Document:

EXHIBIT
4(iii)

 

McCORMICK & COMPANY,
INCORPORATED,

 

                                     as
Issuer,

 

and

 

SUNTRUST  BANK,

 

                                   as
Trustee

 

 

INDENTURE

 

 

Dated as of December 5,
2000

 

 

Reconciliation and tie between Trust Indenture
Act of

1939 and Indenture, dated as of December 5, 2000

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture
  Section

  
	
   

  	
   

  	
   

  	
   

  
	
  § 310

  	
  (a)(1)

  	
   

  	
  6.9

  
	
   

  	
  (a)(2)

  	
   

  	
  6.9

  
	
   

  	
  (a)(3)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(4)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(5)

  	
   

  	
  6.9

  
	
   

  	
  (b)

  	
   

  	
  6.8, 6.10

  
	
  § 311

  	
  (a)

  	
   

  	
  6.13(a)

  
	
   

  	
  (b)

  	
   

  	
  6.13(b)

  
	
   

  	
  (b)(2)

  	
   

  	
  7.3(a)(2), 7.3(b)

  
	
  § 312

  	
  (a)

  	
   

  	
  7.1, 7.2(a)

  
	
   

  	
  (b)

  	
   

  	
  7.2(b)

  
	
   

  	
  (c)

  	
   

  	
  7.2(c)

  
	
  § 313

  	
  (a)

  	
   

  	
  7.3(a)

  
	
   

  	
  (b)

  	
   

  	
  7.3(b)

  
	
   

  	
  (c)

  	
   

  	
  7.3(a), 7.3(b)

  
	
   

  	
  (d)

  	
   

  	
  7.3(c)

  
	
  § 314

  	
  (a)

  	
   

  	
  7.4

  
	
   

  	
  (b)

  	
   

  	
  Not Applicable

  
	
   

  	
  (c)(1)

  	
   

  	
  1.2

  
	
   

  	
  (c)(2)

  	
   

  	
  1.2

  
	
   

  	
  (c)(3)

  	
   

  	
  Not Applicable

  
	
   

  	
  (d)

  	
   

  	
  Not Applicable

  
	
   

  	
  (e)

  	
   

  	
  1.2

  
	
  § 315

  	
  (a)

  	
   

  	
  6.1(a)

  
	
   

  	
  (b)

  	
   

  	
  6.2, 7.3(a) (6)

  
	
   

  	
  (c)

  	
   

  	
  6.1(b)

  
	
   

  	
  (d)

  	
   

  	
  6.1(c)

  
	
   

  	
  (d)(1)

  	
   

  	
  6.1(a) (1)

  
	
   

  	
  (d)(2)

  	
   

  	
  6.1(c) (2)

  
	
   

  	
  (d)(3)

  	
   

  	
  6.1(c) (3)

  
	
   

  	
  (e)

  	
   

  	
  5.14

  
	
  § 316

  	
  (a)(1)

  	
   

  	
  1.1

  
	
   

  	
  (a)(1)(A)

  	
   

  	
  5.2, 5.12

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  5.13

  
	
   

  	
  (a)(2)

  	
   

  	
  Not Applicable

  
	
   

  	
  (b)

  	
   

  	
  5.8

  
	
  § 317

  	
  (a)(1)

  	
   

  	
  5.3

  
	
   

  	
  (a)(2)

  	
   

  	
  5.4

  
	
   

  	
  (b)

  	
   

  	
  10.3

  
	
  § 318

  	
  (a)

  	
   

  	
  1.7

  

 

Note:                   This
reconciliation and tie shall not, for any purpose, be deemed to be a part of
the Indenture.

 

 

TABLE OF CONTENTS (1)

 

	
  RECITALS OF THE COMPANY

  
	
   

  
	
  ARTICLE
  I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

  
	
   

  	
  Section 1.1

  	
  Definitions.

  
	
   

  	
  Section 1.2

  	
  Compliance
  Certificates and Opinions.

  
	
   

  	
  Section 1.3

  	
  Form of
  Documents Delivered to Trustee.

  
	
   

  	
  Section 1.4

  	
  Acts of
  Holders.

  
	
   

  	
  Section 1.5

  	
  Notices, etc.
  to Trustee and Company.

  
	
   

  	
  Section
  1.6

  	
  Notice to
  Holders; Waiver.

  
	
   

  	
  Section 1.7

  	
  Conflict with
  Trust Indenture Act.

  
	
   

  	
  Section 1.8

  	
  Effect of
  Headings and Table of Contents.

  
	
   

  	
  Section
  1.9

  	
  Successors
  and Assigns.

  
	
   

  	
  Section
  1.10

  	
  Separability
  Clause.

  
	
   

  	
  Section
  1.11

  	
  Benefits of
  Indenture.

  
	
   

  	
  Section
  1.12

  	
  Governing
  Law.

  
	
   

  	
  Section
  1.13

  	
  Legal
  Holidays.

  
	
   

  	
  Section
  1.14

  	
  Certain
  Matters Relating to Currencies.

  
	
   

  
	
  ARTICLE
  II SECURITY FORMS

  
	
   

  	
  Section 2.1

  	
  Forms
  Generally.

  
	
   

  	
  Section 2.2

  	
  Form of
  Trustee’s Certificate of Authentication.

  
	
   

  
	
  ARTICLE III THE SECURITIES

  
	
   

  	
  Section
  3.1

  	
  Amount
  Unlimited; Issuable in Series.

  
	
   

  	
  Section 3.2

  	
  Denominations.

  
	
   

  	
  Section 3.3

  	
  Execution,
  Authentication, Delivery and Dating.

  
	
   

  	
  Section 3.4

  	
  Temporary
  Securities.

  
	
   

  	
  Section 3.5

  	
  Registration,
  Registration of Transfer and Exchange.

  
	
   

  	
  Section 3.6

  	
  Mutilated,
  Destroyed, Lost and Stolen Securities.

  
	
   

  	
  Section 3.7

  	
  Payment of
  Interest; Interest Rights Preserved.

  
	
   

  	
  Section 3.8

  	
  Persons Deemed
  Owners.

  
	
   

  	
  Section 3.9

  	
  Cancellation.

  
	
   

  	
  Section 3.10

  	
  Computation of
  Interest.

  
	
   

  	
  Section 3.11

  	
  Global Securities.

  
	
   

  
	
  ARTICLE
  IV SATISFACTION AND DISCHARGE

  
	
   

  	
  Section
  4.1

  	
  Satisfaction
  and Discharge of Securities of any Series.

  

 

(1)                                  Note:
This table of contents shall not, for any purpose, be deemed to be a part of
this Indenture. 

 

i

 

	
   

  	
  Section 4.2

  	
  Application of
  Trust Money.

  
	
   

  	
  Section
  4.3

  	
  Satisfaction
  and Discharge of Indenture.

  
	
   

  	
  Section 4.4

  	
  Reinstatement.

  
	
   

  
	
  ARTICLE
  V REMEDIES

  
	
   

  	
  Section 5.1

  	
  Events of Default.

  
	
   

  	
  Section
  5.2

  	
  Acceleration
  of Maturity; Rescission and Annulment.

  
	
   

  	
  Section
  5.3

  	
  Collection
  of Indebtedness and Suits for Enforcement by Trustee.

  
	
   

  	
  Section
  5.4

  	
  Trustee
  May File Proofs of Claim.

  
	
   

  	
  Section
  5.5

  	
  Trustee
  May Enforce Claims Without Possession of Securities.

  
	
   

  	
  Section 5.6

  	
  Application
  of Money Collected.

  
	
   

  	
  Section 5.7

  	
  Limitation on Suits.

  
	
   

  	
  Section
  5.8

  	
  Unconditional
  Right of Holders to Receive Principal, 
  Premium and Interest.

  
	
   

  	
  Section
  5.9

  	
  Restoration
  of Rights and Remedies.

  
	
   

  	
  Section
  5.10

  	
  Rights and
  Remedies Cumulative.

  
	
   

  	
  Section 5.11

  	
  Delay or
  Omission Not Waiver.

  
	
   

  	
  Section 5.12

  	
  Control by Holders.

  
	
   

  	
  Section 5.13

  	
  Waiver of Past
  Defaults.

  
	
   

  	
  Section 5.14

  	
  Undertaking for
  Costs.

  
	
   

  	
  Section
  5.15

  	
  Waiver
  of Stay or Extension Laws.

  
	
   

  
	
  ARTICLE VI THE TRUSTEE

  
	
   

  	
  Section
  6.1

  	
  Certain
  Duties and Responsibilities.

  
	
   

  	
  Section 6.2

  	
  Notice of Defaults.

  
	
   

  	
  Section 6.3

  	
  Certain Rights
  of Trustee.

  
	
   

  	
  Section
  6.4

  	
  Not
  Responsible for Recitals or Issuance of Securities.

  
	
   

  	
  Section 6.5

  	
  May Hold Securities.

  
	
   

  	
  Section 6.6

  	
  Money Held in Trust.

  
	
   

  	
  Section 6.7

  	
  Compensation
  and Reimbursement.

  
	
   

  	
  Section
  6.8

  	
  Qualification
  of Trustee; Conflicting Interests.

  
	
   

  	
  Section
  6.9

  	
  Corporate
  Trustee Required; Eligibility.

  
	
   

  	
  Section
  6.10

  	
  Resignation
  and Removal; Appointment of Successor.

  
	
   

  	
  Section
  6.11

  	
  Acceptance
  of Appointment by Successor.

  
	
   

  	
  Section
  6.12

  	
  Merger,
  Conversion, Consolidation or Succession to Business.

  
	
   

  	
  Section
  6.13

  	
  Preferential
  Collection of Claims Against Company.

  
	
   

  	
  Section
  6.14

  	
  Appointment
  of Authenticating Agent.

  
	
   

  
	
  ARTICLE VII HOLDERS’ LISTS AND REPORTS BY
  TRUSTEE AND COMPANY

  
	
   

  	
  Section 7.1

  	
  Company to
  Furnish Trustee Names and Addresses of Holders.

  

 

ii

 

	
   

  	
  Section 7.2

  	
  Preservation
  of Information; Communications to Holders.

  
	
   

  	
  Section 7.3

  	
  Reports by
  Trustee.

  
	
   

  	
  Section 7.4

  	
  Reports by
  Company.

  
	
   

  
	
  ARTICLE VIII CONSOLIDATION, MERGER,
  CONVEYANCE, TRANSFER OR LEASE

  
	
   

  	
  Section 8.1

  	
  Company May
  Consolidate, etc., Only on Certain Terms.

  
	
   

  	
  Section 8.2

  	
  Successor
  Corporation Substituted.

  
	
   

  	
  Section 8.3

  	
  Officers’
  Certificate and Opinion of Counsel.

  
	
   

  
	
  ARTICLE
  IX SUPPLEMENTAL INDENTURES

  
	
   

  	
  Section 9.1

  	
  Supplemental
  Indentures Without Consent of Holders.

  
	
   

  	
  Section 9.2

  	
  Supplemental
  Indentures with Consent of Holders.

  
	
   

  	
  Section 9.3

  	
  Execution of
  Supplemental Indentures.

  
	
   

  	
  Section 9.4

  	
  Effect of
  Supplemental Indentures.

  
	
   

  	
  Section 9.5

  	
  Conformity
  with Trust Indenture Act.

  
	
   

  	
  Section 9.6

  	
  Reference in
  Securities to Supplemental Indentures.

  
	
   

  
	
  ARTICLE
  X COVENANTS

  
	
   

  	
  Section
  10.1

  	
  Payment of
  Principal, Premium and Interest.

  
	
   

  	
  Section
  10.2

  	
  Maintenance
  of Office or Agency.

  
	
   

  	
  Section
  10.3

  	
  Money for
  Security Payments to be Held in Trust.

  
	
   

  	
  Section
  10.4

  	
  Corporate
  Existence.

  
	
   

  	
  Section
  10.5

  	
  Maintenance
  of Properties.

  
	
   

  	
  Section
  10.6

  	
  Payment of
  Taxes and Other Claims.

  
	
   

  	
  Section
  10.7

  	
  Limitations
  on Liens.

  
	
   

  	
  Section
  10.8

  	
  Limitations
  on Sale and Leaseback.

  
	
   

  	
  Section
  10.9

  	
  Statement
  by Officers as to Default.

  
	
   

  	
  Section
  10.10

  	
  Waiver of
  Certain Covenants.

  
	
   

  	
  Section
  10.11

  	
  Defeasance
  of Certain Obligations.

  
	
   

  
	
  ARTICLE
  XI REDEMPTION OF SECURITIES

  
	
   

  	
  Section
  11.1

  	
  Applicability
  of Article.

  
	
   

  	
  Section
  11.2

  	
  Election to
  Redeem; Notice to Trustee.

  
	
   

  	
  Section
  11.3

  	
  Selection
  by Trustee of Securities to be Redeemed.

  
	
   

  	
  Section
  11.4

  	
  Notice of
  Redemption.

  
	
   

  	
  Section
  11.5

  	
  Deposit of
  Redemption Price.

  
	
   

  	
  Section
  11.6

  	
  Securities
  Payable on Redemption Date.

  
	
   

  	
  Section
  11.7

  	
  Securities
  Redeemed in Part.

  
	
   

  
	
  ARTICLE XII SINKING FUNDS

  
	
   

  	
  Section
  12.1

  	
  Applicability
  of Article.

  
	
   

  	
  Section
  12.2

  	
  Satisfaction
  of Sinking Fund Payments with Securities.

  
	
   

  	
  Section
  12.3

  	
  Redemption
  of Securities for Sinking Fund.

  

 

iii

 

INDENTURE, dated as of December 5, 2000, between
McCORMICK & COMPANY, INCORPORATED, a Maryland corporation (the “Company”),
and SUNTRUST BANK, a national banking association organized under the laws of
the State of Georgia, as trustee (the “Trustee”).

 

RECITALS OF THE COMPANY

 

The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of its
unsecured debentures, notes or other evidences of indebtedness (herein called
the “Securities”), to be issued in one or more series as in this Indenture
provided.

 

All things necessary have been done to make this
Indenture a valid agreement of the Company, in accordance with its terms.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:

 

ARTICLE
I

 

DEFINITIONS
AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.1                                   Definitions.

 

For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:

 

(a)                                  the
terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;

 

(b)                                 all
other terms used herein which are defined in the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them therein;

 

(c)                                  all
accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles, and, except
as otherwise herein expressly provided, the term “generally accepted accounting
principles” with respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally accepted at the date of
this Indenture; and

 

1

 

(d)                                 the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.

 

“Act”, when used with respect to any Holder, has the
meaning specified in Section 1.4.

 

“Affiliate” of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person.  For the purposes of this definition, “control” when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

 

“Attributable Debt” with respect to any sale leaseback
transaction restricted by Section 10.8 means the lesser of (i) the total
net amount of rent required to be paid during the remaining base term of the
related lease or until the earliest date on which the lessee may terminate such
lease upon payment of a penalty or a lump-sum termination payment (in which
case the total net rent shall include such penalty or termination payment),
discounted at the weighted average interest rate borne by the Outstanding
Securities, compounded semi-annually, or (ii) the sale price of the property so
leased multiplied by a fraction, the numerator of which is the remaining base
term of the related lease and the denominator of which is the base term of such
lease.

 

“Authenticating Agent” means any Person authorized by
the Trustee to act on behalf of the Trustee to authenticate Securities.

 

“Beneficial Owner” means, with respect to Global
Securities, the Person who is the beneficial owner of such Securities as
reflected on the books of the Depositary for such Securities or on the books of
a Person maintaining an account with such Depositary (directly or as an
indirect participant, in accordance with the rules of such Depositary).

 

“Board of Directors” means either the board of
directors of the Company, as the case may be, or any duly authorized committee
of that board.

 

“Board Resolution” means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, and delivered to the Trustee.

 

“Business Day”, when used with respect to any Place of
Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which

 

2

 

banking institutions in that Place of Payment are authorized or
obligated by law, regulation or executive order to close.

 

“Certificate of a Firm of Independent Public
Accountants” means a certificate signed by any firm of independent public
accountants of recognized standing selected by the Company.  The term “independent” when used with
respect to any specified firm of public accountants means such a firm which (1)
is in fact independent, (2) does not have any direct financial interest or any
material indirect financial interest in the Company or in any other obligor
upon the Securities of any series or in any affiliate of the Company or of such
other obligor, and (3) is not connected with the Company or such other obligor
or any affiliate of the Company or of such other obligor, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions, but such firm may be the regular auditors
employed by the Company.  Whenever it is
herein provided that any Certificate of a Firm of Independent Public
Accountants shall be furnished to the Trustee for Securities of any series,
such Certificate shall state that the signer has read this definition and that
the signer is independent within the meaning hereof.

 

“Commission” means the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.

 

“Company” means the Person named as the “Company” in
the first paragraph of this instrument, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter “Company” shall mean such successor Person.

 

“Company Request” or “Company Order” means a written
request or order signed in the name of the Company by any one of its Chairman
of the Board, its President or a Vice President, and by any one of its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.

 

“Consolidated Net Tangible Assets” means the total
assets of the Company and its consolidated subsidiaries, including the
investment in (at equity) and the net amount of advances to and accounts
receivable from corporations which are not consolidated subsidiaries less the
following:

 

(i)                                     current
liabilities of the Company and its consolidated subsidiaries, including an
amount equal to indebtedness required to be redeemed by reason of any sinking
fund payment due in 12 months or less from the date as of which current
liabilities are to be determined;

 

3

 

(ii)                                  all
other liabilities of the Company and its consolidated subsidiaries other than
Funded Debt, deferred income taxes and liabilities for employee post-retirement
health plans other than pensions recognized in accordance with Statement of
Financial Accounting Standards No. 106;

 

(iii)                               all
depreciation and valuation reserves and all other reserves (except for reserves
for contingencies which have not been allocated to any particular purpose) of
the Company and its consolidated subsidiaries;

 

(iv)                              the
book amount of all segregated intangible assets of the Company and its
consolidated subsidiaries, including, but without limitation, such items as
goodwill, trademarks, trade names, patents and unamortized debt discount and
expense less unamortized debt premium; and

 

(v)                                 appropriate
adjustments on account of minority interests of other Persons holding stock in
subsidiaries.

 

Consolidated Net Tangible Assets shall be determined
on a consolidated basis in accordance with generally accepted accounting
principles and as provided herein.

 

“Corporate Trust
Office” means the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office at the
date of execution of this Indenture is located at 919 E. Main Street, Richmond,
Virginia, 23219, Attn: Corporate Trust Department; provided that with respect
to presentment, transfer, exchange, registration or payment of Securities,
“Corporate Trust Office” means at the date hereof SunTrust Bank c/o Harris
Trust Bank of New York, Wall Street Plaza, 88 Pine Street, 19th
Floor, New York, New York 10005.

 

“corporation” includes corporations, associations,
companies and business trusts.

 

“Defaulted Interest” has the meaning specified in
Section 3.7.

 

“Depositary” means a clearing agency registered as
such under the Exchange Act, as amended, or any successor thereto, which shall
in either case be designated by the Company pursuant to Section 3.1 until
a successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Depositary” shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is
more than one such Person, “Depositary” as used with respect to the Securities
of any series shall mean the Depositary with respect to the Securities of that
series.

 

4

 

“Discounted Security” means any Security which
provides for an amount (excluding any amounts attributable to accrued but
unpaid interest thereon) less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2.

 

“Dollars” and the sign “$” mean the currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts.

 

“Event of Default” has the meaning specified in Article
V.

 

“Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

“Exempted Indebtedness” means as of any particular
time the sum of (i) all then outstanding indebtedness for borrowed money of the
Company and Restricted Subsidiaries incurred after the date hereof and secured
by any mortgage, security interest, pledge or lien other than those permitted
by paragraph (a) of Section 10.7, and (ii) all Attributable Debt with
respect to Sale and Leaseback Transactions entered into by the Company and Restricted
Subsidiaries after the date hereof other than those permitted by paragraph (a)
of Section 10.8.

 

“Funded Debt” means any indebtedness of the Company or
a Restricted Subsidiary for borrowed money having a maturity of more than 12
months from the date such indebtedness was incurred or having a maturity of
less than 12 months but by its terms being renewable or extendable beyond 12
months from the date such indebtedness was incurred at the option of the
obligor.

 

“Global Security” means a Security evidencing all or
part of a series of Securities which is executed by the Company and
authenticated and delivered to the Depositary or pursuant to the Depositary’s
instructions, all in accordance with this Indenture and pursuant to a Company
Order, which shall be registered in the name of the Depositary or its nominee
and which shall represent the amount of uncertificated securities as specified
therein.

 

“Government Obligations” means securities that are (i)
direct obligations of the government which issued the currency in which the
Securities of a particular series are payable or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
government that issued the currency in which the Securities of such series are
payable, the payment of which is unconditionally guaranteed by such government,
which, in either case, are full faith and credit obligations of such government
payable in such currency and are not callable or redeemable at the option of
the issuer thereof.

 

“Holder” means a Person in whose name a Security is
registered in the Security Register.

 

5

 

“Indenture” means this instrument as originally
executed and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of particular series of
Securities established as contemplated by Section 3.1.

 

“Interest”, when used with respect to a Discounted
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.

 

“Interest Payment Date”, when used with respect to any
Security, means the Stated Maturity of an installment of interest on such
Security.

 

“Maturity”, when used with respect to any Security,
means the date on which the principal of such Security or an installment of
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.

 

“Officers’ Certificate” means a certificate signed by
the Chairman of the Board, the President, a Vice President or the Treasurer,
and by the Secretary or an Assistant Secretary, of the Company, and delivered
to the Trustee.

 

“Opinion of Counsel” means a written opinion of
counsel, who may be counsel for the Company (including in-house counsel) or the
Trustee, and who shall be reasonably acceptable to the Trustee.

 

“Outstanding”, when used with respect to Securities,
means, as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:

 

(a)                                  Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;

 

(b)                                 Securities,
or portions thereof, for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Securities; provided that if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made; and Securities,
except to the extent provided in Section 4.3, with respect to which the
Company has effected defeasance as provided in Article IV; and

 

(c)                                  Securities
that have been paid pursuant to Section 3.6 or in exchange for or in lieu
of which other Securities have been

 

6

 

authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities are valid
obligations of the Company;

 

provided, however, that in
determining whether the Holders of the requisite principal amount of
Outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (i) Securities owned by the
Company, any obligor upon the Securities or any Affiliate of the Company shall
be disregarded and deemed not to be Outstanding, except that (A) in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded and (B)
Securities so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor; and (ii) the principal amount of any
Discounted Security that shall be deemed to be Outstanding for such purposes
shall be the amount of the principal thereof that would be due and payable as
of the date of such determination upon a declaration of acceleration pursuant
to Section 5.2.

 

“Paying Agent”
means any Person authorized by the Company to pay the principal of (and
premium, if any) or interest on any Securities on behalf of the Company.

 

“Person” means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

 

“Place of Payment”, when used with respect to the
Securities of any series, means the place or places where the principal of (and
premium, if any) and interest on the Securities of that series are payable as
specified as contemplated by Section 3.1.

 

“Predecessor Security” of any particular Security
means every previous Security evidencing all or a portion of the same debt as
that evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.6 in
exchange for a mutilated Security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.

 

“Principal Property” means any manufacturing or
processing plant or warehouse, together with the land upon which it is erected
and any fixtures and equipment comprising a part thereof, owned by the Company
or any Restricted

 

7

 

Subsidiary and located in the United States, the book value (net of
depreciation) of which on the date as of which the determination is being made
is an amount which exceeds 1% of Consolidated Net Tangible Assets, other than
any such manufacturing or processing plant or warehouse or any portion thereof
or any such fixture or equipment (together with the land upon which it is
erected and any fixtures and equipment comprising a part thereof) (i) which is
financed by Industrial Development Bonds or (ii) which, in the opinion of the
Board of Directors, is not of material importance to the total business
conducted by the Company and its Subsidiaries, taken as a whole.

 

“Redemption Date”, when used with respect to any
Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.

 

“Redemption Price”, when used with respect to any
Security to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.

 

“Regular Record Date” for the interest payable on any
Interest Payment Date on the Securities of any series means the date specified
for that purpose as contemplated by Section 3.1.

 

“Responsible Officer”, when used with respect to the
Trustee, means any officer assigned to the Corporate Trust Department of the
Trustee, including any vice president, assistant vice president, assistant
secretary or any other officer of the Trustee to whom any corporate trust
matter is referred because of his or her knowledge of and familiarity with the
particular subject.

 

“Restricted Subsidiary” means any Subsidiary that
owns, operates or leases one or more Principal Properties.

 

“Securities” has the meaning specified in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture.

 

“Security Register” and “Security Registrar” have the
respective meanings specified in Section 3.5.

 

“Special Record Date” for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.7.

 

“Stated Maturity”, when used with respect to any
Security or any installment of principal thereof or interest thereon, means the
date specified in such Security as the fixed date on which the principal of
such Security or such installment of principal or interest is due and payable.

 

“Subsidiary” means each corporation of which the Company
or the Company and one or more Subsidiaries, or any one or more Subsidiaries,
directly or indirectly

 

8

 

own securities entitling the holders thereof to elect a majority of the
directors, either at all times or so long as there is no default or contingency
that permits the holders of any other class or classes of securities to vote
for the election of one or more directors.

 

“Trustee” means the Person named as the “Trustee” in
the first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter “Trustee” shall mean such successor Trustee, and if at any time
there is more than one such Person, “Trustee” as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.

 

“Trust Indenture Act” means the Trust Indenture Act of
1939, as amended.

 

“Yield to Maturity”, when used with respect to any
Discounted Security, means the yield to maturity, if any, set forth on the face
thereof.

 

Section 1.2                                   Compliance
Certificates and Opinions.

 

Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the Company
or any obligor on the Securities shall furnish to the Trustee an Officers’
Certificate stating that all conditions precedent, if any, provided for in this
Indenture (including any covenants, compliance with which constitutes a
condition precedent) relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every certificate (other than certificates provided
pursuant to Section 10.9) or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

 

(a)                                  a
statement that each individual signing such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto;

 

(b)                                 a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

(c)                                  a
statement that, in the opinion of each such individual, he has made such
examination or investigation as is necessary to

 

9

 

enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with; and

 

(d)                                 a
statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.

 

Section 1.3                                   Form of Documents
Delivered to Trustee.

 

In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
any one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.

 

Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. 
Any such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

 

Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.

 

Section
1.4                                   Acts
of Holders.

 

(a)               Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to

 

10

 

Section 6.1) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.

 

(b)              The
fact and date of the execution by any Person of any such instrument or writing
may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in
a capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority.  The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.

 

(c)               The
ownership of Securities shall be proved by the Security Register.

 

(d)              Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future Holder of the same
Security or the Holder of every Security issued upon the transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, suffered or
omitted to be done by the Trustee, any Paying Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.

 

Section
1.5                                   Notices,
etc. to Trustee and Company.

 

Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,

 

(a)               the
Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed, in writing, to or with the
Trustee at 919 E. Main Street, Richmond, Virginia, 23219, Attn: Corporate Trust
Department; or

 

(b)              the
Company by the Trustee or by any Holder shall be sufficient for every purpose
(except as provided in Section 5.1(c)) hereunder if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at 18 Loveton
Circle, Sparks, Maryland, 21152, Attention: Secretary; or at any other address
previously furnished in writing to the Trustee by the Company.

 

Section
1.6                                   Notice
to Holders; Waiver.

 

Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his

 

11

 

address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice.  In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders.  Any notice when mailed to a Holder in the
aforesaid manner shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder.  Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.

 

In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event as required by any provision of this Indenture, then any
method of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.

 

Section
1.7                                   Conflict
with Trust Indenture Act.

 

If any provision
hereof limits, qualifies or conflicts with the duties imposed by any of
Sections 310 through 317, inclusive, of the Trust Indenture Act through the
operation of Section 318(c) thereof, such imposed duties shall control.

 

Section 1.8                                   Effect of Headings
and Table of Contents.

 

The Article and
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

 

Section
1.9                                   Successors
and Assigns.

 

All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.

 

Section
1.10                            Separability
Clause.

 

In case any provision
in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

Section
1.11                            Benefits
of Indenture.

 

Nothing in this
Indenture or in the Securities, express or implied, shall give to any Person
(other than the parties hereto and their successors hereunder, any Paying Agent
and the Holders) any benefit or any legal or equitable right, remedy or claim
under this Indenture.

 

12

 

Section
1.12                            Governing
Law.

 

This Indenture and
the Securities shall be governed by and construed in accordance with the laws
of the State of New York.

 

Section
1.13                            Legal
Holidays.

 

In any case where
any Interest Payment Date, Redemption Date or Stated Maturity of any Security
shall not be a Business Day at any Place of Payment, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same
force and effect as if made on the Interest Payment Date or Redemption Date, or
at the Stated Maturity, and no interest shall accrue with respect to such
payment for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be, to such next succeeding Business
Day.

 

Section 1.14                            Certain Matters Relating to
Currencies.

 

Whenever any
action or Act is to be taken hereunder by the Holders of Securities denominated
in different currencies or currency units, then for purposes of determining the
principal amount of Securities held by such Holders, the aggregate principal
amount of the Securities denominated in a foreign currency or currency unit
shall be deemed to be that amount of Dollars that could be obtained for such
principal amount on the basis of a spot rate of exchange specified to the
Trustee for such series in an Officers’ Certificate for such Foreign Currency
or currency unit into Dollars as of the date the taking of such action or Act
by the Holders of the requisite percentage in principal amount of the
Securities is evidenced to such Trustee.

 

The Trustee shall segregate moneys, funds and accounts
held by the Trustee in one currency or currency unit from any moneys, funds or
accounts held in any other currencies or currency units, notwithstanding any
provision herein that would otherwise permit the Trustee to commingle such
amounts.

 

ARTICLE
II

 

SECURITY
FORMS

 

Section
2.1                                   Forms
Generally.

 

The Securities of
each series shall be in substantially the form established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements

 

13

 

placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities.  If the form of Securities
of any series is established by action taken pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified by the
Secretary or an Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Company Order contemplated by
Section 3.3 for the authentication and delivery of such Securities.

 

The definitive Securities shall be printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.

 

Section
2.2                                   Form
of Trustee’s Certificate of Authentication.

 

Subject to Section 6.14, the Trustee’s certificate of
authentication shall be in substantially the following form:

 

This is one of the Securities referred to in the within-mentioned
Indenture.

 

	
   

  	
  SUNTRUST BANK

  	
   

  
	
   

  	
  as
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  
						

 

ARTICLE
III

 

THE
SECURITIES

 

Section
3.1                                   Amount
Unlimited; Issuable in Series.

 

The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.

 

The Securities may be issued in one or more
series.  There shall be established in
or pursuant to a Board Resolution, and set forth in an Officers’ Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of any series,

 

14

 

(1)                                  the
title of the Securities of the series (which shall distinguish the Securities
of the series from all other Securities);

 

(2)                                  any
limit upon the aggregate principal amount of the Securities of the series that
may be authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the series pursuant to Sections 3.4,
3.5, 3.6, 9.6 or 11.7);

 

(3)                                  the
date or dates on which the principal of the Securities of the series is
payable;

 

(4)                                  the
rate or rates at which the Securities of the series shall bear interest, if
any, the date or dates from which such interest shall accrue (which, in either
case or both, if so provided in such Board Resolution, may be determined by the
Company from time to time and set forth in the Securities of the series issued
from time to time), the Interest Payment Dates on which such interest shall be
payable and the Regular Record Date for the interest payable on any Interest
Payment Date;

 

(5)                                  the
place or places where, subject to the provisions of Section 10.2, the
principal of (and premium, if any) and interest on Securities of the series
shall be payable, any Securities of that series may be surrendered for
exchange, and notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served;

 

(6)                                  the
period or periods within which, the price or prices at which, the currency or
currency unit in which, and the terms and conditions upon which Securities of
the series may be redeemed, in whole or in part, at the option of the Company;

 

(7)                                  the
obligation, if any, of the Company to redeem or purchase Securities of the
series pursuant to any sinking fund or analogous provisions or at the option of
a Holder thereof and the period or periods within which, the price or prices at
which, the currency or currency unit in which, and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in whole or
in part, pursuant to such obligation;

 

(8)                                  if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which Securities of the series shall be issuable;

 

15

 

(9)                                  if
other than the principal amount thereof, the portion of the principal amount of
Securities of the series that shall be payable  upon declaration of
acceleration of the Maturity thereof pursuant to Section 5.2;

 

(10)                            any
Events of Default and covenants of the Company with respect to the Securities
of that series, whether or not such Events of Default or covenants are
consistent with the Events of Defaults or covenants set forth herein;

 

(11)                            if
other than Dollars, the currency or currency unit in which payment of the
principal of (and premium, if any) or interest, if any, on the Securities of
that series shall be made or in which the Securities of that series shall be
denominated and the particular provisions applicable thereto;

 

(12)                            if the
principal of (and premium, if any) and interest, if any, on the Securities of
that series are to be payable, at the election of the Company or a Holder
thereof, in a currency or currency unit other than that in which such
Securities are denominated or stated to be payable, the period or periods
within which, and the terms and conditions upon which, such election may be
made, and the time and manner of determining the exchange rate between the
currency or currency unit in which such Securities are denominated or stated to
be payable and the currency or currency unit in which such Securities are to be
so payable;

 

(13)                            if the
amount of payments of principal of (and premium, if any) or interest, if any,
on the Securities of that series may be determined with reference to an index
based on a currency or currency unit other than that in which such Securities
are denominated or stated to be payable or any other index, the manner in which
such amounts shall be determined;

 

(14)                            if the
Securities of that series do not bear interest, the applicable dates for
purposes of Section 7.1;

 

(15)                            if the
provisions of Section 4.1 relating to the satisfaction and discharge of
this Indenture shall apply to the Securities of that series; or if provisions
for the satisfaction and discharge of this Indenture other than as set forth in
Section 4.1 shall apply to the Securities of that series;

 

(16)                            the
application, if any, of Section 10.11 to the Securities of that series;

 

16

 

(17)                            whether
the Securities of that series shall be issued in whole or in part in the form
of one or more Global Securities and, in such case, the Depositary for such
Global Security or Securities; and whether such Global Security or Securities
shall be temporary or permanent; and

 

(18)                            any
other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture).

 

All Securities of any one series shall be
substantially identical except as to denomination, rate of interest, Stated
Maturity and the date from which interest, if any, shall accrue, and except as
may otherwise be provided in or pursuant to such Board Resolution relating
thereto.  The terms of such Securities,
as set forth above, may be determined by the Company from time to time if so
provided in or established pursuant to the authority granted in a Board
Resolution.  All Securities of any one
series need not be issued at the same time, and unless otherwise provided, a
series may be reopened for issuance of additional Securities of such series.

 

If any of the terms of the series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Officers’ Certificate setting forth the terms of the series.

 

Section
3.2                                   Denominations.

 

The Securities of
each series shall be issuable in registered form without coupons in such
denominations as shall be specified as contemplated by Section 3.1.  In the absence of any such provisions with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.

 

Section
3.3                                   Execution,
Authentication, Delivery and Dating.

 

The Securities shall be executed on behalf of the
Company by its Chairman of the Board, its President or one of its Vice
Presidents and its Chief Financial Officer or Controller.  The signature of any of these officers on
the Securities may be manual or facsimile.

 

Securities bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices on the date of such Securities.

 

17

 

At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication, together with
a Company Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and deliver
such Securities as provided in this Indenture and not otherwise.  If the form or terms of the Securities of
the series have been established in or pursuant to one or more Board
Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating,

 

(a)                                  if
the form of such Securities has been established by or pursuant to Board
Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;

 

(b)                                 if
the terms of such Securities have been established by or pursuant to Board
Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture; and

 

(c)                                  that
such Securities, when authenticated and delivered by the Trustee and issued by
the Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting the enforcement of creditors’ rights and to general equity
principles.

 

With respect to Securities of a series whose terms are to be
established from time to time the Trustee shall be entitled to receive the
Opinion of Counsel described in this Section in connection with the first
authentication of Securities of that series. 
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee’s own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.

 

Each Security shall be dated the date of its
authentication.

 

No Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears
on such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any

 

18

 

Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture.

 

Section
3.4                                   Temporary
Securities.

 

Pending the
preparation of definitive Securities of any series, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities of such series which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.

 

If temporary Securities of any series are issued, the
Company will cause definitive Securities of such series to be prepared without
unreasonable delay.  After the
preparation of definitive Securities of such series, the temporary Securities
of such series shall be exchangeable for definitive Securities of such series
upon surrender of the temporary Securities of such series at the office or
agency of the Company in a Place of Payment for such series, without charge to
the Holder.  Upon surrender for
cancellation of any one or more temporary Securities of any series, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of such series of
authorized denominations.  Until so
exchanged, the temporary Securities of such series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.

 

Section 3.5                                   Registration, Registration
of Transfer and Exchange.

 

The Company shall
cause to be kept at the Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office or agency of the
Company in a Place of Payment being herein sometimes referred to as the
“Security Register”) in which, subject to such reasonable regulations as the
Security Registrar may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities.  The Trustee is hereby initially appointed
“Security Registrar” for the purpose of registering Securities and transfers of
Securities as herein provided.

 

Upon surrender for registration of transfer of any
Security of any series at the office or agency in a Place of Payment for such series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of the same series of the same tenor in any authorized denomination
or denominations and of a like aggregate principal amount.

 

19

 

At the option of the Holder, Securities may be
exchanged for other Securities of the same series of the same tenor in any
authorized denomination or denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency.  Whenever any Securities are so
surrendered for exchange the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.

 

All Securities issued upon any registration of
transfer or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.

 

Every Security presented or surrendered for
registration of transfer, or for exchange or redemption, shall (if so required
by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.

 

No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to
Section 3.4, 9.6 or 11.7 not involving any transfer.

 

The Company shall not be required (a) to issue,
register the transfer of or exchange any Security if such Security may be among
those selected for redemption during a period beginning at the opening of
business 15 days before the day of the selection of the Securities to be
redeemed under Section 11.3 or Section 12.3 and ending at the close of business
on the day of the mailing of the relevant notice of redemption, or (b) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of Securities being redeemed in
part, or (c) to issue, register the transfer of or exchange any Security which
has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Security not to be so repaid.

 

Section
3.6                                   Mutilated,
Destroyed, Lost and Stolen Securities.

 

If any mutilated
Security is surrendered to the Trustee, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of
the same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.

 

If (i) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and (ii)
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them

 

20

 

to save each of them harmless, then, in the absence of notice to the
Company and the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its
discretion, may, instead of issuing a new Security, pay any such Security.

 

Upon the issuance of any new Securities under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.

 

Every new Security of any series issued pursuant to
this Section in lieu of any destroyed, lost or stolen Security shall
constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities of such series
duly issued hereunder.

 

The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.

 

Section
3.7                                   Payment
of Interest; Interest Rights Preserved.

 

Interest on any
Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name the Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, and at maturity, to the Persons
to whom principal is payable.

 

Any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (“Defaulted Interest”) shall forthwith cease to be payable to the
Holder on the Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:

 

(a)          The
Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business and on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner.  The Company shall
notify the Trustee in writing of

 

21

 

the amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
Subsection provided.  Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. 
The Trustee shall promptly notify the Company in writing of such Special
Record Date and, in the name and at the expense of the Company, the Trustee
shall cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record
Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Person in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).

 

(b)                                 The
Company may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after written notice given by
the Company to the Trustee of the proposed payment pursuant to this clause,
such payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.

 

Section 3.8                                   Persons
Deemed Owners.

 

Prior to and at
the time of due presentment for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name any Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any) and (subject
to Section 3.7) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.

 

22

 

Section 3.9                                   Cancellation.

 

All Securities
surrendered for payment, redemption, registration of transfer or exchange shall
be delivered to the Trustee and shall be promptly canceled by it.  The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee.  No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture.  All canceled Securities held by the Trustee shall be destroyed
and, if requested, certification of their destruction delivered to the Company,
unless by a Company Order the Company directs that canceled securities be
returned to it.

 

Section 3.10                            Computation
of Interest.

 

Except as
otherwise specified as contemplated by Section 3.1 for Securities of any
series, interest on the Securities of each series shall be computed on the
basis of a 360-day year of twelve 30-day months.

 

Section 3.11                            Global
Securities.

 

If the Company
shall establish pursuant to Section 3.1 that the Securities of a series
are to be issued in whole or in part in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance
with Section 3.3 and the Company Order with respect to such series,
authenticate and deliver one or more Global Securities in temporary or
permanent form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the outstanding Securities of such
series to be represented by one or more Global Securities, (ii) shall be
registered in the name of the depositary for such Global Security or Securities
or the nominee of such depositary, (iii) shall be delivered by the Trustee to
such depositary or pursuant to such depositary’s instruction, and (iv) shall
bear a legend substantially to the following effect: “Unless and until it is
exchanged in whole or in part for Securities in definitive form, this Security
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary”.  The Trustee shall deal with the Depositary
and its participants as representatives of the Beneficial Owners of the Global
Securities for purposes of exercising the rights of the Holders hereunder and
the rights of the Beneficial Owners of the Global Securities shall be limited
to those established by law and agreements between such Beneficial Owners and
the Depositary and its participants. Beneficial Owners shall not be entitled to
certificates for Global Securities as to which they are the Beneficial Owners.  Requests and directions from, and votes of,
such representatives shall not be

 

23

 

deemed to be inconsistent if they are made with respect to different
Beneficial Owners.

 

Notwithstanding
any other provision of this Section or Section 3.5, unless and until
it is exchanged in whole or in part for Securities in definitive form, a Global
Security representing all or a portion of the Securities of a series may not be
transferred except as a whole by the Depositary for such series to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any such nominee to
a successor Depositary for such series or a nominee of such successor Depositary.  The Beneficial Owner’s ownership of
Securities shall be recorded on the records of a participant of the Depositary
that maintains such Beneficial Owner’s account for such purpose and the
participant’s record ownership of such Securities shall be recorded on the
records of the Depositary.

 

If at any time the Depositary for the Securities of a
series notifies the Company that it is unwilling or unable to continue as
Depositary for the Securities of such series or if at any time the Depositary
for Securities of a series shall no longer be registered or in good standing
under the Exchange Act or other applicable statute or regulation, and the
Company shall not have appointed a successor Depositary with respect to the
Securities of such series, or if at any time there shall have occurred and be
continuing an Event of Default under this Indenture with respect to the
Securities of such series, the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.

 

The Company may at any time and in its sole discretion
determine that the Securities of any series issued in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities.  In such event, the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive form and in
an aggregate principal amount equal to the principal amount of the Global
Security or Securities representing such series in exchange for such Global
Security or Securities.

 

If specified by the Company pursuant to
Section 3.1 with respect to Securities of a series, the Depositary for
such series of Securities may surrender a Global Security for such series of
Securities in exchange in whole or in part for Securities of such series in
definitive form on such terms as are acceptable to the Company and such Depositary.  Thereupon, the Company shall execute and the
Trustee shall authenticate and deliver, without charge,

 

24

 

(i)                                     to
each Person specified by the Depositary a new Security or Securities of the
same series, of any authorized denomination as requested by such Person in
aggregate principal amount equal to and in exchange for such Person’s
beneficial interest in the Global Security; and

 

(ii)                                  to
the Depositary a new Global Security in a denomination equal to the difference,
if any, between the principal amount of the surrendered Global Security and the
aggregate principal amount of Securities delivered to Holders thereof.

 

Upon the exchange of a Global Security for Securities
in definitive form, such Global Security shall be canceled by the Trustee.  Securities issued in exchange for a Global
Security pursuant to this Section 3.11 shall be registered in such names
and in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. 
The Trustee shall deliver such Securities to the Persons in whose names
such Securities are so registered.

 

ARTICLE
IV

 

SATISFACTION
AND DISCHARGE

 

Section
4.1                                   Satisfaction
and Discharge of Securities of any Series.

 

(a)                                  The
Company shall be deemed to have satisfied and discharged the entire
indebtedness on all the Securities of any particular series (i) that have
become due and payable, or (ii) by their terms are to become due and payable at
their Stated Maturity within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the Securities of
such series, or (iii) with respect to which this Section 4.1 is specified
to be applicable pursuant to Section 3.1, and, so long as no Event of
Default shall be continuing, the Trustee for the Securities of such series,
upon Company Request and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such indebtedness,
when:

 

(1)                                  either

 

(A)                         all
Securities of such series theretofore authenticated and delivered and all
coupons, if any, appertaining thereto (other than (i) any Securities and
coupons of such series which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6, (ii) coupons
appertaining to Securities called for redemption and maturing after the
relevant Redemption Date, whose surrender 

 

25

 

is not required as provided in Section 11.6 and (iii) Securities
and coupons of such series for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided in
the last paragraph of Section 10.3) have been delivered to such Trustee
for cancellation; or

 

(B)                                with
respect to all Outstanding Securities of such series described in (A) above
(and, in the case of (i) or (ii) below, any coupons appertaining thereto) not
theretofore so delivered to the Trustee for the Securities of such series for
cancellation:

 

(i)                                     the
Company has deposited or caused to be deposited with such Trustee as trust
funds in trust an amount in the currency or currency unit in which the
Securities of such series are payable (except as otherwise specified pursuant
to Section 3.1 for the Securities of such series), sufficient to pay and
discharge the entire indebtedness on all such Outstanding Securities of such
series and any related coupons for unpaid principal (and premium, if any) and
interest, if any, to the Stated Maturity or any Redemption Date as contemplated
by Section 4.2, as the case may be; or

 

(ii)                                  the
Company has deposited or caused to be deposited with such Trustee as
obligations in trust such amount of Government Obligations as will, as
evidenced by a Certificate of a Firm of Independent Public Accountants
delivered to such Trustee, together with the predetermined and certain income
to accrue thereon (without consideration of any reinvestment thereof), be
sufficient to pay and discharge when due the entire indebtedness on all such
Outstanding Securities of such series and any related coupons for unpaid
principal (and premium, if any) and interest, if any, to the Stated Maturity or
any Redemption Date as contemplated by Section 4.2, as the case may be; or

 

(iii)                               the
Company has deposited or caused to be deposited with such Trustee in trust an
amount equal to the amount referred to in clause (i) or (ii) in any combination
of currency or currency unit or Government Obligations;

 

26

 

(2)                                  the
Company has paid or caused to be paid all other sums payable with respect to
the Securities of such series and any related coupons;

 

(3)                                  the
Company has delivered to such Trustee an Officers’ Certificate and an Opinion
of Counsel, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of the entire indebtedness on all
Securities of such series and any related coupons have been complied with; and

 

(4)                                  if
the Securities of such series and any related coupons are not to become due and
payable at their Stated Maturity within one year of the date of such deposit or
are not to be called for redemption within one year of the date of such deposit
under arrangements satisfactory to such Trustee as of the date of such deposit,
then the Company shall have given, not later than the date of such deposit, an
Opinion of Counsel based on the fact that (x) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (y),
since the date hereof, there has been a change in the applicable United States
federal income tax law, in either case to the effect that, and such opinion
shall confirm that, the Holders of the Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred.

 

(b)                                 Upon
the satisfaction of the conditions set forth in this Section 4.1 with
respect to all the Securities of all series, the terms and conditions of such
series, including the terms and conditions with respect thereto set forth in
this Indenture, shall no longer be binding upon, or applicable to, the Company,
and the Holders of the Securities of such series and any related coupons shall
look for payment only to the funds or obligations deposited with the Trustee
pursuant to Section 4.1(a)(1)(B); provided, however, that in
no event shall the Company be discharged from (i) any payment obligations in
respect of Securities of such series and any related coupons which are deemed
not to be Outstanding under clause (c) of the definition thereof if such
obligations continue to be valid obligations of the Company under applicable
law, (ii) from any obligations under Sections 4.2(b), 6.7, 6.10 and 10.11 and
(iii) from any obligations under Sections 3.5 and 3.6 (except that Securities
of such series issued upon registration of transfer or exchange or in lieu of
mutilated, destroyed, lost or stolen Securities and any related coupons shall
not be obligations of the Company) and Sections 7.1 and 10.2; and provided,
further, that in the event a petition for relief under the Bankruptcy
Act of 1978 or Title 11 of the United States Code or a successor statute is filed
and not discharged with respect to the Company within 91 days after the
deposit, the entire indebtedness on all Securities of such series and any
related coupons shall not be discharged, and in such event the Trustee shall
return such deposited funds or obligations as it is then holding to the Company
upon Company Request.

 

27

 

Section 4.2                                   Application
of Trust Money.

 

(a)                                  All
money and obligations deposited with the Trustee for any series of Securities
pursuant to Section 4.1 shall be held irrevocably in trust and shall be
made under the terms of an escrow trust agreement in form satisfactory to such
Trustee.  Such money and obligations
shall be applied by such Trustee, in accordance with the provisions of the
Securities, any coupons, this Indenture and such escrow trust agreement, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as such Trustee may determine, to the Persons
entitled thereto, of the principal of (and premium, if any) and interest, if
any, on the Securities for the payment of which such money and obligations have
been deposited with such Trustee.  If
Securities of any series are to be redeemed prior to their Stated Maturity, whether
pursuant to any optional redemption provision or in accordance with any
mandatory sinking fund requirement, the Company shall make such arrangements as
are reasonably satisfactory to the Trustee for any series of Securities for the
giving of notice of redemption by such Trustee in the name, and at the expense,
of the Company.

 

(b)                                 The
Company shall pay and shall indemnify the Trustee for any series of Securities
against any tax, fee or other charge imposed on or assessed against Government
Obligations deposited pursuant to Section 4.1 or the interest and
principal received in respect of such Government Obligations other than any
such tax, fee or other charge which by law is payable by or on behalf of
Holders.  The obligation of the Company
under this Section 4.2(b) shall be deemed to be an obligation of the
Company under Section 6.7(b).

 

(c)                                  Anything
in this Article IV to the contrary notwithstanding, the Trustee for any series
of Securities shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations held by it as provided in
Section 4.1 which, as expressed in a Certificate of a Firm of Independent
Public Accountants delivered to such Trustee, are in excess of the amount
thereof which would then have been required to be deposited for the purpose for
which such money or Government Obligations were deposited or received provided
such delivery can be made without liquidating any Government Obligations.

 

Section 4.3                                   Satisfaction
and Discharge of Indenture.

 

Upon compliance by
the Company with the provisions of Section 4.1 as to the satisfaction and
discharge of each series of Securities issued hereunder, and if the Company has
paid or caused to be paid all other sums payable under this Indenture, this Indenture
shall cease to be of any further effect (except as otherwise provided
herein).  Upon Company Request and
receipt of an Opinion of Counsel and an Officers’ Certificate complying with
the provisions of Section 1.2, the Trustees for 

 

28

 

all series of Securities (at the expense of the Company) shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture.

 

Notwithstanding the satisfaction and discharge of this
Indenture, any obligations of the Company under Sections 3.5, 3.6, 4.2(b), 6.7,
6.10, 7.1, 10.2 and 10.11 and the obligations of the Trustee for any series of
Securities under Section 4.2 shall survive.

 

Section 4.4                                   Reinstatement.

 

If the Trustee for any series of Securities is unable
to apply any of the amounts (for purposes of this Section 4.4, “Amounts”)
or Government Obligations, as the case may be, described in
Section 4.1(a)(1)(B)(i) or (ii), respectively, in accordance with the
provisions of Section 4.1 by reason of any legal proceeding or any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company’s obligations under this
Indenture and the Securities of such series and the coupons, if any, appertaining
thereto shall be revived and reinstated as though no deposit had occurred
pursuant to Section 4.1 until such time as the Trustee for such series is
permitted to apply all such Amounts or Government Obligations, as the case may
be, in accordance with the provisions of Section 4.1; provided, however,
that if, due to the reinstatement of its rights or obligations hereunder, the
Company has made any payment of principal of (or premium, if any) or interest,
if any, on such Securities or coupons, the Company shall be subrogated to the
rights of the Holders of such Securities or coupons to receive payment from
such Amounts or Government Obligations, as the case may be, held by the Trustee
for such series.

 

ARTICLE V

 

REMEDIES

 

Section
5.1                                   Events
of Default.

 

Unless otherwise
specified in Section 3.1 with respect to any series of Securities, “Event
of Default”, wherever used herein with respect to Securities of any series,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(a)                                  default
in the payment of any interest on any Security of such series when it becomes
due and payable, and continuance of such default for a period of 30 days; or

 

29

 

(b)                                 default
in the payment of the principal of (or premium, if any, on) any Security of
such series at its Maturity; or

 

(c)                                  default
in the performance, or breach, of any covenant or agreement of the Company in
this Indenture (other than a default in the performance, or a breach, of a
covenant or warranty which is specifically dealt with elsewhere in this
Section or which has expressly been included in this Indenture solely for
the benefit of series of Securities other than such series), and continuance of
such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Outstanding Securities of such series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a “Notice of Default” hereunder; or

 

(d)                                 the
entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of 90 consecutive days; or

 

(e)                                  the
commencement by the Company of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Company to the entry of a decree or order for
relief in respect of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by the Company of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or State
law, or the consent by the Company to the filing of such petition or the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by the Company in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action.

 

30

 

Section 5.2                                   Acceleration
of Maturity; Rescission and Annulment.

 

If an Event of Default with respect to the Securities
of any series at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of such series may, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of such series shall, declare
the principal amount (or, if the Securities of such series are Discounted
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Securities of such series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee if
given by the Holders) and, upon any such declaration such principal amount (or
specified amount) shall become due and payable.  If an Event of Default specified in Section 5.1(d) or (e)
occurs and is continuing, then the principal of all the Securities shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.

 

At any time after
such declaration of acceleration with respect to Securities of any series has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the holders of
a majority in principal amount of the Outstanding Securities of such series, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:

 

(i)                                     the
Company has paid or deposited with the Trustee a sum sufficient to pay

 

(A)                              all
overdue interest on all Securities of such series,

 

(B)                                the
principal of (and premium, if any, on) any Securities of such series which have
become due otherwise than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in such Securities,

 

(C)                                to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Securities, and

 

(D)                               all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel; and

 

(ii)                                  all
Events of Default with respect to Securities of such series, other than the
non-payment of principal of Securities of such 

 

31

 

series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.

 

No such rescission shall affect any subsequent default or impair any
right consequent thereon.

 

Section 5.3                                   Collection
of Indebtedness and Suits for Enforcement by Trustee.

 

The Company
covenants that if:

 

(a)                                  default
is made in the payment of any interest on any Security when such interest
becomes due and payable and such default continues for a period of 30 days, or

 

(b)                                 default
is made in the payment of principal of (or premium, if any, on) any Security at
the Maturity thereof,

 

the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
with interest upon the overdue principal (and premium, if any) and, to the
extent that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

 

If the Company fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so
due and unpaid and may prosecute such proceeding to judgment or final decree,
and may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.

 

If an Event of Default with respect to Securities of
any series occurs and is continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Holders of Securities
of such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement for any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.

 

32

 

Section 5.4                                   Trustee
May File Proofs of Claim.

 

In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company or any other
obligor, upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,

 

(a)                             to
file and prove a claim for the whole amount of principal (and premium, if any)
and interest owing and unpaid in respect of the Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims for the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and of the Holders allowed in such judicial proceeding, and

 

(b)                            to
collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under
Section 6.7.

 

Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

 

Section 5.5                                   Trustee
May Enforce Claims Without Possession of Securities.

 

All rights of
action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name and as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.

 

33

 

Section
5.6                                   Application
of Money Collected.

 

Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST:  To the payment of all amounts due the
Trustee under Section 6.7; and

 

SECOND:  Subject to Article XII, to the payment of
the amounts then due and unpaid upon the Securities for principal (and premium,
if any) and interest, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal (and
premium, if any) and interest.

 

Section 5.7                                   Limitation
on Suits.

 

No Holder of any Securities of any series shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

 

(a)                                  such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of such series;

 

(b)                                 the
Holders of not less than 25% in principal amount for the Outstanding Securities
of such series shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;

 

(c)                                  such
Holder or Holders have offered to the Trustee indemnity satisfactory to the
Trustee against the cost, expenses and liabilities to be incurred in compliance
with such request;

 

(d)                                 the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and

 

(e)                                  no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of
the Outstanding Securities of such series;

 

it being understood and intended that no one or more Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, distribute or prejudice the rights of any other
Holders, or to 

 

34

 

obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all the Holders.

 

Section 5.8                                   Unconditional
Right of Holders to Receive Principal, 
Premium and Interest.

 

Notwithstanding
any other provision in this Indenture, the Holder of any Security shall have
the right on the terms stated herein, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.7) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.

 

Section 5.9                                   Restoration
of Rights and Remedies.

 

If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case the Company, the Trustee and the Holders shall, subject
to any determination in such proceeding, be restored severally and respectively
to their former positions hereunder, and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding has
been instituted.

 

Section
5.10                            Rights
and Remedies Cumulative.

 

Except as provided
in Section 3.6, no right or remedy herein conferred upon or reserved to
the Trustee or to the Trustee and the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

Section
5.11                            Delay
or Omission Not Waiver.

 

No delay or
omission of the Trustee or of any Holder of any Security to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein.  Every right and remedy given
by this Article or by law to the Trustee or the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.

 

35

 

Section 5.12                            Control
by Holders.

 

The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that

 

(a)                                  such
direction shall not be in conflict with any rule of law or with this Indenture;
and

 

(b)                                 the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

 

Section 5.13                            Waiver
of Past Defaults.

 

The Holders of not
less than a majority in principal amount of the Outstanding Securities of any
series may on behalf of the Holders of all the Securities of such series waive
any past default hereunder and its consequences, except a default

 

(a)                                  in
the payment of the principal of (or premium, if any) or interest on any
Security of such series, or

 

(b)                                 in
respect of a covenant or provision hereof which under Article IX cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected.

 

Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture, but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.

 

Section
5.14                            Undertaking
for Costs.

 

All parties to
this Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, the filing by any party litigant in such suit of any undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of

 

36

 

the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the respective Stated Maturities expressed in such Security (or, in
the case of redemption, on or after the Redemption Date).

 

Section
5.15                            Waiver
of Stay or Extension Laws.

 

The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

 

ARTICLE VI

 

THE TRUSTEE

 

Section 6.1                                   Certain
Duties and Responsibilities.

 

(a)                                  With
respect to Securities of any series, except during the continuance of an Event
of Default with respect to Securities of such series,

 

(1)                                  the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(2)                                  in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; but in the case of any such certificates
or opinions which by provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements for this Indenture.

 

(b)                                 In
case an Event of Default with respect to Securities of any series has occurred
and is continuing, the Trustee shall with respect to Securities of such series
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

 

37

 

(c)                                  No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that

 

(1)                                  this
Subsection (c) shall not be construed to limit the effect of Subsection (a) of
this Section;

 

(2)                                  the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;

 

(3)                                  the
Trustee shall not be liable with respect to Securities of any series and with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in principal amount
of the Outstanding Securities of such series relating to the time, method and
place of conducting and proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture;
and

 

(4)                                  no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.

 

(d)                                 Whether
or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.

 

Section 6.2                                   Notice
of Defaults.

 

Within 90 days after the occurrence of any default
hereunder with respect to the Securities of any series, the Trustee shall
transmit by mail to all Holders of Securities of such series, as their names
and addresses appear in the Security Register, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Security of such series or
in the payment of any sinking fund installment with respect to Securities, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of the board
of directors or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and provided,
further, that in the case of any default of the character specified in
Section 5.1(d) no such notice to Holders shall be given until at least 30
days after the occurrence thereof.  For
the purpose of this Section, the term “default” means 

 

38

 

any event which is, or after notice or lapse of time or both would
become, an Event of Default.

 

Section 6.3                                   Certain
Rights of Trustee.

 

Subject to the
provisions of Section 6.1:

 

(a)                                  the
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

 

(b)                                 any
request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company request or Company Order and any resolution of the Board
of Directors may be sufficiently evidenced by a Board Resolution;

 

(c)                                  whenever
in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an
Officers’ Certificate and Opinion of Counsel;

 

(d)                                 the
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;

 

(e)                                  the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;

 

(f)                                    the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence or indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney; and

 

39

 

(g)                                 the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.

 

Section 6.4                                   Not
Responsible for Recitals or Issuance of Securities.

 

The recitals
contained herein, and in the Securities, except the Trustee’s certificates of
authentication, shall be taken as the statements of the Company and the Trustee
or any Authenticating Agent assumes no responsibility for their
correctness.  The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities.  The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.

 

Section 6.5                                   May
Hold Securities.

 

The Trustee, any
Authenticating Agent, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner
or pledgee of Securities, and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.

 

Section 6.6                                   Money
Held in Trust.

 

Money held by the
Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law.  The Trustee
shall be under no liability for interest on any money received by it hereunder.

 

Section 6.7                                   Compensation
and Reimbursement.

 

The Company agrees:

 

(a)                                  to
pay to the Trustee from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust);

 

(b)                                 to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and

 

40

 

(c)                                  to
indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

 

Section 6.8                                   Qualification
of Trustee; Conflicting Interests.

 

The Trustee shall be subject to the provisions of
Section 310(b) of the Trust Indenture Act during the period of time
required thereby.  Nothing herein shall
prevent the Trustee from filing with the Commission the application referred to
in the penultimate paragraph of Section 310(b) of the Trust Indenture
Act.  In determining whether the Trustee
has a conflicting interest as defined in Section 310(b) of the Trust
Indenture Act with respect to the Securities of any series, there shall be
excluded Securities of any particular series of Securities other than that
series.

 

Section 6.9                                   Corporate
Trustee Required; Eligibility.

 

There shall at all
times be a Trustee hereunder which shall be:

 

(i)                                     a
corporation organized and doing business under the laws of the United States of
America, any state thereof, or the District of Columbia, authorized under such
laws to exercise corporate trust powers, and subject to supervision or
examination by Federal or State authority, or

 

(ii)                                  a
corporation or other Person organized and doing business under the laws of a
foreign government that is permitted to act as Trustee pursuant to a rule,
regulation, or other order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to a United
States institutional trustee,

 

having a combined capital
and surplus of at least $50,000,000.  If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.  No obligor upon the Securities or a Person directly or indirectly
controlling, controlled by, or under common control with such obligor shall
serve as Trustee upon the Securities. 
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.

 

41

 

Section 6.10                            Resignation
and Removal; Appointment of Successor.

 

(a)                                  No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11.

 

(b)                                 The
Trustee may resign at any time with respect to the Securities of one or more
series by giving written notice thereof to the Company.  If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

 

(c)                                  The
Trustee may be removed at any time with respect to the Securities of any series
by an Act of the Holders of a majority in principal amount of the Outstanding
Securities of such series, delivered to the Trustee and to the Company.

 

(d)                                 If
at any time:

 

(1)                                  the
Trustee shall fail to comply with Section 310(b) of the Trust Indenture
Act pursuant to Section 6.8 hereof after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a Security for at
least six months unless the Trustee’s duty to resign is stayed in accordance
with Section 310(b) of the Trust Indenture Act, or

 

(2)                                  the
Trustee shall cease to be eligible under Section 6.9 and shall fail to
resign after written request therefor by the Company or by any such Holder, or

 

(3)                                  the
Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, the Holder of any Security who
has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

 

(e)                                  If
the Trustee shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, with respect to the
Securities of any one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee with respect to the securities of such 

 

42

 

series and shall comply with the applicable requirements of
Section 6.11.  If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 6.11, become the successor Trustee and supersede the successor
Trustee appointed by the Company.  If no
successor Trustee with respect to the Securities of any series shall have been
so appointed by the Company or the Holders of such Securities and accepted
appointment in the manner required by Section 6.11, the Holder of any
Security of such series who has been a bona fide Holder for at least six months
may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.

 

(f)                                    The
Company shall give notice of each resignation and each removal of the Trustee
with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Security Register.  Each notice shall
include the name of the successor Trustee with respect to the Securities of
such series and the address of its Corporate Trust Office.

 

Section 6.11                            Acceptance
of Appointment by Successor.

 

(a)                                  In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.

 

(b)                                 In
case of the appointment hereunder of a successor Trustee with respect to the Securities
of one or more (but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of one or more series shall
execute and deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to 

 

43

 

vest in, each successor Trustee all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trust and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor Trustee,
such retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.

 

(c)                                  Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers, trusts and duties referred to in
paragraph (a) or (b) of this Section, as the case may be.

 

(d)                                 No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.

 

Section 6.12                            Merger, Conversion,
Consolidation or Succession to Business.

 

Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.  In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating 

 

44

 

Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

 

Section 6.13                            Preferential
Collection of Claims Against Company.

 

(a)                                  Subject
to Subsection (b) of this Section, if the Trustee shall be or shall become a
creditor, directly or indirectly, secured or unsecured, of the Company within
three months prior to a default, as defined in Subsection (c) of this Section,
or subsequent to such a default, then, unless and until such default shall be
cured, the Trustee shall set apart and hold in a special account for the
benefit of the Trustee individually, the Holders of the Securities and the
holders of other indenture securities (as defined in Subsection (c) of this
Section):

 

(1)                                  an
amount equal to any and all reductions in the amount due and owing upon any
claim as such creditor in respect of principal or interest, effected after the
beginning of such three-month period and valid as against the Company and its
other creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this Subsection, or
from the exercise of any right of set-off which the Trustee could have
exercised if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and

 

(2)                                  all
property received by the Trustee in respect of any claim as such creditor,
either as security therefor, or in satisfaction or composition thereof, or
otherwise, after the beginning of such three-month period, or an amount equal
to the proceeds of any such property, if disposed of, subject, however,
to the rights, if any, of the Company and its other creditors in such property
or such proceeds.  Nothing herein
contained, however, shall affect the right of the Trustee:

 

(A)                              to
retain for its own account (i) payments made on account of any such claim by
any Person (other than the Company) who is liable thereon, and (ii) the
proceeds of the bona fide sale of any such claim by the Trustee to a third
Person, and (iii) distributions made in cash, securities or other property in
respect of claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law;

 

(B)                                to
realize, for its own account, upon any property held by it as security for any
such claim, if such property was so held prior to the beginning of such
three-month period;

 

(C)                                to
realize, for its own account, but only to the extent of the claim hereinafter
mentioned, upon any property

 

45

 

held by it as security for any such claim, if such claim was created
after the beginning of such three-month period and such property was received
as security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such property was
so received the Trustee had no reasonable cause to believe that a default as
defined in Subsection (c) of this Section would occur within three months;
or

 

(D)                               to
receive payment on any claim referred to in paragraph (B) or (C), against the
release of any property held as security for such claim as provided in
paragraph (B) or (C), as the case may be, to the extent of the fair value of
such property.

 

For the purposes
of paragraphs (B), (C) and (D), property substituted after the beginning of
such three-month period for property held as security at the time of such
substitution shall, to the extent of the fair value of the property released,
have the same status as the property released, and, to the extent that any
claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.

 

If the Trustee
shall be required to account, the funds and property held in such special
account and the proceeds thereof shall be apportioned between the Trustee, the
Holders and the holders of other indenture securities in such manner that the
Trustee, the Holders and the holders of other indenture securities realize, as
a result of payments from such special account and payments of dividends on
claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, the same percentage of their respective claims, figured
before crediting to the claim of the Trustee anything on account of the receipt
by it from the Company of the funds and property in such special account and
before crediting to the respective claims of the Trustee and the Holders of the
Securities and the holders of other indenture securities dividends on claims
filed against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account.  As used in this paragraph, with respect to
any claim, the term “dividends” shall include any distribution with respect to
such claim, in bankruptcy or receivership or proceedings for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law, whether such
distribution is made in cash, securities, or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim.  The court in which such

 

46

 

bankruptcy, receivership
or proceedings for reorganization is pending shall have jurisdiction (i) to
apportion between the Trustee and the Holders and the holders of other
indenture securities, in accordance with the provisions of this paragraph, the
funds and property held in such special account and proceeds thereof, or (ii)
in lieu of such apportionment, in whole or in part, to give to the provisions
of this paragraph due consideration in determining the fairness of the
distributions to be made to the Trustee and the Holders and the holders of
other indenture securities, with respect to their respective claims, in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for
any such claim, or to make a specific allocation of such distributions as
between the secured and unsecured portions of such claims, or otherwise to
apply the provisions of this paragraph as a mathematical formula.

 

Any Trustee that has resigned or been removed after
the beginning of such three-month period shall be subject to the provisions of
this Subsection as though such resignation or removal had not occurred.  If any Trustee has resigned or been removed
prior to the beginning of such three-month period, it shall be subject to the
provisions of this Subsection if and only if the following conditions exist:

 

(i)                                     the
receipt of property or reduction of claim, which would have given rise to the
obligation to account, if such Trustee had continued as Trustee, occurred after
the beginning of such three-month period; and

 

(ii)                                  such
receipt of property or reduction of claim occurred within three months after
such resignation or removal.

 

(b)                                 There
shall be excluded from the operation of Subsection (a) of this Section a
creditor relationship arising from:

 

(1)                                  the
ownership or acquisition of securities issued under any indenture, or any
security or securities having a maturity of one year or more at the time of
acquisition by the Trustee;

 

(2)                                  advances
authorized by a receivership or bankruptcy court of competent jurisdiction or
by this Indenture, for the purpose of preserving any property which shall at
any time be subject to the lien of this Indenture or of discharging tax liens
or other prior liens or encumbrances thereon, if notice of such advances and of
the circumstances surrounding the making thereof is given to the Holders at the
time and in the manner provided in this Indenture;

 

(3)                                  disbursements
made in the ordinary course of business in the capacity of trustee under an
indenture, transfer agent, registrar,

 

47

 

custodian,
paying agent, fiscal agent or depositary, or other similar capacity;

 

(4)                                  an
indebtedness created as a result of services rendered or premises rented; or an
indebtedness created as a result of goods or securities sold in a cash
transaction as defined in Subsection (c) of this Section;

 

(5)                                  the
ownership of stock or of other securities of a corporation organized under the
provisions of Section 25(a) of the Federal Reserve Act, as amended, which
is directly or indirectly a creditor of the Company; or

 

(6)                                  the
acquisition, ownership, acceptance or negotiation of any drafts, bills of
exchange, acceptances or obligations which fall within the classification of
self-liquidating paper as defined in Subsection (c) of this Section.

 

(c)                                  For
the purposes of this Section only:

 

(1)                                  the
term “default” means any failure to make payment in full of the principal of or
interest (and premium, if any) on any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due and
payable;

 

(2)                                  the
term “other indenture securities” means securities upon which the Company is an
obligor outstanding under any other indenture (i) under which the Trustee is
also trustee, (ii) which contains provisions substantially similar to the
provisions of this Section, and (iii) under which a default exists at the time
of the apportionment of the funds and property held in such special account;

 

(3)                                  the
term “cash transaction” means any transaction in which full payment for goods
or securities sold is made within seven days after delivery of the goods or
securities in currency or in checks or other orders drawn upon banks and
payable upon demand;

 

(4)                                  the
term “self-liquidating paper” means any draft, bill of exchange, acceptance or
obligation which is made, drawn, negotiated or incurred by the Company for the
purpose of financing the purchase processing, manufacturing, shipment, storage
or sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation of the

 

48

 

creditor
relationship with the Company arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation;

 

(5)                                  the
term “Company” means any obligor upon the Securities;

 

(6)                                  the
term “Federal Bankruptcy Code” means the Bankruptcy Code or Title 11 of the
United States Code; and

 

(7)                                  the
term “Federal Reserve Act, as amended” means Title 12 of the United States
Code.

 

Section
6.14                            Appointment
of Authenticating Agent.

 

At any time when
any of the Securities remain Outstanding the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 3.6, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder.  Wherever reference is made in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee’s certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. 
Each Authenticating Agent shall be acceptable to the Company and shall
at all times be a corporation organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. 
If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.  If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

 

Any corporation into which an Authenticating Agent may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent,

 

49

 

provided such corporation shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.

 

An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. 
Upon receiving such a notice resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register.  Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder,
with like effect as if originally named as an Authenticating Agent.  No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.

 

The Trustee agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this Section,
and the Trustee shall be entitled to be reimbursed for such payments, subject
to the provisions of Section 6.7.

 

If an appointment with respect to one or more series
is made pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee’s certificate of authentication,
an alternate certificate of authentication in the following form:

 

This is one of the
Securities of the series designated therein referred to in the within-mentioned
Indenture.

 

	
   

  	
  SUNTRUST BANK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Authenticating Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Authorized Officer

  

 

50

 

ARTICLE
VII

 

HOLDERS’
LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

Section 7.1                                   Company to Furnish
Trustee Names and Addresses of Holders.

 

The Company will furnish or cause to be furnished to
the Trustee:

 

(a)                                  semi-annually,
not later than June 30th and December 30th in each year, a list, in such form
as the Trustee may reasonably require, of the names and addresses of the
Holders as of the preceding June 15th or December 15th, as the case may be; and

 

(b)                                 at
such other times as the Trustee may request in writing, within 30 days after
receipt by the Company of any such request, a list of similar form and content
as of a date not more than 15 days prior to the time such list is furnished;

 

provided, however, that if
and so long as the Trustee shall be the Security Registrar, no such list need
be furnished.

 

Section
7.2                                   Preservation
of Information; Communications to Holders.

 

(a)                                  The
Trustee shall preserve, in as current a form as is reasonably practicable, the
names and addresses of Holders contained in the most recent list furnished to
the Trustee as provided in Section 7.1 and the names and  addresses
of Holders received by the Trustee in its capacity as Security Registrar or
Paying Agent (if so acting).  The
Trustee may destroy any list furnished to it as provided in Section 7.1
upon receipt of a new list so furnished.

 

(b)                                 If
three or more Holders (hereinafter referred to as “applicants”) apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states the
applicants’ desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five Business Days after the
receipt of such application, at its election, either

 

(1)                                  afford
such applicants access to the information preserved at the time by the Trustee
in accordance with Section 7.2(a), or

 

(2)                                  inform
such applicants as to the approximate number of Holders whose names and
addresses appear in the information

 

51

 

preserved
at the time by the Trustee in accordance with Section 7.2(a), and as to
the approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.

 

If the Trustee
shall elect not to afford such applicants access to such information, the
Trustee shall, upon the written request of such applicants, mail to each Holder
whose name and address appear in the information preserved at the time by the
Trustee in accordance with Section 7.2(a), a copy of the form of proxy or
other communication which is specified in such requests, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders or
would be in violation of applicable law. 
Such written statement shall specify the basis of such opinion.  If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders with reasonable
promptness after the entry of such order and the renewal of such tender,
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.

 

(c)                                  Every
Holder of Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with Section 7.2(b), regardless
of the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under Section 7.2(b).

 

Section 7.3                                   Reports by Trustee.

 

(a)                                  Within
60 days after March 31st of each year commencing with the first March 31st
after the first issuance of Securities, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, a
brief report dated as of such March 31st with respect to any of the following
events which may have occurred within the prior 12 months (but if no such event
has occurred within such period no report need be transmitted):

 

52

 

(1)                                  any
change to its eligibility under Section 6.9 and its qualifications under
Section 310(b) of the Trust Indenture Act pursuant to Section 6.8
hereof;

 

(2)                                  the
creation of any material change to a relationship specified in
Section 310(b)(1) through Section 310(b)(10) of the Trust Indenture
Act;

 

(3)                                  the
character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee (as such)
which remain unpaid on the date of such report, and for the reimbursement of
which it claims or may claim a lien or charge, prior to that of the Securities,
on any property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances if such
advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal
amount of the Securities Outstanding on the date of such report;

 

(4)                                  any
change to the amount, interest rate and maturity date of all other indebtedness
owing by the Company (or by any other obligor on the Securities) to the Trustee
in its individual capacity, on the date of such report, with a brief
description of any property held as collateral security therefor, except an
indebtedness based upon a creditor relationship arising in any manner described
in Section 6.13(b)(2), (3), (4) or (6);

 

(5)                                  any
change to the property and funds, if any, physically in the possession of the
Trustee as such on the date of such report;

 

(6)                                  any
additional issue of Securities which the Trustee has not previously reported;
and

 

(7)                                  any
action taken by the Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Securities, except action in respect of a default, notice of which has been or
is to be withheld by the Trustee in accordance with Section 6.2.

 

(b)                                 The
Trustee shall transmit by mail to all Holders, as their names and addresses
appear in the Security Register, a brief report with respect to the character
and amount of any advances (and if the Trustee elects to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of
this Section (or if no such report has yet been so transmitted, since the
date of execution of this instrument) for the reimbursement of which it claims
or may claim a lien or charge,

 

53

 

prior to that of the Securities, on property or funds held or collected
by it as Trustee and which it has not previously reported pursuant to this
Subsection, except that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at any time aggregate
10% or less of the principal amount of the Securities Outstanding at such time,
such report to be transmitted within 90 days after such time.

 

(c)                                  A
copy of each such report shall, at the time of such transmission to the
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and also with the Company.  The Company will notify the Trustee when the
Securities are listed on any stock exchange.

 

Section
7.4                                   Reports
by Company.

 

The Company and
any other obligor upon the Securities shall:

 

(a)                                  file
with the Trustee, within 15 days after the Company or any other obligor upon
the Securities is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company or any other obligor
upon the Securities may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company
or any other obligor upon the Securities is not required to file information,
documents or reports pursuant to either of said Sections, then it shall file
with the Trustee and, to the extent permitted by the Commission, the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

 

(b)                                 file
with the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Company or any other
obligor upon the Securities with the conditions and covenants of this Indenture
as may be required from time to time by such rules and regulations; and

 

(c)                                  transmit
by mail to all Holders, as their names and addresses appear in the Security
Register, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by the
Company or any other obligor upon the Securities pursuant to Subsections (a)
and (b) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.

 

54

 

ARTICLE
VIII

 

CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE

 

Section
8.1                                   Company
May Consolidate, etc., Only on Certain Terms.

 

The Company shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and the Company shall not permit
any Person to consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless:

 

(1)                                  in
case the Company shall consolidate with or merge into another corporation or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if any)
and interests on all the Securities and the performance of every covenant of
this Indenture on the part of the Company to be performed or observed;

 

(2)                                  immediately
after giving effect to such transaction and treating any indebtedness that
becomes an obligation of the Company or a Subsidiary as a result of such
transaction as having been incurred by the Company or such Subsidiary at the
time of such transaction, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default, shall have happened
and be continuing;

 

(3)                                  if,
as a result of any such consolidation or merger or such conveyance, transfer or
lease, any Principal Property of the Company would become subject to a
mortgage, pledge, lien, security interest or other encumbrance that would not
be permitted by this Indenture, the Company or such successor corporation or
Person, as the case may be, shall take such steps as shall be necessary
effectively to secure the Securities equally and ratably with (or prior to) all
indebtedness secured thereby; and

 

(4)                                  the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such

 

55

 

consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.

 

Section
8.2                                   Successor
Corporation Substituted.

 

Upon any consolidation by the Company, with or merger
by the Company into any other corporation or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety in
accordance with Section 8.1, the successor corporation formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor had been named as the Company herein; and
thereafter, except in the case of a lease, the Company shall be discharged from
all obligations and covenants under the Indenture and the Securities.

 

Section 8.3                                   Officers’
Certificate and Opinion of Counsel.

 

The Trustee,
subject to the provisions of Sections 6.1 and 6.2, may receive and rely upon an
Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any
such consolidation, merger, sale or conveyance, and any such assumption,
complies with the provisions of this Article VIII.

 

ARTICLE
IX

 

SUPPLEMENTAL
INDENTURES

 

Section 9.1                                   Supplemental
Indentures Without Consent of Holders.

 

Without the
consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:

 

(1)                                  to
evidence the succession of another Person to the Company and the assumption by
any such successor of the covenants of the Company herein and in the
Securities; or

 

(2)                                  to
add to the covenants of the Company for the benefit of the Holders of all or
any series of Securities (and if such covenants are to be for the benefit of
less than all series of Securities, stating that such covenants are expressly
being included solely for the benefit of

 

56

 

such
series) or to surrender any right or power herein conferred upon the Company;
or

 

(3)                                  to
add any additional Events of Default with respect to any or all series of
Securities (and, if any such Event of Default applies to fewer than all series
of Securities, stating each series to which such Event of Default applies); or

 

(4)                                  to
add or change any of the provisions of this Indenture to such extent as shall
be necessary to permit or facilitate the issuance of Securities in bearer form,
registrable or not registrable as to principal, and with or without interest
coupons; or

 

(5)                                  to
change or eliminate any of the provisions of this Indenture, provided
that any such change or elimination shall become effective only when there is
no Security Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision; or

 

(6)                                  to
establish the form or terms of Securities of any series as permitted by
Sections 2.1 and 3.1; or

 

(7)                                  to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11(b); or

 

(8)                                  to
cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture
which shall not be inconsistent with the provisions of this Indenture; or

 

(9)                                  to
add to the conditions, limitations and restrictions on the authorized amount,
form, terms or purposes of issue, authentication and delivery of Securities, as
herein set forth, other conditions, limitations and restrictions thereafter to
be observed; or

 

(10)                            to
supplement any of the provisions of this Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of any series of
Securities pursuant to Section 4.1 or 10.11, provided that any such
action shall not adversely affect the interests of the Holders of Securities of
such series and any related coupons or any other series of Securities in any
material respect; or

 

57

 

(11)                            to
comply with the requirements of the Commission in order to effect or maintain
the qualification of this Indenture under the Trust Indenture Act, as
contemplated by Section 9.5 or otherwise; or

 

(12)                            to
make any change that does not adversely affect the legal rights under this
Indenture of any Holder of Securities of any series.

 

Section 9.2                                   Supplemental
Indentures with Consent of Holders.

 

With the consent of the Holders of not less than a majority
in aggregate principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent
of the Holder of each Outstanding Security affected thereby:

 

(a)                                  change
the Stated Maturity of the principal of, or any installment of interest on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce the
amount of the principal of a Discounted Security that would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2, or change any Place of Payment where, or the coin or currency
in which, any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date); or

 

(b)                                 reduce
the percentage in principal amount of the Outstanding Securities, the consent
of whose Holders is required for any such supplemental indenture, or the
consent of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture; or

 

(c)                                  modify
any of the provisions of this Section or Sections 5.13 and 10.10,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in

 

58

 

the
references to “the Trustee” and concomitant changes in this Section and
Section 10.10, or the deletion of this provision, in accordance with the
requirements of Sections 6.11(b) and 9.1(8).

 

A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.

 

Upon the request of the Company, each accompanied by a
copy of a Board Resolution authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Holders as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental indenture.

 

It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

 

Section 9.3                                   Execution of
Supplemental Indentures.

 

In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel and an Officers’ Certificate stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture.  The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects the Trustee’s own
rights, duties or immunities under this Indenture or otherwise.

 

Section 9.4                                   Effect of Supplemental
Indentures.

 

Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

 

Section 9.5                                   Conformity with
Trust Indenture Act.

 

Every supplemental indenture executed pursuant to the
Article shall conform to the requirements of the Trust Indenture Act as then in
effect and shall be deemed to include any provisions of the Trust Indenture Act
necessary to effect such conformity.

 

59

 

Section
9.6                                   Reference
in Securities to Supplemental Indentures.

 

Securities of any
series authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture.  If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.

 

ARTICLE
X

 

COVENANTS

 

Section
10.1                            Payment
of Principal, Premium and Interest.

 

The Company covenants and agrees for the benefit of
each series of Securities that it will duly and punctually pay the principal of
(and premium, if any) and interest on the Securities in accordance with the
terms of the Securities and this Indenture.

 

Section
10.2                            Maintenance
of Office or Agency.

 

The Company will
maintain in each Place of Payment for any series of Securities, an office or
agency where Securities of such series may be presented or surrendered for
payment, where Securities of such series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of such series and this Indenture may be served.  The office of the Trustee at its Corporate
Trust Office or at the offices or agencies of its agent shall be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes.  The Company will give prompt written notice
to the Trustee of any change in the location of any such office or agency.  If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.

 

The Company may from time to time designate one or
more other offices or agencies where the Securities of one or more series may
be presented or surrendered for any or all such purposes, and may from time to
time rescind such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in

 

60

 

each Place of Payment for Securities of any series for such
purposes.  The Company will give prompt
written notice to the Trustee of any such designation or rescission and any
change in the location of any such office or agency.

 

Section
10.3                            Money
for Security Payments to be Held in Trust.

 

If the Company
shall at any time act as its own Paying Agent, it will, on or not more than one
Business Day before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Holders entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its action or failure so to act.

 

If the Company is not acting as Paying Agent, the
Company will, on or before each due date of the principal of (and premium, if
any), or interest on, any Securities, deposit with a Paying Agent a sum in same
day funds sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of such action or
any failure so to act.

 

If the Company is not acting as Paying Agent, the
Company will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:

 

(a)                                  hold
all sums held by it for the payment of the principal of (and premium, if any) or
interest on Securities in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided;

 

(b)                                 give
the Trustee notice of any default by the Company (or any other obligor upon the
Securities) in the making of any payment of principal (and premium, if any) or
interest;

 

(c)                                  at
any time during the continuance of any such default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust by such
Paying Agent; and

 

(d)                                 acknowledge,
accept and agree to comply in all aspects with the provisions of this Indenture
relating to the duties, rights and disabilities of such Paying Agent.

 

The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order

 

61

 

direct any Paying Agent to pay, to the Trustee all sums held in trust
by the Company or such Paying Agent, such sums to be held by the Trustee upon
the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

 

Unless otherwise required by applicable law, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on
any Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, or mail to each
such Holder or both notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such notification, publication or mailing, any unclaimed balance of such money
then remaining will be repaid to the Company.

 

Section
10.4                            Corporate
Existence.

 

Subject to Article VIII, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect
the corporate existence, rights (charter and statutory) and franchises of the
Company and each Subsidiary; provided, however, that the Company
shall not be required to preserve any such right or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries as a whole
and that the loss thereof is not disadvantageous in any material respect to the
Holders; and provided, further, however, that the
foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or
any of their respective assets in compliance with the terms of this Indenture.

 

Section
10.5                            Maintenance
of Properties.

 

The Company shall cause all properties owned by the
Company or any Subsidiary or used or held for use in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof,

 

62

 

all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the maintenance of
any of such properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.

 

Section
10.6                            Payment
of Taxes and Other Claims.

 

The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all material lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings.

 

Section
10.7                            Limitations
on Liens.

 

(a)                                  The
Company will not, and will not permit any Restricted Subsidiary to, hereafter,
create, assume or suffer to exist any mortgage, security interest, pledge or
lien (herein referred to as a “Lien”) of or upon any Principal Property, or any
shares of capital stock or evidences of indebtedness for borrowed money issued
by any Restricted Subsidiary and owned by the Company or any Restricted
Subsidiary, whether owned at the date of this Indenture or thereafter acquired,
without making effective provision, and the Company in such case will make or
cause to be made effective provision, whereby the Securities shall be secured
by such Lien equally and ratably with any and all other indebtedness or
obligations thereby secured, so long as such indebtedness or obligations shall
be so secured; provided, however, that the foregoing shall not
apply to any of the following:

 

(1)                                  Liens
that exist on the date of this Indenture;

 

(2)                                  Liens
on property of any corporation existing at the time such corporation becomes a
Subsidiary;

 

(3)                                  Liens
in favor of the Company or any Subsidiary;

 

(4)                                  Liens
in favor of governmental bodies to secure progress, advance or other payments
pursuant to contract or statute or indebtedness incurred to finance all or a
part of construction of or improvements to property subject to such Liens;

 

63

 

(5)                                  Liens
on property existing at the time of acquisition thereof (including acquisition
through merger or consolidation), and construction and improvement Liens that
are entered into within 180 days from the date of such construction or
improvement, provided that in the case of construction or improvement the Lien
shall not apply to any property theretofore owned by the Company or any
Restricted Subsidiary except substantially unimproved real property on which
the property so constructed or the improvement is located;

 

(6)                                  mechanics’
and similar Liens arising in the ordinary course of business in respect of
obligations not due or being contested in good faith;

 

(7)                                  Liens
for taxes, assessments, or governmental charges or levies that are not
delinquent or are being contested in good faith;

 

(8)                                  Liens
arising from any legal proceedings that are being contested in good faith;

 

(9)                                  any
Liens that (i) are incidental to the ordinary conduct of its business or the
ownership of its properties and assets, (ii) were not incurred in connection
with the borrowing of money or the obtaining of advances or credit and (iii) do
not in the aggregate materially detract from the value of the property of the
Company or any Subsidiary or materially impair the use thereof in the operation
of its business;

 

(10)                            Liens
securing industrial development or pollution control bonds; and

 

(11)                            Liens
for the sole purpose of extending, renewing or replacing (or successively
extending, renewing or replacing) in whole or in part any of the foregoing.

 

(b)                                 Notwithstanding
the provisions of paragraph (a)(5) of this Section 10.7, the Company or
any Restricted Subsidiary may, without equally and ratably securing the
Securities, create or assume Liens which would otherwise be subject to the
foregoing restrictions if at the time of such creation or assumption, and after
giving effect thereto, Exempted Indebtedness does not exceed 15% of
Consolidated Net Tangible Assets.

 

Section
10.8                            Limitations
on Sale and Leaseback.

 

(a)                                  The
Company will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement with any Person providing for the leasing (as lessee) by the
Company or any Restricted Subsidiary of any Principal Property (except for
temporary leases for a term, including any renewal thereof, of

 

64

 

not more than three years and except for leases between the Company and
a Restricted Subsidiary or between Restricted Subsidiaries) which property has
been or is to be sold or transferred by the Company or a Restricted Subsidiary
to such Person (herein referred to as a “Sale and Leaseback Transaction”)
unless either (i) the Company or such Restricted Subsidiary would be entitled
to incur a Lien on such property without equally and ratably securing the
Securities pursuant to clauses (5) and (11) of paragraph (a) of
Section 10.7 or (ii) the net proceeds of such sale are at least equal to
the fair value (as determined by the Board of Directors) of such property and
the Company shall apply an amount equal to the net proceeds of such sale to the
retirement (other than any mandatory retirement or payment at maturity) of (x)
securities (other than any retirement prohibited by the terms of any Securities
pursuant to prohibitions on advance refundings) or (y) Funded Debt of the
Company or any Restricted Subsidiary ranking prior to or on a parity with the
Securities, within 120 days of the effective date of any such arrangement.

 

(b)                                 Notwithstanding
the provisions of paragraph (a) of this Section 10.8, the Company or any
Restricted Subsidiary may enter into Sale and Leaseback Transactions, if at the
time of such entering into, and after giving effect thereto, Exempted
Indebtedness does not exceed 15% of Consolidated Net Tangible Assets.

 

Section
10.9                            Statement
by Officers as to Default.

 

The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of
the Company ending after the date hereof, an Officers’ Certificate, stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance and observance of any of the terms, provisions and
conditions of Sections 10.1 to 10.8, inclusive, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.

 

Section
10.10                     Waiver
of Certain Covenants.

 

The Company may omit in any particular instance to
comply with any covenant or condition set forth in Sections 10.1 through 10.8
if, before or after the time for such compliance, the Holders of not less than
a majority in aggregate principal amount of the Securities at the time
Outstanding shall, by Act of such Holders, waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or effect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.

 

65

 

Section
10.11                     Defeasance
of Certain Obligations.

 

If specified pursuant to Section 3.1 to be
applicable to the Securities of any series, the Company may omit to comply with
and shall have no liability in respect of any term, provision, condition or
limitation set forth in Section 8.1, Section 10.7 and
Section 10.8 (and, if specified pursuant to Section 3.1, the Company’s
obligations under any other covenant), whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or such other
covenant or by reason of reference in any Section or such other covenant to any
other provision herein or in any other document, and any such omission to
comply shall not constitute a default or an Event of Default under Section
5.1(c); provided, however, that the following conditions have
been satisfied:

 

(1)                                  with
respect to all Outstanding Securities of such series and any coupons
appertaining thereto not theretofore delivered to the Trustee for cancellation,
the Company shall have deposited or caused to be deposited with the Trustee for
such series as trust funds or obligations in trust an amount of

 

(i)                                     cash
in the currency or currency unit in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 3.1 for the
Securities of such series);

 

(ii)                                  Government
Obligations; or

 

(iii)                               a
combination of such cash and Government Obligations,

 

in each case in an amount which, together with, as
evidenced by a Certificate of a Firm of Independent Public Accountants
delivered to such Trustee, the predetermined and certain income to accrue on
any Government Obligations when due (without the consideration of any
reinvestment thereof) is sufficient to pay and discharge when due the entire
indebtedness on all such Outstanding Securities of such series and any related
coupons for unpaid principal (and premium, if any) and interest, if any, to the
Stated Maturity or any Redemption Date, as the case may be;

 

(2)                                  such
deposit will not result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to which the Company
is a party or by which it is bound;

 

(3)                                  no
Event of Default or event which with the giving of notice or lapse of time, or
both, would become an Event of Default with respect to the Securities of that
Series shall have occurred and be

 

66

 

continuing
on the date of such deposit and no Event of Default under Section 5.1(d)
or Section 5.1(e) or event of which with the giving of notice or lapse of
time, or both, would become an Event of Default under Section 5.1(d) or
Section 5.1(e) shall have occurred and be continuing on the 91st day after
such date;

 

(4)                                  the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the defeasance contemplated in the Section have been complied with;

 

(5)                                  if
the Securities of such series and any related coupons are not to become due and
payable at their Stated Maturity within one year of the date of such deposit or
are not to be called for redemption within one year of the date of such deposit
under arrangements satisfactory to such Trustee as of the date of such deposit,
then the Company shall have given, not later than the date of such deposit, an
Opinion of Counsel confirming that the Holders of the Securities of such series
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject to federal income tax
on the same amount and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred; and

 

(6)                                  the
Company shall have delivered to the Trustee an Opinion of Counsel (which may be
subject to the customary exceptions) to the effect that after the 91st
day following deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally.

 

All obligations of the Company under this Indenture
with respect to the Securities of such series, other than with respect to
Section 8.1, Section 10.7 and Section 10.8 (and, if specified
pursuant to Section 3.1, the Company’s obligations under any other covenant),
shall remain in full force and effect. 
Anything in this Section 10.11 to the contrary notwithstanding, the
Trustee for any series of Securities shall deliver or pay to the Company, from
time to time upon Company Request, any money or Government Obligations held by
it as provided in this Section 10.11 which, as expressed in a Certificate
of a Firm of Independent Public Accountants delivered to such Trustee, are in
excess of the amount thereof which would then have been required to be
deposited for the purpose of which such money or Government obligations were
deposited or received, provided such delivery can be made without liquidating
any Government Obligations.

 

67

 

ARTICLE XI

 

REDEMPTION OF SECURITIES

 

Section
11.1                            Applicability
of Article.

 

Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 3.1 for
Securities of any series) in accordance with this Article.

 

Section
11.2                            Election
to Redeem; Notice to Trustee.

 

The election of
the Company to redeem any Securities pursuant to Section 11.1 shall be
evidenced by a Board Resolution and an Officers’ Certificate.  In case of any redemption at the election of
the Company, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice period shall be satisfactory to
the Trustee), notify the Trustee in writing of such Redemption Date and of the
principal amount of Securities to be redeemed.

 

Section
11.3                            Selection
by Trustee of Securities to be Redeemed.

 

If less than all
the Securities are to be redeemed, the particular Securities or portions
thereof to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem to be fair and
appropriate, and the amounts to be redeemed shall be equal to $1,000 or any
integral multiple thereof.

 

The Trustee shall promptly notify the Company and each
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.

 

For all purposes
of this Indenture, unless the context otherwise requires, all provisions
relating to redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security which has been or is to be redeemed.

 

Section
11.4                            Notice
of Redemption.

 

Notice of
redemption shall be given by first-class mail, postage prepaid, mailed not less
than 30 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.

 

All notices of redemption shall state:

 

(a)                                  the
Redemption Date;

 

68

 

(b)                                 the
Redemption Price;

 

(c)                                  if
less than all Outstanding Securities are to be redeemed, the identification of
the particular Securities to be redeemed;

 

(d)                                 in
the case of a Security to be redeemed in part, the principal amount of such
Security to be redeemed and that after the Redemption Date upon surrender of
such Security, a new Security or Securities in the aggregate principal amount
equal to the unredeemed portion thereof will be issued;

 

(e)                                  that
Securities called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price;

 

(f)                                    that
on the Redemption Date the Redemption Price will become due and payable upon
each such Security or portion thereof, and that (unless the Company shall
default in payment of the Redemption Price) interest thereon shall cease to
accrue on and after said date;

 

(g)                                 the
place or places where such Securities are to be surrendered for payment of the
Redemption Price; and

 

(h)                                 the
CUSIP Number of the Securities.

 

Notice of redemption of Securities to be redeemed at
the election of the Company shall be given by the Company or, at the Company’s
request, by the Trustee in the name and at the expense of the Company.

 

The notice if mailed in the manner herein provided
shall be conclusively presumed to have been given, whether or not the Holder
receives such notice.  In any case,
failure to give such notice by mail or any defect in the notice to the Holder
of any Security designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other
Security.

 

Section
11.5                            Deposit
of Redemption Price.

 

On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.3) an amount of money in same day funds
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date.

 

Section
11.6                            Securities
Payable on Redemption Date.

 

Notice of redemption having been given as aforesaid,
the Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the

 

69

 

Redemption Price therein specified and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest.  Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price together with accrued interest to the
Redemption Date; provided, however, that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such on the relevant Regular Record Dates according to the terms
and the provisions of Section 3.7.

 

If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
such Security.

 

Section
11.7                            Securities
Redeemed in Part.

 

Any Security which is to be redeemed only in part
shall be surrendered at the office or agency of the Company maintained for such
purpose pursuant to Section 10.2 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security Registrar
or the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge
to the Holder, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered; provided,
however, that the Depositary need not surrender Global Securities for a
partial redemption and may be authorized to make a notation on such Global
Security of such partial redemption.  In
the case of a partial redemption of the Global Securities, the Depositary, and
in turn, the participants in the Depositary, shall have the responsibility to
select any Securities to be redeemed by random lot.

 

ARTICLE XII

 

SINKING
FUNDS

 

Section
12.1                            Applicability
of Article.

 

The provisions of
this Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by
Section 3.1 for Securities of such series.

 

70

 

The minimum amount
of any sinking fund payment provided for by the terms of Securities of any
series is herein referred to as a “mandatory sinking fund payment”, and any
payment in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an “optional sinking fund
payment”.  If provided for by the terms
of Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 12.2.  Each sinking fund payment shall be applied
to the redemption of Securities of any series as provided for by the terms of
Securities of such series.

 

Section
12.2                            Satisfaction
of Sinking Fund Payments with Securities.

 

The Company (1) may deliver Outstanding Securities of
a series (other than any previously called for redemption) and (2) may apply as
a credit Securities of a series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of such series required to
be made pursuant to the terms of such Securities as provided for by the terms
of such series, provided that such Securities have not been previously
so credited.  Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.

 

Section
12.3                            Redemption
of Securities for Sinking Fund.

 

Not less than 75 days prior to each sinking fund
payment date for any series of Securities, the Company will deliver to the
Trustee an Officers’ Certificate specifying the amount of the next ensuing
sinking fund payment for that series pursuant to the terms of that series, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
Securities of that series pursuant to Section 12.2 and will also deliver
to the Trustee any Securities to be so delivered.  The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4.  Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.6 and 11.7.

 

This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Indenture.

 

71

 

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the day and year first above
written.

 

 

	
   

  	
  McCORMICK & COMPANY, INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By U

  	
  /Christopher J. Kurtzman/

  	
   

  
	
   

  	
  Name:

  	
  Christopher J. Kurtzman

  
	
   

  	
  Title:

  	
  Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUNTRUST BANK,

  	
   

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /John A. Hebb/

  	
   

  
	
   

  	
  Name:  John
  A. Hebb

  
	
   

  	
  Title: Vice President

  
									

 

72EXHIBIT
10(i)

 

 

 

 

ASSET PURCHASE AGREEMENT

 

 

among

 

 

KERR GROUP, INC.,

 

 

KERR ACQUISITION SUB I, LLC

as Purchaser,

 

 

and

 

 

SETCO, INC.,

as Seller

 

 

Dated as of June 26, 2003

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  
	
  1.1

  	
  Definitions

  
	
  1.2

  	
  Rules of Construction

  
	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS

  
	
  2.1

  	
  Purchased
  Assets

  
	
  2.2

  	
  Excluded
  Assets

  
	
  2.3

  	
  Assumed Liabilities

  
	
  2.4

  	
  Retained Liabilities

  
	
  2.5

  	
  Purchase Price; Payment of Purchase Price;
  Adjustments

  
	
  2.6

  	
  Allocation of Purchase Price

  
	
  2.7

  	
  Closing

  
	
  2.8

  	
  Assignment of Contracts

  
	
  2.9

  	
  Natural Hazard Disclosure Statement

  
	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

  
	
  3.1

  	
  Organization and Qualification

  
	
  3.2

  	
  Authority Relative to this Agreement

  
	
  3.3

  	
  No Conflict

  
	
  3.4

  	
  Required Filings and Consents

  
	
  3.5

  	
  Financial Statements

  
	
  3.6

  	
  Absence of Undisclosed Liabilities

  
	
  3.7

  	
  Absence of Certain Changes or Events

  
	
  3.8

  	
  Sufficiency and Title to Assets

  
	
  3.9

  	
  Intellectual Property

  
	
  3.10

  	
  Contracts

  
	
  3.11

  	
  Permits

  
	
  3.12

  	
  Compliance with Laws

  
	
  3.13

  	
  Litigation

  
	
  3.14

  	
  Books
  and Records

  
	
  3.15

  	
  Employment Matters

  
	
  3.16

  	
  Employee
  Benefits

  
	
  3.17

  	
  No Finder

  
	
  3.18

  	
  Environmental Matters

  
	
  3.19

  	
  Taxes and Tax Returns

  
	
  3.20

  	
  Customers and Suppliers

  
	
  3.21

  	
  Inventory

  
	
  3.22

  	
  Insurance

  
	
  3.23

  	
  Affiliate Transactions

  
	
  3.24

  	
  Questionable Payments

  
	
  3.25

  	
  Products Liability

  
	
  3.26

  	
  No Powers of Attorney

  
	
  3.27

  	
  Full
  Disclosure

  

 

 

	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF KERR AND PURCHASER

  
	
  4.1

  	
  Organization and Qualification

  
	
  4.2

  	
  Authority Relative to this Agreement

  
	
  4.3

  	
  No Conflict

  
	
  4.4

  	
  Required Filings and Consents

  
	
  4.5

  	
  No Finder

  
	
  4.6

  	
  No Litigation

  
	
  4.7

  	
  Commitment Letters

  
	
   

  	
   

  
	
  ARTICLE V ADDITIONAL COVENANTS

  
	
  5.1

  	
  Conduct of Business

  
	
  5.2

  	
  Intentionally Omitted

  
	
  5.3

  	
  Consents, Filings and Authorizations;
  Efforts to Consummate

  
	
  5.4

  	
  Notices of Certain Events

  
	
  5.5

  	
  Public Announcements

  
	
  5.6

  	
  Access to Information; Confidentiality

  
	
  5.7

  	
  Expenses

  
	
  5.8

  	
  Title and Survey Matters.

  
	
  5.9

  	
  No Recording

  
	
  5.10

  	
  Compliance with ISRA

  
	
  5.11

  	
  Release of Parent Guaranties

  
	
  5.12

  	
  * Adjustments

  
	
  5.13

  	
  Price Decrease Notification

  
	
   

  	
   

  
	
  ARTICLE VI CONDITIONS TO CLOSING

  
	
  6.1

  	
  Conditions to the Obligations of Seller and
  Purchaser

  
	
  6.2

  	
  Conditions to Obligation of Seller

  
	
  6.3

  	
  Conditions to Obligation of Purchaser

  
	
   

  	
   

  
	
  ARTICLE VII TERMINATION; EFFECT OF TERMINATION

  
	
  7.1

  	
  Termination of Agreement

  
	
  7.2

  	
  Effect of Termination; Right to Proceed

  
	
   

  	
   

  
	
  ARTICLE VIII POST-CLOSING COVENANTS

  
	
  8.1

  	
  Certain Transitional Matters

  
	
  8.2

  	
  Transfer and Retention of Transferred
  Employees; Employee Benefits

  
	
  8.3

  	
  Non-Competition Covenant

  
	
  8.4

  	
  Trademarks,
  Etc

  
	
  8.5

  	
  Tax
  Covenants

  
	
  8.6

  	
  Records; Retention

  
	
  8.7

  	
  Designated Reporting Person

  
	
  8.8

  	
  Further Assurances

  
	
   

  	
   

  
	
  ARTICLE IX SURVIVAL; INDEMNIFICATION

  
	
  9.1

  	
  Expiration of Representations and
  Warranties

  
	
  9.2

  	
  Indemnification by Seller

  

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

ii

 

	
  9.3

  	
  Indemnification by Kerr and Purchaser

  
	
  9.4

  	
  Notice
  of Claims

  
	
  9.5

  	
  Opportunity to Defend Third Party Claims

  
	
  9.6

  	
  Limitation of Liability

  
	
  9.7

  	
  Effect of Taxes and Insurance

  
	
  9.8

  	
  Treatment of Indemnity Payments; No
  Duplication

  
	
   

  	
   

  
	
  ARTICLE X GENERAL

  
	
  10.1

  	
  Notices

  
	
  10.2

  	
  Severability

  
	
  10.3

  	
  Assignment; Binding Effect; Benefit

  
	
  10.4

  	
  Incorporation of Exhibits and Schedules

  
	
  10.5

  	
  Governing Law; Submission to Jurisdiction

  
	
  10.6

  	
  Waiver of Jury Trial

  
	
  10.7

  	
  Interpretation

  
	
  10.8

  	
  Counterparts

  
	
  10.9

  	
  Entire
  Agreement

  
	
  10.10

  	
  Waivers and Amendments

  

 

iii

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Form of
  Assignment and Assumption Agreement

  
	
  Exhibit B

  	
   

  	
  Natural Hazard
  Disclosure Statement

  
	
  Exhibit C

  	
   

  	
  Intentionally
  Omitted

  
	
  Exhibit D

  	
   

  	
  Form of
  Transition Services Agreement

  
	
  Exhibit E

  	
   

  	
  Intentionally
  Omitted

  
	
  Exhibit F

  	
   

  	
  Form of
  Assignment of Lease

  
	
  Exhibit G

  	
   

  	
  Form of Bill of
  Sale

  
	
  Exhibit H

  	
   

  	
  Form of Deed

  

 

iv

 

SCHEDULES

 

	
  Schedule 1.1(a)

  	
   

  	
  Seller
  Affiliates

  
	
  Schedule 1.1(b)

  	
   

  	
  Closing Balance
  Sheet / Working Capital

  
	
  Schedule 2.1(a)(i)

  	
   

  	
  Real Property

  
	
  Schedule 2.1(a)(ii)

  	
   

  	
  Real Property
  Leases

  
	
  Schedule 2.1(b)

  	
   

  	
  Tangible
  Personal Property

  
	
  Schedule 2.1(e)

  	
   

  	
  Assigned
  Contracts

  
	
  Schedule 2.1(f)

  	
   

  	
  Listed Permits

  
	
  Schedule 2.1(g)

  	
   

  	
  Listed
  Intellectual Property

  
	
  Schedule 2.1(j)

  	
   

  	
  Vehicles

  
	
  Schedule 2.2(d)

  	
   

  	
  Excluded
  Tangible Personal Property

  
	
  Schedule 2.2(g)

  	
   

  	
  Excluded Assets

  
	
  Schedule 3.1

  	
   

  	
  Subsidiaries

  
	
  Schedule 3.3

  	
   

  	
  No Conflict of
  Seller

  
	
  Schedule 3.4

  	
   

  	
  Seller Consents

  
	
  Schedule 3.5

  	
   

  	
  Seller’s Balance
  Sheets

  
	
  Schedule 3.6

  	
   

  	
  Undisclosed
  Liabilities

  
	
  Schedule 3.7

  	
   

  	
  Certain Changes
  or Events

  
	
  Schedule 3.8

  	
   

  	
  Title to Assets

  
	
  Schedule 3.9(a)

  	
   

  	
  Registered
  Intellectual Property Rights

  
	
  Schedule 3.9(d)

  	
   

  	
  Intellectual
  Property Infringement

  
	
  Schedule 3.9(e)

  	
   

  	
  Intellectual
  Property Claims

  
	
  Schedule 3.9(g)

  	
   

  	
  Computer
  Software

  
	
  Schedule 3.9(h)

  	
   

  	
  Domain Names

  
	
  Schedule 3.10

  	
   

  	
  Material
  Contracts

  
	
  Schedule 3.13

  	
   

  	
  Litigation

  
	
  Schedule 3.15

  	
   

  	
  Employment
  Matters

  
	
  Schedule 3.15(c)

  	
   

  	
  Employment Loss

  
	
  Schedule 3.16

  	
   

  	
  Benefit Plans

  
	
  Schedule 3.18

  	
   

  	
  Environmental
  Matters

  
	
  Schedule 3.19

  	
   

  	
  Taxes and Tax
  Returns

  
	
  Schedule 3.20

  	
   

  	
  Customers and
  Suppliers

  
	
  Schedule 3.22

  	
   

  	
  Insurance

  
	
  Schedule 3.23

  	
   

  	
  Affiliate
  Transactions

  
	
  Schedule 5.1

  	
   

  	
  Conduct of
  Business

  
	
  Schedule 5.1(m)

  	
   

  	
  Permitted
  Capital Expenditures

  
	
  Schedule 5.9

  	
   

  	
  Title
  Commitments

  
	
  Schedule 6.2(f)

  	
   

  	
  Required
  Consents

  
	
  Schedule 6.3(h)

  	
   

  	
  Required
  Consents

  

 

v

 

ASSET PURCHASE AGREEMENT

 

THIS
ASSET PURCHASE AGREEMENT is made as of June 26, 2003
among KERR GROUP, INC., a Delaware corporation (“Kerr”), Kerr
Acquisition Sub I, LLC, a Delaware limited liability company (“Purchaser”),
and SETCO, INC., a Delaware corporation (“Seller”).

 

RECITALS

 

Seller engages in the business of developing,
manufacturing, marketing and distributing specialty plastic bottles and other
containers and shoe parts primarily for the vitamin, mineral and supplement,
food and spice, health care, personal care, health and beauty, pharmaceutical,
household chemical, automotive, industrial and footwear markets (the “Business”).  Subject to the terms and conditions set
forth herein, Seller desires to sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser desires to purchase and acquire from Seller, all of
Seller’s right, title and interest in and to all of the Purchased Assets, as
defined herein (the “Acquisition”).

 

NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby expressly acknowledged, the Parties, intending to be legally bound,
hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                                 Definitions.  As used herein, the following terms shall have the following
meanings:

 

“Accounts Payable” means normal trade payables associated with the ongoing
operations of the business, including liabilities relating to sales allowances,
customer rebates, third party royalty payments and commissions, and pro-card
accruals; provided that the disputed Manpower International, Inc.
payable shall not be deemed to be an
“Account Payable”.

 

“Acquisition” has the meaning given to such
term in the Recitals.

 

“Affiliate” means, with respect to any Person,
any other Person directly or indirectly controlling, controlled by or under
common control with such Person.  For
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.  The Affiliates of Seller
include the Persons listed on Schedule 1.1(a).

 

“Affiliate Marks” means the service marks,
trademarks, trade names and domain names used by Seller in the operation of the
Business and owned by or licensed to an Affiliate of Seller, as listed on Schedule 2.2(g).

 

“Agreement” means this Asset Purchase
Agreement.

 

1

 

“Asserted Liability” has the meaning given to
such term in Section 9.4.

 

“Assigned Contracts” has the meaning given to
such term in Section 2.1(e).

 

“Assignment and Assumption Agreement” has the
meaning given to such term in Section 2.5(b)(ii).

 

“Assignment of Lease” has the meaning given to
such term in Section 6.2(d)(i).

 

“Associate” means, as to any Person,
(a) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity, and (b) any family member or spouse of such
Person, or any family member of such spouse, or any individual who has the same
home as such Person or who is a director or officer of such Person or any of
its parents or Subsidiaries.

 

“Assumed Liabilities” has the meaning given to
such term in Section 2.3.

 

“Audited Financials” has the meaning given to
such term in Section 3.5.

 

“Base Purchase Price” has the meaning given to
such term in Section 6.2(c)(vii).

 

“Business” has the meaning given to such term
in the Recitals.

 

“Business Day” means any day other than a
Saturday, Sunday or a day on which banks in New York City or San Francisco,
California, are authorized or obligated by applicable Law to close.

 

“Capital Expenditures” means Seller’s actual
capital expenditures properly classified as property, plant and equipment in
accordance with GAAP (using, to the extent permitted by GAAP, the practices,
procedures and methods historically used by Seller), accrued during the period
beginning on December 1, 2002 and ending on the earlier of August 31,
2003 and the Closing Date; provided, however, that if the Closing does not
occur on or prior to August 31, 2003 as a result of (i) postponement of
the Closing by Seller pursuant to Section 5.8(b), (ii) a second request
under the HSR Act under Section 7.1(b), or (iii) breach by Seller of its
obligations hereunder, then Capital Expenditures shall accrue during the period
beginning on December 1, 2002 and ending on the Closing Date.  For the avoidance of doubt, items set forth
on Capital Expenditures Schedule 5.1(m) shall be deemed to be Capital
Expenditures for purposes of this Agreement.

 

“Capital Expenditures Adjustment” has the
meaning given to such term in Section 2.5(f).

 

“Closing” has the meaning given to such term in
Section 2.7.

 

“Closing Balance Sheet” means a balance sheet
of Seller, prepared pursuant to Section 2.5(d) setting forth the Purchased
Assets and the Assumed Liabilities as of the Closing Date to the extent such
assets and liabilities would be shown on a balance sheet of Seller prepared in
accordance with GAAP, using, to the extent permitted by GAAP, the practices, 

 

2

 

procedures and methods
used by Seller in preparing the Audited Financials, which balance sheet shall
be prepared by Purchaser.

 

“Closing Capital Expenditures” has the meaning
given to such term in Section 2.5(f)(ii).

 

“Closing Capital Expenditures Adjustment” has
the meaning given to such term in Section 2.5(f)(ii).

 

“Closing Capital Expenditures Objection Notice”
has the meaning given to such term in Section 2.5(f)(ii).

 

“Closing Date” has the meaning given to such
term in Section 2.7.

 

“Closing Proration” has the meaning given to
such term in Section 2.5(c).

 

“Code” means the Internal Revenue Code of 1986,
as amended.

 

“Commitments” has the meaning given to such
term in Section 5.8(a).

 

“Computer Software” means all computer programs
other than computer programs designed for use in the preparation of Tax
Returns, and all documentation relating to the foregoing.

 

“Counterpart Plans” has the meaning given to
such term in Section 8.2.

 

“Current Assets” shall mean the current assets
of the Business that are among the Purchased Assets set forth in the Closing
Balance Sheet.

 

“Current Liabilities” shall mean the current
liabilities of the Business that are among the Assumed Liabilities set forth in
the Closing Balance Sheet.

 

“De Minimis Losses” means a Loss resulting from
a single set of facts or circumstances that does not exceed $10,000.

 

“Environmental Claim” means any claim, action,
cause of action, investigation or notice by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated by
Seller, (b) any violation, or alleged violation, of any Environmental Law,
and (c) the presence of fungus or mold in any building owned or operated by
Seller.

 

“Environmental Laws” means all Laws relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata, and
natural resources), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.

 

3

 

“Estimated Capital Expenditures” has the
meaning given to such term in Section 2.5(f)(i).

 

“Exceptions” has the meaning given to such term
in Section 5.8(a).

 

“Excluded Assets” has the meaning given to such
term in Section 2.2.

 

“Excluded Contracts” has the meaning given to
such term in Section 2.2(g).

 

“Final Closing Capital Expenditures” has the
meaning given to such term in Section 2.5(f)(ii).

 

“Final Closing Capital Expenditures Adjustment”
has the meaning given to such term in Section 2.5(f)(ii).

 

“GAAP” means generally accepted accounting
principles in the United States in effect from time to time, consistently
applied.

 

“Governmental Authority” means any nation or
government, any state or other political subdivision thereof and any entity
(including a court exercising executive, legislative, judicial, regulatory,
administrative functions of, or pertaining to, government).

 

“Guarantee Obligations” has the meaning given
to such term in Section 3.10(a)(vi).

 

“HSR Act” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

“Indebtedness” of any Person at any date shall
include (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations of such Person under any lease of property, real or
personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee,
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (e) all liabilities secured by any
Lien on property owned by such Person even though such Person has not assumed
or otherwise become liable for the payment thereof, and (f) all Guarantee
Obligations of such Person.

 

“Indemnified Party” has the meaning given to
such term in Section 9.4.

 

“Indemnifying Party” has the meaning given to
such term in Section 9.4.

 

“Independent Accounting Firm” means
PricewaterhouseCoopers or such other independent accounting firm of national
reputation as is selected by mutual agreement of Seller and Purchaser; provided,
that if PricewaterhouseCoopers declines to serve and Seller and Purchaser
cannot agree, the Independent Accounting Firm shall be selected by the American
Arbitration Association in accordance with its then-prevailing rules; provided,
further, that any services to be performed by PricewaterhouseCoopers or
such firm selected by the American

 

4

 

Arbitration Association
shall be performed by professionals who (i) have not previously performed any
services for any of the Parties, Parent or their respective Affiliates and (ii)
are based in an office of such firm that has not previously been the primary
office from which services for any of the Parties, Parent or their respective
Affiliates have been performed.

 

“Initial Capital Expenditures Adjustment” has
the meaning given to such term in Section 2.5(f)(i).

 

“Intellectual Property” means, collectively,
the Listed Intellectual Property and the Other Intellectual Property.

 

“IRS” means the United States Internal Revenue
Service.

 

“ISRA” means the New Jersey Industrial Site
Recovery Act, N.J.S.A. 13:1K-6 et seq.

 

“ISRA Approval” means an approval from the
NJDEP authorizing the transfer of the Leased Manufacturing Facility pursuant to
ISRA.

 

“ISRA Parties” has the meaning given to such
term in Section 5.10.

 

“Kerr” has the meaning given to such term in
the preamble of this Agreement.

 

“Knowledge of Seller” means the actual
knowledge of a particular fact or other matter being possessed as of the
pertinent date by any of Robert G. Davey, Paul C. Beard, W. Geoffrey Carpenter,
Tony Imbraguglio, Donald E. Parodi, Lois A. Stevens, Thomas J. Dunn, Robert J.
Kiely, Jr., Robert C. Rodriguez, Keith Burnett, Jim Dunn and Dave Busby.

 

“Latest Balance Sheet” has the meaning given to
such term in Section 3.6.

 

“Latest Balance Sheet Date” has the meaning
given to such term in Section 3.6.

 

“Law” means any federal, state, local,
municipal, foreign or other law, statute, legislation, constitution, principle
of common law, resolution, ordinance, code, edict, decree, proclamation,
treaty, convention, rule, regulation, ruling, directive, requirement,
specification, determination, decision, opinion or interpretation issued,
enacted, adopted, passed, approved, promulgated, made, implemented or otherwise
put into effect by or under the authority of any Governmental Authority.

 

“Leased Manufacturing Facility” means the Real
Property Lease listed as Item 2 on Schedule 2.1(a)(ii).

 

“Lien” means any mortgage, lien, claim, pledge,
charge, equitable interest, right-of-way, easement, encroachment, security
interest, preemptive right, right of first refusal or similar restriction or
right, option, judgment, title defect or encumbrance of any kind.

 

“Listed Intellectual Property” has the meaning
given to such term in Section 2.1(g).

 

“Listed Permits” has the meaning given to such
term in Section 2.1(f).

 

5

 

“Losses” means any costs, payments, Taxes,
losses, claims, damages and expenses whatsoever, including court costs and
reasonable counsel and other professional fees and expenses.

 

“Material Adverse Effect” means any change or
effect that, individually or taken together with all other such changes or
effects that have occurred prior to the date of determination of the Material
Adverse Effect, is materially adverse to the ability of Seller to achieve its
projections or to the Business, assets, liabilities, financial condition or
results of operations of Seller considered as a whole; provided, however,
that in no event shall any of the following, alone or in combination, be deemed
to constitute, nor shall any of the following be taken into account in
determining whether there has been, or will be, a Material Adverse Effect:  (a) changes in general economic
conditions or changes generally affecting the industry in which Seller operates
(which changes do not affect Seller in a materially disproportionate manner);
or (b) changes resulting from the loss, diminution or disruption, whether
actual or threatened, of existing or prospective employee, customer,
distributor or supplier relationships as to which Seller furnishes reasonable
evidence that such changes have resulted from the announcement that Seller
entered into this Agreement.

 

“Material Contracts” has the meaning given to
such term in Section 3.10(a).

 

“Materials of Environmental Concern” means
chemicals, pollutants, contaminants, wastes, toxic substances or hazardous
substances listed, regulated, defined or included under Environmental Laws,
including petroleum and petroleum products, asbestos or asbestos-containing
materials or products, polychlorinated biphenyls, lead or lead-based paints or
materials, and radon.

 

“NHDS” has the meaning given to such term in
Section 2.9.

 

“NJDEP” means the New Jersey Department of
Environmental Protection.

 

“Other Intellectual Property” means trade
secrets and know-how, if any, owned by Seller and used by Seller in the
operation of the Business as currently conducted, including trade secrets and
know-how relating to the technology, systems and processes identified as such
on Schedule 2.1(g).  Other
Intellectual Property does not include patents, copyrights, service marks,
service names, trademarks, trade names or domain names (or any applications
therefor).

 

“Other Liens” has the meaning given to such
term in Section 5.8(b).

 

“Parent” means McCormick & Company,
Incorporated, a Maryland corporation.

 

“Party” means Seller, Purchaser or Kerr, as the
context requires, and the term “Parties” means, collectively, Seller, Purchaser
and Kerr.

 

“Permitted Exceptions” has the meaning given to
such term in Section 5.8(a).

 

“Permitted Lien” means:  (a) any Lien imposed by Law for Taxes,
assessments or governmental charges that are not yet delinquent and remain
payable without penalty or that are being contested in good faith by
appropriate proceedings; (b) any carrier’s, warehousemen’s, 

 

6

 

mechanic’s,
materialmen’s, repairmen’s or other like Lien imposed by Law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than forty-five (45) days or are being contested in good faith by
appropriate proceedings; (c) any pledge or deposit made in the ordinary
course of business in compliance with workers’ compensation, unemployment
insurance or other social security Laws or other statutory obligations of
Seller; (d) any cash deposit or right of set-off to secure the performance
of bids, tenders, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds, government contracts and other obligations of
a like nature, in each case in the ordinary course of business; (e) any
Lien arising by operation of Law; and (f) any Permitted Exception.

 

“Person” means an individual, corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, syndicate, person (including a “person” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934), trust,
association, entity or government or political subdivision, agency or
instrumentality of a government.

 

“Plan” or “Plans” have the meanings
given to such terms in Section 3.16.

 

“Pro Forma Revenues” has the meaning given to
such term in Section 3.5.

 

“Product” has the meaning given to such term in
Section 3.10(a)(ix).

 

“Purchase Price” has the meaning given to such
term in Section 2.5(a).

 

“Purchase Price Objection Notice” has the
meaning given to such term in Section 2.5(d).

 

“Purchased Assets” has the meaning given to
such term in Section 2.1.

 

“Purchaser” has the meaning given to such term
in the preamble of this Agreement.

 

“Purchaser Indemnitee” has the meaning given to
such term in Section 9.2.

 

“R&T Code” has the meaning given to such
term in Section 8.7.

 

“Real Property” has the meaning given to such
term in Section 2.1(a).

 

“Real Property Leases” has the meaning given to
such term in Section 2.1(a).

 

“Registered Intellectual Property Rights” has
the meaning given to such term in Section 3.9(a).

 

“Remediation Activities” has the meaning given
to such term in Section 5.10.

 

“Representative” means, with respect to either
Party, any of such Party’s directors, officers, employees, attorneys,
accountants or other agents.

 

“Retained Liabilities” has the meaning given to
such term in Section 2.4.

 

7

 

“Security Deposits” means the full amount of
any and all deposits made by or on behalf of Seller.

 

“Seller” has the meaning given to such term in
the preamble of this Agreement.

 

“Seller Indemnitee” has the meaning given to
such term in Section 9.3.

 

“Subsidiary” means, with respect to Seller, any
corporation, partnership, limited partnership, limited liability company or
other legal entity of which Seller (either alone or through or together with any
other subsidiary) owns, directly or indirectly, a majority of the stock or
other equity interests.

 

“Supply Agreement” has the meaning given to
such term in Section 6.2(c)(vi).

 

“Surveys” has the meaning given to such term in
Section 5.8(a).

 

“Tangible Personal Property” has the meaning
given to such term in Section 2.1(b).

 

“Target Capital Expenditures” means * million
multiplied by the quotient of (x) the number of days actually elapsed from
December 1, 2002 through and including the applicable date provided in the
definition of Capital Expenditures in this Section 1.1, divided by (y)
365.

 

“Target Working Capital” means the difference
of (A) the product of (i) the sum of the net sales (which shall be net of
discounts, allowances and other, similar adjustments used to calculate the Pro
Forma Revenues, consistently applied) of Seller for the three full calendar
months immediately preceding the Closing Date multiplied by *, multiplied by
(ii) * minus (B) the lower of (i) * and (ii) the sum of accrued sales allowances,
the * accrual, pro card accrual and prepaid real property tax as of the Closing
Date.

 

“Tax Return” means any return, report,
statement, form or other documentation (including any additional or supporting
material and any amendments or supplements) filed or maintained, or required to
be filed or maintained, with respect to or in connection with the calculation,
determination, assessment or collection of any Taxes.

 

“Taxes” means: 
(a) any and all taxes, fees, levies, duties, tariffs, imposts and
other charges of any kind, imposed by any Governmental Authority,
including:  (i) taxes or other
charges on, measured by, or with respect to income, franchise, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers’ compensation, unemployment compensation
or net worth; (ii) taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes;
(iii) license, registration and documentation fees; and (iv) customs
duties, tariffs and similar charges; (b) any liability for the payment of
any amounts of the type described in (a) as a result of being a member of an
affiliated, combined, consolidated or unitary group for any taxable period;
(c) any liability for the payment of amounts of the type described in (a)
or (b) as a result of being a transferee of, or a successor in interest to, any
Person or as a result of an express or implied obligation to indemnify any
Person; and (d) any and all interest, penalties, additions to tax and 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

8

 

additional amounts
imposed in connection with or with respect to any amounts described in (a), (b)
or (c).

 

“Terminated Employee” has the meaning given to
such term in Section 8.2.

 

“Title Company” has the meaning given to such
term in Section 5.8(a).

 

“Title Documents” has the meaning given to such
term in Section 5.8(a).

 

“Title Objections” has the meaning given to
such term in Section 5.8(b).

 

“Title Policy” has the meaning given to such
term in Section 6.3(g).

 

“Transaction Documents” means, collectively,
this Agreement and each of the other agreements and instruments to be executed
and delivered by either or both of the Parties in connection with the
consummation of the Acquisition.

 

“Transferred Employee” has the meaning given to
such term in Section 8.2.

 

“Transition Services Agreement” has the meaning
given to such term in Section 6.2(c)(v).

 

“WARN Act” means the Worker Adjustment and
Retraining Notification Act.

 

“Withholding Taxes” has the meaning given to
such term in Section 2.5(b).

 

“Working Capital” shall mean Current Assets
minus Current Liabilities, (prepared in accordance with GAAP, using, to the
extent permitted by GAAP, the accounting principles, methodologies, procedures and
classifications used by Seller in preparing the Audited Financials).

 

“Working Capital Adjustment” has the meaning
given to such term in Section 2.5(d).

 

1.2                                 Rules of Construction.  The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms.  The words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “but not limited
to.”  All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require.  All Exhibits
and Schedules attached to this Agreement shall be deemed incorporated herein by
reference as if fully set forth herein. 
Words such as “herein,” “hereof,” “hereto,” “hereby” and “hereunder”
refer to this Agreement and to the Schedules and Exhibits, taken as a whole.  Except as otherwise expressly provided
herein:  (a) any reference in this
Agreement to any agreement shall mean such agreement as amended, restated,
supplemented or otherwise modified from time to time; (b) any reference in
this Agreement to any Law shall include corresponding provisions of any
successor Law and any regulations and rules promulgated pursuant to such Law or
such successor Law; and (c) all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time.

 

9

 

Neither the captions to
Sections or subdivisions thereof nor the Table of Contents shall be deemed to
be a part of this Agreement.

 

ARTICLE II

PURCHASE AND SALE OF PURCHASED ASSETS

 

2.1                                 Purchased Assets.  Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties, covenants and
agreements of the Parties contained herein, at the Closing, Seller shall sell,
convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase
and acquire from Seller, free and clear of all Liens other than Permitted Liens
(except with respect to the Real Property, subject only to Permitted
Exceptions), all of Seller’s right, title and interest in and to the following
assets, properties, rights and interests of Seller as of the date hereof and
those acquired after the date hereof and on or before the Closing Date, except
for those assets, properties, rights and interests that are set forth in
Section 2.2 as being Excluded Assets (collectively, the “Purchased
Assets”):

 

(a)                                  all
the real property and interests in real property described on Schedule 2.1(a)(i)
and such as are required to make the statement in the second sentence of
Section 3.8(a) true, together with all buildings, fixtures, facilities and
other improvements located on such real property (collectively, the “Real
Property”), and the leasehold estates, including any Security Deposits
relating thereto, described on Schedule 2.1(a)(ii) and such as are
required to make the statement in the first sentence of Section 3.8(b)
true, under which Seller is a lessee (collectively, the “Real Property
Leases”);

 

(b)                                 all
the machinery, equipment, tools, furniture, computer hardware, materials,
leasehold improvements, computing and telecommunications equipment and other
items of tangible personal property owned by the Seller or (to the extent
assignable) leased by Seller or by Affiliates of Seller and used in the
operation of the Business on the Closing Date, including those listed or
described on Schedule 2.1(b), together with any express or implied
warranty by the manufacturer, seller or lessor of any such item or component
part thereof, to the extent such warranties may be assigned without consent or
any requisite consent is obtained (collectively, the “Tangible Personal
Property”);

 

(c)                                  all
inventories of Seller, including all finished goods, work in process, supplies
and raw materials;

 

(d)                                 (i) all
trade accounts receivable and other rights to payment from customers of Seller
and the full benefit of all security for such accounts or rights to payment;
(ii) all other accounts or notes receivable of Seller and the full benefit
of all security for such accounts or notes; and (iii) any claim, remedy or
other right related to any of the foregoing;

 

(e)                                  all
the contracts, leases, licenses, purchase orders, commitments and other binding
arrangements of Seller, including those listed or described on Schedule 2.1(e)
(“Assigned Contracts”);

 

(f)                                    all
the permits, licenses, approvals, franchises, certificates, consents and other
authorizations of any Governmental Authority issued to or held by Seller,
including those 

 

10

 

listed or
described on Schedule 2.1(f), and such as are required to make the
statement in the first sentence of Section 3.11 true (collectively, the “Listed
Permits”), to the extent they may be legally transferred by agreement;

 

(g)                                 all
the patents, copyrights, service marks, trademarks, trade names and domain
names (and all registrations and applications therefor) owned by or licensed to
Seller and used, held for use or planned to be used in connection with products
currently under active development, in each case, by Seller in the operation of
the Business, including those listed or required to be listed on Schedule 2.1(g),
and such as are required to make the statement in the first sentence of
Section 3.9(a) true (the “Listed Intellectual Property”), together
with the Other Intellectual Property;

 

(h)                                 all
the data, records, files, manuals, blueprints and other documentation of
Seller, in each case related to the Purchased Assets and used, held for use or
planned to be used in connection with products currently under active
development, in each case, by Seller in the operation of the Business,
including:  (i) service and
warranty records; (ii) sales promotion materials, creative materials, art
work, photographs, public relations and advertising material, studies, reports,
correspondence and other similar documents and records, whether in electronic
form or otherwise; (iii) all client, customer and supplier lists,
telephone numbers and electronic mail addresses with respect to past, present
or prospective clients, customers and suppliers; (iv) copies of accounting
and tax books, ledgers and records and other financial records; (v) all
sales and credit records, catalogs and brochures, purchasing records and
records relating to suppliers; and (vi) subject to applicable Law,
original personnel records of all Transferred Employees;

 

(i)                                     all
the payments (or pro rata portions thereof) made by Seller with respect to the
Purchased Assets or the Business which constitute, as of the Closing Date,
prepaid expenses in accordance with GAAP;

 

(j)                                     all
the vehicles owned or (to the extent assignable) leased by Seller or by
Affiliates of Seller and used in the operation of the Business on the Closing
Date, in each case as listed on Schedule 2.1(j);

 

(k)                                  the
goodwill related to the conduct of the Business and all rights to continue to
use the Purchased Assets as an ongoing business;

 

(l)                                     all
assets included in the calculation of Current Assets on the Closing Balance Sheet; and

 

(m)                               all
other assets, properties, rights, claims and interests of Seller that are not
specifically included in the definition of the term “Excluded Assets” in
Section 2.2.

 

2.2                                 Excluded Assets.  Notwithstanding anything to the contrary in
Section 2.1, the following assets, properties, rights and interests of
Seller (collectively, the “Excluded Assets”) are excluded from the
Purchased Assets and shall remain the property of Seller after the Closing:

 

11

 

(a)                                  corporate
seals, certificates of incorporation, minute books, stock books, Tax Returns,
original accounting and tax books, ledgers, records and other financial records
or other records relating to the corporate organization of Seller;

 

(b)                                 all
cash on hand, cash equivalents, investments (including stock, debt instruments,
options and other instruments and securities) and bank deposits;

 

(c)                                  all
accounts or notes receivable owed to Seller by Parent or any Person listed on Schedule 1.1(a);

 

(d)                                 all
rights of Seller:  (i) to use any
service marks, service names, trademarks, trade names, domain names, logos or
brand names, and related goodwill, of Parent or any other Person listed on Schedule 1.1(a)
(including any derivatives thereof), or to use blueprints, drawings, designs,
manuals, documentation or other intellectual property rights attributable to or
which are used solely in Seller’s manufacturing of products for Parent or any
other Person listed on Schedule 1.1(a) and (ii) in any
tangible personal property (including molds, tooling and other equipment) which
are used or usable solely in Seller’s manufacturing of products for Parent or
any other Person listed on Schedule 1.1(a), in each case to the
extent listed on Schedule 2.2(d);

 

(e)                                  all
insurance policies, fidelity or surety bonds or fiduciary liability policies
covering the Purchased Assets, the Business or the operations, employees,
officers or directors of Seller and all rights of Seller of every nature and
description under or arising out of such policies and bonds;

 

(f)                                    originals
of all personnel records and other records that Seller is required by Law to retain
in its possession;

 

(g)                                 the
assets listed on Schedule 2.2(g), including the contracts, leases,
licenses, permits, plans, purchase orders, commitments and other binding
arrangements of Seller, including those between Seller and its Affiliates,
listed on Schedule 2.2(g) (the “Excluded Contracts”);

 

(h)                                 any
assets, properties, rights or interests of Seller which have been transferred
or disposed of in the ordinary course of the Business prior to the Closing Date
to the extent permitted by Section 5.1;

 

(i)                                     except
as expressly provided in Section 2.5(c), claims for refunds of Taxes paid
by Seller;

 

(j)                                     all
shares of capital stock or other ownership interests held by Seller in any
Subsidiary set forth on Schedule 3.1; and

 

(k)                                  all
rights of Seller under this Agreement, including Seller’s rights in the
consideration paid to Seller pursuant to this Agreement.

 

2.3                                 Assumed Liabilities.  Upon the terms and subject to the conditions
of this Agreement, Purchaser shall assume on the Closing Date, upon the
consummation of the Closing, 

 

12

 

and shall pay, perform
and discharge when due, the following obligations and liabilities arising on or
after the Closing Date (the “Assumed Liabilities”):

 

(a)                                  all
obligations of Seller under the Assigned Contracts, including the lease
relating to the Leased Manufacturing Facility, other than (i) liabilities or
obligations arising from any pre-Closing breach or default by Seller of or
under any Assigned Contract and (ii) liabilities for Capital Expenditures not
yet paid that are included in the calculation of the Capital Expenditures
Adjustment; and

 

(b)                                 Accounts
Payable as set forth in the Closing Balance
Sheet as of the Closing Date.

 

2.4                                 Retained Liabilities.  Purchaser shall not assume, and Seller shall
pay, perform and discharge when due and remain liable for any and all
liabilities of Seller (including any liability of Seller under this Agreement)
and any liabilities that otherwise encumber the Business or the Purchased
Assets, in each case other than the Assumed Liabilities (collectively, the “Retained
Liabilities”).

 

2.5                                 Purchase Price; Payment of Purchase Price;
Adjustments.

 

(a)                                  The
aggregate consideration payable to Seller for the Purchased Assets
(collectively, the “Purchase Price”) shall be as follows:

 

(i)                                     The
Base Purchase Price, as adjusted at Closing in accordance with
Section 2.5(c) and as adjusted after Closing in accordance with
Sections 2.5(d) and 2.5(f);

 

(ii)                                  the
assumption of the Assumed Liabilities; and

 

(iii)                               the
* Earnout as described in Section 2.5(e).

 

(b)                                 The
Purchase Price shall be paid as follows:

 

(i)                                     At
Closing, Purchaser shall pay Seller cash in the amount equal to the Base
Purchase Price, plus or minus the Closing Proration, as
determined in accordance with Section 2.5(c), plus or minus
the Initial Capital Expenditures Adjustment and minus all applicable
withholding Taxes (the “Withholding Taxes”).  Purchaser shall make such payment via wire transfer of
immediately available funds to an account specified by Seller, which account
shall be so specified at least two (2) Business Days prior to the Closing Date.

 

(ii)                                  At
Closing, Purchaser shall execute and deliver an Assignment and Assumption
Agreement, in the form attached as Exhibit A (the “Assignment
and Assumption Agreement”), evidencing the assignment by Seller of certain
of the Purchased Assets and the assumption by Purchaser of the Assumed
Liabilities.

 

(iii)                               After
Closing, any Working Capital Adjustment due shall be paid by the paying Party
within five (5) Business Days after the calculation of the Working Capital
Adjustment becomes conclusive and binding on the Parties in accordance with
Section 2.5(d).  The paying Party
shall make such payment via wire transfer of immediately available funds to an 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

13

 

account specified
by the recipient Party, which account shall be so specified at least two (2) Business
Days before payment of the Working Capital Adjustment becomes due.

 

(iv)                              After
Closing, any Final Closing Capital Expenditures Adjustment due shall be paid by
the paying Party within five (5) Business Days after the calculation of the
Final Closing Capital Expenditures Adjustment becomes conclusive and binding on
the Parties in accordance with Section 2.5(f).  The paying Party shall make such payment via wire transfer of
immediately available funds to an account specified by the recipient Party,
which account shall be so specified at least two (2) Business Days before
payment of the Final Capital Expenditures Adjustment becomes due.

 

(c)                                  Liability
for all accrued or prepaid real estate Taxes attributable to the Real Property
and the Real Property Leases shall be prorated between Seller and Purchaser as
of 12:01 a.m. on the Closing Date based on the most recently ascertainable real
estate Tax bill.  Such proration between
the pre-Closing Date period and the post-Closing Date period shall be made by
multiplying such Taxes by a fraction, the numerator of which is the actual
number of days in the pre-Closing period and the denominator of which is the
number of days in the real property tax year in which the real property taxes
are assessed, as the case may be.  Any
net credit resulting from such proration in favor of Seller shall be paid in
cash by Purchaser to Seller at Closing and any resulting net credit in favor of
Purchaser shall be credited against the Purchase Price paid by Purchaser at
Closing (such amount, as applicable, the “Closing Proration”).  Any refunds of such real estate Taxes made
after the Closing shall first be applied to the unreimbursed third-party costs
incurred by Seller or Purchaser in obtaining the refund, then shall be paid to
Seller (for such Taxes accrued through the period prior to the Closing Date)
and to Purchaser (for the period commencing on and after the Closing
Date).  If any proceeding to determine
the assessed value of the Real Property or the real estate Taxes payable with
respect to the Real Property commenced before the date hereof is continuing as
of the Closing Date, Seller shall be authorized to continue to prosecute such
proceeding and shall be entitled to any abatement proceeds therefrom allocable
to any period before the Closing Date, and Purchaser agrees to cooperate as
reasonably requested with Seller and to execute any and all documents
reasonably requested by Seller in furtherance of the foregoing.

 

(d)                                 The
Purchase Price shall be: (i)  increased on a dollar for dollar basis to
the extent that the Working Capital on the Closing Date exceeds the Target
Working Capital and (ii) decreased on a dollar for dollar basis to the extent
that the Working Capital on the Closing Date is less than the Target Working
Capital (the “Working Capital Adjustment”).  Within sixty (60) days following the Closing, Purchaser shall
prepare and deliver to Seller a Closing
Balance Sheet as of the Closing Date, together with a calculation of the
Working Capital Adjustment based on such Closing
Balance Sheet.  Following delivery of
the Closing Balance Sheet and Working Capital Adjustment, Purchaser shall
provide Seller and its Representatives with reasonable access to the books,
records, facilities and employees of Purchaser, and shall cooperate with
Seller’s Representatives, in connection with Seller’s review of the Closing
Balance Sheet and Working Capital Adjustment. 
The Working Capital Adjustment calculated by Purchaser shall be
conclusive and binding on the Parties unless Seller, within thirty (30) days
after its receipt of the Working Capital Adjustment, gives Purchaser a written
notice of objection setting forth in reasonable detail the amount in dispute
and the basis for such dispute (a “Purchase Price Objection Notice”); provided,
that Seller shall not be required to give details 

 

14

 

regarding the
amount or basis of any dispute if Purchaser shall have failed to provide Seller
the access and cooperation required by this Section.  If Seller delivers a Purchase Price Objection Notice, the Parties
shall attempt in good faith to resolve such dispute through negotiation, and
any agreement reached shall be conclusive and binding on the Parties.  If the Parties are unable, despite good
faith negotiations, to resolve the disputes described in the Purchase Price
Objection Notice within thirty (30) days after delivery of the Purchase Price
Objection Notice, then the Parties shall promptly submit any such unresolved
dispute to the Independent Accounting Firm. 
The Parties shall cooperate fully with the Independent Accounting Firm,
including providing all work papers and back-up materials relating to the
unresolved disputes requested by the Independent Accounting Firm to the extent
available to the Parties and their respective Representatives.  The determination of the Independent Accounting
Firm shall be set forth in a written notice delivered to Purchaser and Seller
within thirty (30) days after submission of the disputes to the Independent
Accounting Firm and shall be conclusive and binding on the Parties.  The fees and expenses of the Independent
Accounting Firm shall be shared equally by Seller and Purchaser.  The Working Capital Adjustment shall be
revised to reflect the resolution of the disputes resolved in accordance with
this Section 2.5(d).

 

(e)                                  Following
each anniversary of the first day of the month after the month in which the
Closing Date occurs up to and including the fifth such anniversary (each such
anniversary, an “Earnout Measurement Date”), Purchaser shall be
obligated to pay to Seller an amount equal to one-third of the Contribution
Margin (as defined below) generated by Purchaser’s aggregate sales of *
patented * parts (“* Parts”) during the twelve-month period immediately
preceding each such Earnout Measurement Date (the “* Earnout”); provided,
however, that no such payment shall be required with respect to any
Earnout Measurement Date for which the aggregate volume of shipments of * Parts
by Purchaser during the twelve-month period immediately preceding such Earnout
Measurement Date was below * percent (*) of the base volume of shipments of *
Parts by Seller for its fiscal year ended November 30, 2002.  Within thirty (30) days following each
Earnout Measurement Date, Purchaser shall prepare and deliver to Seller a
written notice providing a calculation of the * Earnout for such Earnout
Measurement Date (a “* Calculation”) together with a check in the amount
calculated therein (the “Original Amount”). Following delivery of the *
Calculation, Purchaser shall provide Seller and its Representatives reasonable access
to the books, records, facilities and employees of Purchaser, and shall
cooperate with Seller’s Representatives, in connection with Seller’s review of
the * Calculation.  The * Calculation
calculated by Purchaser shall be conclusive and binding on the Parties unless
Seller, within thirty (30) days after its receipt of the * Calculation, gives
Purchaser written notice of its objection setting forth in reasonable detail
the amount in dispute and the basis for such dispute (a “* Objection Notice”).  If Seller delivers a * Objection Notice, the
Parties shall attempt in good faith to resolve such dispute through
negotiation, and any agreement reached shall be conclusive and binding on the
Parties.  If the Parties are unable,
despite good faith negotiations, to resolve the disputes described in the *
Objection Notice within twenty (20) days after delivery of the * Objection
Notice, then the Parties shall promptly submit any such unresolved dispute to
the Independent Accounting Firm.  The
Parties shall cooperate fully with the Independent Accounting Firm, including
providing all work papers and back-up materials relating to the unresolved
disputes requested by the Independent Accounting Firm to the extent available
to the 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

15

 

Parties and their
respective Representatives.  The determination
of the Independent Accounting Firm shall be set forth in a written notice
delivered to Purchaser and Seller within thirty (30) days after submission of
the disputes to the Independent Accounting Firm and shall be conclusive and
binding on the Parties.  The fees and
expenses of the Independent Accounting Firm shall be shared equally by Seller
and Purchaser.  The * Calculation shall
be revised as necessary to reflect the resolution of the disputes resolved in
accordance with this Section 2.5(e), and within five (5) days after final
resolution, if the amount determined by the * Calculation has been revised to
be an amount that is greater than or less than the Original Amount, either
Purchaser or Seller, as applicable, shall deliver to the other a check in such
amount as is necessary such that the total amount paid by Purchaser to Seller
pursuant to this Section 2.5(e) shall be equal to the amount provided in
such revised * Calculation.  For
purposes of this section 2.5(e), “Contribution Margin” shall mean
gross sales (i) minus discounts, rebates, allowances, chargebacks, shipping
charges and the like and (ii) minus costs of variable labor, direct materials and variable overhead expenses.

 

(f)                                    The
Purchase Price shall be adjusted as follows:

 

(i)                                     Two
Business Days before the Closing Date, the Seller shall deliver to Purchaser a
certificate containing a calculation of the Capital Expenditures as of such
date (the “Estimated Capital Expenditures”).  The Estimated Capital Expenditures minus the Target Capital
Expenditures shall be the “Initial Capital Expenditures Adjustment”; provided
that the Initial Capital Expenditures Adjustment shall be zero if such
adjustment would otherwise be less than the product of (A) 0.05 and (B) the
Target Capital Expenditures.  On the
Closing Date, the Purchase Price shall be (i) increased on a dollar for
dollar basis to the extent that the Initial Capital Expenditures Adjustment
exceeds zero and (ii) decreased on a dollar for dollar basis to the extent that
the Initial Capital Expenditures Adjustment is less than zero.

 

(ii)                                  Within
sixty (60) days following the Closing, Purchaser shall prepare and deliver to
Seller a calculation of the Capital Expenditures as of the Closing Date (the “Closing
Capital Expenditures”).  The Closing
Capital Expenditures minus the Target Capital Expenditures, if any, shall be
the “Closing Capital Expenditures Adjustment”; provided that the
Closing Capital Expenditures Adjustment shall be zero if such adjustment would
otherwise be less than the product of (A) 0.05 and (B) the Target Capital
Expenditures.  Following delivery of the
calculation of the Closing Capital Expenditures Adjustment, Purchaser shall
provide Seller and its Representatives with reasonable access to the books,
records, facilities and employees of Purchaser, and shall cooperate with Seller
and its Representatives, in connection with Seller’s review of the Closing
Capital Expenditures Adjustment.  The Closing
Capital Expenditures Adjustment calculated by Purchaser shall be conclusive and
binding on the Parties unless Seller, within thirty (30) days after its receipt
of the Closing Capital Expenditures Adjustment, gives Purchaser a written
notice of objection setting forth in reasonable detail the amount in dispute
and the basis for such dispute (a “Closing Capital Expenditures Objection
Notice”); provided, that Seller shall not be required to give
details regarding the amount or basis of any dispute if Purchaser shall have
failed to provide Seller the access and cooperation required by this Section.  If Seller delivers a Closing Capital
Expenditures Objection Notice, the Parties shall attempt in good faith to
resolve such dispute through negotiation, and any agreement reached shall be
conclusive and binding on the Parties. 
If the Parties are unable, despite good faith negotiations, to resolve
the disputes described in the Closing Capital Expenditures Objection Notice
within 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

16

 

thirty (30) days
after delivery of the Closing Capital Expenditures Objection Notice, then the
Parties shall promptly submit any such unresolved dispute to the Independent
Accounting Firm.  The Parties shall
cooperate fully with the Independent Accounting Firm, including providing all
work papers and back-up materials relating to the unresolved disputes requested
by the Independent Accounting Firm to the extent available to the Parties and
their respective Representatives.  The
determination of the Independent Accounting Firm shall be set forth in a
written notice delivered to Purchaser and Seller within thirty (30) days after
submission of the disputes to the Independent Accounting Firm and shall be
conclusive and binding on the Parties. 
The fees and expenses of the Independent Accounting Firm shall be shared
equally by Seller and Purchaser.  The
Closing Capital Expenditures and the Closing Capital Expenditures Adjustment shall
be revised to reflect the resolution of the disputes resolved in accordance
with this Section 2.5(f) (the “Final Closing Capital Expenditures”
and the “Final Closing Capital Expenditures Adjustment”,
respectively).  After the Final Closing
Capital Expenditures is determined in accordance with this Section 2.5(f),
(x) Purchaser shall pay to Seller in accordance with Section 2.5(b)(iv)
any amount by which the Final Closing Capital Expenditures Adjustment exceeds
the Initial Capital Expenditures Adjustment and (y) Seller shall pay to
Purchaser in accordance with Section 2.5(b)(iv) any amount by which the
Final Capital Expenditures Adjustment is less than the Initial Capital
Expenditures Adjustment.

 

2.6                                 Allocation of Purchase Price.  Promptly after the date hereof, but in any
event within five (5) Business Days after the date hereof, Purchaser shall
engage a valuation or appraisal firm and shall instruct it to deliver to
Purchaser and Seller within twenty (20) days after engagement a statement of
the value of the Real Property, Real Property Leases, and any motor vehicles
for which a value must be stated in the applicable transfer documents or
related filings to be made on or about the Closing Date.  By the later of: (i) February 1, 2004,
(ii) 30 Business Days after the calculation of the Working Capital Adjustment
becomes conclusive and binding on the Parties in accordance with
Section 2.5(d) or (iii) 30 Business Days after the calculation of the
Final Closing Capital Expenditures Adjustment becomes conclusive and binding on
the Parties in accordance with Section 2.5(f), Purchaser shall deliver to
Seller a statement (the “Final Allocation Statement”), such Final
Allocation Statement to be subject to Seller’s consent, which consent shall not
be unreasonably withheld allocating the Purchase Price, in accordance with
Section 1060 of the Code and (with respect to the Real Property, Real
Property Leases and motor vehicles described therein) in conformity with the
statement of the valuation or appraisal firm described above, among:
(a) the Purchased Assets, (b) the non-competition covenant contained
in Section 8.3 of this Agreement, (c) the Assumed Liabilities and (d) the
Affiliate Mark required to be transferred pursuant to Section 6.3(e).  If the Parties are unable, despite good
faith negotiations, to agree on such allocation within twenty (20) days after
delivery of the Final Allocation Statement, then the Independent Accounting
Firm will be retained to determine such allocation (the fees and expenses of
which shall be shared equally by Purchaser and Seller) and shall be instructed
to provide its determination to Purchaser and Seller, which determination shall
be final and binding upon Purchaser and Seller.  The Parties agree that such allocation pursuant to the Final
Allocation Statement shall be used in filing IRS Form 8594, Asset Acquisition
Statement under Section 1060 of the Code (“Form 8594”), and all Tax
Returns (except to the extent such filings are required to be made by Seller
prior to receipt of the Final Allocation Statement, in which case the Parties
shall agree on the appropriate allocation for such filings).  Subject to the requirements of applicable
Tax Laws or prior Tax elections, neither Seller nor 

 

17

 

Purchaser will take any
position inconsistent with such allocations in any Tax Return or in any
examination of any Tax Return, in any refund claim or in any Tax litigation.  For avoidance of doubt, Seller shall have no liability for inconsistent
Tax Returns or other filings made prior to Seller’s receipt of the Final
Allocation Statement if made in a manner consistent with the procedures
provided above if after receipt of the Final Allocation Statement Seller takes
such steps as are reasonably available under applicable Law to amend such
inconsistent Tax Returns to be consistent with the Final Allocation Statement.

 

2.7                                 Closing.  The
consummation of the purchase and sale of the Purchased Assets in accordance
with this Agreement (the “Closing”) shall take place at 10:00 a.m.,
local time, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
Four Embarcadero Center, San Francisco, California 94111, on the second Business
Day after all of the conditions precedent to Closing hereunder shall have been
satisfied or waived, or at such other time and place as the Parties shall agree
in writing.  Unless the parties
otherwise agree in writing, the Closing with respect to the Real Property shall
be conducted through a customary escrow arrangement with the Title Company.  The date of the Closing is referred to as the
“Closing Date.”  The Parties
shall deliver at the Closing such documents, certificates of officers and other
instruments as are set forth in Article VI hereof and as may reasonably be
required to effect the transfer by Seller of the Purchased Assets pursuant to
and as contemplated by this Agreement and to consummate the Acquisition.  All events occurring at the Closing shall be
deemed to occur simultaneously (with the concurrent delivery of the documents
required to be delivered pursuant to Article VI, delivery of the Title
Policies and payment of the Purchase Price).

 

2.8                                 Assignment of Contracts.  Seller shall use its best efforts (subject
to the limitations below) to obtain the written consent of any third party
required in connection with the transfer of any Assigned Contract to Purchaser
on or before the Closing Date (including, for the avoidance of doubt, leaving
in place any guarantees requested by any such third party as set forth under
Section 5.11). Notwithstanding anything in this Agreement to the contrary,
to the extent that any Assigned Contract is not assignable without the consent
of another party whose consent has not been obtained, this Agreement shall not
constitute an assignment or attempted assignment of such Assigned Contract if
the assignment or attempted assignment would constitute a breach thereof or
materially detract from the rights transferred to Purchaser.  If such consent is not obtained, then (A)
Seller shall use its best efforts to enter into any arrangement requested by
Purchaser that is designed to give Purchaser the full benefit of such Assigned
Contract accruing on or after the Closing and that does not violate any
applicable Law or presently existing agreement to which Seller is a party, and
(B) Purchaser shall use its best efforts to cooperate with Seller to consummate
such arrangement.  Notwithstanding
anything to the contrary in this Section 2.8, (i) Seller shall not be
required to make out-of-pocket payments to third parties (excluding payments to
Seller’s or Parent’s employees or other internal costs of Seller or Parent) in
excess of * in connection with its obligations under this Section 2.8 and
(ii) neither of Purchaser and Kerr shall be required to make any payment to any
third party in connection with its obligations under this
Section 2.8.  Seller shall provide
Purchaser with a reasonable opportunity to participate in any discussions or
negotiations, written or oral, with each lessor under each Lease in connection
with obtaining consent thereunder.

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

18

 

2.9                                 Natural Hazard Disclosure Statement.  Promptly following execution of this
Agreement, Seller shall deliver to Purchaser a Natural Hazard Disclosure
Statement executed by Seller as and to the extent prescribed by California Law,
in the form attached as Exhibit B (the “NHDS”), applicable
to the Real Property.  Within seven (7)
Business Days after Purchaser’s receipt of the NHDS, Purchaser shall execute
and deliver to Seller one counterpart original of the NHDS.  Purchaser’s signature on the NHDS shall,
among other things, serve to acknowledge Purchaser’s receipt from Seller of the
NHDS and Purchaser’s understanding and acceptance thereof.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF
SELLER

 

As an inducement to Kerr and Purchaser to enter into
this Agreement and to consummate the Acquisition, Seller represents and
warrants to Kerr and Purchaser as follows:

 

3.1                                 Organization and Qualification.  Seller is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on the Business as it is now being
conducted.  Seller is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where
the character of the assets and properties owned, leased or operated by it or
the nature of the Business makes such qualification or licensing necessary,
except for failures to be so qualified or licensed and in good standing that do
not have a Material Adverse Effect. 
Except as set forth on Schedule 3.1, Seller has no
Subsidiaries.

 

3.2                                 Authority Relative to this Agreement.  Seller has all necessary corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party, to perform its obligations hereunder and to
consummate the Acquisition.  The
execution and delivery of this Agreement and such other Transaction Documents
by Seller and the consummation by Seller of the Acquisition have been duly and
validly authorized by all necessary corporate action on the part of Seller, and
no other corporate proceedings on the part of Seller are necessary to authorize
this Agreement or to consummate the Acquisition.  This Agreement and such other Transaction Documents have been or
will be duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery by Purchaser, each such agreement
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, fraudulent conveyance,
reorganization or other similar Law affecting the enforceability of creditors’
rights generally and to the effect of general principles of equity which may
limit the availability of remedies (whether in a proceeding at law or in
equity).

 

3.3                                 No Conflict.  Except as set forth on Schedule 3.3, the execution
and delivery of this Agreement by Seller do not, and the performance by Seller
of its obligations hereunder and the consummation of the Acquisition will
not:  (a) conflict with or violate
any provision of the certificate of incorporation or by-laws of Seller;
(b) assuming that all filings and notifications described in
Section 3.4 have been made, conflict with or violate any Law or order
applicable to Seller or by which any of the Purchased Assets or Seller is bound
or affected; or (c) result in any material breach of or constitute a
material default under, or require notice or consent under, any mortgage,
indenture, deed of trust, lease, contract, agreement, license or other
instrument to

 

19

 

which Seller is a party
or by which any of the Purchased Assets is bound or affected, or result in the
creation of a material Lien on any of the Purchased Assets, except in the case
of clauses (b) and (c), for any conflict, violation, breach or default that
would not reasonably be expected to have a Material Adverse Effect.

 

3.4                                 Required Filings and Consents.  The execution and delivery of this Agreement
by Seller do not, and the performance by Seller of its obligations hereunder
and the consummation of the Acquisition will not, require any consent,
approval, authorization or permit of, or filing by Seller with or notification
by Seller to, any Governmental Authority, except for:  (a) the consents, approvals, authorizations, declarations or
rulings set forth on Schedule 3.4; (b) the filing of a
Notification and Report Form pursuant to the HSR Act and the expiration or
earlier termination of the applicable waiting period thereunder with respect to
the Acquisition; and (c) such consents, approvals, authorizations, permits
and filings the failure of which to obtain would not reasonably be expected to
have a Material Adverse Effect.

 

3.5                                 Financial Statements.  Set forth on Schedule 3.5 are true
and complete copies of (a) Seller’s balance sheets at November 30,
2001 and 2002, and its income statements and statements of cash flows for the
three (3) years ended November 30, 2002, together with the notes thereto
and the report thereon of Ernst & Young LLP (the “Audited Financials”),
and (b) Seller’s unaudited balance sheet at May 31, 2003 and the
related unaudited consolidated income statements and a statement of capital
expenditures for the six month period ended at such date (the “Interim
Financials”) and (c) the pro forma presentation of Seller’s revenues for
(i) the year ended November 30, 2002, and (ii) the six months ended
May 31, 2003, which pro forma presentations are based on the Audited
Financials or the Interim Financials, as applicable, and have been adjusted
solely to reflect the pricing referred to in subclauses (x) and (y) below (the
“Pro Forma Revenues”).  The
Audited Financials and, subject to normal and recurring quarter-end, year-end
and audit adjustments, the Interim Financials have been prepared in accordance
with GAAP, applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to the Audited Financials and except for the
absence of notes to the Interim Financials), and present fairly the financial
position of Seller as of the applicable date and Seller’s results of operations
and cash flows for the periods then ended. 
Parent and Seller agree that the Pro Forma Revenues represent in all
material respects the revenues of Seller for the periods set forth therein as
if sales by Seller to Parent (x) during the year ended November 30, 2002
had occurred at prices set forth on Schedule 3.5 hereto and (y)
during the six months ended May 31, 2003 had occurred at prices set forth
on Schedules 3.1(a) and 3.1(b) to the Supply Agreement.  Parent and Seller agree that Seller’s
aggregate gross margin on sales to Parent and the other Persons identified on
Schedule 1.1(a) for the six months ended May 31, 2003 would not have
been materially less than the aggregate gross margin set forth on
Schedule 3.5 if the pricing on Schedules 3.1(a) and 3.1(b) to the Supply
Agreement had been in effect during such period and such aggregate gross
margins had otherwise been calculated in accordance with the practices, procedures
and methods used by Seller in preparing the Interim Financials.  Parent and Seller acknowledge that Kerr and
Purchaser’s acceptance of the prices set forth on Schedules 3.1(a) and 3.1(b)
to the Supply Agreements is made solely in reliance on this representation.

 

3.6                                 Absence of Undisclosed Liabilities.  As of the date hereof, Seller does not have
any liabilities (absolute, contingent, accrued or otherwise) in respect of the
Business other than: 
(a) liabilities reflected in the balance sheet of Seller at
May 31, 2003 included in the Interim 

 

20

 

Financials (the “Latest
Balance Sheet”); (b) liabilities incurred since the date of the Latest
Balance Sheet (the “Latest Balance Sheet Date”) in the ordinary course
of business; (c) obligations of continued performance under contracts and
other commitments and arrangements entered into in the ordinary course of the
Business to the extent permitted under Section 5.1; (d) the
liabilities described on Schedule 3.6; and (e) liabilities
under this Agreement.

 

3.7                                 Absence of Certain Changes or Events.  From the Latest Balance Sheet Date to the
date hereof, except as contemplated by this Agreement or disclosed on Schedule 3.7,
Seller has conducted the Business in the ordinary course of business and:

 

(a)                                  there
has not been any material damage to or destruction or loss of any asset,
property, right or interest of Seller used in the Business, whether or not
covered by insurance, that has had or would reasonably be expected to have a
Material Adverse Effect;

 

(b)                                 Seller
has not sold or transferred any material amount of its assets, properties,
rights or interests used in the Business, other than sales of inventory and
disposal of obsolete, damaged or defective inventory or other assets in the
ordinary course of business;

 

(c)                                  Seller
has not increased the salary, bonus or other compensation payable to any
officer or employee of Seller other than in the ordinary course of business
consistent with past practice;

 

(d)                                 Seller
has not entered into, modified or terminated any contract or transaction
involving a total remaining commitment of at least $250,000  other than in the ordinary course of
business, or received written notice of termination of any material contract or
transaction;

 

(e)                                  Seller
has not entered into any agreement to take any of the actions set forth in
subsections (b) through (d) of this Section 3.7; and

 

(f)                                    Seller
has not taken or failed to take any other action which action or failure would
violate Section 5.1 if such action or failure were to occur after the date
hereof.

 

3.8                                 Sufficiency and Title to Assets.  Except as set forth on Schedule 3.8:

 

(a)                                  No
proceeding is pending or, to the Knowledge of Seller, threatened for the taking
or condemnation of all or any portion of the Real Property.  The Real Property is all of the real
property owned by Seller.  Seller has not
entered into any agreements giving any Person any right to lease, sublease or
otherwise occupy any portion of the Real Property.  To the Knowledge of Seller, true and complete copies of all
surveys of the Real Property in Seller’s possession have heretofore been
furnished to Purchaser.  There are no
ongoing proceedings (judicial or, to the Knowledge of Seller, legislative),
claims or disputes of which Seller has notice affecting any Real Property that
might curtail or interfere with the use of such property.  To the Knowledge of Seller, each Real
Property is in material compliance with all Laws, including (i) the
Americans with Disabilities Act, 42 U.S.C. § 12102, et seq., together with
all rules, regulations and official interpretations promulgated pursuant
thereto, and (ii) all Laws with respect to zoning, building, fire, life
safety, health codes and sanitation. 
Seller has not, since 

 

21

 

June 1, 2001,
received any notices of existing violations of any Laws applicable to any Real
Property.  Since January 1, 2001,
Seller has not received any notice of, or other writing referring to, any requirements
or recommendations by any insurance company that has issued a policy covering
any part of the Real Property or by any board of fire underwriters or other
body exercising similar functions, requiring or recommending any repairs or
work to be done on any part of the Real Property, which repair or work has not
been completed.  To the Knowledge of
Seller, Seller has obtained all appropriate certificates of occupancy required
to use and operate the Real Property located in the State of California in the
manner in which such Real Property is currently being used and operated.  True and complete copies of all such
certificates have heretofore been furnished to Purchaser.

 

(b)                                 The
Real Property Leases are the only leasehold estates under which Seller is a
lessee (or sublessee) of any real property or interest therein.  To the Knowledge of Seller, no proceeding is
pending (and Seller has not received notice of any pending proceeding) and, to
the Knowledge of Seller, no proceeding is threatened for the taking or condemnation
of all or any portion of the property demised under the Real Property
Leases.  A true and complete copy of
each Real Property Lease has heretofore been delivered to Purchaser.  Each Real Property Lease is valid, binding
and enforceable against Seller and, to the Knowledge of Seller (without
inquiry), against the landlord thereunder in accordance with its terms and is
in full force and effect with respect to Seller and, to the Knowledge of Seller
(without inquiry) the landlord thereunder. 
Seller has not encumbered the leasehold estate created by each Real
Property Lease with any leasehold mortgages or any other Liens.  Seller has not received notice of any
existing defaults by Seller under any of the Real Property Leases and, to the
Knowledge of Seller, there are no existing defaults by Seller under any of the
Real Property Leases.  To the Knowledge
of Seller, no event has occurred that (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would constitute a default
under any Real Property Lease.  To the
Knowledge of Seller, Seller has obtained all appropriate certificates of
occupancy required to use and operate each Real Property Lease in the manner in
which such Real Property Lease is currently being used and operated in New
Jersey to the extent that Seller is obligated to obtain such certificate of
occupancy pursuant to applicable Laws and the terms of the Real Property
Leases.  True and complete copies of all
such certificates have heretofore been furnished to Purchaser.

 

(c)                                  The
Real Property, the premises demised under the Real Property Leases, the other
assets comprising the Purchased Assets and the Affiliate Marks are, taken
together, all of the assets used, held for use or planned to be used in
connection with products currently under active development, in each case, in
the Business, and are adequate and sufficient for the operation of the Business
as currently conducted.

 

(d)                                 To
the Knowledge of Seller, except as disclosed in the engineering reports previously
made available to Purchaser and listed on Schedule 3.8, each of the
buildings, improvements, and equipment owned, leased or used by Seller are
structurally sound with no known defects and are in good operating condition
and repair and are adequate for the uses to which they are being put.  Seller is not in possession of any
engineering reports dated June 1, 1993 or later regarding the structural
sufficiency of the buildings, improvements, and/or equipment owned, leased or
used by Seller except as set forth in Schedule 3.8.  To the Knowledge of Seller, except as
disclosed in the engineering reports previously made available to 

 

22

 

Purchaser and
listed on Schedule 3.8, none of such buildings, improvements, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost.  The roof of each such structure is in good
repair and condition.

 

(e)                                  Seller
has good and valid title to the Tangible Personal Property, free and clear of
all Liens other than Permitted Liens.

 

3.9                                 Intellectual Property.

 

(a)                                  Schedule 3.9(a)
is a complete list of the Listed Intellectual Property that is the subject of
any application filed with, or any registration issued by, any government
agency (collectively, “Registered Intellectual Property Rights”).  All Registered Intellectual Property Rights
and the Affiliate Marks are, to the Knowledge of Seller, enforceable, and all
material fees, payments and filings due in respect of such Registered
Intellectual Property Rights and the Affiliate Marks as of the date hereof have
been made.  Each material item of
Intellectual Property is: 
(i) owned by Seller, free and clear of all Liens, restrictions or
encumbrances on Seller’s right to transfer to Purchaser the Listed Intellectual
Property and Other Intellectual Property (or in the case of the Affiliate
Marks, owned by an Affiliate of Seller), or (ii) rightfully used by Seller
pursuant to a valid license, sublicense, consent or other similar agreement
identified as such in Schedule 3.9(a); and the Intellectual
Property (together with any intellectual property included in the Excluded
Assets) constitutes all of the intellectual property that is necessary to
conduct the Business as currently conducted and in connection with products
currently under active development.

 

(b)                                 Each
material item of Intellectual Property transferred to Purchaser pursuant to the
Acquisition shall be owned, available for use or enforceable, as the case may
be, by Purchaser immediately following the Closing on substantially identical
terms and conditions as it was owned by, available to or enforceable by, as the
case may be, Seller immediately prior to the Closing.

 

(c)                                  The
consummation of the Acquisition will not result in Kerr or Purchaser being
bound by any non-compete or other restriction on the operation of the Business
that was previously binding on Seller or the granting by Kerr or Purchaser of
any rights or licenses to any intellectual property rights of Kerr or Purchaser
to a third party (including a covenant not to sue) that was previously binding
on Seller.

 

(d)                                 Except
as disclosed on Schedule 3.9(d), Seller is not aware of any facts
which would lead it to reasonably believe that the operation of the Business as
currently conducted infringes or will infringe on any intellectual property
rights of any other Person.

 

(e)                                  Except
as disclosed on Schedule 3.9(e), no claims have been asserted nor,
to the Knowledge of Seller, are threatened by any Person against Seller
that:  (i) challenge the validity,
enforceability, registrability or ownership by Seller of any of the
Intellectual Property or (ii) claim that the operation of the Business as
currently conducted infringes or will infringe any intellectual property rights
of any other Person.  To the Knowledge
of Seller, no third party is engaged in unauthorized use, infringement or
misappropriation of any Intellectual Property.

 

23

 

(f)                                    There
are no settlements, forbearances to sue, consents, judgments, or orders or
similar obligations (other than license agreements in the ordinary course of
business) which (i) restrict Seller’s rights to use any Intellectual
Property; (ii) restrict Seller’s Business in order to accommodate a third
party’s intellectual property rights; or (iii) permit third parties to use
any intellectual property owned by Seller.

 

(g)                                 Schedule 3.9(g)
lists all Computer Software owned or licensed by, or otherwise used in the
Business, other than third party software applications that are generally
available and have an individual acquisition cost of $5,000 or less, and
identifies whether each of the foregoing items of Computer Software are owned,
licensed or otherwise used, as the case may be.

 

(h)                                 Schedule 3.9(h)
lists all domain names that are the subject of any application filed by Seller
with, or any registration issued to Seller by, a recognized registration
authority.

 

3.10                           Contracts.

 

(a)                                  Schedule 3.10
sets forth a list of the following contracts, agreements and instruments
pertaining to the Business to which Seller is a party or is bound as of the
date hereof (collectively, the “Material Contracts”):

 

(i)                                     any
contract involving more than $100,000 over the life of the contract;

 

(ii)                                  any
contract that expires more than one (1) year after the date of this Agreement
or that may be renewed at the option of any Person other than Seller so as to
expire more than one (1) year after the date of this Agreement;

 

(iii)                               any
trust indenture, mortgage, promissory note, loan agreement or other contract
for borrowed money (other than trade payables incurred in the ordinary course
of business not exceeding $100,000 individually or $200,000 in the aggregate);

 

(iv)                              any
contract for capital expenditures in excess of $200,000  in the aggregate except as set forth on Schedule 5.1(m);

 

(v)                                 any
contract limiting the freedom of Seller to engage in any line of business or to
compete with any other Person, or any confidentiality, secrecy or
non-disclosure contract or any contract that may be terminable as a result of
Seller’s status as a competitor of any party to such contract;

 

(vi)                              any
agreement of guarantee, support, indemnification, assumption or endorsement of,
or any similar commitment with respect to, the liabilities of any other Person
other than customer agreements made in the ordinary course of the Business (“Guarantee
Obligations”);

 

24

 

(vii)                           any
employment contract, arrangement or policy (including any collective bargaining
contract or union agreement) which may not be immediately terminated without
notification or penalty (including any augmentation or acceleration of
benefits);

 

(viii)                        any
contract providing for a joint venture, partnership or similar legal
relationship with any other Person;

 

(ix)                                any
contract granting to any Person, on a conditional basis or otherwise, any
ownership interest in, or license to manufacture or prepare, any product
developed, manufactured or sold by the Business (each, a “Product”)
utilizing any proprietary recipe or formulation;

 

(x)                                   any
sales agency, distribution or similar agreements with respect to Products or
for the distribution by Seller of products of another party involving
consideration in excess of $100,000;

 

(xi)                                any
agreement providing for a rebate, discount, bonus or commission in excess of
$100,000 with respect to the sale of any Product;

 

(xii)                             any
agreement requiring Seller to advance or loan any amount in excess of $100,000
to or on behalf of any of its directors, employees, shareholders, Affiliates or
Associates (or their respective Affiliates or Associates);

 

(xiii)                          any
agreement providing for the acquisition after January 1, 2001 by Seller
(or any predecessor in interest) of any real property, operating business or
the shares or other equity interests of any Person for consideration in excess
of $100,000;

 

(xiv)                         any
employment, severance, consulting or other agreement of any nature with any
current or former shareholder, director, officer or any Affiliate thereof
involving consideration in excess of $100,000 per year individually or $100,000
per year in the aggregate;

 

(xv)                            any
agreement restricting the ability of Seller to incur Indebtedness;

 

(xvi)                         any
agreement relating to Indebtedness, interest rate swap or hedging agreements,
sale and leaseback transactions and other similar financing transactions;

 

(xvii)                      any contract
existing between Seller and any Governmental Authority;

 

(xviii)                   any agreement
providing for the provision by Seller to any third party of any confidential
information or restricting Seller from providing such information to third
parties;

 

(xix)                           any
agreement restricting Seller’s ownership, operation, sale, transfer, pledge or
other disposition of any of the Purchased Assets;

 

(xx)                              any
Real Property Lease;

 

25

 

(xxi)                           any
agreement providing for production by Seller of any Product on an exclusive or
requirements basis;

 

(xxii)                        any
agreement with a consultant or subcontractor involving payment of consideration
over the term of such agreement in excess of $100,000; or

 

(xxiii)                     any contract,
agreement or instrument within the Knowledge of Seller which is otherwise
material to the conduct or operation of the Business.

 

(b)                                 Seller
has performed in all material respects the obligations required to be performed
by it under the Material Contracts, and, to the Knowledge of Seller, each of
the Material Contracts is valid and binding and in full force and effect.  True, correct and complete copies of all
Material Contracts have been made available to Purchaser.  Seller has not made or received any claim of
any material default under any Material Contract, and as of the date hereof, to
the Knowledge of Seller, there is no material breach or anticipated breach by
any other party to any Material Contract.

 

3.11                           Permits.  The
Listed Permits are all material permits, licenses, approvals, franchises,
certificates, consents and other authorizations of any Governmental Authority
that are required in order for Seller to conduct the Business as it is now
being conducted.  Each of the Listed
Permits is in full force and effect, except for immaterial failures.  To the Knowledge of Seller, Seller is not in
conflict in any material respect with or in material default or violation of
any Listed Permit.

 

3.12                           Compliance with Laws.  Seller is not in material conflict with or
in material default or violation of any Law applicable to the Purchased Assets
or the Business.

 

3.13                           Litigation.  Except as set forth on Schedule 3.13, as of the date
hereof, there are no material claims, actions, suits, investigations,
arbitrations, inquiries or proceedings pending or, to the Knowledge of Seller,
threatened, against Seller before any Governmental Authority.

 

3.14                           Books and Records.  All books of account and other financial
books and records of Seller directly relating to the Business are true, correct
and complete in all material respects.

 

3.15                           Employment Matters.

 

(a)                                  Schedule 3.15
sets forth a list of all Persons who were employed by Seller, on a full time or
a part time basis, as of February 1, 2003, including all such Persons who
at such date were on military leave, disability leave or any other leave
approved by the Company or mandated by applicable Law and a description of all
compensation and benefits provided by Seller to each such Person, which list is
true and complete in all material respects. 
Except as otherwise required by Law or as set forth on Schedule 3.15,
the employment of all such employees is terminable by Seller at will.

 

(b)                                 Except
as set forth on Schedule 3.15: 
(i) Seller is not a party to any contract with any labor
organization or other bargaining representative of its employees;
(ii) there is no unfair labor practice charge or complaint pending or, to
the Knowledge of Seller,

 

26

 

threatened against
Seller; (iii) Seller has not experienced any labor strike, slowdown, work
stoppage or similar labor controversy within the past three (3) years;
(iv) Seller has paid in full to all of its employees all compensation and
benefits due and payable to such employees; and (v) Seller is in material
compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and occupational
safety and health and Seller has not received written notice of any
investigation, charge or complaint against Seller relating to the Business
pending before the Equal Employment Opportunity Commission or any other
federal, state or local government agency or court or other tribunal regarding
an unlawful employment practice.

 

(c)                                  Since
January 1, 2003, (i) Seller has not effectuated a “plant closing” (as
defined in the WARN Act) affecting any site of employment or one or more facilities
or operating units within any site of employment or facility; (ii) there
has not occurred a “mass layoff” (as defined in the WARN Act) affecting any
site of employment or facility of the Seller; and (iii) Seller has not
engaged in layoffs or employment terminations sufficient in number to trigger
application of the WARN Act or any similar state, local or foreign law or
regulation.  Except as set forth on Schedule 3.15(c),
no employee of Seller has suffered an “employment loss” (as defined in the WARN
Act) during the six-month period prior to the date of this Agreement.

 

3.16                           Employee Benefits.  Schedule 3.16 sets forth a
complete and accurate list as of the date hereof of each employment,
consulting, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, stock appreciation right or other equity-based
incentive, severance or termination pay, change in control, hospitalization or
other medical, life, disability or other insurance, supplemental unemployment
benefits, savings, profit-sharing, pension or retirement plan, program, policy,
agreement or arrangement, and each other employee or fringe benefit plan,
program, policy agreement or arrangement, sponsored, maintained or contributed
to or required to be contributed to by Seller for the benefit of Seller’s
employees, whether formal or informal and whether legally binding or not (each,
a “Plan;” collectively, the “Plans”).  No event has occurred in connection with any Plan that has, will
or may result in any fine, penalty, assessment or other liability for which any
transferee of assets of Seller may be responsible, whether by operation of Law
or by contract.  The transactions
contemplated by this Agreement, will not, either alone or in combination with
any other event or events, cause Kerr or Purchaser to incur any liabilities
with respect to any Plan, including (a) any liability under
Section 4980B of the Code or (b) any liability with respect to any
employee of Seller that was incurred or arose on or prior to the Closing Date.

 

3.17                           No Finder.  Seller
has not incurred any liability to any broker, finder, investment banker or any
other Person for any brokerage, finder’s or other fee or commission in
connection with this Agreement or the Acquisition.

 

3.18                           Environmental
Matters.  (a)                                            Except
as set forth on Schedule 3.18, (i) the Business is in material compliance
with all applicable Environmental Laws, which compliance includes, but is not
limited to, the possession by Seller and its Subsidiaries of all permits and
other governmental authorizations required under Environmental Laws for the
Business, and compliance with the terms and conditions thereof; (ii) neither
Seller nor any of its Subsidiaries has received any written or, to the
Knowledge of Seller, oral communication, whether from a 

 

27

 

Governmental
Authority or any other Person, that alleges that the Business is not in
compliance with any Environmental Laws, and, to the Knowledge of Seller, there
are no circumstances that would be reasonably expected to prevent or interfere
with such compliance in the future.  For
purposes of this Section 3.18, “Knowledge of Seller” includes the actual
knowledge of each plant manager and environmental manager for each facility or
property in the Business named in Schedule 3.18.

 

(b)                                 Except
as set forth on Schedule 3.18, there is no Environmental Claim pending or,
to the Knowledge of Seller, threatened against Seller and any of its
Subsidiaries relating to the Business or, to the Knowledge of Seller, against
any Person whose liability for any Environmental Claim relating to the Business
Seller or any of its Subsidiaries has retained or assumed either contractually
or by operation of law.

 

(c)                                  Except
as set forth on Schedule 3.18, to the Knowledge of Seller, there has been
no release, emission, discharge, presence or disposal of any Material of
Environmental Concern, and there are no actions, activities, circumstances,
conditions, events or incidents that present a material threat of release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
would reasonably be expected to form the basis of any material Environmental
Claim against Seller or any Subsidiary relating to the Business, or, to the
Knowledge of Seller, against any Person whose liability for any Environmental
Claim relating to the Business Seller or any of its Subsidiaries has retained
or assumed either contractually or by operation of law.

 

(d)                                 Except
as set forth on Schedule 3.18:  (i)
neither Seller nor any Subsidiary is the subject, either directly or
indirectly, of any Environmental Claim with respect to any on-site or off-site
locations where Seller or any Subsidiary has stored, disposed or arranged for
the disposal of Materials of Environmental Concern for, from or with respect to
the Business, (ii) there are no underground storage tanks located on property
owned or controlled by Seller or any Subsidiary for the Business, and, to the
Knowledge of Seller, there are no underground storage tanks located on property
otherwise used for the Business, (iii) there is no damaged asbestos contained
in or forming part of any building, building component, structure or office
space owned, leased or otherwise used for the Business, (iv) to the Knowledge
of the Seller, there is no other asbestos contained in or forming part of any
building, building component, structure or office space owned, leased or
otherwise used for the Business, and (v) to the Knowledge of Seller, no
polychlorinated biphenyls (PCBs) or PCB-containing items are used or stored at
any property owned, used or leased for the Business.

 

(e)                                  Except
as set forth on Schedule 3.18, Seller has provided to Purchaser all
written assessments, reports, data, results of investigations or audits and
similar documents that are in the possession of or reasonably available to
Seller or any Subsidiary regarding the environmental condition of the property
owned, used or leased for the Business, or the compliance (or noncompliance) by
Seller or any Subsidiary with any Environmental Laws relating to the Business.

 

(f)                                    Except
as set forth in Section 5.10 or on Schedule 3.18, Seller is not
required by virtue of the transactions set forth herein and contemplated
hereby, or as a condition to the effectiveness of any transactions contemplated
hereby, (i) to perform a site assessment for 

 

28

 

Materials of
Environmental Concern, (ii) to remove or remediate Materials of Environmental
Concern, (iii) to give notice to or receive approval from any governmental
authority, or (iv) to record or deliver to any person or entity any disclosure
document or statement pertaining to environmental matters.

 

(g)                                 With
respect to the matters disclosed in the reports listed in Schedule 3.18(g)
hereto, there is no individual item or series of related items that would
reasonably be expected to cause Losses greater than $200,000, or that, taken in
the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

3.19                           Taxes and Tax Returns.  Except as set forth on Schedule 3.19:

 

(a)                                  Seller
has timely filed or will have timely filed on its behalf (taking into account
extensions to file) those Tax Returns which are currently due or, if not yet
due, will timely file, or will have timely filed on its behalf (taking into
account extensions to file) all Tax Returns required to be filed by it or on
its behalf for all taxable periods ending on or before the Closing Date, and
all such Tax Returns are, or will be when filed, true, correct and complete in
all material respects;

 

(b)                                 Seller
has paid, or had paid on its behalf, to the appropriate Governmental Authority,
or, if payment is not yet due, will pay, or will have paid, to the appropriate
Governmental Authority, all Taxes due and payable for all taxable periods
beginning on or before the Closing Date;

 

(c)                                  except
in the case of a Lien for ad valorem
property taxes or income taxes not yet due and payable or otherwise disclosed
on Schedule 3.19, there is no unpaid Tax which constitutes a Lien
upon any of the Purchased Assets;

 

(d)                                 Seller
is not a party to any Tax allocation or Tax sharing agreement or has any
liability or obligation to any Person as a result of, or pursuant to, any such
allocation or agreement, except as set forth in the notes to the Audited
Financials; and

 

(e)                                  Seller
is not a Person other than a “United States Person” within the meaning of the
Code.

 

3.20                           Customers and Suppliers.

 

(a)                                  Schedule 3.20
lists the ten customers of Seller who, during the period December 1, 2001
to November 30, 2002, purchased the largest amount of Products from
Seller, based on net sales.  Since
December 1, 2002, except as set forth on Schedule 3.20, there
has not been any material adverse change in the business relationship of Seller
with any such customer or customers. 
Except as set forth on Schedule 3.20, no such customer has
materially reduced its purchases since December 1, 2002, or, to the
Knowledge of Seller or to the actual knowledge of the salesperson responsible
for the account of such customer, has advised Seller that it is (i)
terminating, considering terminating, or planning to terminate its business
relationship with Seller, or (ii) considering reducing or planning to reduce
(other than oral statements made in the 

 

29

 

ordinary course of
business in connection with contract renewal negotiations) its future purchases
from Seller by 10% or more.

 

(b)                                 Since
December 1, 2002, no Person who supplies resin to Seller has reduced the
supply of resin available to Seller or, to the Knowledge of Seller or to the
actual knowledge of the purchaser responsible for the account of such supplier,
advised Seller that it is (i) terminating or intends to terminate its business
relationship with Seller or (ii) reducing or intends to reduce the supply of
resin available to Seller by 10% or more. 
Seller currently maintains sufficient resin inventory to conduct the
Business as it is conducted.  Seller has
access to sufficient amounts of resin supply, purchasable at then prevailing
market prices, necessary to conduct the Business as it is conducted.

 

3.21                           Inventory.  The
inventory reflected in the Latest Balance Sheet is good and merchantable
material, of a quality and quantity saleable in the ordinary course of Business
consistent with Seller’s past practice and was acquired by Seller in the
ordinary course of business of the Business consistent with Seller’s past
practice and is carried on the books and records of Seller in accordance with
GAAP.

 

3.22                           Insurance.  Set forth
in Schedule 3.22 is a complete and accurate list as of the date
hereof of all insurance policies carried by Seller (as a party, named insured
or otherwise the beneficiary of coverage). 
All such insurance policies are in full force and effect and shall
remain in full force and effect through the Closing Date.  Such policies are sufficient for compliance
with all requirements of Law and of all agreements to which Seller is a party,
are valid, outstanding and enforceable policies, insure against risks of the
kind customarily insured against and in amounts customarily carried by
companies similarly situated and by companies engaged in similar businesses and
owning similar properties.  Neither
Seller nor, to the Knowledge of Seller, any other insured party to any
insurance policy, is in breach or default (including any breach or default with
respect to the payment of premiums or the giving of notices) and no event has
occurred that, with notice or lapse of time or both, would constitute such a
breach or default or permit termination or modification of any such
policy.  The Seller has not been denied
coverage since January 1, 2000. 
Seller does not currently owe any deficiency amounts or Taxes for
industrial insurance obligations arising under applicable state law.

 

3.23                           Affiliate Transactions.  Schedule 3.23 lists all
agreements and arrangements and contains a summary of all transactions since
January 1, 2000 and all currently proposed agreements, arrangements and
transactions related to the Business and that are between Seller, on the one
hand, and any current or former director, officer, shareholder or other
Affiliate or Associate of Seller, or any of their respective Affiliates or
Associates, or any entity in which any such Person has a direct or indirect material
interest, on the other hand.  All
Indebtedness that is related to the Business and that is owed by any of the
current or former officers, directors, shareholders or other Affiliate or
Associate of Seller, or any of their respective Affiliates or Associates, are
reflected in the Latest Balance Sheet.

 

3.24                           Questionable Payments.  Neither Seller nor any employee, officer,
director, Affiliate or Associate of Seller or other Person acting on behalf of
Seller, has (a) used any corporate or company funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) made any direct or indirect unlawful payments to 

 

30

 

government officials or
employees from corporate funds; (c) established or maintained any unlawful
or unrecorded fund of corporate monies or other assets; (d) made any false
or fictitious entries on the books or records of any of such corporations;
(e) made any bribe, payoff, kickback or other unlawful payment; or (f)
made any material favor or gift which is not, in good faith, believed by Seller
to be fully deductible by Seller or Seller’s consolidated group for any income
tax purposes and which was, in fact, so deducted.

 

3.25                           Products Liability.  Except as set forth on Schedule 3.13,
there are no material claims presently pending or, to the Knowledge of Seller,
threatened against Seller that are (a) for products liability on account
of any express or implied warranty, law, regulation or other theory or
(b) for personal injury.

 

3.26                           No Powers of Attorney.  Seller has not granted any general or
special powers of attorney or any other authorizations of third parties to act
as agents for Seller except for powers of attorney granted in connection with
Seller’s Taxes and Tax Returns.

 

3.27                           Full Disclosure.  No representation or warranty by Seller in
this Agreement or statement in any Schedule contains any untrue statements
of a material fact or omits to state any material fact necessary, in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF KERR
AND PURCHASER

 

As an inducement to Seller to enter into this
Agreement and to consummate the Acquisition, each of Kerr and Purchaser jointly
and severally represents and warrants to Seller as follows:

 

4.1                                 Organization and Qualification.  Each of Kerr and Purchaser is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware.  Each of Kerr and
Purchaser is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for failures to be so qualified or licensed and
in good standing that do not have a material adverse effect on the ability of
Kerr and Purchaser to consummate the transactions contemplated hereby.

 

4.2                                 Authority Relative to this Agreement.  Each of Kerr and Purchaser has all necessary
corporate or limited liability company power and authority to execute and
deliver this Agreement and the other Transaction Documents to which it is a
party, to perform its obligations hereunder and to consummate the
Acquisition.  The execution and delivery
of this Agreement and the other Transaction Documents to which it is a party by
each of Kerr and Purchaser and the consummation by Purchaser of the Acquisition
have been duly and validly authorized by all necessary corporate action on the
part of each of Kerr and Purchaser, and no other corporate proceedings on the
part of Kerr or Purchaser are necessary to authorize this Agreement or to
consummate the Acquisition.  This
Agreement and the other Transaction Documents to which it is a party have been
or will be duly executed and delivered by each of Kerr and Purchaser and,
assuming the due authorization, execution and delivery by Seller, each such
agreement 

 

31

 

constitutes a legal,
valid and binding obligation of each of Kerr and Purchaser, enforceable against
each of Kerr and Purchaser in accordance with its terms, subject to the effect
of any applicable bankruptcy, moratorium, insolvency, fraudulent conveyance,
reorganization or other similar Law affecting the enforceability of creditors’
rights generally and to the effect of general principles of equity which may
limit the availability of remedies (whether in a proceeding at law or in
equity).

 

4.3                                 No Conflict.  The
execution and delivery of this Agreement by each of Kerr and Purchaser do not,
and the performance by each of Kerr and Purchaser of its obligations hereunder
and the consummation of the Acquisition will not:  (a) conflict with or violate any provision of the
certificate of incorporation or by-laws of Kerr or the certificate of formation
or limited liability company operating agreement of Purchaser; (b) to the
knowledge of Kerr and Purchaser, assuming that all filings and notifications
described in Section 4.4 have been made, conflict with or violate any Law
or order applicable to Kerr or Purchaser or by which Kerr or Purchaser or any
of their assets or properties is bound or affected; or (c) to the knowledge
of Kerr and Purchaser, result in any material breach of or constitute a
material default under, or require notice or consent under, any mortgage,
indenture, deed of trust, lease, contract, agreement, license or other
instrument to which Kerr or Purchaser is a party or by which Kerr’s or
Purchaser’s assets or properties are bound, or result in the creation of a
material Lien on any asset or property of Kerr or Purchaser, except in the case
of clauses (b) and (c), for any conflict, violation, breach or default that
would not reasonably be expected to have a material adverse effect on the
ability of Kerr or Purchaser to consummate the transactions contemplated
hereby.

 

4.4                                 Required Filings and Consents.  The execution and delivery of this Agreement
by each of Kerr and Purchaser do not, and the performance by Kerr or Purchaser
of its obligations hereunder and the consummation of the Acquisition will not,
require any consent, approval, authorization or permit of, or filing by Kerr or
Purchaser with or notification by Kerr or Purchaser to, any Governmental
Authority, except for:  (a) the
filing of a Notification and Report Form pursuant to the HSR Act and the
expiration or earlier termination of the applicable waiting period thereunder
with respect to the Acquisition and (b) such consents, approvals,
authorizations, permits and filings the failure of which to obtain would not
reasonably be expected to have a material adverse effect on the ability of Kerr
or Purchaser to consummate the transactions contemplated hereby.

 

4.5                                 No Finder.  Other
than an aggregate fee of $1,687,500 payable to Fremont Partners, L.L.C. and
Fremont Partners III, L.L.C., which fee shall be the sole responsibility of
Kerr and/or Purchaser, neither Kerr nor Purchaser has agreed to pay to any
broker, finder, investment banker or any other Person a brokerage, finder’s or
other fee or commission in connection with this Agreement or the Acquisition.

 

4.6                                 No Litigation.  There is no claim, action, suit or proceeding pending or, to the
knowledge of Kerr and Purchaser, threatened, before any Governmental Authority
that prohibits or restricts, or seeks to prohibit or restrict, the consummation
of the Acquisition.

 

4.7                                 Commitment Letters. 
Kerr has provided to Seller a true and complete copy of the commitment letter
received by Kerr from Wells Fargo Bank.

 

32

 

ARTICLE V

ADDITIONAL COVENANTS

 

5.1                                 Conduct of Business.  From the date hereof through the Closing
Date, except as contemplated by this Agreement or described on Schedule 5.1,
Seller agrees to conduct Seller’s operations in the ordinary course, consistent
with past practice, and agrees to:

 

(a)                                  use
its commercially reasonable efforts to (i) preserve for the benefit of
Purchaser the goodwill and the existing relationships of Seller with its
customers, suppliers and others with whom Seller deals; (ii) retain the
services of its key employees; (iii) perform its obligations under the Material
Contracts; (iv) maintain, keep and preserve the Business and the Purchased
Assets in the same condition as the date hereof, except that in the case of any
Purchased Assets constituting Tangible Personal Property, ordinary wear and
tear and casualty is permitted; (v) preserve intact the Business and its
organization; (vi) maintain books and records in accordance with past practice;
and (vii) maintain in effect the insurance coverage provided under the policies
set forth in Schedule 3.22;

 

(b)                                 not
waive, release or cancel any material claims against third parties or material
debts owing to Seller, other than customer billing reductions and write-downs
made in the ordinary course of business consistent with past practice and other
than in respect of claims or debts that would be Excluded Assets;

 

(c)                                  not
(i) grant any general increase in the compensation of officers or employees,
except in accordance with pre-existing contracts or consistent with past
practice; (ii) enter into any contract with any employee, officer, director,
Affiliate or Associate of Seller or any Affiliate or Associate of any such
Person, provided, however, that this shall not prevent Seller
from hiring employees on an at-will basis to fill an opening vacated by a
departing or transferring employee in the ordinary course of business, provided
that the compensation being offered to the individual is consistent with other
personnel in the same or a similar position; (iii) enter into any collective
bargaining agreement or similar contract; (iv) enter into any agreement that
requires Seller to pay any severance or termination pay (or that requires that
the Seller provide a certain period of notice to an employee in advance of the
effective date of termination or pay in lieu of such advance notice) to any
employee, director, officer or consultant of Seller, provided that this
shall not serve to prohibit Seller from paying any severance or termination pay
(or pay in lieu of advance notice) which Seller was obligated to pay pursuant
to any agreement, policy or practice entered into prior to the execution of
this Agreement, even if the event triggering the actual obligation to pay such
amounts occurs after the execution of this Agreement; (v) adopt or materially
amend any employee or fringe benefit plans, agreements or arrangements, except
as required pursuant to applicable Law; or (vi) engage in any work force
reduction or restructuring resulting in employee layoffs triggering the
notification requirements under the Worker Adjustment and Retraining
Notification Act or similar applicable state or municipal statute or ordinance;

 

(d)                                 not
make any change in any accounting principle, method, estimate or practice,
except for any such change required by reason of a concurrent change in GAAP;

 

33

 

(e)                                  not
(i) enter into any contract, agreement, commitment or binding understanding or
arrangement requiring performance during or following a period in excess of one
year or outside of the ordinary course of business consistent with past
practice; or (ii) without prior consultation with Purchaser, renew, fail to
renew, or permit or not permit to be automatically renewed any material
agreement, including any material customer, supplier, distributor, licensing,
employment or other material contracts, to which Seller is a party (other than
amendments or terminations of agreements pursuant to or contemplated by this
Agreement);

 

(f)                                    not
(i) cancel, materially modify or materially amend any Real Property Lease or
Material Contract; (ii) contract for or incur any expense in connection with
opening any additional Business facility; (iii) cancel any of the Listed
Permits or allow any Listed Permit to expire or not be renewed; (iv) revalue
any of its material assets or any material amount of its properties, other than
in the ordinary course of business consistent with past practice; or (v) sell
or dispose of any of the Purchased Assets (except for the sale of inventory and
the disposition of damaged or defective inventory, equipment or other material
in the ordinary course of business consistent with past practice), or permit
the creation of any Lien, except for Permitted Liens;

 

(g)                                 not
enter into or amend any agreements pursuant to which any other party is granted
exclusive marketing, manufacturing or other exclusive rights of any type or
scope with respect to any of its products or proprietary technology, other than
exclusive rights of Seller’s customers in molds, tooling and other design
materials of such customers;

 

(h)                                 not
amend the certificate of incorporation, bylaws or similar organizational documents
of Seller;

 

(i)                                     not
merge or consolidate with any other Person or acquire a material amount of
assets or equity or debt securities from any other Person, except for purchases
of supplies and capital expenditures in the ordinary course of business consistent
with past practice or otherwise in accordance with Seller’s projections;

 

(j)                                     not
commence a lawsuit, claim, action, arbitration or other administrative or
judicial proceeding other than (i) for the routine collection of bills, (ii) in
such cases where Seller in good faith determines that failure to commence suit
would result in a material impairment of a valuable aspect of Seller’s
business, provided Seller consults with Purchaser prior to filing such
suit, or (iii) for a breach of this Agreement;

 

(k)                                  not
(i) pay, discharge, or satisfy any material claim, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than in the ordinary course of business consistent with past practice; or (ii)
fail to pay or otherwise satisfy (except if being contested in good faith) any
material accounts payable, liabilities or obligations when due and payable;

 

(l)                                     not
take or fail to take any action that would cause any of the representations and
warranties of Seller contained in this Agreement to be untrue in any material
respect as of the Closing Date (disregarding for these purposes any materiality
or Material Adverse Effect qualifier contained therein);

 

34

 

(m)                               not
make any capital expenditure exceeding $200,000 individually or in the
aggregate other than those set forth on Schedule 5.1(m) without the
prior written consent of Kerr;

 

(n)                                 not
perform or take, or fail to perform or take, any action that has or is
reasonably likely to have a Material Adverse Effect; or

 

(o)                                 not
agree or commit to do any of the foregoing provided in subsections (b) through
(n).

 

Notwithstanding any of the foregoing, nothing herein
shall be construed to prohibit or restrict any activities or transactions
undertaken with respect to any of the Excluded Assets, the Retained
Liabilities, or the business of Seller other than the Business, so long as, in
each case, such activities or transactions will not have a negative effect on
the Purchased Assets or the Business.

 

5.2                                 Intentionally
Omitted.

 

5.3                                 Consents, Filings and Authorizations; Efforts to
Consummate.  As promptly as
practicable after the date hereof, Purchaser and Seller shall make all filings
and submissions under such Laws as are applicable to them or to their
respective Affiliates, including the filing of a Notification and Report Form
pursuant to the HSR Act and the filing of notices required by ISRA, and as may
be required for the consummation of the Acquisition in accordance with the terms
of this Agreement.  Purchaser and Seller
shall consult with each other prior to any such filing, and neither Seller nor
Purchaser shall make any such filing or submission to which the other of them
reasonably objects in writing.  All such
filings shall comply in form and content in all material respects with
applicable Laws.  Subject to the terms
and conditions herein, each of Seller and Purchaser, without payment or further
consideration, shall use its commercially reasonable efforts to take or cause
to be taken all actions and to do or cause to be done all things necessary,
proper or advisable:  (a) to cause
the conditions to the obligations of the other Party to consummate the
Acquisition to be satisfied as soon as reasonably practicable (including, in the
case of Seller, the removal of all Liens on the Purchased Assets other than
Permitted Liens) and (b) under applicable Laws, permits and orders, to
consummate and make effective the Acquisition as soon as reasonably
practicable, including obtaining all consents required in connection with such
Party’s consummation of the Acquisition. 
Seller and Parent (but only to the extent that Parent shall make
available its Representatives who are substantially involved in the Business)
shall provide Kerr and Purchaser with reasonable assistance to obtain the debt
financing needed by Purchaser for the consummation of the transactions
contemplated by this Agreement, subject to reimbursement by Kerr and Purchaser
for any reasonable documented out-of-pocket expenses incurred by Seller or
Parent in connection with the providing of such assistance.  Such assistance shall include, to the extent
it is commercially reasonable for Seller and Parent to do so, making
appropriate Representative of Parent and Seller available to participate in
informational meetings, assisting with the preparation of an information
package in connection with such financing, including the syndication of any
loans to be funded in connection with the transactions contemplated by this
Agreement, cooperating with respect to matters relating to bank collateral to
take effect as of the Closing in connection with such financing (including the
pledge of the Purchased Assets by Purchaser and the obtaining of 

 

35

 

authorizations, consents
and approvals required under any Real Property Lease in order to subject the
leasehold interest represented thereby to Liens in favor of any lenders
providing such financing), using its commercially reasonable efforts to obtain customary
“comfort” letters and legal opinions and executing and delivering such
documents, certificates, agreements and other writings as shall take effect as
of the Closing and as are reasonably requested in connection therewith.  Without limiting the generality of the
foregoing, Purchaser shall use its commercially reasonable efforts to obtain
such debt financing.  Nothing herein
shall require any Party to take any action that would reasonably be expected to
have a material adverse effect on such Party.

 

5.4                                 Notices of Certain Events.  Prior to the Closing Date, each of Seller
and Purchaser shall promptly notify the other of:

 

(a)                                  any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the Acquisition;

 

(b)                                 any
material notice or other material oral or written communication from any
Governmental Authority in connection with the Acquisition;

 

(c)                                  any
change that has a Material Adverse Effect, or could delay or impede the ability
of either Seller or Purchaser to perform its obligations under this Agreement
and to consummate the Acquisition;

 

(d)                                 the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Closing
Date; and

 

(e)                                  any
material failure of any Party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied hereunder.

 

5.5                                 Public Announcements.  From and after the date of this Agreement
until the Closing Date, Kerr and Purchaser, on the one hand, and Seller, on the
other hand, agree not to make any public announcement or other disclosure
concerning this Agreement or the transactions contemplated herein without
obtaining the prior consent of the other Party as to form, content and timing
(such consent not to be unreasonably withheld); provided, however,
that the foregoing shall not restrict (a) any Party (or Parent) from making
any public announcement or disclosure as may be required by applicable Law
(including the rules of any stock exchange or other self-regulated body) on
advice of a nationally recognized securities law firm that such Party is
reasonably obliged to make public announcements or disclosure or
(b) Seller from informing its employees and agents about this Agreement
and the transactions contemplated hereby, provided that Kerr and
Purchaser shall be permitted reasonable opportunity to comment upon the initial
proposed communication to Seller’s employees and agents before release.

 

5.6                                 Access to Information; Confidentiality.

 

(a)                                  From
and after the date of this Agreement until the Closing Date, upon reasonable
notice and subject to applicable Law relating to the exchange of information
and to 

 

36

 

confidentiality
obligations of Seller entered into prior to the date hereof, Seller shall
afford to Purchaser’s Representatives access during normal business hours to
the employees of Seller and to such properties, books, computer systems,
records, contracts, commitments and other information of Seller relating to the
Business as Purchaser may reasonably request, but excluding books, computer
systems, records, contracts, commitments and information primarily related to
the sale of the Business, the Excluded Assets or the Retained Liabilities.  In the event that Purchaser’s due diligence
reveals any condition of the Real Property or the premises demised under the
Real Property Leases that in Purchaser’s judgment requires disclosure to any
Governmental Authority, Purchaser shall immediately notify Seller thereof.  In such event, Seller, and not Purchaser or
any Person acting on Purchaser’s behalf, shall make such disclosures to the
extent Seller reasonably deems appropriate. 
Notwithstanding the foregoing, Purchaser may disclose matters concerning
the Real Property to a Governmental Authority on written advice of a
nationally-recognized law firm that Purchaser is reasonably obliged to make
such disclosure if Purchaser gives Seller not less than ten (10) days prior
written notice of the proposed disclosure, together with a copy of such written
advice.

 

(b)                                 Purchaser
acknowledges that the information provided to Purchaser and its Representatives
in connection with the Acquisition and this Agreement is subject to, and
Purchaser shall, and shall cause its Representatives to, fully comply with the
provisions of, that certain Confidentiality Agreement, dated as of
February 6, 2003, between Purchaser and Seller (the “Confidentiality
Agreement”), the terms of which are incorporated herein by this
reference.  Notwithstanding the
foregoing, following the Closing Date, any information with respect to the
Business that is included in the Purchased Assets shall not be subject to the
Confidentiality Agreement.

 

(c)                                  From
and after the Closing Date, Parent, Seller and any Representatives of Parent or
Seller shall maintain in confidence and not use or disclose to any third party
any confidential or proprietary information regarding the business operations,
product formulations, ingredients or processes, technical know-how or data,
specifications, finances or other business matters of Seller which information
constitutes any part of the Purchased Assets; provided, that nothing in
this Section 5.6(d) shall apply to information that (i) is in the
public domain, (ii) is independently developed by such Person after the
Closing, or (iii) is disclosed to the recipient by a third party which has
no duty of confidentiality to Purchaser or its Affiliates.  Upon discovery by Parent, Seller or any of
their respective Representatives that such Person is in possession of any such
confidential or proprietary information, such Person shall promptly return all
such information to Purchaser, without retaining any copies thereof except for
copies that such Person is required to retain by applicable Law.  Parent and Seller shall be responsible for
ensuring the compliance of their respective Representatives with the obligations
in this Section 5.6(d).  If Parent,
Seller or their respective Representatives receive a request or are required
(by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose all or any part of such
confidential or proprietary information, Parent and Seller, as the case may be,
agree to, or will ensure that their respective Representatives, promptly notify
Purchaser of the existence, terms and circumstances surrounding such request so
that Purchaser may seek a protective order or other appropriate remedy.

 

(d)                                 Notwithstanding
any provision herein to the contrary, each Party and each of the respective
employees, representatives and agents of each Party are hereby expressly 

 

37

 

authorized to
disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
transactions contemplated by this Agreement and the Transaction Documents, provided
that the confidentiality provisions of this Agreement shall continue to apply
to the extent that any information (e.g., names of the Parties) is not relevant
to understanding the tax treatment or tax structure of the transactions contemplated
hereby.

 

5.7                                 Expenses.  Except
as otherwise specifically provided in this Agreement, each Party shall bear its
own expenses incurred in connection with the preparation, execution and
performance of this Agreement and the Acquisition, including all fees and
expenses of such Party’s Representatives, provided that:

 

(a)                                  Purchaser
shall pay all fees required in connection with the filing of the Notification
and Report Form under the HSR Act; and

 

(b)                                 Seller
shall pay all recording fees, sales taxes, transfer taxes and similar taxes
imposed upon transfer of the Purchased Assets pursuant to this Agreement.

 

5.8                                 Title and Survey Matters.

 

(a)                                  Seller
has delivered to Purchaser, and Purchaser has reviewed and approved the
following:  (i) the owner’s title
commitments identified on Schedule 5.8, as the same have been
supplemented or updated prior to the dated hereof (collectively, the “Commitments”)
for the Real Property prepared by First American Title Insurance Company (the “Title
Company”); (ii) copies of all documents supporting exceptions (“Exceptions”)
set forth in the Commitments; and (iii) a copy of the existing surveys for
the Real Property identified on Schedule 2.1(a)(i) (collectively,
the “Surveys”) (such Commitments, Exceptions, and Surveys collectively,
the “Title Documents”).  The
following matters are hereby approved by Purchaser (collectively, the “Permitted
Exceptions”):  (A) all
exceptions to title shown on the Commitments and all matters shown on the
Surveys; (B) all of the contracts, leases and other agreements listed as
Items 1 through 119 on Schedule 2.1(e); (C) the Lien of
non-delinquent Taxes (it being agreed by Purchaser and Seller that if any Tax
is levied or assessed with respect to the Real Property for public improvements
that will benefit the Real Property subsequent to the date of this Agreement
and Seller has the election to pay such Tax either immediately or under a
payment plan with interest, Seller may elect to pay under a payment plan, which
election shall be binding on Purchaser); (D) all printed exceptions and
exclusions contained in the form of the Title Policies to be issued at Closing;
and (E) any matters caused or created by, or otherwise approved or
consented to in writing by, Purchaser.

 

(b)                                 Purchaser
shall have the right to object in writing to any title matter that is not a
Permitted Exception (other than any matter falling within subsection (E)
of the definition of Permitted Exceptions) which may appear on supplemental
title commitments or updates to the Commitments issued after the date of the
respective Commitments (collectively, “Other Liens”) within five (5)
days after receipt thereof (together with a copy of such new exception) by
Purchaser.  Unless Purchaser shall
timely object to such Other Liens, all such Other Liens which are set forth in
any such supplemental commitments or updates shall be deemed to constitute
additional Permitted Exceptions.  Any
exceptions which are timely objected to by Purchaser 

 

38

 

shall be herein
collectively called the “Title Objections.”  Seller may elect (but shall not be obligated) to remove, or cause
to be removed at its expense, any Title Objections, and shall be entitled to a
reasonable adjournment of the Closing (not to exceed a period of thirty (30)
days) for the purpose of such removal, which removal will be deemed effected by
the issuance of title insurance eliminating the Title Objections or insuring
against the effect of the Title Objections; provided, however,
Seller shall be obligated to remove or bond over any and all Liens for borrowed
money, mechanics’ and materialmen’s liens, tax liens and any Liens resulting
from the failure to satisfy an obligation when due, in each case affecting any
Real Property, on or before the Closing Date. 
Seller shall notify Purchaser in writing within five (5) days after
receipt of Purchaser’s notice of Title Objections whether Seller elects to
remove the same.  If Seller fails to
remove any Title Objections prior to the Closing, Purchaser may elect either
to:  (i) terminate this Agreement
or (ii) waive such Title Objections, in which event such Title Objections
shall be deemed additional “Permitted Exceptions” and the Closing shall occur
as herein provided (A) with a reduction of or credit against the Purchase Price
as the Parties may agree or (B) subject to Purchaser’s right to indemnification
pursuant to Section 9.2.

 

(c)                                  If
on the Closing Date there are any Title Objections which Seller has elected to
remove, Seller may use any portion of the Purchase Price to satisfy the same; provided
Seller shall either deliver to Purchaser at Closing instruments sufficient to
cause such Title Objections to be released of record, together with the cost of
recording or filing such instruments, or cause the Title Company to omit as an
exception, the same, without any additional cost to Purchaser, whether such
insurance is made available in consideration of payment, bonding, indemnity of
Seller or otherwise.

 

5.9                                 No Recording.  The provisions of this Agreement shall not constitute a Lien on
the Real Property.  Neither Purchaser
nor any of its Representatives shall record or file this Agreement or any
notice or memorandum hereof in any public records.  If Purchaser breaches the foregoing provision, this Agreement shall,
at Seller’s election, terminate.

 

5.10                           Compliance with ISRA.  Seller shall obtain an ISRA
Approval and comply with all terms thereof as required to permit the transfer
of the Leased Manufacturing Facility, as contemplated herein, including giving
all required and timely notices of this Agreement to the NJDEP.  Purchaser shall cooperate as necessary and
appropriate with Seller and its Representatives and with representatives of
NJDEP (collectively, the “ISRA Parties”) to facilitate Seller’s
compliance with the ISRA process, including executing required documents in
connection therewith as Seller may reasonably request.  If the ISRA Approval requires the ISRA
Parties to continue compliance activities at the Leased Manufacturing Facility
after the Closing, Purchaser shall accept the transfer of the Leased
Manufacturing Facility subject to the right of the ISRA Parties, and any other
person who may be ordered to do so by NJDEP, to enter upon the Leased
Manufacturing Facility and conduct such engineering, sampling, monitoring and
other remediation activities (“Remediation Activities”) as may be
necessary to complete the ISRA process. 
Seller shall give prompt notice to Purchaser prior to entering the
Leased Manufacturing Facility to conduct Remediation Activities and shall use
commercially reasonable efforts to prevent interference with Purchaser’s
business and operations in performing Remediation Activities.  Purchaser shall use commercially reasonable
efforts to minimize interference with Remediation Activities.  Seller’s obligation to perform Remediation
Activities shall continue to ensure full compliance with all requirements of
ISRA and the NJDEP to obtain 

 

39

 

full closure and approval
by NJDEP under ISRA and in accordance with any applicable requirements of the
Real Property Lease for the Leased Manufacturing Facility.

 

5.11                           Release of
Parent Guaranties. 
Purchaser and Kerr shall use their commercially reasonable efforts to
assist Parent in its effort to receive a full and unconditional release of its
obligations under each guaranty by Parent of any obligations of Seller,
including (i) the Guaranty dated September 11, 1986, executed by
Parent in favor of Keystone Operating Partnership, L.P., to secure the obligations
of Seller in respect of the Leased Manufacturing Facility and
(ii) the Guaranty, dated October 31, 1997, executed by Parent in
favor of Keystone New Jersey, L.P. (formerly Morris Cranbury Associates, LLC)
to secure the obligations of Seller in respect of a leased warehouse located at
1244 Cranbury South River Road, Cranbury, New Jersey; provided that if
it is necessary to leave any such guaranty in place in order to obtain the
consent of any Lessor under Section 2.8, then such guaranty shall remain
in place and shall not be released.  In
the event that, as of the Closing Date, Parent shall not have received such a
release under either or both such Guaranties, Kerr shall (i) indemnify Parent
for any amount paid by Parent pursuant to the terms of such Guaranty or
Guaranties and (ii) not renew, or permit Purchaser to renew, the relevant lease
if such Guaranty would remain outstanding upon such renewal.

 

5.12                           * Adjustments.

 

(a)                                  If
(A) the * by Purchaser resulting from * to the * listed in * during the twelve
months ending December 31, * is * than (B) the * by Seller resulting from
* to the * listed in * during the twelve months ending May 31, *, then
Seller shall pay to Purchaser an amount equal to the * of (i) * (ii) the * of
the amount described in * the amount described in *.  From and after the Closing, Purchaser shall use its reasonable
commercial efforts to * with, and * from * to, the * listed in *.

 

(b)                                 If
(A) the * by Purchaser resulting from * to the * listed in * during the twelve
months ending December 31, * Seller’s * from * to the * listed in * during
the twelve months ending May 31, * (adjusted for the * from *) is * than
(B) the * by Seller resulting from * to the * listed in * during the twelve
months ending May 31, *, then Seller shall pay to Purchaser an amount
equal to the * of (i) * (ii) the * of the amount described in * the amount
described in *; provided that no payment hereunder shall * the amount
described in *.  Seller has not and
shall not * to, and has not and will not * any * with, the * listed in * that
would reasonably be expected to result in * to the * listed in * under such
proposal or agreement at a *.  From and
after the Closing, Purchaser shall use its reasonable commercial efforts to *
the * with, and * from * to, the * listed in *.

 

5.13                           Price
Decrease Notification.  Seller shall notify Purchaser
within three Business Days after offering any price decrease in excess of 1% to
any customer, which notice shall 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

40

 

include the name of the customer,
the products for which the decrease was made and the amount of the decrease.

 

ARTICLE VI

CONDITIONS TO CLOSING

 

6.1                                 Conditions to the Obligations of Seller and
Purchaser.  The obligations
of Seller and Purchaser to consummate the Acquisition are subject to the
satisfaction  or, if permitted by applicable Law, waiver of the following
conditions on or prior to the Closing Date:

 

(a)                                  No
Injunction.  No provision of any
applicable Law shall be in effect and no interlocutory, appealable or final
order shall have been issued that prohibits or restricts the consummation of
the Acquisition.

 

(b)                                 HSR.  All waiting periods applicable to the
consummation of the Acquisition under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the Department of
Justice or the Federal Trade Commission challenging or seeking to enjoin the
consummation of the Acquisition, which action shall not have been withdrawn or
terminated.

 

(c)                                  ISRA
Approval.  Seller shall have
obtained an ISRA Approval authorizing the transfer of the Leased Manufacturing
Facility.

 

6.2                                 Conditions to Obligation of Seller.  The obligation of Seller to consummate the
Acquisition is subject to the fulfillment at or prior to the Closing of the
following conditions, any one or more of which may be waived in whole or in
part by Seller:

 

(a)                                  Accuracy
of Representations and Warranties. 
Each of the representations and warranties of Purchaser contained in
this Agreement shall have been true and correct in all material respects (other
than representations and warranties subject to “materiality” qualifiers, which
shall be true and correct as stated) when made and on and as of the Closing as
if made at and as of the Closing; provided, that representations and
warranties which address matters only as of a certain date shall have been true
and correct in all material respects (other than representations and warranties
subject to “materiality” qualifiers, which shall be true and correct as stated)
as of such certain date.

 

(b)                                 Performance.  Purchaser shall have performed and complied
in all material respects with all agreements, obligations and covenants
required to be performed or complied with by it on or prior to the Closing
Date.

 

(c)                                  Deliveries
to Seller.  Purchaser shall have delivered
to Seller the following:

 

(i)                                     A
certificate, dated the Closing Date, of an executive officer of Purchaser
confirming the matters set forth in Section 6.2(a) and (b);

 

(ii)                                  A
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
Purchaser certifying, that attached or appended to such certificate:  (A) is a true and 

 

41

 

correct copy of
the certificate of formation of Purchaser, and all amendments thereto;
(B) is a true copy of all limited liability company actions taken by it,
including actions of its sole member, authorizing the consummation of the
Acquisition and the execution, delivery and performance of this Agreement and
each of the Transaction Documents to be delivered by Purchaser pursuant hereto;
and (C) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and the other
Transaction Documents to which Purchaser is a party;

 

(iii)                               A
counterpart of the Assignment and Assumption Agreement duly executed by
Purchaser;

 

(iv)                              A
certificate of good standing from the appropriate state agency, dated as of a
recent date, certifying that Purchaser is in good standing in the State of
Delaware;

 

(v)                                 A
counterpart of a transition services agreement, in the form attached as Exhibit D
(the “Transition Services Agreement”), duly executed by Purchaser;

 

(vi)                              A
counterpart of a supply agreement in the form mutually agreed upon by Kerr and
Parent (the “Supply Agreement”), duly executed by Purchaser and Kerr;
and

 

(vii)                           A
certificate setting forth the “Base Purchase Price” (the “Base Purchase
Price”).

 

(d)                                 Real
Property Deliveries.  Purchaser
shall have delivered to Seller the following:

 

(i)                                     A
counterpart of an assignment and assumption of each of the Real Property Leases
in the form attached as Exhibit F or in the form required by the
applicable Real Property Lease (each, an “Assignment of Lease”); and

 

(ii)                                  If
applicable, duly completed and executed real estate transfer tax declarations.

 

(e)                                  Withholding
Tax Estimate.  At least three
Business Days before the Closing Date, Purchaser shall have delivered to Seller
a good faith estimate of the Withholding Taxes.

 

(f)                                    Consents.  Seller shall have obtained the third party
consents to the assignment of the contracts listed on Schedule 6.2(f).

 

6.3                                 Conditions to Obligation of Purchaser.  The obligation of Kerr and Purchaser to
consummate the Acquisition is subject to the fulfillment at or prior to the
Closing of the following conditions, any one or more of which may be waived in
whole or in part by Kerr and Purchaser:

 

(a)                                  Accuracy
of Representations and Warranties. 
Each of the representations and warranties of Seller contained in this
Agreement shall have been true and correct in all material respects (other than
representations and warranties subject to “materiality” qualifiers, 

 

42

 

which shall be
true and correct as stated) when made and on and as of the Closing as if made
at and as of the Closing; provided, that representations and warranties
which address matters only as of a certain date shall have been true and
correct in all material respects (other than representations and warranties
subject to “materiality” qualifiers, which shall be true and correct as stated)
as of such certain date.

 

(b)                                 Performance.  Seller shall have performed and complied in
all material respects with all agreements, obligations and covenants required
to be performed or complied with by it on or prior to the Closing Date.

 

(c)                                  No
Material Adverse Effect.  During the
period from the date hereof to the Closing Date, there shall not have occurred
and be continuing any Material Adverse Effect.

 

(d)                                 Deliveries
by Seller.  Seller shall have
delivered to Purchaser the following:

 

(i)                                     A
certificate, dated the Closing Date, of an executive officer of Seller
confirming the matters set forth in Section 6.3(a), (b) and (c);

 

(ii)                                  A
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
Seller certifying, among other things, that attached or appended to such
certificate:  (A) is a true and
correct copy of the charter and by-laws of Seller, and all amendments thereto;
(B) is a true copy of all corporate actions taken by it, including resolutions
of its board of directors and sole stockholder, authorizing the consummation of
the Acquisition and the execution, delivery and performance of this Agreement
and each of the Transaction Documents to be delivered by Seller pursuant
hereto; and (C) are the names and signatures of its duly elected or
appointed officers who are authorized to execute and deliver this Agreement and
the other Transaction Documents to which Seller is a party;

 

(iii)                               A
counterpart of the Assignment and Assumption Agreement duly executed by Seller;

 

(iv)                              Certificates
of good standing from the appropriate state agencies, dated as of a recent
date, certifying that Seller is in good standing in the State of Delaware and
in each jurisdiction in which Seller is qualified to do business as a foreign
corporation;

 

(v)                                 An
affidavit certifying, under penalties of perjury, Seller’s United States
taxpayer identification number and that Seller is not a “foreign person” within
the meaning of Section 1445(b)(2) of the Code and Section 18662 of
the California Revenue and Taxation Code;

 

(vi)                              Any
certificates, affidavits or forms necessary to comply with or to reduce state
withholding Taxes.

 

(vii)                           A
counterpart of the Transition Services Agreement, duly executed by Seller;

 

(viii)                        A
counterpart of the Supply Agreement, duly executed by Parent;

 

43

 

(ix)                                A
bill of sale for the Tangible Personal Property, in the form attached as Exhibit G,
duly executed by Seller;

 

(x)                                   Original
certificates of title to all vehicles included in the Purchased Assets,
executed by Seller to the extent necessary to reflect the assignment by Seller
to Purchaser of such assets; and

 

(xi)                                Valid
and effective assignment documentation, in form and substance reasonably
acceptable to Purchaser, of any rights to the Intellectual Property that are
included in the Purchased Assets.

 

(e)                                  Deliveries
by Parent.  Parent shall have
delivered or caused to be delivered by one of its Affiliates to Purchaser valid
and effective assignment documentation, in form and substance reasonably
acceptable to Purchaser, of such Person’s rights in and to the Affiliate Mark
listed as Item 49 on Schedule 2.2(g).

 

(f)                                    Real
Property Deliveries.  Seller shall
have delivered to Purchaser the following:

 

(i)                                     Special
warranty deeds, grant deeds or quitclaim deeds, in the form attached as Exhibit H,
duly executed by Seller, in favor of Purchaser, in recordable form,
transferring good and valid fee simple title to the Real Property to be
conveyed by Seller to Purchaser hereunder, subject only to Permitted
Exceptions, and such affidavits or other customary instruments as the Title
Company or Purchaser may reasonably request;

 

(ii)                                  A
counterpart of each Assignment of Lease duly executed by Seller; and

 

(iii)                               If
applicable, duly completed and executed real estate Tax declarations.

 

(g)                                 Title
Company Deliveries.  The Title
Company shall have delivered to Purchaser (and if applicable, Purchaser’s
lenders) an owner’s (or lender’s) form of title insurance policy (or a mark-up
commitment therefor) in the form of the Title Commitments (each, a “Title
Policy”), in the amount of the Purchase Price applicable to the Real
Property insured by such Title Policy, insuring that fee simple title to the
Real Property is vested in Purchaser or its nominee subject only to the
Permitted Exceptions.

 

(h)                                 Consents.  Seller shall have obtained the third party
consents to the assignment of the contracts listed on Schedule 6.3(h)
and the pledges of leasehold interests as reasonably requested by Kerr and
Purchaser pursuant to Section 5.3.

 

(i)                                     Financing.  Kerr and Purchaser shall have received the
financing contemplated by either or both of the commitment letters referred to
in Section 4.7.

 

(j)                                     Liens.  Seller shall have removed all Liens on the Purchased
Assets other than Permitted Liens.

 

44

 

ARTICLE VII

TERMINATION; EFFECT OF TERMINATION

 

7.1                                 Termination of Agreement.  This Agreement may be terminated and the
Acquisition may be abandoned at any time prior to the Closing:

 

(a)                                  by
mutual written consent of Seller and Purchaser;

 

(b)                                 after
September 15, 2003, by either Seller or Purchaser, if the Closing has not
occurred by that date; provided, however, that Seller shall have
the right to extend such date in accordance with Section 5.8(b); provided,
further, that such date shall be extended to 120 days after a second
request, if any, by the Department of Justice or the Federal Trade Commission
in connection with the filing of a Notification and Report Form pursuant to the
HSR Act; and provided, further, that the right to terminate this
Agreement pursuant to this Section 7.1(b) shall not be available to a
Party whose action or failure to act has been a principal cause of or resulted
in the failure of the Acquisition to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;

 

(c)                                  by
Seller, upon written notice, if any representation or warranty of Purchaser
shall have become untrue such that the condition set forth in
Section 6.2(a) would not be satisfied or if Purchaser shall have
materially breached any agreement, obligation or covenant such that the
condition set forth in Section 6.2(b) would not be satisfied; provided
that if the inaccuracy in Purchaser’s representations and warranties or the
breach of Purchaser’s agreement, obligation or covenant is curable through the
exercise of Purchaser’s commercially reasonable efforts, then Seller may not
terminate this Agreement for thirty (30) days after Seller shall have given
written notice of such inaccuracy or breach to Purchaser (so long as Purchaser
continues to use commercially reasonable efforts to cure the inaccuracy or
breach during such period), it being understood that Seller may not terminate
this Agreement if Purchaser cures such inaccuracy or breach within such thirty
(30) day period;

 

(d)                                 by
Purchaser, upon written notice if any representation or warranty of Seller
shall have become untrue such that the condition set forth in
Section 6.3(a) would not be satisfied or if Seller shall have materially
breached any agreement, obligation or covenant such that the condition set
forth in Section 6.3(b) would not be satisfied; provided that if
the inaccuracy in Seller’s representations and warranties or the breach of
Seller’s agreement, obligation or covenant is curable through the exercise of
Seller’s commercially reasonable efforts, then Purchaser may not terminate this
Agreement for thirty (30) days after Purchaser shall have given written notice
of such inaccuracy or breach to Seller (so long as Seller continues to use
commercially reasonable efforts to cure such inaccuracy or breach during such
period), it being understood that Purchaser may not terminate this Agreement if
Seller cures such inaccuracy or breach within such thirty (30) day period;

 

(e)                                  by
Purchaser or Seller if there shall be any Law that makes consummation of the
Acquisition illegal or otherwise prohibited, or if any order of any
Governmental Authority enjoining Purchaser or Seller from consummating the
Acquisition is entered and such order shall have become final and
nonappealable; or

 

45

 

(f)                                    by
Purchaser, to the extent permitted by Section 5.8(b) if Seller fails to
remove any Title Objections.

 

7.2                                 Effect of Termination; Right to Proceed.

 

(a)                                  In
the event that Seller can demonstrate by a preponderance of the evidence that,
prior to the execution of this Agreement by the Parties, Richard Hofmann,
Lawrence Caldwell, Robert Rathsam, Timothy Guhl, Kathy Kruse or Megan Petry had
actual knowledge of any facts and circumstances that would constitute a breach
of or inaccuracy in any representation or warranty of Seller contained in
Article III hereof, and such facts and circumstances were not within the
Knowledge of Seller as of the execution of this Agreement by the Parties, then
Purchaser shall not be entitled to seek indemnification for such breach or
inaccuracy pursuant to Section 9.2(a).

 

(b)                                 In
the event that this Agreement is terminated pursuant to Section 7.1(a),
(b), (e) or (f), all further obligations of the Parties shall terminate without
further liability of either Party (except for obligations under this
Section 7.2, Sections 5.5, 5.6 and 5.7 and Articles I, IX and
X); provided that termination shall not relieve any party of liability
for any breach of this agreement occurring before such termination.

 

(c)                                  Subject
to Section 7.2(a), upon termination of this Agreement for breach pursuant
to Section 7.1(c) or (d): 
(i) the breaching Party shall be liable to the non-breaching Party
for any breach of any representation, warranty, covenant or agreement of such
breaching Party existing at the time of termination and (ii) the
non-breaching Party may seek such remedies, including damages against the breaching
Party, with respect to any such breach as are provided in this Agreement or as
are otherwise available at Law or in equity. 
The agreements contained in Sections 3.17, 4.5, 5.5, 5.6, 5.7, 10.5
and 10.6 and Articles I, IX and X shall survive the termination hereof.

 

(d)                                 In
the event that a condition precedent to a Party’s obligation is not met,
nothing contained herein shall be deemed to require any Party to terminate this
Agreement, rather than to waive such condition precedent and proceed with the
Acquisition.

 

ARTICLE VIII

POST-CLOSING COVENANTS

 

8.1                                 Certain Transitional Matters.  From and after the Closing Date:

 

(a)                                  Purchaser
shall have the right and authority to collect for Purchaser’s own account all
accounts or notes receivable which are included in the Purchased Assets;

 

(b)                                 Purchaser
shall have the right and authority to retain and endorse without recourse the
name of Seller on any check or any other evidence of indebtedness received by
Purchaser on account of any accounts receivable which are included in the
Purchased Assets;

 

(c)                                  Seller
shall promptly transfer and deliver to Purchaser any cash or other property, if
any, that Seller may receive which constitutes Purchased Assets; and

 

46

 

(d)                                 Purchaser
shall promptly transfer and deliver to Seller any cash or other property, if
any, that Purchaser may receive which constitutes Excluded Assets.

 

8.2                                 Transfer and Retention of Transferred Employees;
Employee Benefits.  On the
Closing Date, Seller shall terminate all Persons who are employed by Seller as
of such date, excluding only those Persons who are on short- or long-term
disability leave as of such date (the “Terminated Employees”).  Purchaser shall offer employment, from and
after the Closing Date, on an at-will basis (but shall not be restricted from
entering into employment agreements with any Terminated Employee) to all
Terminated Employees. In addition, if any Person who was on short- or long-term
disability leave from Seller returns to work for Seller on a date that is
within six months of the Closing Date, and provides the proper medical
authorization to resume work, Purchaser shall offer employment to such Person
as of the date of such Person’s return to work; provided that Purchaser
shall not be obligated to offer employment to more than 20 such employees,
taking into account all such employees hired by Purchaser from Seller or any
Affiliate of Seller.  Employees of
Seller who are not offered employment with Purchaser as of the Closing Date
shall continue as employees of Seller and to be covered under Seller’s employee
benefit plans and programs in accordance with the terms of such plans and
programs.  Seller shall cash-out each
Terminated Employee with respect to such Terminated Employee’s accrued and
unused vacation as of the Closing Date. 
On and after the Closing Date, Purchaser shall arrange for each employee
of Seller who becomes an employee of Purchaser or any Affiliate of Purchaser
(each, a “Transferred Employee”) to participate in such active
counterpart employee benefit plans, programs, and arrangements in which
similarly situated employees of Purchaser and its Affiliates participate from
time to time (the “Counterpart Plans”), in accordance with the
eligibility criteria thereof, provided that such Transferred Employees
shall: (a) receive full credit for years of service prior to the Closing Date
for all purposes for which such service was recognized under the Plans, provided
that such crediting of service shall not result in the duplication of benefits
(such as pension benefits, accrued vacation, etc.), and (b) to the extent
Counterpart Plans are maintained by Purchaser or its Affiliates, participate in
such Plans on terms no less favorable, in the aggregate, than those offered to similarly-situated
employees of the Purchaser and its Affiliates. 
Purchaser or its Affiliates shall give credit under those of its
Counterpart Plans that are welfare benefit plans for all co-payments,
deductibles and out-of-pocket maximums satisfied by Transferred Employees (and
their eligible dependents) in respect of the calendar year in which the Closing
occurs.  Purchase or its Affiliates
shall waive all pre-existing conditions (to the extent waived under the applicable
Plans of the Seller) that would otherwise be applicable to Transferred
Employees under the Counterpart Plans in which Transferred Employees of the
Seller or Affiliates become eligible to participate on or following the Closing
Date.  Purchaser will retain the
Transferred Employees for such period as may be necessary, when considered
together with any employees discharged by Seller prior to Closing, to avoid,
with respect to any facility operated by Seller in the Business:  (a) a “plant closing,” “mass layoff,”
“layoff,” “relocation” or “termination” of “employees” (as those terms are
defined in the Worker Adjustment and Retraining Notification Act of 1988 or
California Labor Code Section 1400, et seq., effective January 1,
2003); or (b) any liability to Seller under any Law which would reasonably be
expected to arise from any actual or anticipated termination of employees by
Purchaser after Closing, provided Seller has provided Purchaser (i) by
July 1, 2003 with an accurate list of employees terminated by Seller 

 

47

 

within 180 days prior to
and including such date and (ii) on the Closing Date with an accurate list of
employees terminated by Seller within 180 days prior to and including the
Closing Date.  No assets, liabilities or
reserves relating to any Seller Plan will be transferred in connection with
this Agreement from Seller or its Affiliates or any Seller Plan to Purchaser or
its Affiliates or any employee benefit plan of Purchaser or its Affiliates; provided,
however, that the plan administrator of an applicable Counterpart Plan
shall accept rollover contributions from an appropriate Plan to the extent such
rollover contributions comply with the terms of such Counterpart Plan and the
plan administrator of such Counterpart Plan reasonably concludes that the
contribution is a valid rollover contribution.

 

8.3                                 Non-Competition Covenant.  Seller and Parent shall not,
directly or indirectly, within North America, South America and Europe, for a
period of five (5) years after the Closing Date, engage in the business of
manufacturing, marketing or distributing to third parties specialty plastic
bottles and other containers and plastic shoe parts primarily for the vitamin,
mineral and supplement, food and spice, healthcare, personal care, health and
beauty, pharmaceutical, household chemical, automotive, industrial and footwear
markets; provided, however, that the foregoing shall not restrict
(a) Seller’s and Parent’s ownership, operation or control of any entity
acquired by Seller or Parent after the Closing Date (an “Acquired Entity”)
if the gross revenues of such entity attributable to products, the production,
marketing or sale of which would otherwise violate the terms of this
Section 8.3, (i) do not exceed five percent (5%) of the net revenues
of the Acquired Entity for the twelve (12) month period ending on the last day
of the last fiscal quarter preceding the date of the definitive agreement
providing for such acquisition for which such results of operation are
available and (ii) do not exceed $25,000,000, or (b) the direct or
indirect ownership by Seller of five percent (5%) or less of any entity whose
securities have been registered under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 or the securities Laws of any other
jurisdiction.  For the avoidance of
doubt, nothing in this Section 8.3 shall restrict Parent or any Affiliate
of Parent from developing, purchasing, marketing, distributing or otherwise
dealing in any products to be sold to third parties by Parent or such Affiliate
which incorporate such plastic bottles and other containers.  Further,
for a period of five (5) years after the Closing Date, Seller and Parent shall
not, directly or indirectly solicit, request, cause or induce Lois A.
Stevens, Donald E. Parodi, Robert J. Kiely, Jr. or Thomas J. Dunn to leave the
employ of or otherwise terminate his or her relationship with the Purchaser nor
shall Seller hire or seek to hire any such person while he or she is employed
by the Purchaser.  Seller acknowledges that Purchaser shall be entitled
to seek equitable relief from a court of competent jurisdiction restraining any
breach by Seller of this Section 8.3.

 

8.4                                 Trademarks, Etc.  As promptly as practicable after the Closing, Purchaser shall
revise trademarks and product literature, change signage and stationery and
otherwise discontinue use of all intellectual property constituting Excluded
Assets and all Affiliate Marks (which, for purposes of the limitations set
forth in this Section 8.4, shall not include the Affiliate Mark listed as
Item 49 on Schedule 2.2(g)) (collectively, “Excluded
Intellectual Property”); provided, however, that for a period
of forty-five (45) days from the Closing Date, Purchaser may consume stationery
and similar supplies and may sell inventory on hand as of the Closing Date
which contain such Excluded Intellectual Property so long as such items are, as
promptly as practicable after the Closing Date, overstamped or otherwise
appropriately indicate that the Business is then owned by Purchaser.  Without limiting the foregoing, Purchaser
shall, and shall cause each of its Affiliates to, (i) no later than the
close of business on the business day 

 

48

 

following the Closing
Date, discontinue affixing in any manner whatsoever such Excluded Intellectual
Property to any Product and (ii) no later than the close of business on
the forty-fifth (45th) calendar day after the Closing Date,
discontinue selling, shipping and delivering any product having such Excluded
Intellectual Property affixed thereto in any manner whatsoever.

 

8.5                                 Tax Covenants.

 

(a)                                  From
and after the Closing, each of Seller and Purchaser shall cooperate with the
other in connection with Tax matters relating to the Business and the Purchased
Assets, including:  (i) the
preparation and filing of Tax Returns; (ii) the determination of a Party’s
liability for Taxes and the amounts of any Taxes due or of a Party’s right to a
refund of Taxes and the amount of any such refund; (iii) the examination
of Tax Returns; and (iv) the conduct of any administrative or judicial
proceedings in respect of Taxes assessed or proposed to be assessed.  Subject to Section 5.6(b), such
cooperation shall include each Party making all information and documents in
its possession relating to the Business and Purchased Assets available to the
other Party.

 

(b)                                 The
Parties shall retain all Tax Returns, schedules and work papers, and all
material records and other documents relating thereto, until the expiration of
the applicable statute of limitations (including, to the extent notified by any
Party, any extension thereof) of the Tax period to which such Tax Returns and
other documents and information relate. 
Each Party shall also make available to the other Party, as reasonably
requested and available, personnel (including officers, directors, employees
and agents) responsible for preparing, maintaining and interpreting information
and documents relevant to Taxes, and personnel reasonably required as witnesses
or for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.  Any information or documents provided under
this Section 8.5(b) shall be kept confidential by the party receiving such
information or documents, except as may otherwise be necessary in connection
with the filing of Tax Returns or in connection with administrative or judicial
proceedings relating to Taxes.

 

(c)                                  In
the event any Governmental Authority with responsibility for Taxes informs
Seller or Purchaser of any notice of proposed audit, claim, assessment or other
dispute concerning an amount of Taxes with respect to which the other Party may
incur liability hereunder, the Party so informed shall promptly notify the
other Party of such matter.  Such notice
shall contain factual information (to the extent known) describing any asserted
Tax liability in reasonable detail and shall be accompanied by copies of any
notice or other documents received from such Governmental Authority with respect
to such matter.  If an Indemnified Party
has knowledge of an asserted Tax liability with respect to a matter for which
it is to be indemnified hereunder and such Party fails to provide the
Indemnifying Party prompt notice of such asserted Tax liability, then
(i) if the Indemnifying Party is precluded from contesting the asserted
Tax liability in any forum as a result of the failure to give prompt notice,
the Indemnifying Party shall have no obligation to indemnify the Indemnified
Party for Taxes arising out of such asserted Tax liability, and (ii) if
the Indemnifying Party is not precluded from contesting the asserted Tax
liability in any forum, but such failure to provide prompt notice results in a
monetary detriment to the Indemnifying Party, then any amount which the
Indemnifying Party is otherwise required to pay the Indemnified Party pursuant
to this Agreement shall be reduced by the amount of such detriment.

 

49

 

(d)                                 Seller
and Purchaser agree that Purchaser has purchased substantially all the property
used in Seller’s trade or business, and in connection therewith, Purchaser
shall employ Transferred Employees who immediately before the Closing Date were
employed in such trade or business by Seller. 
Accordingly, Seller shall
provide Purchaser with all necessary and accurate payroll records for the
calendar year which includes the Closing Date. 
Furthermore, pursuant to Rev. Proc. 96-60, 1996-2 C.B. 399,
if Purchaser elects, each Party shall comply with the requirements provided in
the alternative procedure under Rev. Proc. 96-60, pursuant to which Purchaser
shall furnish a Form W-2 to each employee employed by Purchaser who had been
employed by Seller disclosing all wages and other compensation paid for such
calendar year, and Taxes withheld therefrom, and Seller shall be relieved of
the responsibility to do so.  If
Purchaser does not elect such alternative procedure, each Party shall comply
with the requirements provided in the standard procedure under Rev. Proc.
96-60.

 

8.6                                 Records; Retention.  Following the Closing, each of Purchaser and
Seller shall afford the other and its Representatives reasonable access during
normal business hours to, and (if permitted by law) the right to make copies
and extracts from, the books, records and other data in Purchaser’s or Seller’s
possession relating to the Business, the Purchased Assets, the Excluded Assets,
the Assumed Liabilities and the Retained Liabilities with respect to periods
prior to the Closing Date, at the requesting Party’s expense, to the extent
that such access may be requested by Purchaser or Seller for any business
purpose, including to facilitate the investigation, litigation and final
disposition of any claims which may have been or may be made against Purchaser,
Seller or their respective Affiliates. 
Purchaser and Seller agree that for a period of seven (7) years
following the Closing Date, such Party shall not destroy or otherwise dispose
of any such books, records or data in its possession without (a) giving
the other at least sixty (60) days’ prior written notice of such intended
disposition and (b) offering to deliver to the other, at the other’s
expense, custody of any or all of the books, records and data that such Party
intends to destroy.

 

8.7                                 Designated Reporting Person.  In order to assure compliance with the
requirements of Section 6045 of the Code (and any related reporting
requirements) and Section 18643 of the California Revenue and Taxation
Code (the “R&T Code”), the Parties agree as follows:

 

(a)                                  If
the Title Company executes a statement in writing, in form and substance
reasonably acceptable to the Parties, pursuant to which the Title Company
agrees to assume all responsibilities for information reporting required under
Section 6045(e) of the Code and Section 18643 of the R&T Code,
Seller and Purchaser shall designate the Title Company as the person to be
responsible for all information reporting under Section 6045(e) of the
Code (the “Reporting Person”) and Section 18643 of the R&T
Code.  If the Title Company refuses to
execute a statement pursuant to which it agrees to be the Reporting Person,
Seller and Purchaser agree to appoint another third party mutually satisfactory
to the Parties as the Reporting Person.

 

(b)                                 Seller
and Purchaser hereby agree:

 

(i)                                     to
provide to the Reporting Person all information and certifications regarding
such Party, as reasonably requested by the Reporting Person or otherwise
required to be provided by a Party under Section 6045 of the Code; and

 

50

 

(ii)                                  to
provide to the Reporting Person such Party’s taxpayer identification number and
a statement (on IRS Form W-9 or an acceptable substitute form, or on any other
form the Code might require and/or any form requested by the Reporting Person),
signed under penalties of perjury, stating that the taxpayer identification
number supplied by such Party to the Reporting Person is correct.

 

(c)                                  Each
Party agrees to retain a copy of this Agreement for not less than four (4)
years from the end of the calendar year in which the Closing occurs and to
produce such copy to the IRS upon a valid request therefor.

 

8.8                                 Further Assurances.  Seller hereby agrees, without further
consideration, to execute and deliver following the Closing such other
instruments of transfer and take such other action as Purchaser or its counsel
may reasonably request in order to put Purchaser in possession of, and to vest
in Purchaser, good and valid title to the Purchased Assets in accordance with
this Agreement and to consummate the Acquisition.  Purchaser hereby agrees, without further consideration, to take
such other action following the Closing and execute and deliver such other
documents as Seller or its counsel may reasonably request in order to
consummate the Acquisition in accordance with this Agreement.

 

ARTICLE IX

SURVIVAL; INDEMNIFICATION

 

9.1                                 Expiration of Representations and Warranties.  The representations and warranties in this
Agreement (other than the representations and warranties contained in
Sections 3.1, 3.2, 3.3(a) and (b), 3.8(e), 3.15(b) and (c), 3.16, 3.17,
3.18, 3.19, 3.23, 3.24 and 3.25) shall survive the Closing until the second
anniversary of the Closing Date, at which time they shall terminate; provided
that (i) the representations and warranties contained in Sections 3.1,
3.2, 3.3(a) and (b), 3.8(e), 3.17 and 3.23 shall survive the Closing
indefinitely and (ii) the representations and warranties contained in
Sections 3.15(b) and (c), 3.16, 3.18, 3.19, 3.24 and 3.25 shall survive
the Closing until ninety (90) days after the expiration of the relevant statute
of limitations.

 

9.2                                 Indemnification by Seller.  Subject to the limitations set forth in
Section 7.2(a) and this Article IX, Seller shall indemnify, defend,
save and hold Kerr, Purchaser, and their respective Affiliates and the
Representatives of any of them (collectively, “Purchaser Indemnitees”)
harmless from and against any and all Losses incurred by any Purchaser
Indemnitee (except to the extent included in the Assumed Liabilities) arising
out of:

 

(a)                                  Seller’s
breach or the failure of any representation or warranty contained in this
Agreement (such breach or failure to be determined without giving effect to any
qualifications for “Knowledge,” “materiality” or “Material Adverse Effect”
contained in any representation or warranty) and any action, suit or proceeding
arising out of such breach or failure;

 

(b)                                 Seller’s
breach of any covenant or agreement made by Seller in or pursuant to this
Agreement and any action, suit or proceeding arising out of such breach;

 

51

 

(c)                                  Seller’s
failure to pay, perform or discharge when due any of the Retained Liabilities
and any action, suit or proceeding arising out of such failure;

 

(d)                                 Seller’s
operation of the Business or any event relating to or arising out of Seller’s
assets (including the Purchased Assets), in each case prior to the Closing,
except with respect to the Assumed Liabilities;

 

(e)                                  Taxes
assessed on, or expenses attributable to, any of the Real Property or the Real
Property Leases after the Closing Date for the period prior to the Closing Date
(such that Seller shall have borne all real property Taxes and all expenses
attributable thereto allocable to the period prior to the Closing Date), in
each case net of any amount previously paid under Section 2.5(c).  Notwithstanding the foregoing, an increase
in a Real Property Tax assessment as a result of the Acquisition, including the
California Supplemental Tax Bill and any similar Taxes, shall not be prorated
under this Section 9.2(e) or Section 2.5(c) and shall be the sole
liability of Purchaser;

 

(f)                                    a third party claim that the conduct of the
Business as it is currently conducted infringes U.S. Patent No. *, or any other
patent claiming priority over U.S. Patent No. *; or

 

(g)                                 a third-party claim by * or any other Person
alleging that the conduct of the Business as it is currently conducted with
respect to the items at issue in this lawsuit gives rise to liability under the
theories alleged in *.

 

Without limiting the generality of the foregoing,
Seller shall indemnify, defend and hold harmless Purchaser Indemnitees from and
against all Losses asserted against, resulting to, imposed on, sustained,
incurred or suffered by any of Purchaser Indemnitees, directly or indirectly
(except to the extent included in the Assumed Liabilities), by reason of or
resulting from (i) any claim, action, suit, investigation, arbitration,
inquiry, proceeding or litigation involving the Business, Seller or any of
Seller’s agents or assets (including the Purchased Assets), in each case
arising from events on or prior to the Closing Date but excluding (A) all
Assumed Liabilities and (B) Losses to the extent arising from or related
to any post-Closing breach or default by Purchaser of or under any Assumed
Contract, (ii) any liability of Purchaser Indemnitees arising from the
non-compliance with any applicable bulk transfer laws or Article 6 of the
Uniform Commercial Code, (iii) any Environmental Claim or pollution or threat
to human health or the environment that is related in any way to the
management, use, control, ownership or operation of the Business, including all
on-site and off-site activities involving Materials of Environmental Concern, and
that occurred, existed, arises out of conditions or circumstances that occurred
or existed, or was caused, in whole or in part, on or before the Closing Date,
whether or not the pollution or threat to human health or the environment is
described in Schedule 3.18, (iv) any and all obligations or
liabilities under covenants relating to employment, other than those
obligations and liabilities expressly undertaken or assumed by Purchaser
hereunder, (v) any and all Taxes of Seller for all taxable periods, whether
before, on or after the Closing Date (except to the extent allocated to
Purchaser with respect to the Real Property or the Real Property Leases
pursuant to Sections 2.5(c) and 9.2(e) of this Agreement), (vi) any and all
employee benefits or 

 

*  Confidential
treatment has been requested for certain portions of this document pursuant to
an application for confidential treatment sent to the SEC.  Such portions are omitted from this filing
and filed separately with the SEC.

 

52

 

employment related liabilities relating to any
employee benefit plan that is sponsored, maintained or contributed to or
required to be contributed to by Seller or any Affiliate of Seller, (vii)
arising from any conflict, violation, breach or default by Seller described in
Section 3.3(a) or 3.3(b) (without giving effect to any qualifications
described in the Schedules or for “Knowledge,” “materiality” or “Material
Adverse Effect” contained therein), (viii) Seller’s failing to obtain any
consents, approvals, authorizations, permits and filings pursuant to
Section 3.4(c) (without giving effect to any qualifications for
“Knowledge,” “materiality” or “Material Adverse Effect” contained therein) and
(ix) failing to remove any Title Objections pursuant to Section 5.8(b).

 

9.3                                 Indemnification by Kerr and Purchaser.  Subject to the limitations set forth in this
Article IX, Kerr and Purchaser shall jointly and severally indemnify,
defend, save and hold Seller, Seller’s Affiliates and the Representatives of
any of them (collectively, “Seller Indemnitees”) harmless from and
against any and all Losses incurred by any Seller Indemnitee arising out of:

 

(a)                                  Kerr’s
or Purchaser’s breach of any representation or warranty contained in this
Agreement and any action, suit or proceeding arising out of such breach;

 

(b)                                 Kerr’s
or Purchaser’s breach of any covenant or agreement made by Kerr or Purchaser in
or pursuant to this Agreement (such breach or failure to be determined without
giving effect to any qualifications for “Knowledge,” “materiality” or “Material
Adverse Effect” contained in any representation or warranty) and any action,
suit or proceeding arising out of such breach;

 

(c)                                  Kerr’s
or Purchaser’s failure to pay, perform or discharge when due any of the Assumed
Liabilities and any action, suit or proceeding arising out of such failure;

 

(d)                                 any
Assumed Liabilities, except for Losses to the extent attributable to a breach
by Seller of any Assigned Contract prior to Closing; or

 

(e)                                  following
the Closing, Purchaser’s operation of the Business or any event relating to or
arising out of Purchaser’s assets (including the Purchased Assets).

 

9.4                                 Notice of Claims.  Except as provided in Section 8.5, if
any Purchaser Indemnitee or Seller Indemnitee (an “Indemnified Party”)
believes that it has suffered or incurred any Losses for which it is entitled
to indemnification under this Article IX, such Indemnified Party shall so
notify the Party from whom indemnification is being claimed (the “Indemnifying
Party”) with reasonable promptness and reasonable particularity in light of
the circumstances then existing.  If any
claim is instituted by or against a third party with respect to which any
Indemnified Party intends to claim indemnification under this Article IX,
such Indemnified Party shall promptly notify the Indemnifying Party of such
claim.  The notice provided by the
Indemnified Party to the Indemnifying Party shall describe the claim (the “Asserted
Liability”) in reasonable detail and shall indicate the amount (or an
estimate) of the Losses that have been or may be suffered by the Indemnified
Party.  The failure of an Indemnified
Party to give any notice required by this Section 9.4 shall not affect any
of the Indemnified Party’s rights under this Article IX or 

 

53

 

otherwise except and to
the extent that such failure is prejudicial to the rights or obligations of the
Indemnifying Party.

 

9.5                                 Opportunity to Defend Third Party Claims.
If any action is brought by a third party against any Indemnified Party, the
Indemnifying Party shall be entitled: 
(a) to participate in such action and (b) to elect, by written
notice delivered to the Indemnified Party within thirty (30) days after the
Indemnifying Party’s receipt of notice of the Asserted Liability, to defend,
compromise or settle such action, with counsel reasonably satisfactory to the
Indemnified Party.  The Indemnified
Party shall cooperate with respect to any such participation, defense,
settlement or compromise.  The
Indemnified Party shall have the right to employ its own counsel in any such
case, but the fees and expenses of the Indemnified Party’s counsel shall be at
the sole expense of the Indemnified Party unless:  (i) the Indemnifying Party shall have authorized in writing
employment of such counsel at the expense of the Indemnifying Party;
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to defend such action within thirty (30)
days after the Indemnifying Party received notice of the Asserted Liability;
(iii) the Indemnified Party shall have reasonably concluded, based upon
written advice of counsel, that there are defenses available to the Indemnified
Party that are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party
with respect to such different defenses); or (iv) representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding, in any of
which events the fees and expenses of one additional counsel shall be borne by
the Indemnifying Party.  The
Indemnifying Party shall not settle or compromise any action or consent to the
entry of a judgment that:  (a) does
not provide for the claimant to give an unconditional release to the
Indemnified Party in respect of the Asserted Liability; (b) involves
relief other than monetary damages; (c) places restrictions or conditions
on the operation of the business of the Indemnified Party or any of its Affiliates;
or (d) involves any finding or admission of liability or of any violation
of Law.  The Indemnifying Party shall
not be liable for any settlement of any claim or action effected without its
written consent; provided that such consent is not unreasonably withheld.  After payment of any Asserted Liability by
the Indemnifying Party, the Indemnified Party, if requested by the Indemnifying
Party, shall assign to the Indemnifying Party all rights the Indemnified Party
may have against any applicable account debtor or other responsible Person in
respect of the Asserted Liability.  If
the Indemnifying Party chooses to defend any Asserted Liability, the
Indemnified Party shall make available to the Indemnifying Party any books,
records or other documents within its control that are necessary or appropriate
for such defense.  Any expenses of any
Indemnified Party for which indemnification is available hereunder shall be
paid upon written demand therefor.

 

9.6                                 Limitation of Liability.

 

(a)                                  Seller
shall not be obligated to provide any indemnification under Section 9.2(a)
except to the extent the aggregate amount for which it is obligated to provide
such indemnification exceeds the sum of $1,000,000, after which Seller shall be
obligated to pay the entire amount, beginning with the first dollar of Loss,
which is payable pursuant to Section 9.2(a); provided, however,
that De Minimis Losses shall not count towards such 

 

54

 

$1,000,000 amount
unless and until the aggregate amount of all De Minimis Losses exceeds
$100,000; provided, further, that in the case of any breach of
any representation or warranty under Sections 3.1, 3.2, 3.3, 3.6, 3.8(e), 3.16,
3.17, 3.18, 3.19, 3.23 and 3.24, respectively, Seller shall be obligated to
provide indemnification for the entire amount of such Loss, beginning with the
first dollar of Loss, without regard to whether such loss is a De Minimis Loss
and without regard to whether the aggregate amount for which the obligation to
provide indemnification under this Article IX exceeds the sum of
$1,000,000; provided, further, that in no event shall the
aggregate liability of Seller under this Article IX with respect to
Seller’s breach of its representations and warranties exceed one-half of the
Purchase Price other than for breach of any representation or warranty
contained in Sections 3.1, 3.2, 3.3, 3.6, 3.8, 3.16, 3.17, 3.18, 3.19, 3.23 and
3.24, which liability and obligation to indemnify shall be without limitation.

 

(b)                                 Kerr
and Purchaser shall not be obligated to provide any indemnification under
Section 9.3(a) except to the extent the aggregate amount for which they
are obligated to provide such indemnification exceeds the sum of $1,000,000,
after which Kerr and Purchaser shall be obligated to pay the entire amount,
beginning with the first dollar of Loss, which is payable pursuant to
Section 9.3(a); provided, however, that De Minimis Losses
shall not count towards such $1,000,000 amount unless and until the aggregate
amount of all De Minimis Losses exceeds $100,000; provided, further,
that in the case of any breach of any representation or warranty under Sections
4.1, 4.2, 4.3(a) or (b), and 4.5, respectively, Kerr and Purchaser shall be
obligated to provide indemnification for the entire amount of such Loss,
beginning with the first dollar of Loss, without regard to whether such loss is
a De Minimis Loss and without regard to whether the aggregate amount for which
the obligation to provide indemnification under this Article IX exceeds
the sum of $1,000,000; provided, further, that in no event shall
the aggregate liability of Kerr and Purchaser under this Article IX with
respect to Kerr’s and Purchaser’s breach of their representations and
warranties exceed one-half of the Purchase Price other than for breach of any
representation or warranty contained in Sections 4.1, 4.2, 4.3(a) or (b), and
4.5, which liability and obligation to indemnify shall be without limitation; provided,
further, that the preceding clause shall not limit Purchaser’s
obligation or liability with respect to the Assumed Liabilities.

 

(c)                                  The
provisions of this Article IX shall be the exclusive remedy available to
the Seller Indemnitees and the Purchaser Indemnitees after the Closing in the
event any such Person shall have a claim with respect to the matters covered by
this Agreement, other than with respect to claims involving intentional
misrepresentation, fraud, or willful misconduct.

 

9.7                                 Effect of Taxes and Insurance.  The amount of any Losses for which
indemnification is provided under this Article IX (a) shall be
reduced to take account of any net Tax benefit realized, in the year of the Tax
payment or the next succeeding taxable year and shall be increased to take
account of any net Tax detriment realized, in the year of the Tax payment or
the next succeeding taxable year arising from the incurrence or payment of any
such Losses or from the receipt of any such indemnification payment determined
on a with or without basis and (b) shall be reduced by the insurance
proceeds received and any other amount, if any, recovered from third parties by
the Indemnified Party (or its Affiliates) with respect to any Losses.  If any Indemnified Party shall have received
any indemnification payment pursuant to this Article IX with respect to
any Loss, such Indemnified Party shall, upon written request by the
Indemnifying Party, assign to such Indemnifying Party (to the extent of the
indemnification payment) any 

 

55

 

claim which such
Indemnified Party may have under any applicable insurance policy which provides
coverage for such Loss.  Such
Indemnified Party shall reasonably cooperate (at the expense of the
Indemnifying Party) to collect under such insurance policy.  If any Indemnified Party shall have received
any payment pursuant to this Article IX with respect to any Loss and has
or shall subsequently have received insurance proceeds or other amounts with
respect to such Loss, then such Indemnified Party shall promptly pay over to
the Indemnifying Party the amount so recovered (after deducting the amount of
the expenses incurred by it in procuring such recovery), but not in excess of
the amount previously so paid by the Indemnifying Party.

 

9.8                                 Treatment
of Indemnity Payments; No Duplication.  Any indemnification payment made pursuant to
this Article IX shall be treated, to the extent permitted or required by
law, by all Parties as an adjustment to the Purchase Price.  Notwithstanding anything contained in this
Article IX to the contrary, Purchaser shall not be entitled to
indemnification hereunder to the extent that any Losses were  (i) 
included in the calculation of the Working Capital Adjustment or the
Final Closing Capital Expenditures (excluding losses resulting from Seller’s
breach of any payment or other obligation to any counterparty with respect to
any Capital Expenditures) or (ii) offset by an adjustment pursuant to
Section 3.3 or 3.4 of the Supply Agreement or Section 5.12 hereof.

 

ARTICLE X

GENERAL

 

10.1                           Notices.  All
notices, requests, claims, demands or other communications that are required or
may be given pursuant to the terms of this Agreement or the other Transaction
Documents shall be in writing and shall be deemed to have been duly given:  (a) when delivered, if delivered by
hand; (b) one (1) Business Day after transmitted, if transmitted by a
nationally-recognized overnight courier service; (c) when sent by
facsimile transmission, if sent by facsimile transmission which is confirmed;
or (d) three (3) Business Days after mailing, if mailed by registered or
certified mail (return receipt requested), in each case to the Parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 10.1):

 

(a)                                  If
to Seller:

 

Setco, Inc.

18 Loveton Circle

Sparks,
Maryland  21152

Attention:  Corporate Secretary

Telephone:  (410) 771-7563

Fax:  (410) 527-8228

 

With a
simultaneous copy to:

 

Piper Rudnick LLP

6225 Smith Avenue

Baltimore,
Maryland 21209-3600

Attention:  Theodore Segal, Esq.

Telephone:  (410) 580-3000

Fax:  (410) 580-3001

 

56

 

(b)                                 If
to Purchaser:

 

Kerr Acquisition
Sub I, LLC

c/o Kerr Group
Inc.

500 New Holland Avenue

Lancaster, Pennsylvania  17602-2104

Attention:   Lawrence C. Caldwell

Telephone:  (717) 390-8439

 

With a
simultaneous copy to:

 

Skadden, Arps,
Slate, Meagher & Flom LLP

525 University
Avenue, Suite 1100

Palo Alto,
California  94301

Attention:  Kenton J. King, Esq.

Telephone:  (650) 470-4500

Fax:  (650) 470-4570

 

(c)                                  If
to Kerr:

 

Kerr Group, Inc.

500 New Holland Avenue

Lancaster, Pennsylvania  17602-2104

Attention:   Lawrence C. Caldwell

Telephone:  (717) 390-8439

 

With a
simultaneous copy to:

 

Skadden, Arps,
Slate, Meagher & Flom LLP

525 University
Avenue, Suite 1100

Palo Alto,
California  94301

Attention:  Kenton J. King, Esq.

Telephone:  (650) 470-4500

Fax:  (650) 470-4570

 

10.2                           Severability.  If any provision of this Agreement for any reason shall be held
to be illegal, invalid or unenforceable, such illegality shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such illegal, invalid or unenforceable provision had never been included
herein.

 

10.3                           Assignment; Binding Effect; Benefit.  No assignment by any Party of its rights nor
delegation by any Party of its obligations under this Agreement or any
Transaction Document shall be permitted unless Kerr and Purchaser, on the one
hand, or Seller, on the other hand, consents in writing thereto, except that
Purchaser may (a) assign, in its sole discretion, any 

 

57

 

of or all of its rights,
interests and obligations under this Agreement to Kerr or to any direct or
indirect wholly-owned Subsidiary of Kerr, and (b) pledge this Agreement
and any of its rights and obligations hereunder in whole or in part to any
other Person, in each case without the consent of Seller, provided in
each case that no such assignment shall relieve Purchaser of any of its
obligations hereunder.  This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and permitted assigns. 
Notwithstanding anything in this Agreement to the contrary, expressed or
implied, this Agreement is not intended to confer any rights or remedies on any
Person other than the Parties and their respective successors and permitted
assigns.

 

10.4                           Incorporation of Exhibits and Schedules.  All Exhibits and Schedules attached hereto
and referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.  The disclosures made by the Parties in any
Schedule to this Agreement shall apply with the same force and effect to
each other Section hereof to which it is reasonably apparent that such
disclosures should apply.

 

10.5                           Governing Law; Submission to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY
LAW OTHER THAN THAT OF NEW YORK.  COURTS
WITHIN THE STATE OF NEW YORK (LOCATED WITHIN NEW YORK CITY) WILL HAVE
JURISDICTION OVER ALL DISPUTES BETWEEN THE PARTIES ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.  THE PARTIES HEREBY CONSENT TO AND AGREE TO
SUBMIT TO THE JURISDICTION OF SUCH COURTS. 
EACH OF THE PARTIES WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH
DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT
(A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH
COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL
PROCESS ISSUED BY SUCH COURTS; OR (C) ANY LITIGATION COMMENCED IN SUCH
COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

 

10.6                           Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION
OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

10.7                           Interpretation.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any provisions of this Agreement.

 

10.8                           Counterparts.  This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
Parties in separate 

 

58

 

counterparts, each of
which when executed and delivered shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.

 

10.9                           Entire Agreement.  This Agreement (including the Schedules and
Exhibits attached hereto) and the other Transaction Documents executed in
connection with the consummation of the Acquisition contain the entire
agreement between the Parties with respect to the subject matter hereof and
supersede all prior agreements, written or oral, with respect thereto.

 

10.10                     Waivers and
Amendments.  This
Agreement may be amended, superseded, canceled, renewed or extended only by a
written instrument signed by all of the Parties.  The provisions hereof may be waived only in writing signed by the
Party or Parties waiving compliance.  No
delay on the part of any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part
of any Party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege.

 

[Signatures
appear on the next page]

 

59

 

EXECUTION

 

IN WITNESS WHEREOF, the Parties have caused this
Agreement to be signed in their respective names by their duly authorized
representatives as of the date first above written.

 

	
   

  	
  KERR GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Richard
  D. Hofmann

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard D. Hofmann

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  KERR ACQUISITION SUB I, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Richard
  D. Hofmann

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard D. Hofmann

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  

 

 

Signature
Page 1 of 3 to

Asset
Purchase Agreement, dated as of June 26, 2003, among

Kerr
Group, Inc., Purchaser and Setco, Inc.

 

 

	
   

  	
  SETCO, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Robert
  G. Davey

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert G. Davey

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  

 

 

Signature
Page 2 of 3 to

Asset
Purchase Agreement, dated as of June 26, 2003, among

Kerr Group, Inc., Purchaser and Setco, Inc.

 

 

GUARANTY

 

Parent hereby guarantees
the prompt payment by Seller of Seller’s indemnification obligations under
Section 9.2 of this Agreement.  If
Seller defaults in the payment of any such indemnification obligation, Parent
shall pay to Purchaser or the applicable Purchaser Indemnitee any damages,
costs and expenses that such Person is entitled to recover from Seller by
reason of Seller’s default.  Parent
acknowledges that the bankruptcy of Seller shall not relieve Parent of its
obligations under this Guaranty.  Parent
further agrees to the provisions of 5.3 (Consents, Filings and Authorizations;
Efforts to Consummate), 5.6 (Access to Information; Confidentiality), 8.3
(Non-Competition Covenant) and the last three sentences of Section 3.5
(Financial Statements) of this Agreement.

 

	
   

  	
  McCORMICK & COMPANY, INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Robert
  G. Davey

  	
   

  
	
   

  	
  Name:

  	
  Robert G. Davey

  
	
   

  	
  Title:

  	
  Executive Vice President

  

 

 

Signature
Page 3 of 3 to

Asset
Purchase Agreement, dated as of June 26, 2003, among

Kerr Group, Inc., Purchaser and Setco, Inc.

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