material business other than
as a passive holding company. Certain baskets and exceptions to the foregoing
covenants shall be agreed.
         
The Borrower or any restricted subsidiary will be permitted to make acquisitions
(each, a “Permitted Acquisition”) so long as (a) no Event of Default exists and
the Borrower would be in compliance (on a pro forma basis after giving effect to
such acquisition and any other acquisition, disposition, debt incurrence, debt
retirement and customary pro forma adjustments, including pro forma cost savings
and synergy addbacks, to be agreed) with the Financial Covenants recomputed as
of the last day of the most recently ended fiscal quarter of the Borrower for
which financial statements are available and (b) subject to the limitations set
forth in “Guarantees” and “Security” above, the acquired company and its
subsidiaries (other than any designated as an unrestricted subsidiary) will
become Guarantors and pledge their Collateral to the Administrative Agent to the
extent required by the Credit Facilities Documentation. With respect to
acquisitions of entities that do not become Guarantors, consideration provided
by the Borrower or a Guarantor will be limited to an aggregate amount not to
exceed an amount equal to the sum of (x) an amount to be agreed and (y)
available “Cumulative Credit” amounts (to be defined in a manner consistent with
the Documentation Principles and based on the unswept portion of Excess Cash
Flow plus qualified equity proceeds (other than Specified Equity
Contributions)).

 
 
B-15

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So long as no event of default has occurred and is then continuing, the Borrower
and any restricted subsidiary will be permitted to (a) incur indebtedness
(“Ratio Indebtedness”) subject to compliance on a pro forma basis with (i) the
Financial Covenants recomputed as of the last day of the most recently ended
fiscal quarter of the Borrower for which financial statements are available,
(ii) a Total Net Leverage Ratio (to be defined in a manner consistent with the
Documentation Principles and, in any case, to be determined net of all
unrestricted cash and cash equivalents, but to exclude the cash proceeds from
the indebtedness being incurred) of 5.50:1.00 and (iii) if such indebtedness (or
other permitted indebtedness) is to be secured, the amount of such indebtedness
could have been incurred as Incremental Facilities (and shall be treated as
first lien debt for all ratio calculations) under the test described above,
subject to the execution and delivery of pari passu or junior lien intercreditor
agreements; provided that such indebtedness shall (A) have a maturity at least
91 days after the latest date of maturity of the Senior Secured Credit
Facilities, (B) in the event such indebtedness is incurred or guaranteed on a
pari passu secured basis by the Borrower or a Guarantor, be in the form of debt
securities or indebtedness that is not a term loan or revolving loan, and (C)
have terms and conditions (other than pricing, rate floors, discounts, fees, and
optional redemption provisions) that are not materially less favorable (when
taken as a whole) to the Borrower than the terms and conditions of the Credit
Facilities Documentation (when taken as a whole); provided further that any such
indebtedness incurred pursuant to clause (a) above by a restricted subsidiary
that is not a Guarantor (including any non-U.S. subsidiaries) shall be capped at
an amount to be agreed and (b) make unlimited non-ordinary course asset sales
subject to fair market value, the consideration for such sales being at least
75% cash consideration (subject to designated non-cash consideration) and
compliance, if required, with the mandatory prepayment provisions.
 

 
 
B-16

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Financial Maintenance Covenants:
 
Limited to the following financial maintenance covenants (the “Financial
Covenants”) solely for the benefit of the Revolving Facility: (i) a maximum
Consolidated Total Net Leverage Ratio (to be defined in a manner consistent with
the Documentation Principles and, in any case, to be determined net of all
unrestricted cash and cash equivalents) and (ii) a minimum Consolidated Net Cash
Interest Coverage Ratio (to be defined in a manner consistent with the
Documentation Principles).  The Term Facility shall not have the benefit of, or
any rights with respect to, the Financial Covenants (including, without
limitation, as to amendments, modifications and waivers).
         
The foregoing Financial Covenants will be tested quarterly with respect to the
Borrower and its restricted subsidiaries on a consolidated basis, with the first
covenant test to commence with the first full fiscal quarter ending after the
Closing Date.
         
The levels with respect to the Financial Covenants shall be set to reflect at
least a 35% cushion (calculated on a non-cumulative basis, with the levels with
respect to the minimum Consolidated Net Cash Interest Coverage Ratio reflecting
a greater cushion than the levels with respect to the maximum Consolidated Total
Net Leverage Ratio) to Consolidated EBITDA from the Borrower’s financial model
most recently delivered to the Lead Arranger prior to the date of the Commitment
Letter (the “Borrower’s Financial Model”) together with any updates or
modifications thereto reasonably agreed among the Borrower and the Commitment
Parties or as necessary to reflect (i) any exercise of “market flex” pursuant to
the Fee Letter (including as to margin, LIBOR floor, OID and upfront fees), (ii)
if the Unsecured Bridge Facility is funded, assuming that the interest rate
under the Unsecured Bridge Facility is at the Unsecured Total Cap, (iii) the
actual pricing of the Term Loans, Unsecured Notes and other Securities issued on
the Closing Date in excess of the related yield assumed in the Borrower’s
Financial Model (or if the actual pricing of the Unsecured Notes or other
Securities occurs after completion of Successful Syndication, assuming pricing
at the Unsecured Total Cap or such other yield acceptable to the Borrower) and
(iv) Adjusted LIBOR consistent with the assumptions in the Borrower’s Financial
Model.

 
 
B-17

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It is agreed that “Consolidated EBITDA” as used in the calculation of the
Financial Covenants and otherwise in the Facilities Documentation shall be
defined in a manner consistent with the Documentation Principles and in any
event shall include, without limitation:
         
(i)  (x) cost savings, operating expense reductions and synergies related to the
Transactions that are reasonably identifiable and factually supportable and
projected by the Borrower in good faith to result from actions that have been
taken or with respect to which substantial steps have been taken (in the good
faith determination of the Borrower) within 18 months after the Closing Date and
(y) cost savings, operating expense reductions and synergies related to mergers
and other business combinations, acquisitions, divestitures, restructurings,
cost savings initiatives and other similar initiatives consummated after the
Closing Date that are reasonably identifiable and factually supportable and
projected by the Borrower in good faith to result from actions that have been
taken or with respect to which substantial steps have been taken (in the good
faith determination of the Borrower) within 18 months after a merger or other
business combination, acquisition or divestiture (or 12 months in the case of
any other restructuring, cost savings initiative or other initiative) is
consummated;
         
(ii)  restructuring and related charges up to an amount to be agreed; and
         
(iii)  adjustments and add-backs reflected in the Company’s financial model as
provided to the Lead Arranger, and others as shall be mutually negotiated in
light of Borrower’s business, operations and the Company’s business plan.
         
For purposes of determining compliance with the Financial Covenants, any cash
equity contribution (which shall be common equity or otherwise in a form
reasonably acceptable to the Administrative Agent) made to the Borrower after
the beginning of the relevant fiscal quarter and on or prior to the day that is
10 days after the day on which financial statements are required to be delivered
for such fiscal quarter will, at the request of the Borrower, be included in the
calculation of Consolidated EBITDA solely for the purposes of determining
compliance with the financial maintenance covenants at the end of such fiscal
quarter and applicable subsequent periods which include such fiscal quarter (any
such equity contribution so included in the calculation of Consolidated EBITDA,
a “Specified Equity Contribution”), subject solely to the following terms and
conditions: (a) in each four fiscal quarter  period, there shall be at least two
fiscal quarters in respect of which no Specified Equity Contribution is made,
(b) the amount of any Specified Equity Contribution shall be no greater than the
amount required to cause the Borrower to be in pro forma compliance with the
Financial Covenants, (c) all Specified Equity Contributions shall be disregarded
for purposes of determining any baskets with respect to the covenants contained
in the Credit Facilities Documentation, (d) no more than five Specified Equity
Contributions shall be made during the term of the Senior Secured Credit
Facilities and (e) there shall be no reduction in indebtedness in connection
with any Specified Equity Contributions for determining compliance with the
Financial Covenants and no Specified Equity Contribution will reduce (or count
towards) net leverage/indebtedness for purposes of any calculation thereof.

 
 
B-18

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Unrestricted Subsidiaries:
 
The Credit Facilities Documentation will contain provisions pursuant to which ,
subject to limitations on loans, advances, and other investments in,
unrestricted subsidiaries, the Borrower will be permitted to designate any
existing or subsequently acquired or organized subsidiary as an “unrestricted
subsidiary” and subsequently re-designate any such unrestricted subsidiary as a
restricted subsidiary, provided that, (x) immediately after giving effect to any
such designation, no event of default shall have occurred and shall be
continuing and (y) after giving pro forma effect to such designation or
re-designation, as if it had occurred on the first day of the applicable
reference period, the Borrower would be in compliance with the Financial
Covenants, recomputed as of the last day of the most recently ended fiscal
quarter of the Borrower for which financial statements are
available.  Unrestricted subsidiaries will not be subject to the representation
and warranties, affirmative or negative covenant or event of default provisions
of the Credit Facilities Documentation, and the results of operations and
indebtedness of unrestricted subsidiaries will not be taken into account for
purposes of determining compliance with the Financial Covenants.  The
designation of any subsidiary as an unrestricted subsidiary shall constitute an
investment therein at the date of designation in an amount equal to the fair
market value thereof.  The designation of any unrestricted subsidiary as a
restricted subsidiary shall constitute (i) the incurrence at the time of
designation of any indebtedness, liens or investments of such subsidiary
existing at such time and (ii) a return on any such investment in an amount
equal to the fair market value.
 

 
 
B-19

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Events of Default:
 
Limited to the following (to be applicable to Holdings, the Borrower and its
restricted subsidiaries): nonpayment of principal, interest or fees (with grace
periods for interest, fees and other amounts); failure to perform negative
covenants and the Financial Covenants (and affirmative covenants to provide
notice of default or maintain the Borrower’s corporate existence); failure to
perform other covenants subject to a 30- day cure period after notice by the
Administrative Agent; any representation or warranty incorrect in any material
respect when made; cross-default and cross-acceleration to other indebtedness,
subject to a threshold amount; bankruptcy or insolvency proceedings; monetary
judgment, subject to a threshold amount; ERISA events, subject to material
adverse effect; invalidity (actual or asserted in writing by the Borrower or any
Guarantor) of the Credit Facilities Documentation or material portion of
Collateral; and change of control (to include a pre and post-initial public
offering provision); provided that, notwithstanding anything to the contrary in
the Credit Facilities Documentation, a breach of the Financial Covenants will
not constitute an Event of Default for purposes of the Term Facility (or any
other facility other than the Revolving Facility), and the Lenders under the
Term Facility (or any other facility other than the Revolving Facility
(including any Incremental Revolving Facilities)) will not be permitted to
exercise any remedies with respect to an uncured breach of the Financial
Covenants until the date, if any, on which the commitments under the Revolving
Facility have been terminated and the loans under the Revolving Facility have
been accelerated as a result of such breach.
     
Voting:
 
Amendments and waivers of the Credit Facilities Documentation will require the
approval of Lenders holding more than 50% of the aggregate amount of the loans
and commitments under the Senior Secured Credit Facilities (the “Required Bank
Lenders”), except that the consent of each Lender directly adversely affected
thereby shall be required with respect to (a) increases in the commitment of
such Lender, (b) reductions of principal (including any amortization payment),
interest or fees, (c) extensions of final maturity or the due date of any
interest, fee or amortization payment, (d) releases of all or substantially all
Guarantors or all or substantially all of the Collateral, and (e) changes in
voting thresholds.  Defaulting Lenders will be subject to the suspension of
certain voting rights.  Notwithstanding the foregoing, amendments and waivers of
the Financial Covenants (or any of the financial definitions included in the
Financial Covenants) will require only the consent of Lenders holding more than
50% of the aggregate commitments and loans under the Revolving Facility and no
other consents or approvals shall be required.

 
 
B-20

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The Credit Facilities Documentation will permit amendments thereof without the
approval or consent of the Lenders to effect a permitted “repricing transaction”
(i.e., a transaction in which any tranche of Term Loans is refinanced with a
replacement tranche of term loans, or is modified with the effect of, bearing a
lower rate of interest) other than any Lender holding Term Loans subject to such
“repricing transaction” that will continue as a Lender in respect of the
repriced tranche of Term Loans or modified Term Loans.
         
For the avoidance of doubt, the Credit Facilities Documentation may be amended
in order to modify any provision relating to pro rata sharing of payments (other
than the “waterfall provisions” applicable following enforcement) among the
Lenders (and, in any case, any provision requiring pro rata payments or sharing
of payments in connection with “amend and extend” transactions) with the consent
of the Required Bank Lenders.
         
The Credit Facilities Documentation shall contain customary provisions for
replacing non-consenting Lenders in connection with amendments and waivers
requiring the consent of all Lenders under the Senior Secured Credit Facilities,
or of all Lenders directly affected thereby so long as Lenders under the
relevant facilities holding more than 50% of the aggregate amount of the loans
and commitments under the Senior Secured Credit Facilities shall have consented
thereto.
     
Cost and Yield Protection:
 
The Credit Facilities Documentation shall contain customary provisions (a)
protecting the Lenders against increased costs or loss of yield resulting from
changes in reserve, capital adequacy and other requirements of law (it being
understood that Dodd-Frank and Basel III and the applicable regulations
thereunder shall be deemed to be changes in law following the Closing Date) and
from the imposition of or changes in certain withholding or other taxes and (b)
indemnifying the Lenders for “breakage costs” incurred in connection with, among
other things, any prepayment of a LIBOR borrowings on a day other than the last
day of an interest period with respect thereto, it being understood that there
will be a customary exception to be agreed to the gross-up obligations for U.S.
federal withholding taxes imposed as a result of any failure of a Lender to
comply with the procedures, certifications, information reporting, disclosure or
other related requirements of newly enacted Sections 1471-1474 of the Internal
Revenue Code of 1986, as amended (and any regulations promulgated thereunder or
published administrative guidance issued pursuant thereto), and any amended or
successor version that is substantively comparable.

 
 
B-21

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Assignments and Participations:
 
The Lenders will be permitted to assign (other than to any Disqualified Lender)
(a) loans under the Term Facility with the consent of the Borrower (not to be
unreasonably withheld or delayed) and (b) loans and commitments under the
Revolving Facility with the consent of the Borrower, the Swingline Lender and
the Issuing Bank (in each case, not to be unreasonably withheld or delayed);
provided that no consent of the Borrower shall be required in the case of (A)
the Term Facility only, if such assignment is made to another Lender or an
affiliate or approved fund of a Lender or in connection with the initial
syndication (subject to the terms of the Commitment Letter), (B) the Revolving
Facility only, if such assignment is made to another Lender that is a Lender
under the Revolving Facility, or (C) after the occurrence and during the
continuance of a payment or bankruptcy with respect to the Borrower) event of
default. All assignments will require the consent of the Administrative Agent,
not to be unreasonably withheld or delayed.  In the case of the Term Facility
only, the Borrower shall be deemed to have consented to an assignment of loans
under the Term Facility if the Borrower does not object to such assignment
within 10 business days following the Borrower’s receipt of a written request
for consent to such assignment from the Administrative Agent.
         
Each assignment (other than to another Lender, an affiliate of a Lender or an
approved fund) will be in an amount of an integral multiple of $1,000,000 in the
case of the Term Facility and $5,000,000 in the case of the Revolving Facility
(or lesser amounts, if agreed between the Borrower and the Administrative Agent)
or, if less, all of such Lender’s remaining loans and commitments of the
applicable class.  Assignments will be by novation and in the case of the Senior
Secured Credit Facilities will not be required to be pro rata among the Senior
Secured Credit Facilities. The Administrative Agent shall receive a processing
and recordation fee of $3,500 for each assignment.

 
 
B-22

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The Lenders will be permitted to sell participations (other than to any
Disqualified Lender) in loans and commitments without restriction in accordance
with applicable law and subject to limitations consistent with the Documentation
Principles.  Voting rights of participants shall be limited to matters set forth
under “Voting” above with respect to which the unanimous vote of all Lenders (or
all directly and adversely affected Lenders, if the participant is directly and
adversely affected) would be required.
         
The Credit Facilities Documentation shall provide that so long as no default or
event of default is continuing, Term Loans may be purchased by and assigned to
Holdings or any of its subsidiaries on a non-pro rata basis through (a) open
market purchases and/or (b) Dutch auctions open to all Lenders on a pro rata
basis in accordance with customary procedures to be agreed; provided that any
such Term Loans shall be automatically and permanently cancelled immediately
upon acquisition thereof by Holdings or any of its subsidiaries.
     
Expenses and Indemnification:
 
The Borrower shall pay, if the Closing Date occurs, all reasonable and
documented or invoiced out-of-pocket costs and expenses of the Administrative
Agent and the Commitment Parties (without duplication) associated with the
syndication of the Senior Secured Credit Facilities and the preparation,
execution and delivery, administration, amendment, modification, waiver and/or
enforcement of the Credit Facilities Documentation (including the reasonable
fees, disbursements and other charges of counsel identified herein or otherwise
retained with the Borrower’s consent (such consent not to be unreasonably
withheld or delayed) and, if necessary, one firm of local counsel in each
appropriate jurisdiction (which may include a single special counsel acting in
multiple jurisdictions) for the Administrative Agent and the Commitment Parties
taken as a whole).

 
 
B-23

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The Borrower will indemnify the Administrative Agent, the Commitment Parties,
the Lenders and their affiliates, and the directors, officers, employees,
counsel, agents, advisors and other representatives of the foregoing, and hold
them harmless from and against any and all losses, liabilities, damages, claims
and reasonable and documented or invoiced out-of-pocket fees and expenses
(including reasonable fees, disbursements and other charges of one counsel for
all indemnified parties and, if necessary, one firm of local counsel in each
appropriate jurisdiction (which may include a single special counsel acting in
multiple jurisdictions) for all indemnified parties (and, in the case of an
actual or perceived conflict of interest, where the indemnified person affected
by such conflict informs the Borrower of such conflict and thereafter retains
its own counsel, of another firm of counsel for such affected indemnified
person)) of any such indemnified person arising out of or relating to any claim
or any litigation or other proceeding (regardless of whether such indemnified
person is a party thereto and whether or not such proceedings are brought by the
Borrower, its equity holders, its affiliates, creditors or any other third
person) that relates to the Transactions, including the financing contemplated
hereby; provided that no indemnified person will be indemnified for any
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements to the extent it has resulted
from (i) the gross negligence, bad faith or willful misconduct of such person or
any of its controlled affiliates or controlling persons or any of the officers,
directors, employees, agents, advisors, or members of any of the foregoing, in
each case who are involved in or aware of the Transactions (as determined by a
court of competent jurisdiction in a final and non-appealable decision), (ii) a
material breach of the Credit Facilities Documentation by any such person or one
of its affiliates or (iii) disputes between and among indemnified persons to the
extent such disputes do not arise from any act or omission of the Borrower or
any of its affiliates (other than claims against an indemnified person acting in
its capacity as an agent or arranger or similar role under the Senior Secured
Credit Facilities unless such claims arise from the gross negligence, bad faith
or willful misconduct of such indemnified person).
     
Governing Law and Forum:
 
New York.
     
Counsel to the Administrative Agent, the Lead Arranger and the Bookrunner:
 
Cahill Gordon & Reindel LLP.

 
 
B-24

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ANNEX I
 
Interest Rates:
 
Initially, the interest rates under the Senior Secured Credit Facilities will be
as follows:
         
With respect to the Revolving Loans, at the option of the Borrower, initially,
Adjusted LIBOR plus 5.00% or ABR plus 4.00%.
         
From and after the delivery by the Borrower to the Administrative Agent of the
Borrower’s financial statements for the period ending at least one full fiscal
quarter following the Closing Date, interest rates under the Revolving Facility
shall be subject to at least one 25 basis points reduction on a pricing grid to
be determined based upon the Consolidated First Lien Net Leverage Ratio set
forth in the applicable officer’s certificate and shall be as agreed upon
between the Borrower and the Administrative Agent.
         
With respect to Term Loans, at the option of the Borrower, initially, Adjusted
LIBOR plus 5.00% or ABR plus 4.00%.
         
From and after the delivery by the Borrower to the Administrative Agent of the
Borrower’s financial statements for the period ending at least one full fiscal
quarter following the Closing Date, interest rates under the Term Facility shall
be subject to one 25 basis points reduction on a pricing grid to be determined
based upon the Consolidated First Lien Net Leverage Ratio set forth in the
applicable officer’s certificate and shall be as agreed upon between the
Borrower and the Administrative Agent.
         
With respect to swingline borrowings, ABR plus 4.00%.
         
The Borrower may elect interest periods of 1, 2, 3 or 6 months (or, if agreed by
all relevant Lenders, 9 or 12 months) for Adjusted LIBOR borrowings.
         
Calculation of interest shall be on the basis of the actual days elapsed in a
year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR
loans where the applicable rate is determined pursuant to clause (i) of the
definition of ABR).
         
Interest shall be payable in arrears (a) for loans accruing interest at a rate
based on Adjusted LIBOR, at the end of each interest period and, for interest
periods of greater than 3 months, every three months, and on the applicable
maturity date and (b) for loans accruing interest based on the ABR, quarterly in
arrears and on the applicable maturity date.

 
 
Annex I to Exhibit B - 1

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ABR is the Alternate Base Rate, which is the highest of (i) the rate of interest
established by the Administrative Agent, from time to time, as its “corporate
base rate”, (ii) the Federal Funds Rate plus 1/2 of 1.0% and (iii) the one-month
Adjusted LIBOR rate plus 1.0% per annum.
         
Adjusted LIBOR is the London interbank offered rate for dollars, adjusted for
statutory reserve requirements.
         
With respect to the Term Loans, there shall be a minimum Adjusted LIBOR (i.e.
Adjusted LIBOR prior to adding any applicable interest rate margins thereto)
requirement of (i) 1.25% per annum and (ii) a minimum ABR requirement of 2.25%.
     
Letter of Credit Fee:
 
A per annum fee equal to the spread over Adjusted LIBOR under the Revolving
Facility will accrue on the aggregate face amount of outstanding letters of
credit under the Revolving Facility, payable in arrears at the end of each
quarter and upon the termination of the respective letter of credit, in each
case for the actual number of days elapsed over a 360-day year.  Such fees shall
be distributed to the Revolving Lenders pro rata in accordance with the amount
of each such Lender’s Revolving Facility commitment, with exceptions for
defaulting Revolving Lenders.  In addition, the Borrower shall pay to each
Issuing Bank, for its own account, (a) a fronting fee equal to 0.125% per annum
upon of the aggregate face amount of outstanding letters of credit, payable in
arrears at the end of each quarter and upon the termination of the Revolving
Facility, calculated based upon the actual number of days elapsed over a 360-day
year, and (b) customary issuance and administration fees.
     
Commitment Fees:
 
The Borrower shall pay a commitment fee of 0.50% per annum on the average daily
unused portion of the Revolving Facility, payable quarterly in arrears
commencing from the Closing Date, calculated based upon the actual number of
days elapsed over a 360-day year.  Such fees shall be distributed to the
Revolving Lenders pro rata in accordance with the amount of each such Lender’s
Revolving Facility commitment, with exceptions for defaulting Revolving Lenders.
         
Swingline loans shall, for purposes of the commitment fee calculations only, not
be deemed to be a utilization of the Revolving Facility.

 
Annex I to Exhibit B - 2

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EXHIBIT C
 
Project Prism
Senior Unsecured Increasing Rate Bridge Loans
Summary of Principal Terms and Conditions3

Borrower:
 
Same as the Borrower under the Senior Secured Credit Facilities.
     
Administrative Agent:
 
MSSF will act as sole administrative agent (in such capacity, the
“Administrative Agent”) for a syndicate of banks, financial institutions and
other entities arranged by the Lead Arranger (as defined below) in consultation
with the Borrower (excluding any Disqualified Lender) with respect to the
Unsecured Bridge Facility (together with the Initial Lenders, the “Lenders”),
and will perform the duties customarily associated with such roles.
     
Lead Arranger and Bookrunner:
 
MSSF, Citi and RBCCM will act as joint lead arrangers and joint bookrunners for
the Unsecured Bridge Facility (collectively, the “Lead Arranger”), and will
perform the duties customarily associated with such role.
     
Syndication Agent:
 
Citi will act as syndication agent for the Unsecured Bridge Facility.
     
Documentation Agent:
 
RBCCM will act as documentation agent for the Unsecured Bridge Facility.
     
Unsecured Bridge Facility:
 
A senior unsecured bridge facility (the “Unsecured Bridge Facility”) in an
aggregate principal amount of $290 million plus, at the Borrower’s election, an
amount sufficient to fund any OID or upfront fees required to be funded on the
Closing Date in connection with the issuance of the Unsecured Notes or any other
Securities on the Closing Date minus the amount of gross proceeds from Unsecured
Notes on the Closing Date (the loans thereunder, the “Unsecured Bridge Loans”).
     
Guarantees:
 
The same as the guarantors for the Senior Secured Credit Facilities.  Any
guarantee will be automatically released upon the release of the corresponding
guarantee under the Senior Secured Credit Facilities (other than upon payment in
full thereof).

 

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3
All capitalized terms used but not defined herein have the meanings given to
them in the Commitment Letter to which this term sheet is attached.

 
 
C-1

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Security:
 
None.
     
Use of Proceeds:
 
The proceeds of borrowings under the Unsecured Bridge Facility will be used by
the Borrower on the Closing Date, together with the proceeds from borrowings
under the Term Facility and the Revolving Facility and cash on hand at the
Borrower and Prism, solely to pay the Acquisition Costs
     
Interest Rates:
 
Interest for the first 90-day period commencing on the Closing Date shall be
payable at the London interbank offered rate (“LIBOR”) for U.S. dollars (for
interest periods of 1, 2, 3 or six months, as selected by the Borrower) plus 800
basis points (the “Initial Margin”).  Following the 90th day after the Closing
Date, interest on the Unsecured Bridge Loans shall be payable at a rate equal to
the Unsecured Total Cap (as defined in the Fee Letter).  The Unsecured Bridge
Facility shall have a LIBOR floor equal to 1.25% per annum.
         
Notwithstanding anything to the contrary set forth above, at no time, other than
as provided in the second succeeding paragraph, shall the per annum yield on the
Unsecured Bridge Loans exceed the Unsecured Total Cap.
     
Interest Payments:
 
Interest on the Unsecured Bridge Loans will be payable in cash quarterly in
arrears.
     
Default Rate:
 
The applicable interest rate plus 2.0% on overdue amounts.
         
Notwithstanding anything to the contrary set forth herein, in no event shall any
cap or limit on the yield or interest rate payable with respect to the Unsecured
Bridge Loans, Senior Unsecured Term Loans or Unsecured Exchange Notes affect the
payment of any default rate of interest in respect of any Unsecured Bridge
Loans, Senior Unsecured Term Loans or Unsecured Exchange Notes.

 
 
C-2

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Maturity:
 
The Unsecured Bridge Loans will mature on the first anniversary of the date of
funding of the Unsecured Bridge Loans (the “Maturity Date”).  On the Maturity
Date, any Unsecured Bridge Loan that has not been previously repaid in full will
be, subject to the absence of a bankruptcy or other insolvency event of default,
automatically converted into a senior unsecured term loan (each a “Senior
Unsecured Term Loan”) due on the date that is eight years after the date of
funding of the Unsecured Bridge Facility (the “Senior Unsecured Extended
Maturity Date”).  The date on which Unsecured Bridge Loans are converted into
Senior Unsecured Term Loans is referred to as the “Senior Unsecured Conversion
Date”.  At any time on or after the Senior Unsecured Conversion Date, at the
option of the applicable Lender, the Senior Unsecured Term Loans may be
exchanged in whole or in part for senior unsecured exchange notes (the
“Unsecured Exchange Notes”) having an equal principal amount; provided that no
Unsecured Exchange Notes shall be issued until the Borrower shall have received
requests to issue at least $75 million in aggregate principal amount of
Unsecured Exchange Notes.  The Senior Unsecured Bridge Loans, the Senior
Unsecured Term Loans and the Unsecured Exchange Notes shall be pari passu
obligations of the Borrower.
         
The Senior Unsecured Term Loans will be governed by the provisions of the
Unsecured Bridge Loan Documentation (as defined below) and will have the same
terms as the Unsecured Bridge Loans except as expressly set forth herein or on
Annex I hereto.  The Unsecured Exchange Notes will be issued pursuant to an
indenture that will have the terms set forth on Annex II hereto.
     
Mandatory Prepayment:
 
The Unsecured Bridge Loans shall be prepaid at 100% of the outstanding principal
amount thereof with, subject to exceptions and baskets and in any event (in the
case of clause (ii) below) no less favorable than those applicable to the Term
Facility, (i) the net proceeds from the issuance of the Unsecured Notes or any
other debt securities, or subject to certain exceptions to be mutually agreed,
other indebtedness for borrowed money of the Borrower or any of its restricted
subsidiaries (such exceptions to include borrowings under any Incremental
Facility), (ii) the net proceeds from any non-ordinary course asset sales by the
Borrower or any of its restricted subsidiaries in excess of amounts either
reinvested in accordance with the Term Facility or used to repay the Term
Facility or other secured debt and (iii) the net proceeds of public equity
issuances of Holdings and the Borrower (subject to certain exceptions). The
Borrower will also be required to prepay the Unsecured Bridge Loans following
the occurrence of a change of control at 100% of the outstanding principal
amount thereof. In the event any Lender or affiliate of a Lender purchases debt
securities from the Borrower pursuant to a permitted securities demand at a
price above the level at which such Lender or affiliate has reasonably
determined such debt securities can be resold by such Lender or affiliate to a
bona fide third party at the time of such purchase (and notifies the Borrower
thereof), the net cash proceeds received by the Borrower in respect of such debt
securities may, at the option of such Lender or affiliate, be applied first to
prepay the Unsecured Bridge Loans of such Lender or affiliate prior to being
applied to prepay the Unsecured Bridge Loans held by other Lenders. These
mandatory prepayment provisions will not apply to the Senior Unsecured Term
Loans.

 
C-3

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Optional Prepayment:
 
The Unsecured Bridge Loans may be prepaid, in whole or in part, at par plus
accrued and unpaid interest upon not less than three days’ prior written notice,
at the option of the Borrower at any time.
     
Right to Resell Unsecured Bridge Loans:
 
Each Lender shall have the absolute and unconditional right to resell or assign
the Unsecured Bridge Loans or commitments held by it in compliance with
applicable law to any third party at any time; provided that, for the twelve
month period commencing on the Closing Date and so long as no payment or
bankruptcy event of default exists or a Demand Failure Event (as defined in the
Fee Letter) has occurred and is continuing, the consent of the Borrower (not to
be unreasonably withheld) shall be required with respect to any assignment that
would result in the Initial Lenders collectively holding less than 50.1% of the
aggregate outstanding principal amount of the Unsecured Bridge Loans.  The
Administrative Agent shall receive, other than with respect to assignments by
Initial Lenders, a processing and recordation fee of $3,500 for each assignment.
          
The Lenders will be permitted to sell participations in loans and commitments
without restriction.  Voting rights of participants shall be limited to matters
in respect of (a) reductions of principal, interest or fees, (b) extensions of
final maturity or the due date of any interest or fee payment, (c) releases of
all or substantially all of the Guarantors and (d) changes in voting
threshold.  The definitive credit documentation will contain customary yank a
bank provisions.

 
 
C-4

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Conditions to All Borrowings:
 
The availability of the borrowings under the Unsecured Bridge Facility on the
Closing Date shall be conditioned solely upon (a) delivery of a customary
borrowing notice, (b) the accuracy of representations and warranties in all
material respects (subject, on the Closing Date, to the Certain Funds
Provisions) and (c) the applicable conditions set forth in Exhibit D to the
Commitment Letter.
     
Documentation:
 
The definitive documentation relating to the Unsecured Bridge Loans (the
“Unsecured Bridge Loan Documentation” and, together with the Credit Facilities
Documentation, the “Facilities Documentation”) shall be negotiated in good faith
to finalize the Unsecured Bridge Loan Documentation, giving effect to the
Certain Funds Provision, as promptly as reasonably practicable, shall be
consistent with Emdeon with changes determined to be reasonably necessary by the
Lead Arrangers in light of market conditions at the time of syndication
(provided that such modifications shall not be in contravention of any of the
terms and conditions set forth in this Exhibit C), shall contain the terms and
conditions set forth in this Exhibit C and shall be consistent with the
Documentation Principles as applied to transactions of this kind. Such Unsecured
Bridge Loan Documentation shall contain only those payments, conditions to
borrowing, mandatory prepayments, representations, warranties, covenants and
events of default expressly set forth in this Exhibit C, in each case,
applicable to the Borrower and its restricted subsidiaries and with standards,
qualifications, thresholds, exceptions, “baskets” and grace and cure periods
consistent with the Documentation Principles as applied to transactions of this
kind.
     
Representations and Warranties:
 
The Unsecured Bridge Loan Documentation will contain representations and
warranties relating to the Borrower and its restricted subsidiaries
substantially consistent with the representations and warranties applicable to
the Senior Secured Credit Facilities but including changes thereto customary for
bridge loan financings.

 
 
C-5

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Covenants:
 
The Unsecured Bridge Loan Documentation will contain such affirmative covenants
as are customary for bridge loan financings of this type and substantially
similar to (but less restrictive than) those for the Senior Secured Credit
Facilities to the extent applicable, and the Unsecured Bridge Loan Documentation
will contain such incurrence-based negative covenants as are customary for high
yield senior unsecured debt securities (but in any event less restrictive than
those in the Senior Secured Credit Facilities) (it being understood that prior
to the Maturity Date the restricted payments and debt incurrence covenants shall
be more restrictive than is customary for high yield senior unsecured debt
securities in a manner to be mutually agreed). There will not be any financial
maintenance covenants.
     
Events of Default:
 
The Unsecured Bridge Loan Documentation will contain such events of default
(including notice and grace periods) as are customary for high yield senior
unsecured debt securities (but in any event less restrictive than those in the
Senior Secured Credit Facilities), consisting of nonpayment of principal,
interest or other amounts; violation of covenants; incorrectness of
representations and warranties in any material respect; cross acceleration to
material indebtedness; bankruptcy or insolvency proceedings; material monetary
judgments subject to a threshold amount; and actual or asserted invalidity of
material guarantees.
     
Voting:
 
Amendments and waivers of the Unsecured Bridge Loan Documentation will require
the approval of Lenders holding more than 50% of the aggregate amount of the
loans and commitments under the Unsecured Bridge Facility, except that the
consent of each Lender directly adversely affected thereby shall be required
with respect to (a) increases in the commitment of such Lender, (b) reductions
of principal, interest or fees payable to such Lender, (c) extensions of final
maturity of the Unsecured Bridge Loans of such Lender or the due date of any
interest or fee payment, (d) releases of all or substantially all of the
Guarantors and (e) changes in voting thresholds.
     
Cost and Yield Protection:
 
Customary for financings of this kind, it being agreed that the documentation
will provide customary provisions regarding withholding tax liabilities and a
customary exception to be agreed to the gross-up obligations for U.S. federal
withholding taxes imposed as a result of any failure of a Lender to comply with
the procedures, certifications, information reporting, disclosure or other
related requirements of newly enacted Sections 1471-1474 of the Internal Revenue
Code of 1986, as amended (and any regulations promulgated thereunder or
published administrative guidance issued pursuant thereto), and any amended or
successor version that is substantively comparable.

 
 
 

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Expenses and Indemnification:
 
On the same basis as under the Senior Secured Credit Facilities.
     
Governing Law:
 
New York.
     
Counsel to the Administrative Agent, the Lead Arranger and the Bookrunner:
 
Cahill Gordon & Reindel LLP.

 
 
C-6

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ANNEX I

Senior Unsecured Term Loans

Maturity:
 
The Senior Unsecured Term Loans will mature on the date that is eight years
after the funding of the Unsecured Bridge Loans.
     
Interest Rate:
 
The Senior Unsecured Term Loans will bear interest at an interest rate per annum
(the “Senior Unsecured Term Loan Interest Rate”) equal to the Unsecured Total
Cap.  Interest shall be payable on the last day of each fiscal quarter of the
Borrower and on the maturity date of the Senior Unsecured Term Loans, in each
case payable in arrears and computed on the basis of a 360 day year.  Interest
will be payable in cash.
     
Guarantees and Security:
 
Same as Unsecured Bridge Facility (except no guarantee by Holdings).
     
Covenants, Defaults and Mandatory Prepayments:
 
Upon and after the Senior Unsecured Conversion Date, the covenants, mandatory
prepayments and defaults which would be applicable to the Unsecured Exchange
Notes, if issued, will also be applicable to the Senior Unsecured Term Loans in
lieu of the corresponding provisions of the Unsecured Bridge Loan Documentation
(except that any offer to repurchase upon the occurrence of a change of control
will be made at 100% of the outstanding principal amount thereof, plus accrued
and unpaid interest to the date of repurchase).
     
Optional Prepayment:
 
The Senior Unsecured Term Loans may be prepaid, in whole or in part, at par,
plus accrued and unpaid interest upon not less than three days’ prior written
notice, at the option of the Borrower at any time.

 
 
Annex I to Exhibit C - 1

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ANNEX II
Unsecured Exchange Notes

Issue:
 
The Unsecured Exchange Notes will be issued under an indenture capable of being
qualified under the Trust Indenture Act of 1939, as amended.  Such indenture
shall be negotiated in good faith and shall be based on forms of definitive
documentation agreed to by you and the Commitment Parties, and such indenture
(including all covenants, defaults and mandatory offers to purchase) shall be
consistent with the terms in this Term Sheet and the Documentation Principles as
applied to transactions of this kind.
     
Maturity:
 
The Unsecured Exchange Notes will mature on the date that is eight years after
the date of funding of the Unsecured Bridge Loans.
     
Interest Rate:
 
The Unsecured Exchange Notes will bear interest payable semi-annually at an
interest rate per annum equal to the Unsecured Total Cap.  Interest will be
payable in cash.
     
Guarantees and Security:
 
Same as the Senior Unsecured Term Loans.
     
Repurchase with Asset Sale Proceeds:
 
The Borrower will be required to make an offer to repurchase the Unsecured
Exchange Notes at 100% of the outstanding principal amount thereof with, subject
to exceptions consistent with the Documentation Principles as applied to
transactions of this kind, the net proceeds from any non ordinary course asset
sales by the Borrower or any of its restricted subsidiaries in excess of amounts
either reinvested in a manner consistent with the Documentation Principles as
applied to transactions of this kind or applied to repay the Senior Secured
Credit Facilities or other secured debt.
     
Repurchase upon Change of Control:
 
The Borrower will be required to make an offer to repurchase the Unsecured
Exchange Notes following the occurrence of a change of control at a price in
cash equal to 101% (or 100% in the case of Unsecured Exchange Notes held by the
Commitment Parties or their respective affiliates other than Asset Management
Affiliates (as defined in the Fee Letter)) of the outstanding principal amount
thereof, plus accrued and unpaid interest to the date of repurchase.

 
Annex II to Exhibit C -2

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Optional Redemption:
 
The Unsecured Exchange Notes will be non-callable (subject to the make-whole and
equity clawback exceptions in the two succeeding paragraphs below) until the
fourth anniversary of the date of funding of the Unsecured Bridge Loans.
Thereafter, each Unsecured Exchange Note will be callable at par plus accrued
interest plus a premium equal to one half of the coupon on such Unsecured
Exchange Note, which premium shall decline ratably on each subsequent
anniversary of such funding date to zero on the date that is two years prior to
the maturity of the Unsecured Exchange Notes.
         
Notwithstanding the foregoing, unless a Demand Failure Event has occurred and is
continuing, any Unsecured Exchange Notes held by the Commitment Parties or their
respective affiliates other than Asset Management Affiliates may be repaid, in
whole or in part, in minimum denominations to be agreed, at par plus accrued and
unpaid interest upon not less than one business days’ prior written notice, at
the option of the Borrower at any time.
         
Prior to the fourth anniversary of the date of funding of the Unsecured Bridge
Loans, the Borrower may redeem such Unsecured Exchange Notes at a make-whole
price based on U.S. Treasury notes with a maturity closest to the fourth
anniversary of such funding date plus 50 basis points.
         
Prior to the third anniversary of such funding date, the Borrower may redeem up
to 35% of such Unsecured Exchange Notes with proceeds from an equity issuance at
a price equal to par plus the coupon on such Unsecured Exchange Notes.
         
The optional redemption provisions will be otherwise consistent with the
Documentation Principles as applied to transactions of this kind.
     
Defeasance Provisions:
 
Consistent with the Documentation Principles as applied to transactions of this
kind.
     
Modification:
 
Consistent with the Documentation Principles as applied to transactions of this
kind.

 
Annex II to Exhibit C -3

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Registration Rights:
 
The Borrower will use commercially reasonable efforts to file after the first
issuance of the Unsecured Exchange Notes and use commercially reasonable efforts
to cause to become effective, a shelf registration statement with respect to the
Unsecured Exchange Notes (a “Shelf Registration Statement”) and/or a
registration statement relating to a Registered Exchange Offer (as defined
below). If a Shelf Registration Statement is filed, the Borrower will keep such
Shelf Registration Statement effective and available (subject to customary
exceptions) until one year from the effectiveness of the Shelf Registration
Statement. If within 365 days from the first issuance of the Unsecured Exchange
Notes, a Shelf Registration Statement for the Unsecured Exchange Notes has not
been declared effective or the Borrower has not effected an exchange offer (a
“Registered Exchange Offer”) whereby the Borrower has offered registered notes
having terms identical to the Senior Exchange Notes (the “Substitute Notes”) in
exchange for all outstanding Unsecured Exchange Notes, then the Borrower will
pay liquidated damages of 0.25% per annum on the principal amount of Unsecured
Exchange Notes outstanding to holders of Transfer Restricted (to be defined in a
manner to be agreed) Unsecured Exchange Notes from and including the 366th day
after the date of the issuance of any Unsecured Exchange Note (the “Default
Registration Date”) to but excluding the earlier of the effective date of such
Shelf Registration Statement or the date of consummation of such Registered
Exchange Offer (such damages may be payable, at the option of the Borrower, in
the form of additional Unsecured Exchange Notes). Such liquidated damages shall
increase by 0.25% per annum on the date that is three months after the Default
Registration Date and on each date occurring three months thereafter, to a
maximum increase in interest of 1.00%. The Borrower will also pay such
liquidated damages for any period of time (subject to customary exceptions)
following the effectiveness of a Shelf Registration Statement that such Shelf
Registration Statement is not available for resales thereunder.
     
Covenants:
 
Consistent with the Documentation Principles as applied to transactions of this
kind (but in any event less restrictive than those in the Senior Secured Credit
Facilities and with a reporting covenant appropriate for transactions of this
kind).
     
Events of Default:
 
Consistent with the Documentation Principles as applied to transactions of this
kind (but in any event less restrictive than those in the Senior Facilities).

 
Annex II to Exhibit C -4

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EXHIBIT D
Project Prism
Summary of Additional Conditions4
 
The initial borrowings under the Credit Facilities shall be subject to the
following conditions:
 
1.
The Acquisition shall have been consummated, or substantially simultaneously
with the initial borrowing under the Term Facility, shall be consummated, in all
material respects in accordance with the terms of the Acquisition Agreement,
dated December 20, 2011, without giving effect to any amendments, consents or
waivers by you thereto that are material and adverse to the Lenders or the Lead
Arranger (as reasonably determined by the Lead Arranger), without the prior
consent of the Lead Arranger (such consent not to be unreasonably withheld,
delayed or conditioned) (it being understood that (a) any reduction in the
purchase price of, or consideration for, the Acquisition is not material and
adverse to the interests of the Lenders or the Lead Arranger, but shall reduce
the Term Facility and the Unsecured Bridge Facility (or Unsecured Notes) ratably
and (b) any amendment to the definition of “Material Adverse Change” or
“Material Adverse Effect” is material and adverse to the interests of the
Lenders and the Lead Arranger).

 
2.
No Material Adverse Change (as defined in the Acquisition Agreement) has
occurred which is not capable of remedy prior to the Closing Date.

 
3.
Subject in all respects to the Certain Funds Provisions, all documents and
instruments required to create and perfect the Senior Administrative Agent’s
security interest in the Collateral (as defined in Exhibit B) shall have been
executed and delivered and, if applicable, be in proper form for filing.

 
4.
The Administrative Agent and the Lead Arranger shall have received all
documentation and other information about the Borrower and the Guarantors as has
been reasonably requested in writing at least 15 days prior to the Closing Date
by the Administrative Agent or the Lead Arranger that they reasonably determine
is required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the
PATRIOT Act.

 

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4
Capitalized terms used in this Exhibit E shall have the meanings set forth in
the other Exhibits attached to the Commitment Letter to which this Exhibit E is
attached (the “Commitment Letter”).  In the case of any such capitalized term
that is subject to multiple and differing definitions, the appropriate meaning
thereof in this Exhibit E shall be determined by reference to the context in
which it is used.

 
 
D-1

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5.
The execution and delivery of (i) the Credit Facilities Documentation, in the
case of the Senior Secured Credit Facilities and the Unsecured Bridge Loan
Documentation, in the case of the Unsecured Bridge Facility, which shall, in
each case, be consistent with the Commitment Letter and Term Sheets and subject
to the Certain Funds Provision set forth in the Commitment Letter and (ii)
customary legal opinions, customary evidence of authorization, customary
officer’s certificates, good standing certificates (to the extent applicable) in
the jurisdiction of organization of the Borrower and each Guarantor and a
solvency certificate of the Borrower’s chief financial officer, chief accounting
officer or other officer with equivalent duties (certifying that, after giving
effect to the Transactions, the Borrower and its subsidiaries on a consolidated
basis are solvent) in substantially the form set forth in Annex I attached to
this Exhibit D.

 
6.
The Lead Arranger shall have received a pro forma consolidated balance sheet and
related pro forma consolidated statement of income of the Borrower as of and for
the twelve-month period ending on the last day of the most recently completed
four-fiscal quarter period ended at least 45 days prior to the Closing Date (or
90 days in case such four-fiscal quarter period is the end of the Borrower’s
fiscal year), prepared after giving effect to the Transactions as if the
Transactions had occurred as of such date (in the case of such balance sheet) or
at the beginning of such period (in the case of such statement of income).

 
7.
As a condition to the availability of the Unsecured Bridge Facility, (a) the
Borrower shall have provided the Commitment Parties with a customary preliminary
offering memorandum  containing all customary information (other than a
“description of notes” and information customarily provided by the Commitment
Parties or their counsel), including financial statements, pro forma financial
statements, business and other financial data of the type and form that are
customarily included in private placements pursuant to Rule 144A promulgated
under the Securities Act (including information required by Regulation S-X and
Regulation S-K under the Securities Act, which is understood to include
statements of net assets to be sold and statements of revenues and direct
operating expenses of Prism, but not to include consolidating and other
financial statements and data that would be required by Sections 3-10 and 3-16
of Regulation S-X and Item 402 of Regulation S-K and information regarding
executive compensation and related party disclosure related to SEC Release Nos.
33-8732A, 34-54302A and IC-27444A) or that would be necessary for the Commitment
Parties to receive customary (for high yield debt securities) “comfort”
(including “negative assurance” comfort) from independent accountants in
connection with the offering of the Unsecured Notes, as well as drafts of
customary comfort letters (which shall provide “negative assurance” comfort) by
independent auditors of the Borrower which such auditors are prepared to issue
upon completion of customary procedures and (b) the Commitment Parties shall
have been afforded a period (the “Notes Marketing Period”) of at least 15
consecutive business days commencing on or after January 3, 2012 and upon
receipt of the information described in clause (a) to seek to place the
Unsecured Notes with qualified purchasers thereof; provided  that the Notes
Marketing Period will not be deemed to have commenced if (A) the Notes Marketing
Period is not completed prior to the Comfort Letter End Date or (B) a
Competition Condition (as defined in the Acquisition Agreement) is not satisfied
or waived in accordance with the Acquisition Agreement on the Comfort Letter End
Date, in which case the Notes Marketing Period shall not be deemed to commence
until (x) the Notes Marketing Period would have otherwise commenced in
accordance with the terms hereof and (y) the receipt by the Commitment Parties
of the information described in clause (a) which contains audited statements of
net assets to be sold and related statements of revenue and direct operating
expenses of Prism for the fiscal year ending December 31, 2011.  If you shall in
good faith reasonably believe that the Borrower has delivered the preliminary
offering memorandum together with the information and data required to be
delivered pursuant to clause (a) of this Paragraph 7, you may deliver to the
Lead Arrangers written notice to that effect (stating when you believe it
completed any such delivery), in which case the Borrower shall be deemed to have
satisfied its requirements under clause (a) of this Paragraph 7 on the date
specified in such notice and the Notes Marketing Period shall be deemed to have
commenced on the date specified in such notice, in each case unless the Lead
Arrangers in good faith reasonably believe that the Borrower has not delivered
the preliminary offering memorandum together with the information and data
required to be delivered pursuant to clause (a) of this Paragraph 7 and, within
three business days after their receipt of such notice from you, the Lead
Arrangers deliver a written notice to you to that effect (stating with
specificity which information is required to satisfy the Borrower’s requirements
under clause (a) of this Paragraph 7 for purposes of compliance with this
condition only).

 
 
D-2

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For purposes hereof, the “Comfort Letter End Date” means February 10, 2011 or
such later date (i) on which independent accountants delivering customary
“comfort” letters in connection with the offering of Unsecured Notes are able to
give “negative assurance” comfort or (ii) to which the Lead Arrangers may agree.
 
8.
The Lead Arranger shall have received (a) audited consolidated balance sheets of
Holdings and related statements of income, changes in equity and cash flows of
Holdings for the three most recent fiscal years ended at least 90 days prior to
the Closing Date, (b) audited statements of net assets to be sold and related
statements of revenues and direct operating expenses of Prism for the three most
recent fiscal years ended at least 90 days prior to the Closing Date, (c)
unaudited consolidated balance sheets and related statements of income, changes
in equity and cash flows of Holdings for each subsequent fiscal quarter (other
than the fourth fiscal quarter of Holdings’ fiscal year) after the date of the
most recent financial statements delivered pursuant to clause (a) above and
ended at least 45 days before the Closing Date and (d) unaudited statements of
net assets to be sold and related statements of revenues and direct operating
expenses of Prism for the nine month period ended September 30, 2011 and the
prior comparative period and for each subsequent fiscal quarter commencing with
the quarter ending March 31,  2012; provided that filing of the required
financial statements on form 10-K and form 10-Q by Holdings will satisfy the
foregoing requirements with respect to Holdings and its subsidiaries.

 
9.
All fees required to be paid on the Closing Date pursuant to the Fee Letter and
reasonable out-of-pocket expenses required to be paid on the Closing Date
pursuant to the Commitment Letter, to the extent invoiced at least three
business days prior to the Closing Date (except as otherwise reasonably agreed
by the Borrower), shall, upon the initial borrowing under the Term Facility,
have been paid (which amounts may be offset against the proceeds of the Credit
Facilities).

 
10.
The Refinancing shall have been consummated or substantially concurrently with
the initial borrowings under the Senior Credit Facilities, shall be consummated.

 
D-3

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ANNEX I
 
FORM OF SOLVENCY CERTIFICATE

SOLVENCY CERTIFICATE

of
 
PRESTIGE BRANDS, INC.

AND ITS SUBSIDIARIES

Pursuant to the [Credit Agreement], the undersigned hereby certifies, solely in
such undersigned’s capacity as [chief financial officer] [specify other officer
with equivalent duties] of the Borrower, and not individually, as follows:
 
As of the date hereof, after giving effect to the consummation of the
Transactions, including the making of the Loans under the Credit Agreement on
the date hereof, and after giving effect to the application of the proceeds of
such Loans:
 
 
a.
The fair value of the assets of the Borrower and its Subsidiaries, on a
consolidated basis, exceeds, on a consolidated basis, their debts and
liabilities, subordinated, contingent or otherwise;

 
 
b.
The present fair saleable value of the property of the Borrower and its
Subsidiaries, on a consolidated basis, is greater than the amount that will be
required to pay the probable liability, on a consolidated basis, of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured;

 
 
c.
The Borrower and its Subsidiaries, on a consolidated basis, are able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
liabilities become absolute and matured; and

 
 
d.
The Borrower and its Subsidiaries, on a consolidated basis, are not engaged in,
and are not about to engage in, business for which they have unreasonably small
capital.

 
For purposes of this Certificate, the amount of any contingent liability at any
time shall be computed as the amount that would reasonably be expected to become
an actual and matured liability. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.
 
The undersigned is familiar with the business and financial position of the
Borrower and its Subsidiaries. In reaching the conclusions set forth in this
Certificate, the undersigned has made such other investigations and inquiries as
the undersigned has deemed appropriate, having taken into account the nature of
the particular business anticipated to be conducted by the Borrower and its
Subsidiaries after consummation of the transactions contemplated by the
Commitment Letter.

 
Annex I to Exhibit D -1

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[Signature Page Follows]
 
 
Annex I to Exhibit D -2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate in such
undersigned’s capacity as [chief financial officer] [specify other officer with
equivalent duties] of the Borrower, on behalf of the Borrower, and not
individually, as of the date first stated above.

 

 
PRESTIGE BRANDS, INC.
     
By
  
   
Name:
   
Title:

 
[Signature Page to Solvency Certificate]
 
 
 

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