Document:

Exhibit 10.1

 

 

REVOLVING CREDIT AGREEMENT

 

Dated as of
October 20, 2003

 

Among

 

HORMEL FOODS CORPORATION

 

as
Borrower

 

and

 

THE BANKS NAMED HEREIN

 

as
Lenders

 

and

 

CITICORP USA, INC.

 

as
Administrative Agent

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

as Documentation
Agent

 

and

 

SUNTRUST BANK

 

as Syndication
Agent

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I

  
	
   

  	
   

  
	
  DEFINITIONS AND ACCOUNTING
  TERMS

  
	
   

  
	
  Section
  1.01

  	
  Certain Defined Terms

  
	
  Section
  1.02

  	
  Computation of Time Periods

  
	
  Section
  1.03

  	
  Accounting
  Terms

  
	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  
	
  AMOUNTS AND TERMS OF THE
  ADVANCES

  
	
   

  
	
  Section
  2.01

  	
  The
  Advances

  
	
  Section
  2.02

  	
  Making the Advances

  
	
  Section 2.03

  	
  Fees

  
	
  Section
  2.04

  	
  Optional Termination and Reduction of the
  Commitments

  
	
  Section
  2.05

  	
  Repayment and Prepayment of Advances

  
	
  Section
  2.06

  	
  Interest on Advances

  
	
  Section
  2.07

  	
  Interest Rate Determination

  
	
  Section
  2.08

  	
  Voluntary Conversion or Continuation of
  Advances

  
	
  Section
  2.09

  	
  Increased
  Costs

  
	
  Section
  2.10

  	
  Payments and Computations

  
	
  Section 2.11

  	
  Taxes

  
	
  Section
  2.12

  	
  Sharing of Payments, Etc

  
	
  Section
  2.13

  	
  Evidence
  of Debt

  
	
  Section
  2.14

  	
  Use
  of Proceeds

  
	
  Section
  2.15

  	
  Substitution of Lenders

  
	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  
	
  CONDITIONS OF
  EFFECTIVENESS AND LENDING

  
	
   

  
	
  Section
  3.01

  	
  Conditions Precedent to Effectiveness

  
	
  Section
  3.02

  	
  Conditions Precedent to Each Borrowing

  
	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  
	
  REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
   

  
	
  Section
  4.01

  	
  Representations and Warranties of the
  Borrower

  
	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  
	
  COVENANTS OF THE BORROWER

  
			

 

 

	
  Section
  5.01

  	
  Affirmative Covenants

  
	
  Section
  5.02

  	
  Negative Covenants

  
	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  
	
  EVENTS OF DEFAULT

  
	
   

  	
   

  
	
  Section
  6.01

  	
  Events
  of Default

  
	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  
	
  ADMINISTRATIVE AGENT

  
	
   

  
	
  Section
  7.01

  	
  Authorization and Action

  
	
  Section
  7.02

  	
  Agents’ Reliance, Etc.

  
	
  Section
  7.03

  	
  CUSA and Affiliates

  
	
  Section
  7.04

  	
  Lender Credit Decision

  
	
  Section
  7.05

  	
  Indemnification

  
	
  Section
  7.06

  	
  Successor Administrative Agent

  
	
  Section
  7.07

  	
  Other
  Agents

  
	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section
  8.01

  	
  Amendments,
  Etc.

  
	
  Section 8.02

  	
  Notices, Etc.

  
	
  Section
  8.03

  	
  No Waiver; Remedies

  
	
  Section
  8.04

  	
  Costs, Expenses and Indemnification

  
	
  Section
  8.05

  	
  Right
  of Set-off

  
	
  Section
  8.06

  	
  Binding Effect; Entire Agreement

  
	
  Section
  8.07

  	
  Assignments and Participations

  
	
  Section
  8.08

  	
  Confidentiality

  
	
  Section
  8.09

  	
  Governing
  Law

  
	
  Section
  8.10

  	
  Execution in Counterparts

  
	
  Section
  8.11

  	
  Consent to Jurisdiction; Waiver of
  Immunities

  
	
  Section
  8.12

  	
  Waiver of Trial by Jury

  
	
  Section
  8.13

  	
  Website Communications

  

 

H-2

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule I

  	
  Applicable Lending Offices

  
	
   

  	
   

  
	
  Schedule II

  	
  Banks’ Commitments

  
	
   

  	
   

  
	
  Schedule 4.01(a)

  	
  Material Subsidiaries

  
	
   

  	
   

  
	
  Schedule 4.01(c)

  	
  Government Consents

  
	
   

  	
   

  
	
  Schedule 8.02

  	
  Notices

  

 

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Assignment
  and Acceptance

  
	
   

  	
   

  
	
  Exhibit B

  	
  Form of Compliance
  Certificate

  
	
   

  	
   

  
	
  Exhibit C

  	
  Form of
  Notice of Conversion/Continuation

  
	
   

  	
   

  
	
  Exhibit D

  	
  Form of Notice of Borrowing

  
	
   

  	
   

  
	
  Exhibit
  E

  	
  Form
  of Promissory Note

  
	
   

  	
   

  
	
  Exhibit F

  	
  Form of Opinion
  of Counsel to Borrower

  
	
   

  	
   

  
	
  Exhibit G

  	
  Form of
  Opinion of O’Melveny & Myers LLP

  

 

H-3

 

U.S. $150,000,000

REVOLVING CREDIT AGREEMENT

 

Dated as of October 20, 2003

 

HORMEL FOODS CORPORATION,
a Delaware corporation (the “Borrower”), the Banks listed on the
signature pages (the “Banks,” together with each bank which
becomes a lender hereunder pursuant to Section 8.07, collectively the “Lenders”), CITICORP
USA, INC. (“CUSA”), as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”), and the other
agents named herein agree as follows:

 

ARTICLE
I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01  Certain
Defined Terms.  As
used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):

 

“Adjusted Eurodollar
Rate” shall mean, for any Interest Period for a Eurodollar Rate Advance
comprising part of the same Borrowing, an interest rate per annum equal to the
rate per annum obtained by dividing (a)(i) the offered rate (if any) appearing
on the Telerate Screen which displays British Bankers’ Association Interest
Settlement Rates for deposits of the relevant amount in Dollars for a period
equal to the Interest Period relating to that Advance at approximately 11:00 A.M.
(London time) two Business Days before the first day of such Interest Period,
or (ii) if the Administrative Agent is unable to access the Telerate Screen or
if the relevant rate is not displayed, the average (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which Citibank was offering to leading banks
in the London interbank market deposits in Dollars of an equivalent amount and
for such Interest Period at or about 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period with respect to each Eurodollar
Rate Advance, by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage, subject, however, to the provisions of
Section 2.02(b).  For the purposes of
this definition, “Telerate Screen” means the display on the Telerate Service or
such other service as may be nominated by the British Bankers’ Association
Interest Settlement Rates for deposits in Dollars.

 

“Administrative Agent”
means CUSA, in its capacity as administrative agent for the Lenders, or any
Person serving as its successor.

 

“Advance” means an
advance by a Lender to the Borrower as part of a Borrowing pursuant to Section
2.01, and refers to a Base Rate Advance or a Eurodollar Rate Advance, each of
which shall be a “Type” of Advance.

 

“Affiliate” means,
as to any Person, any other Person that, directly or indirectly, controls, is
controlled by or is under common control with such Person.

 

1

 

“Agent” or “Agents”
means the Administrative Agent; provided, that, solely for purposes of Sections
7.02, 7.04, 7.05, 8.04, 8.07(b)(iv), 8.08 and 8.12 of this Agreement the term
“Agent” or “Agents”, as the case may be, shall include each financial
institution named on the signature page or facing page hereof as an agent and
the Arranger.

 

“Agent Parties”
has the meaning set forth in Section 8.l3(b).

 

“Agreement” means
this Revolving Credit Agreement as it may be amended, supplemented or otherwise
modified from time to time.

 

“Applicable Lending
Office” means, with respect to each Lender, such Lender’s Domestic Lending
Office in the case of a Base Rate Advance, and such Lender’s Eurodollar Lending
Office in the case of a Eurodollar Rate Advance.

 

“Applicable Margin”
means, for any period for which any interest payment is to be made with respect
to any Advance, the interest rate per annum derived by dividing (i) the
sum of Daily Margins for each of the days included in such period by
(ii) the number of days included in such period.

 

“Arranger” means
CGMI as sole lead arranger and book runner.

 

“Assignment and
Acceptance” means an assignment and acceptance entered into by a Lender and
an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of Exhibit A hereto.

 

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy” as now and
hereafter in effect, or any successor statute.

 

“Base Rate” means,
for any period, a fluctuating interest rate per annum as shall be in effect
from time to time which rate per annum shall at all times be equal to the
highest of:

 

(a)        the rate of interest
announced publicly by Citibank in New York, New York, from time to time, as
Citibank’s base rate (which is a rate set by Citibank based upon various
factors including Citibank’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate);

 

(b)        the sum of (A) 1/2 of
one percent per annum, plus (B) the rate obtained by dividing
(x) the latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of deposit of
major United States money market banks (such three-week moving average being
determined weekly by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or terminated, on the basis
of quotations for such rates received by Citibank, in either case adjusted to
the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent), by (y) a percentage equal
to 100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement (including, but not limited to, any

 

2

 

marginal reserve requirements for Citibank in respect of liabilities
consisting of or including (among other liabilities) three-month nonpersonal
time deposits of at least $100,000), plus (C) the average during
such three-week period of the daily net annual assessment rates estimated by
Citibank for determining the current annual assessment payable by Citibank to
the Federal Deposit Insurance Corporation for insuring three-month deposits in
the United States; or

 

(c)        1/2 of one percent per
annum above the Federal Funds Rate.

 

“Base Rate Advance”
means an Advance which bears interest at a rate per annum determined on the
basis of the Base Rate, as provided in Section 2.06(a).

 

“Borrower” means
Hormel Foods Corporation, a Delaware corporation.

 

“Borrowing” means
a borrowing consisting of simultaneous Advances of the same Type made on the
same day pursuant to the same Notice of Borrowing by each of the Lenders
pursuant to Section 2.02(a).

 

“Business Day”
means a day of the year other than a Saturday or a Sunday on which banks are
not required or authorized to close in New York City or Los Angeles and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.

 

“Capital Lease”
means, with respect to any Person, any lease of any property by that Person as
lessee which would, in conformity with GAAP, be required to be accounted
for as a capital lease on the balance sheet of that Person.

 

“Cash” means money,
currency or a credit balance in a deposit account.

 

“Cash Equivalents”
means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case maturing
within one year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having the highest rating generally obtainable from either
S&P or Moody’s, (c) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, having a
rating of A-2 or higher from S&P or P-2 or higher from Moody’s,
(d) certificates of deposit or bankers’ acceptances maturing within one
year from the date of acquisition thereof issued by any lender, (e) investments
in money market funds having total portfolio asset value in excess of
$100,000,000, (f) investments in industrial revenue bonds supported by a
standby letter of credit provided that the securities have a short-term rating
of A-1 or higher from S&P or P-1 or higher from Moody’s or a long-term
rating of A or higher from S&P or from Moody’s, and (g) money market
preferred stock (auction preferred stock) with a rating of A-2 or higher from
S&P or A or higher from Moody’s.

 

“CGMI” means
Citigroup Global Markets Inc.

 

3

 

“Citibank” means
Citibank, N.A.

 

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

 

“Commitment” has
the meaning specified in Section 2.01.

 

“Commitment
Termination Date” means October 17, 2006 or such earlier date as the
Commitments may be terminated pursuant to Section 2.04 or Section 6.01.

 

“Communications”
has the meaning set forth in Section 8.13(a).

 

“Compliance
Certificate” means a certificate substantially in the form of Exhibit B
hereto, delivered to the Lenders by the Borrower pursuant to Section
5.01(b)(iii).

 

“Convert,” “Conversion”
and “Converted” each refers to a conversion of Advances of one Type into
Advances of another Type pursuant to Section 2.08.

 

“CUSA” means
Citicorp USA, Inc.

 

“Daily Margin”
means, for any date of determination, for the designated Level, Utilization
Ratio applicable to such date of determination and Type of Advance, the
following interest rates per annum:

 

	
   

  	
   

  	
  Daily
  Margin when

  Utilization Ratio

  is equal to or

  less than 0.50:1.00

  	
   

  	
  Daily
  Margin when

  Utilization Ratio

  is greater than

  0.50:1.00

  	
   

  
	
   

  	
   

  	
  TYPE OF
  ADVANCE

  	
   

  	
  TYPE OF
  ADVANCE

  	
   

  
	
   

  	
   

  	
  Base Rate

  Advance

  	
   

  	
  EURO Rate

  Advance

  	
   

  	
  Base Rate

  Advance

  	
   

  	
  EURO Rate

  Advance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level
  1

  	
   

  	
  0

  	
  %

  	
  0.1800

  	
  %

  	
  0.10

  	
  %

  	
  0.2800

  	
  %

  
	
  Level
  2

  	
   

  	
  0

  	
  %

  	
  0.2150

  	
  %

  	
  0.10

  	
  %

  	
  0.3150

  	
  %

  
	
  Level
  3

  	
   

  	
  0

  	
  %

  	
  0.2500

  	
  %

  	
  0.125

  	
  %

  	
  0.3750

  	
  %

  
	
  Level
  4

  	
   

  	
  0

  	
  %

  	
  0.4000

  	
  %

  	
  0.175

  	
  %

  	
  0.5750

  	
  %

  
	
  Level
  5

  	
   

  	
  0

  	
  %

  	
  0.5500

  	
  %

  	
  0.25

  	
  %

  	
  0.8000

  	
  %

  

 

For purposes of this definition, (a) “Utilization
Ratio” means, as of any date of determination, the ratio of (1) the
Total Utilization of Commitments to (2) the aggregate outstanding amount
of all Commitments (whether used or unused) in effect as of such date,
(b) if any change in the rating established by S&P or Moody’s with
respect to Long-Term Debt shall result in a change in the Level, the change in
the Daily Margin shall be effective as of the date on which such rating change
is publicly announced, and (c) if the ratings established by both of
S&P and Moody’s with respect to Long-Term Debt are unavailable for any
reason for any day, then the applicable level for such day shall be deemed to
be Level 5 (or, if the Requisite Lenders consent in writing, such other Level
as may be reasonably determined by the Requisite Lenders from a rating with
respect to Long-Term Debt for such day established by another rating agency
reasonably acceptable to the Requisite Lenders).

 

4

 

“Debt” means
(i) indebtedness for borrowed money or for the deferred purchase price of
property or services, (ii) obligations as lessee under Capital Leases, or
(iii) obligations under guarantees in respect of indebtedness or in
respect of obligations of others of the kinds referred to in clause (i) or (ii)
above.

 

“Designating Lender”
has the meaning specified in Section 8.07(g).

 

“Dollars” and the
sign “$” each means lawful money of the United States of America.

 

“Domestic Lending
Office” means, with respect to any Lender, the office of such Lender
specified as its “Domestic Lending Office” opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which an Eligible
Assignee became a Lender, or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Agents.

 

“EBITDA” means,
for any period, consolidated net income (excluding extraordinary, unusual, or
nonrecurring gains or losses), plus provision for income taxes of the Borrower
and its Subsidiaries, plus interest expense of the Borrower and its Subsidiaries,
plus depreciation expense of the Borrower and its Subsidiaries, plus
amortization of intangibles of the Borrower and its Subsidiaries, as determined
on a consolidated basis in conformity with GAAP.

 

“Effective Date”
means the date on which all of the conditions in Section 3.01 were satisfied or
waived, which date was October 20, 2003.

 

“Eligible Assignee”
means (i) a commercial bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus of at least
$100,000,000; (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economical Cooperation and
Development (the “OECD”), or a political subdivision of any such country and
having a combined capital and surplus of at least $100,000,000, provided that
such bank is acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the OECD; and
(iii) any Person engaged in the business of lending and that is an Affiliate of
a Lender or of a Person of which a Lender is a Subsidiary.

 

“Environmental Law”
means any and all statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or other governmental restrictions of any federal, state or local governmental
authority within the United States or any State or territory thereof and which
relate to the environment or the release of any materials into the environment.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated and rulings issued thereunder.

 

“ERISA Affiliate”
means any Person who for purposes of Title IV of ERISA is a member of the
Borrower’s controlled group, or under common control with the Borrower, within
the meaning of Section 414 of the Code and the regulations promulgated and
rulings issued thereunder.

 

5

 

“ERISA Event”
means (i) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect
thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Pension Plan of a notice of intent to terminate such
Pension Plan pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (iii) the cessation of operations at a facility by the Borrower or
an ERISA Affiliate in the circumstances described in Section 4062(e) of
ERISA; (iv) the withdrawal by the Borrower or an ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure
by the Borrower or any ERISA Affiliate to make a payment to a Pension Plan
required under Section 302(f)(1) of ERISA, which Section imposes a lien
for failure to make required payments; (vi) the adoption of an amendment
to a Pension Plan requiring the provision of security to such Pension Plan,
pursuant to Section 307 of ERISA; or (vii) the institution by the
PBGC of proceedings to terminate a Pension Plan, pursuant to Section 4042
of ERISA, or the occurrence of any event or condition which, in the reasonable
judgment of the Borrower, might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, a
Pension Plan.

 

“Eurocurrency
Liabilities” has the meaning assigned to that term in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.

 

“Eurodollar Lending
Office” means, with respect to any Lender, the office of such Lender
specified as its “Eurodollar Lending Office” opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which it became a Lender
(or, if no such office is specified, its Domestic Lending Office), or such
other office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.

 

“Eurodollar Rate
Advance” means an Advance that bears interest as provided in Section
2.06(b).

 

“Eurodollar Rate
Reserve Percentage” for any Interest Period for any Eurodollar Rate Advance
means the reserve percentage applicable during such Interest Period (or if more
than one such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirements (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for member
banks in the Federal Reserve System with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.

 

“Events of Default”
has the meaning specified in Section 6.01.

 

“Existing Credit
Agreement” means that certain Credit Agreement dated as of October 25,
2001, by and among the Borrower, the Administrative Agent, the banks named
therein and the other parties thereto.

 

6

 

“Federal Funds Rate”
means, for any period, a fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.

 

“Hormel Foundation”
is a Minnesota non-profit corporation organized for religious, charitable,
scientific, literary or educational purposes. 
The Hormel Foundation is a public foundation.  The Hormel Foundation is the beneficial owner of 46.24% of common
stock of The Hormel Foods Corporation as of September 20, 2003.

 

“Hostile Acquisition”
means the acquisition of the capital stock or other equity interests of a
Person (the “Target”) through a tender offer or similar solicitation of the
owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the Board of Directors
of the Target or by similar action if the Target is not a corporation or as to
which such approval has been withdrawn.

 

“Insufficiency”
means, with respect to any Pension Plan, the amount, if any, of its unfunded
benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

 

“Interest Period”
means, for each Eurodollar Rate Advance comprising part of the same Borrowing,
the period commencing on the date of such Eurodollar Rate Advance, or on the
date of continuation of such Advance as a Eurodollar Rate Advance upon
expiration of successive Interest Periods applicable thereto, or on the date of
Conversion of a Base Rate Advance into a Eurodollar Rate Advance, and ending on
the last day of the period selected by the Borrower pursuant to the provisions
below.  The duration of each such
Interest Period shall be one, two, three or six months, as the Borrower may
select in the Notice of Borrowing or the Notice of Conversion/Continuation for
such Advance; provided, however, that:

 

(i)         the Borrower may not
select any Interest Period in respect of Advances that ends after the
Commitment Termination Date;

 

(ii)        Interest Periods
commencing on the same date for Advances comprising part of the same Borrowing
shall be of the same duration; and

 

(iii)       whenever the last day of
any Interest Period would otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, that if such 

 

7

 

extension would cause the
last day of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding Business
Day.

 

“Lenders” means
the Lenders listed on Schedule I hereof and each Eligible Assignee that shall
become a party hereto pursuant to Section 8.07.

 

“Level” means
Level 1, Level 2, Level 3, Level 4 or Level 5, as the case may be.

 

“Level 1” means
that, as of any date of determination, the Long-Term Debt carries either of the
following ratings:

 

“A+” from S&P

“A1” from Moody’s

 

“Level 2” means
that, as of any date of determination, the criteria of Level 1 are not
satisfied and the Long-Term Debt carries either of the following ratings:

 

“A” from S&P

“A2” from Moody’s

 

“Level 3” means
that, as of any date of determination, the criteria of neither Level 1 nor
Level 2 are satisfied and the Long-Term Debt carries either of the following
ratings:

 

“A-” from S&P

“A3” from Moody’s

 

“Level 4” means
that, as of any date of determination, the criteria of neither Level 1, Level 2
nor Level 3 are satisfied and the Long-Term Debt carries either of the
following ratings:

 

“BBB+” from S&P

“Baa1” from Moody’s

 

“Level 5” means
that, as of any date of determination, the criteria of neither Level 1, Level
2, Level 3 nor Level 4 are satisfied.

 

“Lien” means any
lien, mortgage, pledge, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement and any
lease in the nature thereof).

 

“Loan Documents”
means this Agreement and the related documents.

 

“Long-Term Debt”
means senior, unsecured, long term debt securities of the Borrower.

 

“Margin Stock” has
the meaning assigned to that term in Regulation U promulgated by the Board
of Governors of the Federal Reserve System, as in effect from time to time.

 

“Material Subsidiary”
means any Subsidiary of the Borrower having total assets in excess of
$20,000,000.

 

8

 

“Moody’s” means
Moody’s Investors Service, Inc.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to
which the Borrower or any ERISA Affiliate of the Borrower is making, or is
obligated to make, contributions or has Withdrawal Liability.

 

“Multiple Employer
Plan” means a single employer plan, as defined in Section 4001(a)(15)
of ERISA, which (i) is maintained for employees of the Borrower or an
ERISA Affiliate and at least one Person other than the Borrower and its ERISA
Affiliates or (ii) was so maintained and in respect of which the Borrower
or an ERISA Affiliate could have liability under Section 4063, 4064 or 4069 of
ERISA in the event such plan has been or were to be terminated.

 

“Net Debt” means
amounts incurred by the Borrower and its subsidiaries and classified as Debt
pursuant to clauses (i) and (ii) of the definition thereof minus the sum
of Cash and Cash Equivalents.

 

“Net Income” means
net income in accordance with GAAP.

 

“Notice of Borrowing”
has the meaning specified in Section 2.02(a).

 

“Notice of
Conversion/Continuation” means a notice substantially in the form of Exhibit
C hereto, delivered to the Administrative Agent by the Borrower pursuant to
Section 2.08.

 

“Payment Office”
means the principal office of CUSA, located on the date hereof at 2 Penns Way,
Suite 200, New Castle, Delaware 19720  (or such other place as the Administrative
Agent may designate by notice to the Borrower and the Lenders from time to
time).

 

“PBGC” means the
U.S. Pension Benefit Guaranty Corporation.

 

“Pension Plan”
means a Single Employer Plan or a Multiple Employer Plan or both.

 

“Person” means an
individual, partnership, limited liability company, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof.

 

“Platform” has the
meaning set forth in Section 8.13(b).

 

“Potential Event of
Default” means a condition or event which, after notice or lapse of time or
both, would constitute an Event of Default if that condition or event were not
cured or removed within any applicable grace or cure period.

 

 “Register” has the meaning specified
in Section 8.07(d).

 

“Requisite Lenders”
means at any time Lenders holding greater than 51% of the then aggregate unpaid
principal amount of the Advances held by Lenders, or, if no such principal
amount is then outstanding, Lenders having greater than 51% of the Commitments
(provided that, for purposes hereof, neither the Borrower, nor any of
its Affiliates, if a Lender, shall be 

 

9

 

included in (i) the
Lenders holding such amount of the Advances or having such amount of the
Commitments or (ii) determining the aggregate unpaid principal amount of
the Advances or the total Commitments).

 

“S&P” means
Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies.

 

“SEC” means the
Securities and Exchange Commission and any successor agency.

 

“Single Employer Plan”
means a single employer plan, as defined in Section 4001(a)(15) of ERISA, which
(i) is maintained for employees of the Borrower or any ERISA Affiliate and
no Person other than the Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could
have liability under Section 4062 or 4069 of ERISA in the event such plan has
been or were to be terminated.

 

“SPV” has the
meaning specified in Section 8.07(g).

 

“Subsidiary” of
any Person means, as of any time of determination, any corporation,
association, partnership, limited liability company or other business entity of
which more than 50% of the total voting power of shares of stock or other
securities entitled to vote in the election of directors, managers or trustees
thereof is at such time owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of that Person or a combination
thereof.

 

“Total Utilization of
Commitments” means at any date of determination the aggregate principal
amount of all Advances outstanding at such date.

 

“Type” means, with
reference to an Advance, a Base Rate Advance or a Eurodollar Rate Advance.

 

“Withdrawal Liability”
has the meaning given such term under Part I of Subtitle E of
Title IV of ERISA.

 

Section 1.02  Computation
of Time Periods.  In
this Agreement in the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including” and the words
“to” and “until” each means “to but excluding”.

 

Section 1.03  Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.  All computations determining compliance with
financial covenants or terms, including definitions used therein, shall be
prepared in accordance with generally accepted accounting principles in effect
at the time of the preparation of, and in conformity with those used to
prepare, the historical financial statements delivered to the Lenders pursuant
to Section 4.01(e).  If at any time the
computations for determining compliance with financial covenants or provisions
relating thereto utilize generally accepted accounting principles different
than those then being utilized in the financial statements being delivered to
the Lenders, such financial statements shall be accompanied by a reconciliation
statement.

 

10

 

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

 

Section 2.01  The Advances.

 

(a)   Each Lender severally agrees,
on the terms and conditions hereinafter set forth, to make Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Commitment Termination Date in an aggregate amount not
to exceed at any time outstanding the amount set opposite such Lender’s name on
Schedule II hereof or, if such Lender has entered into any Assignment
and Acceptance, set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(c), as such amount may be reduced
pursuant to Section 2.04 (such Lender’s “Commitment”); provided
that (i) in no event shall the aggregate principal amount of Advances from
any Lender outstanding at any time exceed its Commitment then in effect and
(ii) the Total Utilization of Commitments shall not exceed the aggregate
Commitments then in effect.

 

(b)   Each Borrowing shall be in an
aggregate amount not less than $5,000,000 or a multiple of $1,000,000 in excess
thereof and shall consist of Advances of the same Type made on the same day by
the Lenders ratably according to their respective Commitments.  Within the limits of each Lender’s
Commitment, the Borrower may from time to time borrow, prepay pursuant to
Section 2.05(b) and reborrow under this Section 2.01.

 

Section 2.02  Making the
Advances.

 

(a)   Each Borrowing shall be made on
notice, given not later than (x) 11:00 A.M. (New York City time) on the
date of a proposed Borrowing consisting of Base Rate Advances and
(y) 11:00 A.M. (New York City time) on the third Business Day prior
to the date of a proposed Borrowing consisting of Eurodollar Rate Advances, by
the Borrower to the Administrative Agent, which shall give to each Lender
prompt notice thereof by telecopier. 
Each such notice of a Borrowing (a “Notice of Borrowing”) shall
be sent by telecopier, confirmed immediately in writing, in substantially the
form of Exhibit D hereto, specifying therein the requested (i) date
of such Borrowing, (ii) Type of Advances comprising such Borrowing,
(iii) aggregate amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurodollar Rate Advances, the initial Interest Period
for each such Advance.  The Borrower
may, subject to the conditions herein provided, borrow more than one Borrowing
on any Business Day.  Each Lender shall,
before 2:00 P.M. (New York City time) in the case of a Borrowing consisting of
Base Rate Advances and before 11:00 A.M. (New York City time) in the case of a
Borrowing consisting of Eurodollar Rate Advances, in each case on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Administrative Agent at its address referred to in Section 8.02, in same
day funds, such Lender’s ratable portion of such Borrowing.  After the Administrative Agent’s receipt of
such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will make such funds available to the
Borrower at the Administrative Agent’s aforesaid address.

 

(b)   Anything in subsection (a)
above to the contrary notwithstanding,

 

11

 

(i)            the Borrower may not
select Eurodollar Rate Advances for any Borrowing or with respect to
the Conversion or continuance of any Borrowing if the aggregate amount of
such Borrowing or such Conversion or continuance is less than $5,000,000;

 

(ii)           there shall be no more
than five Interest Periods relating to Borrowings consisting of Eurodollar Rate
Advances outstanding at any time;

 

(iii)          if any Lender shall, at
least one Business Day before the date of any requested Borrowing, notify
the Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other governmental authority asserts that it is unlawful, for such
Lender or its Eurodollar Lending Office to perform its obligations hereunder to
make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, the Commitment of such Lender to make Eurodollar Rate Advances or to
Convert all or any portion of Base Rate Advances shall forthwith be suspended until
the Administrative Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer exist and
such Lender’s then outstanding Eurodollar Rate Advances, if any, shall be
converted to Base Rate Advances as of the end of any applicable Interest Period
or at such earlier time as may be legally required; to the extent that such
affected Eurodollar Rate Advances become Base Rate Advances, all payments of
principal that would have been otherwise applied to such Eurodollar Rate
Advances shall be applied instead to such Lender’s Base Rate Advances; provided
that if Requisite Lenders are subject to the same illegality or assertion of
illegality, then the right of the Borrower to select Eurodollar Rate Advances
for such Borrowing or any subsequent Borrowing or to Convert all or any
portion of Base Rate Advances shall forthwith be suspended until the
Administrative Agent shall notify the Borrower that the circumstances causing
such suspension no longer exist, and each Advance comprising such Borrowing
shall be a Base Rate Advance; and

 

(iv)          if the Requisite Lenders
shall, at least one Business Day before the date of any requested Borrowing,
notify the Administrative Agent that the Adjusted Eurodollar Rate for Eurodollar
Rate Advances comprising such Borrowing will not adequately reflect the cost to
such Requisite Lenders of making, funding or maintaining their respective
Eurodollar Rate Advances for such Borrowing, the right of the Borrower to
select Eurodollar Rate Advances for such Borrowing or any subsequent Borrowing
shall be suspended until the Administrative Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist, and
each Advance comprising such Borrowing shall be made as a Base Rate Advance.

 

(c)   Each Notice of Borrowing shall
be irrevocable and binding on the Borrower. 
In the case of any Borrowing which the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part
of such Borrowing or by reason of the termination of hedging or other similar
arrangements, in each case when such Advance is not made on such date (other
than by reason of (i) a breach of a Lender’s obligations hereunder or (ii) a
suspension of 

 

12

 

Eurodollar Rate Advances
under clauses (iii), (iv) or (v) of paragraph (b) of this Section 2.02),
including without limitation, as a result of any failure to fulfill on or
before the date specified in such Notice of Borrowing for such Borrowing
the applicable conditions set forth in Article III.

 

(d)   Unless the Administrative Agent
shall have received notice from a Lender prior to the date of any Borrowing
that such Lender will not make available to the Administrative Agent such Lender’s
ratable portion of such Borrowing, the Administrative Agent may assume that
such Lender has made such portion available to the Administrative Agent on the
date of such Borrowing in accordance with subsection (a) of this Section 2.02
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall
not have so made such ratable portion available to the Administrative Agent,
such Lender and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Administrative Agent, at
(i) in the case of the Borrower, the interest rate applicable at the time
to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate.  If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender’s Advance as part of such Borrowing for
purposes of this Agreement.

 

(e)   The failure of any Lender to
make the Advance to be made by it as part of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder to make its Advance on
the date of such Borrowing, but no Lender shall be responsible for the failure
of any other Lender to make the Advance to be made by such other Lender on the
date of any Borrowing.

 

Section 2.03  Fees.

 

(a)   Facility Fees.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee on such
Lender’s daily average Commitment, whether used or unused, from the Effective
Date in the case of each Lender and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender until the Commitment Termination Date, payable quarterly in
arrears on the last day of each March, June, September and December during the
term of such Lender’s Commitment, commencing December 31, 2003, and on the
Commitment Termination Date, in an amount equal to the product of (i) such
Lender’s daily average Commitment, whether used or unused, in effect during the
period for which such payment that is to be made times (ii) the
weighted average rate per annum that is derived from the rates determined
pursuant to the table set forth below based upon ratings on the Long-Term Debt:

 

	
  Level

  	
   

  	
  Facility
  Fee Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  0.07

  	
  %

  
	
  2

  	
   

  	
  0.085

  	
  %

  
	
  3

  	
   

  	
  0.125

  	
  %

  
	
  4

  	
   

  	
  0.15

  	
  %

  
	
  5

  	
   

  	
  0.20

  	
  %

  

 

13

 

If any change in the
rating established by S&P or Moody’s with respect to Long-Term Debt shall
result in a change in the Level, the change in the facility fee shall be
effective as of the date on which such rating change is publicly
announced.  If the ratings established
by both S&P and Moody’s with respect to Long-Term Debt are unavailable for
any reason for any day, then the applicable Level for purposes of calculating
the facility fee for such day shall be deemed to be Level 5 (or, if the
Requisite Lenders consent in writing, such other Level as may be reasonably
determined by the Requisite Lenders from a rating with respect to Long-Term Debt
for such day established by another rating agency reasonably acceptable to the
Requisite Lenders).

 

(b)   Agents’ Fees.  The Borrower agrees to pay to the
Administrative Agent and the Arranger the fees payable to each such Agent
pursuant to the fee letter dated as of September 15, 2003, among the
Borrower, CUSA and CGMI, in the amounts and at the times specified in such
letter.

 

Section 2.04  Optional Termination and Reduction of the
Commitments. The Borrower shall have the right, upon at least
three (3) Business Days’ notice to the Administrative Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective
Commitments of the Lenders; provided that (i) each partial
reduction shall be in the aggregate amount of $10,000,000 or a multiple of
$1,000,000 in excess thereof, and (ii) the aggregate of the Commitments of the
Lenders shall not be reduced to an amount which is less than the Total
Utilization of Commitments.  Once so
reduced or terminated pursuant to this Section 2.04, Commitments of the Lenders
shall not be reinstated.

 

Section 2.05  Repayment
and Prepayment of Advances.

 

(a)   Mandatory Repayment on
Certain Date.  The Borrower shall
repay the outstanding principal amount of each Advance on the Commitment
Termination Date.

 

(b)   Voluntary Prepayments of
Borrowings.

 

(i)            The Borrower shall
have no right to prepay any principal amount of any Advances other than as
provided in this subsection (b).

 

(ii)           The Borrower may, upon
notice to the Administrative Agent no later than 11:00 A.M. (New York
time) (A) on the date the Borrower proposes to prepay, in the case of Base Rate
Advances and (B) at least five (5) Business Days’ notice to the Administrative
Agent in the case of Eurodollar Rate Advances, stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amounts of the Advances comprising part
of the same Borrowing in whole or ratably in part; provided, however,
that (x) each partial prepayment shall be in an aggregate principal amount
not less than $2,000,000 and multiples of $1,000,000 in excess thereof, and
(y) in the case of any such prepayment of any Eurodollar Rate Advance, the
Borrower shall pay all accrued interest to the date of such prepayment on 

 

14

 

the portion of such Eurodollar Rate Advance being prepaid and shall be
obligated to reimburse the Lenders in respect thereof pursuant to Section
8.04(b).

 

Section 2.06  Interest on
Advances.  The
Borrower shall pay to each Lender interest accrued on the principal amount of
each Advance outstanding from time to time from the date of such Advance until
such principal amount shall be paid in full, at the following rates per annum:

 

(a)   Base Rate Advances.  If such Advance is a Base Rate Advance,
a rate per annum equal at all times to (i) the Base Rate in effect from
time to time plus (ii) the Applicable Margin, if any, payable quarterly
in arrears on the last day of each March, June, September and December during
the term of this Agreement, commencing December 31, 2001, and on the Commitment
Termination Date; provided that any amount of principal, interest, fees
and other amounts payable under this Agreement (including, without limitation,
the principal amount of Base Rate Advances, but excluding the principal amount
of Eurodollar Rate Advances) which is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest from the date on
which such amount is due until such amount is paid in full, payable on demand,
at a rate per annum equal at all times to 2% per annum above the Base Rate in
effect from time to time.

 

(b)   Eurodollar Rate Advances.  If such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during the Interest Period for
such Advance to the sum of (i) the Adjusted Eurodollar Rate for such Interest
Period plus (ii) the Applicable Margin, payable in arrears on the last
day of such Interest Period and, if such Interest Period has a duration of more
than three months, on the day which occurs during such Interest Period three
months from the first day of such Interest Period; provided that any
principal amount of any Eurodollar Rate Advance which is not paid when due
(whether at stated maturity, by acceleration or otherwise) shall bear interest
from the date on which such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to (A) during
the Interest Period applicable to such Eurodollar Rate Advance, the greater of
(x) 2% per annum above the Base Rate in effect from time to time and
(y) 2% per annum above the rate per annum required to be paid on such
amount immediately prior to the date on which such amount became due and
(B) after the expiration of such Interest Period, 2% per annum above
the Base Rate in effect from time to time.

 

Section 2.07  Interest
Rate Determination.  The Administrative Agent shall give prompt
notice to the Borrower and the Lenders of the applicable interest rate
determined by the Administrative Agent for purposes of Section 2.06(a) or
2.06(b).

 

Section 2.08  Voluntary Conversion or
Continuation of Advances.

 

(a)   The Borrower may on any
Business Day, upon delivery of a Notice of Conversion/Continuation to the
Administrative Agent not later than 12:00 noon (New York City time) on the
third Business Day prior to the date of such Notice of Conversion/Continuation,
and subject to the provisions of Section 2.02(b), (1) Convert all
Advances of one Type comprising the same Borrowing into Advances of another
Type and (2) upon the expiration of any Interest Period applicable to
Advances which are Eurodollar 

 

15

 

Rate Advances, continue
all (or, subject to Section 2.02(b), any portion of) such Advances as
Eurodollar Rate Advances and the succeeding Interest Period(s) of such
continued Advances shall commence on the last day of the Interest Period of the
Advances to be continued; provided, however, that any Conversion
of any Eurodollar Rate Advances into Base Rate Advances shall be made on, and
only on, the last day of an Interest Period for such Eurodollar Rate
Advances.  Each such Notice of
Conversion/Continuation shall, within the restrictions specified above, specify
(i) the date of such continuation or Conversion, (ii) the Advances
(or, subject to Section 2.02(b), any portion thereof) to be continued or
Converted, (iii) if such continuation is of, or such Conversion is into,
Eurodollar Rate Advances, the duration of the Interest Period for each such
Advance, and (iv) in the case of a continuation of or a Conversion into a
Eurodollar Rate Advance, that no Potential Event of Default or Event of Default
has occurred and is continuing.

 

(b)   If, upon the expiration of the
then existing Interest Period applicable to any Advance which is a Eurodollar
Rate Advance, the Borrower shall not have delivered a Notice of
Conversion/Continuation in accordance with this Section 2.08, then such Advance
shall upon such expiration automatically be Converted to a Base Rate Advance.

 

(c)   After the occurrence of and
during the continuance of a Potential Event of Default or an Event of Default,
the Borrower may not elect to have an Advance be made or continued as, or
Converted into, a Eurodollar Rate Advance after the expiration of any Interest
Period then in effect for that Advance.

 

Section 2.09  Increased Costs.

 

(a)   If, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements in the case of Eurodollar Rate Advances
included in the Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law), there shall be any increase in the cost to any Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Advances,
then the Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost; provided that Borrower
shall have no obligation to pay an additional amount in respect of any
increased cost attributable to the period before 90 days prior to the date of
such demand.  A certificate as to the
amount and manner of calculation of such increased cost, submitted to the
Borrower and the Administrative Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.

 

(b)   If any Lender determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law) affects or would affect the amount of capital required or expected to
be maintained by such Lender or any corporation controlling such Lender and
that the amount of such capital is increased by or based upon the existence of
such Lender’s commitment to lend hereunder and other commitments of this type,
then, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall 

 

16

 

immediately pay to the
Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender or such corporation in the light of such circumstances, to the extent
that such Lender reasonably determines such increase in capital to be allocable
to the existence of such Lender’s commitment to lend hereunder; provided
that Borrower shall have no obligation to pay an additional amount in respect
of any additional amount attributable to the period before 90 days prior to the
date of such demand.  A certificate as
to such amounts and the manner of calculation thereof submitted to the Borrower
and the Administrative Agent by such Lender shall be conclusive and binding for
all purposes, absent manifest error.

 

(c)   If a Lender shall change its
Applicable Lending Office, such Lender shall not be entitled to receive any
greater payment under Section 2.09 or 2.11 than the amount such Lender
would have been entitled to receive if it had not changed its Applicable
Lending Office, unless such change was made at the request of the Borrower or
at a time when the circumstances giving rise to such greater payment did not
exist.

 

Section 2.10  Payments
and Computations.

 

(a)   The Borrower shall make each
payment hereunder not later than 1:00 P.M. (New York City time) on the day when
due in Dollars to the Administrative Agent at its address referred to in
Section 8.02 in same day funds.  Subject
to the immediately succeeding sentence, the Administrative Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.09 or 2.11) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment
of any other amount payable to any Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement.  Upon receipt
of principal or interest paid after an Event of Default and an acceleration or
a deemed acceleration of amounts due hereunder, the Administrative Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest ratably in accordance with each Lender’s outstanding
Advances (other than amounts payable pursuant to Section 2.09 or 2.11) to
the Lenders for the account of their respective Applicable Lending
Offices.  Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall
make all payments hereunder in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.

 

(b)   All computations of interest
based on the Base Rate shall be made by the Administrative Agent on the
basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Adjusted Eurodollar Rate or the Federal
Funds Rate and of facility fees shall be made by the Administrative Agent on
the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or such fees are payable.  Each 

 

17

 

determination by the
Administrative Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.

 

(c)   Whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
facility fee, as the case may be; provided, however, if such
extension would cause payment of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.

 

(d)   Unless the Administrative Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Lenders hereunder that the Borrower will not make such
payment in full, the Administrative Agent may assume that the Borrower has made
such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender.  If and to the extent
that the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.

 

Section 2.11  Taxes.

 

(a)   Any and all payments
by the Borrower hereunder shall be made, in accordance with Section 2.10,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of each
Lender and each Agent, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Lender or such Agent
(as the case may be) is organized or any political subdivision thereof or in
which its principal office is located, (ii) in the case of each Lender
taxes imposed on its net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender’s Applicable Lending Office or any political
subdivision thereof and (iii) in the case of each Lender and each Agent,
taxes imposed by the United States by means of withholding at the source if and
to the extent that such taxes shall be in effect and shall be applicable on the
date hereof in the case of each Bank and on the effective date of the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender, on payments to be made to the Agents or such Lender’s
Applicable Lending Office (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).  If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or either Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.11) such Lender or such Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.

 

18

 

(b)   In addition, the Borrower
agrees to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as “Other Taxes”).

 

(c)   The Borrower will indemnify
each Lender and each Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.11) paid by such Lender or
such Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted.  This indemnification shall be made within 30
days from the date such Lender or such Agent (as the case may be) makes written
demand therefor.

 

(d)   Within 30 days after the date
of any payment of Taxes, the Borrower will furnish to the Administrative Agent,
at its address referred to in Section 8.02, the original or a certified copy of
a receipt evidencing payment thereof.

 

(e)   Each Lender organized under the
laws of a jurisdiction outside the United States, on or prior to the date of
its execution and delivery of this Agreement, in the case of each Bank, and on
the date of the Assignment and Acceptance pursuant to which it becomes a
Lender, in the case of each other Lender, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower with (i) Internal Revenue
Service Form W-8BEN or W-8EC1, as appropriate, or any successor form prescribed
by the Internal Revenue Service, to establish that such Lender is not subject
to United States withholding tax with respect to any payments to such Lender of
interest payable under this Agreement and (ii) to the extent it does not act or
ceases to act for its own account with respect to any sums paid or payable to
such Lender hereunder (for example, in the case of a typical participation by
such Lender), Internal Revenue Service Form W-8IMY or any successor form
prescribed by the Internal Revenue Service to establish that the Lender is not
acting for its own account with respect to a portion of any such sums paid or
payable to such Lender.  If the form
provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from “Taxes” as
defined in Section 2.11(a).

 

(f)    For any period with respect to
which a Lender has failed to provide the Borrower with the appropriate form
described in Section 2.11(e) (other than if such failure is due to a change in
law occurring subsequent to the date on which a form originally was required to
be provided, or if such form otherwise is not required under the first sentence
of subsection (e) above), such Lender shall not be entitled to indemnification
under Section 2.11(a) with respect to Taxes imposed by the United States; provided,
however, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall, at the
expense of such Lender, take such steps as the Lender shall reasonably request
to assist the Lender to recover such Taxes.

 

19

 

(g)   Without prejudice to the
survival of any other agreement of the Borrower hereunder, the agreements
and obligations of the Borrower contained in this Section 2.11 shall survive
the payment in full of principal and interest hereunder.

 

Section 2.12  Sharing of
Payments, Etc.  If
any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of
the Advances made by it (other than pursuant to Section 2.09 or 2.11) in excess
of its ratable share of payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an
amount equal to such Lender’s ratable share (according to the proportion of
(i) the amount of such Lender’s required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered.  The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section 2.12 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

 

Section 2.13  Evidence of Debt.

 

(a)   Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing
to such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

 

(b)   The Register maintained by the
Administrative Agent pursuant to Section 8.07(c) shall include a control
account, and a subsidiary account for each Lender, in which accounts (taken
together) shall be recorded (i) the date, amount and tenor, as applicable,
of each Borrowing, the Type of Advances comprising such Borrowing and the
Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any
principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder, and (iv) the amount of any sum received by the
Administrative Agent from the Borrower hereunder and each Lender’s share
thereof.

 

(c)   The entries made in the
Register shall be conclusive and binding for all purposes, absent manifest
error.

 

(d)   If, in the opinion of any
Lender, a promissory note or other evidence of debt is required, appropriate or
desirable to reflect or enforce the indebtedness of the Borrower resulting from
the Advances made, or to be made, by such Lender to the Borrower, then, upon
request of such Lender, the Borrower shall promptly execute and deliver to such

 

20

 

Lender a promissory note
substantially in the form of Exhibit E, payable to the order of such
Lender in an amount up to the maximum amount of Advances payable or to be
payable by the Borrower to the Lender from time to time hereunder.

 

Section 2.14  Use of Proceeds.

 

(a)   Advances shall be used by the
Borrower for commercial paper backup and for general corporate purposes,
including acquisition financing; provided that proceeds of Advances and
proceeds of commercial paper as to which this Agreement provides backup shall
not be used for any Hostile Acquisition.

 

(b)   No portion of the proceeds of
any Advances under this Agreement shall be used by the Borrower or any of its
Subsidiaries in any manner which might cause the Advances or the application of
such proceeds to violate, or require any Lender to make any filing or take any
other action under, Regulation U, Regulation T, or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Securities Exchange Act of 1934, in each case as in effect on
the date or dates of such Advances and such use of proceeds.

 

Section 2.15  Substitution
of Lenders.  If any
Lender requests compensation from the Borrower under Section 2.09(a) or (b) or
Section 2.11, the Borrower shall have the right, with the assistance of the
Agents, to seek one or more Eligible Assignees (which may be one or more of the
Lenders) reasonably satisfactory to the Administrative Agent and the Borrower
to purchase the Advances and assume the Commitments of such Lender, and the
Borrower, the Administrative Agent, such Lender, and such Eligible Assignees
shall execute and deliver an appropriately completed Assignment and Acceptance
pursuant to Section 8.07(a) hereof to effect the assignment of rights to and
the assumption of obligations by such Eligible Assignees; provided that
(i) such requesting Lender shall be entitled to compensation under Section 2.09
and 2.11 for any costs incurred by it prior to its replacement, (ii) no Event
of Default, or Potential Event of Default, has occurred and is continuing,
(iii) the Borrower has satisfied all of its obligations under the Loan
Documents relating to such Lender, including without limitation obligations, if
any, under Section 8.04(b) and (iv) the Borrower shall have paid the
Administrative Agent a $3,500 administrative fee if such replacement Lender is
not an existing Lender.

 

ARTICLE III

CONDITIONS OF EFFECTIVENESS AND LENDING

 

Section 3.01  Conditions
Precedent to Effectiveness.

 

(a)   The effectiveness of the
Agreement is subject to the prior or concurrent satisfaction of the following
conditions and the Administrative Agent shall receive for the account of each
Lender party to the Agreement the following, each, unless otherwise noted,
dated the Effective Date, and in form and substance satisfactory to the
Administrative Agent and the Arranger:

 

(i)            Copies of resolutions
of the Board of Directors of the Borrower (or its Executive Committee, together
with evidence of the authority of the Executive 

 

21

 

Committee) approving this Agreement, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, certified as of a recent
date prior to the Effective Date;

 

(ii)           A certificate of the
Secretary or an Assistant Secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized to sign this
Agreement and the other documents to be delivered by the Borrower hereunder;

 

(iii)          Certified copies of the
Borrower’s Certificate of Incorporation, together with good standing
certificates from the State of Delaware and the State of Minnesota, each to be
dated a recent date prior to the Effective Date;

 

(iv)          Copies of the Borrower’s
Bylaws, certified as of the Effective Date by its Secretary or an Assistant
Secretary;

 

(v)           Executed originals of
this Agreement and the other documents to be delivered by the Borrower
hereunder;

 

(vi)          A favorable opinion of
Mahlon C. Schneider, Senior Vice President and General Counsel to the Borrower,
substantially in the form of Exhibit F hereto;

 

(vii)         A favorable opinion of
O’Melveny & Myers LLP, counsel for the Agents, substantially in the form of
Exhibit G hereto;

 

(viii)        A certificate of an
authorized officer of the Borrower to the effect that since October 26, 2002,
there has been no material adverse change in the business, condition (financial
or otherwise), results of operations or prospects of the Borrower and its
Subsidiaries, taken as a whole;

 

(ix)           A certificate of an
authorized officer of the Borrower, in form and substance satisfactory to the
Administrative Agent, to the effect that (i) the representations and warranties
in Section 4.01 are correct on and as of the Effective Date, to the same extent
as though made on and as of the Effective Date, except to the extent that any
such representation or warranty expressly relates only to an earlier date, in
which case they were correct as of such earlier date; (b) such Borrower has
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed and satisfied by it on or
before the Effective Date; and (c) no event has occurred and is continuing, or
would result from the Borrowings made on and as of the Effective Date or from
the application of the proceeds from such Borrowings, which constitutes an
Event of Default or a Potential Event of Default;

 

(x)            Payment of up front
fees to the Lenders, as agreed by and among the Arranger, Lenders and the
Borrower;

 

(xi)           Evidence of (i) the
contemporaneous repayment of any indebtedness of the Borrower under the
Existing Credit Agreement (including borrowings and accrued interest), (ii) the
contemporaneous payment of fees payable, if any, by the 

 

22

 

Borrower under the Existing Credit Agreement and (iii)
the contemporaneous termination of the Existing Credit Agreement on the
Effective Date.

 

(b)   The Administrative Agent shall
have received such other approvals, opinions or documents as the Requisite
Lenders through the Administrative Agent may reasonably request (which request
shall be made in sufficient time to allow the Borrower to comply therewith).

 

Section 3.02  Conditions
Precedent to Each Borrowing.  The obligation of each Lender to make an
Advance on the occasion of a Borrowing (including the initial Borrowing) shall
be subject to the further conditions precedent that (x) the Administrative
Agent shall have received a Notice of Borrowing with respect thereto in
accordance with Section 2.02 and (y) on the date of such Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the Borrower of the proceeds of such
Borrowing shall constitute a representation and warranty by the Borrower that
on the date of such Borrowing such statements are true):

 

(i)            The representations
and warranties of the Borrower contained in Section 4.01 (other than in Section
4.01(e)(ii)) are correct on and as of the date of such Borrowing, before and
after giving effect to such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date, except to the extent that any
such representation or warranty expressly relates only to an earlier date, in
which case they were correct as of such earlier date;

 

(ii)           No event has occurred
and is continuing, or would result from such Borrowing or from the application
of the proceeds therefrom, which constitutes an Event of Default or a Potential
Event of Default.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.01  Representations and Warranties of
the Borrower. 
The Borrower represents and warrants as follows:

 

(a)   Due Organization, etc.  The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the jurisdiction
of its incorporation. Each Material Subsidiary is listed in Schedule 4.01(a)
and is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation in which failure to be
so duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation would have a material adverse effect on the
business, condition (financial or otherwise), results of operations or
prospects of the Borrower and its Subsidiaries, taken as a whole.  The Borrower and each of its Material
Subsidiaries are qualified to do business in and are in good standing under the
laws of each jurisdiction in which failure to be so qualified would have a
material adverse effect on the business, condition (financial or otherwise),
results of operations or prospects of the Borrower and its Subsidiaries, taken
as a whole.

 

23

 

(b)   Due Authorization, etc.  The execution, delivery and performance by
the Borrower of this Agreement and the other Loan Documents are within the
Borrower’s corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower’s Certificate of
Incorporation or (ii) applicable law or any material contractual
restriction binding on or affecting the Borrower or any of its Material
Subsidiaries.

 

(c)   Governmental Consent.  No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents, other than those that
have been obtained, all of which are listed on Schedule 4.01(c).

 

(d)   Validity.  This Agreement is the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar laws affecting creditors’
rights generally and to the application of general principles of equity.

 

(e)   Condition of the Borrower.  (i) The consolidated balance sheet of the
Borrower and its Subsidiaries as at October 26, 2002, and the related
consolidated statements of income and retained earnings of the Borrower and its
Subsidiaries for the fiscal year then ended, copies of which have been
previously furnished to each Bank, fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as at such date and the results
of the operations of the Borrower and its Subsidiaries for the periods ended on
such dates, all in accordance with GAAP consistently applied, and (ii) since
October 26, 2002, there has been no material adverse change in the business,
condition (financial or otherwise), results of operations or prospects of the
Borrower and its Subsidiaries, taken as a whole.

 

(f)    Litigation.  (i) There is no pending action,
investigation or proceeding against the Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator, and (ii) to the
knowledge of the Borrower, there is no pending or threatened action,
investigation or proceeding affecting the Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator, which, in either case, in
the reasonable judgement of the Borrower could reasonably be expected to
materially adversely affect the financial condition or operations of the
Borrower and its Subsidiaries, taken as a whole, or with respect to actions of
third parties, which purports to affect the legality, validity or
enforceability of this Agreement or the other Loan Documents.

 

(g)   Margin Regulations.  The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock in any manner that violates,
or would cause a violation of Regulation T, Regulation U or Regulation X.  Less than 10 percent of the fair market
value of the assets of (i) the Borrower or (ii) the Borrower and its
Subsidiaries consists of Margin Stock.

 

24

 

(h)   Payment of Taxes.  The Borrower and each of its Subsidiaries
have filed or caused to be filed all material tax returns (federal, state,
local and foreign) required to be filed and paid all material amounts of taxes
shown thereon to be due, including interest and penalties, except for such
taxes as are being contested in good faith and by proper proceedings and with
respect to which appropriate reserves are being maintained by the Borrower or
any such Subsidiary, as the case may be.

 

(i)    Governmental Regulation.  The Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act
of 1940, each as amended, or to any Federal or state statute or regulation
limiting its ability to incur indebtedness for money borrowed.  No Subsidiary of the Borrower is subject to
any regulation that would limit the ability of the Borrower to enter into or
perform its obligations under this Agreement.

 

(j)    ERISA.

 

(i)            No ERISA Event which
might result in liability of the Borrower or any of its ERISA Affiliates in
excess of $10,000,000 (or, in the case of an event described in clause (v) of
the definition of ERISA Event, $750,000) (other than for premiums payable under
Title IV of ERISA) has occurred or is reasonably expected to occur with respect
to any Pension Plan.

 

(ii)           Schedule B (Actuarial
Information) to the most recently completed annual report prior to the
Effective Date (Form 5500 Series) for each Pension Plan, which report has been
filed with the Internal Revenue Service by the Borrower or an ERISA Affiliate,
is complete and, to the best knowledge of the Borrower, accurate, and since the
date of such Schedule B there has been no material adverse change in the
funding status of any such Pension Plan.

 

(iii)          Neither the Borrower nor
any ERISA Affiliate has incurred, or, to the best knowledge of the Borrower, is
reasonably expected to incur, any Withdrawal Liability to any Multiemployer
Plan which has not been satisfied or which is or might be in excess of
$10,000,000.

 

(iv)          Neither the Borrower nor
any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and, to the best knowledge of the
Borrower, no Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated within the meaning of Title IV of ERISA.

 

(k)   Compliance With Law;
Environmental Matters.  (i) The
Borrower and each of its Subsidiaries are in compliance in all material
respects with all statutes, regulations, rules and orders of any court or other
governmental authority applicable to them (including all Environmental Laws)
the non-compliance with which could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), results of
operations or prospects of the Borrower and its Subsidiaries, taken as a whole,
and (ii) there has been no “release or threatened release of a
hazardous substance” (as defined by 

 

25

 

the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. § 9601 et  seq.) or any other
release, emission or discharge into the environment of any hazardous or toxic
substance, pollutant or other materials from the Borrower’s or its
Subsidiaries’ property other than as permitted under applicable Environmental
Law and other than those which would not have a material adverse effect on
the business, condition (financial or otherwise), results of operations or
prospects of the Borrower and its Subsidiaries, taken as a whole.  Other than disposals (A) for which the
Borrower has been indemnified in full or (B) which would not have a
material adverse effect on the business, condition (financial or otherwise),
results of operations or prospects of the Borrower and its Subsidiaries, taken
as a whole, all “hazardous waste” (as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. §6901 et  seq. (1976) and the regulations
thereunder, 40 CFR Part 261 (“RCRA”)) generated at the Borrower’s or any
Subsidiaries’ properties have in the past been and shall continue to be
disposed of at sites which maintain valid permits under RCRA and any applicable
state or local Environmental Law.

 

(l)    Disclosure.  As of the Effective Date, to the best of the
Borrower’s knowledge, no representation or warranty of the Borrower or any of
its Subsidiaries contained in this Agreement or any other Loan Document or in
any other document, certificate or written statement furnished to the Banks by
or on behalf of the Borrower or any of its Subsidiaries contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained in such agreements, documents, certificates and
statements not misleading in light of the circumstances in which the same were
made.

 

ARTICLE V

COVENANTS OF THE BORROWER

 

Section 5.01  Affirmative
Covenants.  So long
as any Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will, unless the Requisite Lenders shall otherwise
consent in writing:

 

(a)   Compliance with Laws, Etc.;
Taxes.  Comply, and cause each of
its Subsidiaries to comply, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, (i) complying with
all Environmental Laws and (ii) paying before the same become delinquent
(x) all taxes, assessments, governmental charges and levies imposed upon it or
upon its property and (y) all lawful claims that, if unpaid, might by law
become a lien upon their property; provided, however, that
neither the Borrower nor any such Subsidiary shall be required to pay or
discharge any such tax, assessment, charge, levy or claim (A) that is
being contested in good faith and by proper proceedings and for which
appropriate reserves are being maintained, or (B) the failure to pay or
discharge which would not have a material adverse effect on the business,
condition (financial or otherwise), results of operations or prospects of the
Borrower and its Subsidiaries, taken as a whole.

 

(b)   Reporting Requirements.  Furnish to the Administrative Agent (in
sufficient quantity for delivery to each Lender) for prompt distribution by the
Administrative Agent to the Lenders:

 

26

 

(i)            as soon as available
and in any event within 55 days after the end of each of the first three
quarters of each fiscal year of the Borrower, consolidated balance sheets as of
the end of such quarter and consolidated statements of source and application
of funds of the Borrower and its Subsidiaries and consolidated statements of
income and retained earnings of the Borrower and its Subsidiaries for such
quarter and the period commencing at the end of the previous fiscal
year and ending with the end of such quarter and certified by the chief
financial officer or chief accounting officer of the Borrower;

 

(ii)           as soon as available
and in any event within 100 days after the end of each fiscal year of the
Borrower, a copy of the annual audit report for such year for the Borrower
and its Subsidiaries, containing financial statements (including a consolidated
balance sheet and consolidated statement of income and cash flows of the
Borrower and its Subsidiaries) for such year, certified by and accompanied by
an opinion of Ernst & Young LLP or other nationally recognized independent
public accountants.  The opinion shall
be unqualified (as to going concern, scope of audit and disagreements over the
accounting or other treatment of offsets) and shall state that such
consolidated financial statements present fairly in all material respects the
financial position of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;

 

(iii)          together with each
delivery of the report of the Borrower and its Subsidiaries pursuant to
subsections (i) and (ii) above, a Compliance Certificate for the relevant
accounting period executed by the chief financial officer, treasurer or
assistant treasurer of the Borrower demonstrating in reasonable detail
compliance during and at the end of such accounting periods with the restriction
contained in Section 5.02(d) (and setting forth the arithmetical computation
required to show such compliance) and stating that the signer has reviewed the
terms of this Agreement and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the transactions and condition of
the Borrower and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence at
the end of such accounting period, and that the signer does not have knowledge
of the existence as at the date of the compliance certificate, of any condition
or event that constitutes an Event of Default or Potential Event of
Default or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Borrower has taken,
is taking and proposes to take with respect thereto;

 

(iv)          as soon as possible and
in any event within five days after the occurrence of each Event of Default and
each Potential Event of Default, continuing on the date of such statement, a
statement of an authorized financial officer of the Borrower setting forth
details of such Event of Default or event and the action which the Borrower has
taken and proposes to take with respect thereto;

 

(v)           promptly after any
material change in accounting policies or reporting practices, notice and a
description in reasonable detail of such change;

 

27

 

(vi)          promptly and in any
event within 30 days after the Borrower or any ERISA Affiliate knows or has
reason to know that any ERISA Event referred to in clause (i) of the definition
of ERISA Event with respect to any Pension Plan has occurred which might result
in liability to the PBGC in excess of $500,000 a statement of the chief
accounting officer of the Borrower describing such ERISA Event and the action,
if any, that the Borrower or such ERISA Affiliate has taken or proposes to take
with respect thereto;

 

(vii)         promptly and in any event
within 15 days after the Borrower or any ERISA Affiliate knows or has reason to
know that any ERISA Event (other than an ERISA Event referred to in (vi) above)
with respect to any Pension Plan has occurred which might result in liability
to the PBGC in excess of $500,000, a statement of the chief accounting officer
of the Borrower describing such ERISA Event and the action, if any, that the
Borrower or such ERISA Affiliate has taken or proposes to take with respect
thereto;

 

(viii)        promptly and in any event
within five Business Days after receipt thereof by the Borrower or any ERISA
Affiliate from the PBGC, copies of each notice from the PBGC of its intention
to terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan;

 

(ix)           promptly and in any
event within 15 days after receipt thereof by the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the Borrower or any ERISA Affiliate concerning (w) the
imposition of Withdrawal Liability by a Multiemployer Plan in excess of
$500,000, (x) the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of ERISA,
(y) the termination of a Multiemployer Plan within the meaning of Title IV
of ERISA or (z) the amount of liability incurred, or expected to be
incurred, by the Borrower or any ERISA Affiliate in connection with any event
described in clause (w), (x) or (y) above;

 

(x)            promptly after the
commencement thereof, notice of all material actions, suits and proceedings
before any court or government department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any of its
Subsidiaries, of the type described in Section 4.01(f);

 

(xi)           promptly after the
occurrence thereof, notice of (A) any event which makes any of the
representations contained in Section 4.01(k) inaccurate in any material respect
or (B) the receipt by the Borrower of any notice, order, directive or
other communication from a governmental authority alleging violations of or
noncompliance with any Environmental Law which could reasonably be expected to
have a material adverse effect on the business, condition (financial or
otherwise), results of operations or prospects of the Borrower and its
Subsidiaries, taken as a whole;

 

(xii)          promptly after any
change in the rating established by S&P or Moody’s, as applicable, with
respect to Long-Term Debt, a notice of such change, which notice shall specify
the new rating, the date on which such change was publicly announced, and such
other information with respect to such change as any Lender through either
Agent may reasonably request;

 

28

 

(xiii)         promptly after the
sending or filing thereof, copies of all reports which the Borrower sends to
any of its public security holders, and copies of all reports and registration
statements which the Borrower files with the SEC or any national security
exchange;

 

(xiv)        promptly after the Borrower
or any ERISA Affiliate creates any employee benefit plan to provide health or
welfare benefits (through the purchase of insurance or otherwise) for any
retired or former employee of the Borrower or any of its ERISA Affiliates
(except as provided in Section 4980B of the Code and except as provided
under the terms of any employee welfare benefit plans provided pursuant
to the terms of collective bargaining agreements) under the terms of which
the Borrower and/or any of its ERISA Affiliates are not permitted to terminate
such benefits, a notice detailing such plan; and

 

(xv)         such other information
respecting the condition or operations, financial or otherwise, of the Borrower
or any of its Subsidiaries as any Lender through the Administrative Agent may
from time to time reasonably request.

 

Documents
required to be delivered pursuant to this Section 5.01(b) (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at
www.hormel.com; or (ii) on which such documents are posted on the Borrower’s
behalf on IntraLinks/IntraAgency or another relevant website, if any, to which
each Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrower shall notify
(which may be by facsimile or electronic mail) the Administrative Agent and
each Lender of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. 
Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 5.01(b)(iii) and notices of each
Event of Default and each Potential Event of Default required by Section
5.01(b)(iv) to the Administrative Agent and each of the Lenders.  Except for such Compliance Certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrower with any such request
for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

 

(c)   Corporate Existence, Etc.  Preserve and maintain, and cause each of its
Material Subsidiaries to preserve and maintain, at all times its fundamental
business and preserve and keep in full force and effect its corporate existence
(except as permitted under Section 5.02(b) hereof) and all rights, franchises
and licenses necessary or desirable in the normal conduct of its business;
provided, however, that this paragraph (c) shall not apply in 

 

29

 

any case when, in the good
faith business judgment of the Borrower, such preservation or maintenance is
neither necessary nor appropriate for the prudent management of the business of
the Borrower.

 

(d)   Inspection.  Permit, and cause each of its Material
Subsidiaries to permit, any authorized representative designated by the
Administrative Agent or any Lender; at the expense of the Administrative Agent
or such Lender, to visit and inspect any of the properties of the Borrower or
any of its Material Subsidiaries, including its and their financial and
accounting records, and to take copies and to take extracts therefrom, and
discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants, all during normal hours, upon
reasonable notice and as often as may be reasonably requested.

 

(e)   Insurance.  Maintain, and cause each of its Material
Subsidiaries to maintain, insurance to such extent and covering such risks as
is usual for companies engaged in the same or similar business and on request
will advise the Lenders of all insurance so carried.

 

(f)    Maintenance of Properties.  Keep, and cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear or damage from casualty excepted, all material
properties used or useful in the business of such Borrower and its Subsidiaries
and from time to time will make or use its reasonable efforts to cause to be
made all appropriate repairs, renewals and replacements thereof.

 

(g)   Maintenance of Books, Etc.  Keep, and cause each of its
Subsidiaries to keep, proper books of records and accounts, in which full and
correct entries shall be made of all financial transactions and the assets
and business of the Borrower and each of its domestic Subsidiaries in
accordance with GAAP and with respect to foreign Subsidiaries in accordance
with customary accounting standards in the applicable jurisdiction, in each
case consistently applied and consistent with prudent business practices.

 

Section 5.02  Negative
Covenants.  So long
as any Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, without the written consent of the Requisite Lenders:

 

(a)   Liens, Etc.  The Borrower will not create or suffer
to exist, or permit any of its Subsidiaries to create or suffer to exist,
any Lien, upon or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, in each case to secure or provide for the payment of
any Debt of any Person, unless the Borrower’s obligations hereunder shall be
secured equally and ratably with, or prior to, any such Debt; provided
however that the foregoing restriction shall not apply to the following Liens
which are permitted:

 

(i)            Liens on assets of any
Subsidiary of the Borrower existing at the time such Person becomes a
Subsidiary (other than any such Lien created in contemplation of becoming a
Subsidiary);

 

30

 

(ii)           purchase money Liens
upon or in any property acquired or held by the Borrower or any Subsidiary in
the ordinary course of business to secure the purchase price of such property
or to secure Debt incurred solely for the purpose of financing the acquisition
of such property (provided that the amount of Debt secured by such Lien does
not exceed 100% of the purchase price of such property and transaction costs
relating to such acquisition) and Liens existing on such property at the time
of its acquisition (other than any such Lien created in contemplation of such
acquisition); and the interest of the lessor thereof in any property that is
subject to a Capital Lease;

 

(iii)          any Lien securing Debt
that was incurred prior to or during construction or improvement of property
for the purpose of financing all or part of the cost of such construction or
improvement, provided that the amount of Debt secured by such Lien does not
exceed 100% of the fair market value of such property after giving effect to
such construction or improvement;

 

(iv)          any Lien securing Debt
of a Subsidiary owing to the Borrower;

 

(v)           Liens resulting from
any extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Debt secured by any Lien referred to
in clauses (i), (ii) and (iii) above so long as (x) the aggregate principal
amount of such Debt shall not increase as a result of such extension, renewal
or replacement and (y) Liens resulting from any such extension, renewal or
replacement shall cover only such property which secured the Debt that is being
extended, renewed or replaced;

 

(vi)          Liens on accounts
receivable resulting from the sale of such accounts receivable by the Borrower
or a Subsidiary of the Borrower, so long as, at any time, the aggregate
outstanding amount of such accounts receivable does not, together with the
amount of Debt secured by Liens permitted by clause (vii), exceed 10% of the
consolidated stockholder’s equity of the Borrower and its consolidated Subsidiaries;
and

 

(vii)         Liens other than Liens
described in clauses (i) through (vi) hereof, whether now existing or hereafter
arising, securing Debt in an aggregate amount that does not, together with the
amount of accounts receivable subject to Liens permitted by clause (vi), exceed
10% of the consolidated stockholder’s equity of the Borrower and its
consolidated Subsidiaries.

 

(b)   Restrictions on Fundamental
Changes.  The Borrower will not, and
will not permit any of its Material Subsidiaries to, merge or consolidate with
or into, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or a substantial portion of
its assets (whether now owned or hereafter acquired) to any Person, or enter into
any partnership, joint venture, syndicate, pool or other combination, unless no
Event of Default or Potential Event of Default has occurred and is continuing
or would result therefrom and, in the case of a merger or consolidation of the
Borrower, (i) the Borrower is the surviving entity or (ii) the
surviving entity assumes all of the Borrower’s obligations under this Agreement
in a manner satisfactory to the Requisite Lenders.

 

31

 

(c)   Plan Terminations.  The Borrower will not, and will not permit
any ERISA Affiliate to, terminate any Pension Plan so as to result in liability
of the Borrower or any ERISA Affiliate to the PBGC in excess of $25,000,000, or
permit to exist any occurrence of an event or condition which reasonably
presents a material risk of a termination by the PBGC of any Pension Plan with
respect to which the Borrower or any ERISA Affiliate would, in the event of
such termination, incur liability to the PBGC in excess of $25,000,000.

 

(d)   Maximum Debt Ratio.  The Borrower will not permit the ratio of
(i) Net Debt as of the end of any fiscal quarter to (ii) EBITDA, for each
period consisting of the four consecutive fiscal quarters then ended, to exceed
2.50 to 1.00.

 

ARTICLE VI

EVENTS OF DEFAULT

 

Section 6.01  Events of
Default.  If any of
the following events (“Events of Default”) shall occur and be continuing:

 

(a)   The Borrower shall fail to pay
any principal of any Advance when the same becomes due and payable or the
Borrower shall fail to pay any interest on any Advance or any fees or other
amounts payable hereunder within five Business Days of the date due; or

 

(b)   Any representation or warranty
made or deemed made by the Borrower herein or by the Borrower pursuant to this
Agreement (including any notice, certificate or other document delivered
hereunder) shall prove to have been incorrect in any material respect when
made; or

 

(c)   The Borrower shall fail to
perform or observe (i) any term, covenant or agreement contained in this
Agreement (other than any term, covenant or agreement contained in Section
5.01(b)(iv), 5.01(c) or 5.02) on its part to be performed or observed and the
failure to perform or observe such other term, covenant or agreement shall
remain unremedied for 30 days after the Borrower obtains knowledge of such
breach or (ii) any term, covenant or agreement contained in
Section 5.01(b)(iv), 5.01(c) or 5.02; or

 

(d)   The Borrower or any of its
Subsidiaries shall fail to pay any principal of or premium or interest on any
Debt that is outstanding in a principal amount at least equal to 2% of
consolidated net worth of the Borrower and its consolidated Subsidiaries in the
aggregate (but excluding Debt arising under this Agreement) of the Borrower or
such Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or the
Borrower or any of its Subsidiaries shall fail to perform or observe any other
agreement, term or condition contained in any agreement or instrument relating
to any such Debt (or if any other event or condition of default under any such
agreement or instrument shall exist) and such failure, event or condition shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such failure, event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; 

 

32

 

or any such Debt shall be
declared to be due and payable as a result of such failure, event or condition;
or

 

(e)   The Borrower or any of its
Material Subsidiaries shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower or any of its Material
Subsidiaries seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for a substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 60
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or any of its
Material Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or

 

(f)    Any judgment or order for the
payment of money in excess of 2% of consolidated net worth of the Borrower and
its consolidated Subsidiaries, individually or in the aggregate, shall be
rendered against the Borrower or any of its Material Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor upon
a final or nonappealable judgment or order or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

 

(g)

 

(i)            Any ERISA Event with
respect to a Pension Plan shall have occurred and, 30 days after notice thereof
shall have been given to the Borrower by the Administrative Agent,
(x) such ERISA Event shall still exist and (y) the sum (determined as
of the date of occurrence of such ERISA Event) of the Insufficiency of such
Pension Plan and the Insufficiency of any and all other Pension Plans with
respect to which an ERISA Event shall have occurred and then exist (or in the
case of a Pension Plan with respect to which an ERISA Event described in clause
(iii) through (vi) of the definition of ERISA Event shall have occurred and
then exist, the liability related thereto) is equal to or greater than
$25,000,000; or

 

(ii)           The Borrower or any
ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred an aggregate Withdrawal Liability for all years to such
Multiemployer Plan in an amount that, when aggregated with all other amounts
then required to be paid to Multiemployer Plans by the Borrower and its ERISA
Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $25,000,000 and it is reasonably likely that all amounts
then required to be paid to Multiemployer Plans by the Borrower and its ERISA
Affiliates as Withdrawal Liability will exceed $25,000,000; or

 

33

 

(iii)          The Borrower or any
ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, and it is reasonably likely that as a
result of such reorganization or termination the aggregate annual contributions
of the Borrower and its ERISA Affiliates to all Multiemployer Plans that are
then in reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan year of such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $25,000,000; or

 

(h)

 

(i)            any Person or two or
more Persons (other than the Hormel Foundation) acting in concert shall have
acquired beneficial ownership or the right to acquire beneficial ownership
(within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act
of 1934), directly or indirectly, of securities of the Borrower (or other
securities convertible into such securities) representing 35% or more of the
combined voting power of all securities of the Borrower entitled to vote in the
election of directors, other than securities having such power only by reason of
the happening of a contingency (“Share Acquisition”); or

 

(ii)           individuals who either
(1) have been directors of  the Borrower
for the prior 24-month period or (2) were nominated or elected by directors in
office during such period (but prior to any Share Acquisition) shall cease for
any reason to constitute a majority of the board of directors of the Borrower;

 

then, and in any such event, the Administrative Agent
(i) shall at the request, or may with the consent, of the Requisite
Lenders, by notice to the Borrower, declare the obligation of each Lender to
make Advances to be terminated, whereupon the same shall forthwith terminate,
and (ii) shall at the request, or may with the consent, of the Requisite
Lenders, by notice to the Borrower, declare the Advances, all interest thereon
and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Advances, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower or any of its
Subsidiaries under the Bankruptcy Code or the expiration of the 60-day grace
period provided in Section 6.01(e), (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Advances, all
such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.

 

34

 

ARTICLE VII

ADMINISTRATIVE AGENT

 

Section 7.01  Authorization
and Action.  Each
Lender hereby appoints and authorizes CUSA to act as the Administrative Agent
under this Agreement and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto.  As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the
Advances and other amounts owing hereunder), the Administrative Agent shall not
be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Requisite
Lenders, and such instructions shall be binding upon all Lenders; provided,
however, that the Administrative Agent shall not be required to take any
action which exposes the Administrative Agent to personal liability or which is
contrary to any of the Loan Documents or applicable law.  The Administrative Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant
to the terms of the Loan Documents.

 

Section 7.02  Agents’
Reliance, Etc.  Neither the Agents nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
any of the Loan Documents, except for their own gross negligence or willful
misconduct.  Without limitation of the
generality of the foregoing, the Agents: (i) may treat the Lender that
made any Advance as the payee thereof until the Administrative Agent receives
and accepts an Assignment and Acceptance entered into by such Lender, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts;
(iii) make no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with any of the Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any of the Loan Documents on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any of the Loan Documents
or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of any of the Loan
Documents by acting upon any notice, consent, certificate or other instrument
or writing (which may be by telecopier) believed by it to be genuine and signed
or sent by the proper party or parties.

 

Section 7.03  CUSA and
Affiliates.  With
respect to its respective Commitment and the respective Advances made by it,
CUSA shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an Agent; and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated, include CUSA
respectively in its individual capacity. 
CUSA and its Affiliates may

 

35

 

accept deposits from, lend money to, act as trustee under indentures
of, acquire equity interests in and generally engage in any kind of commercial
banking, investment banking, trust, financial advisory, underwriting or other
business with, the Borrower, any of its Subsidiaries and other Affiliates and
any Person who may do business with or own securities of the Borrower or any
such Subsidiary or Affiliate, all as if CUSA was not an Agent and without any
duty to account therefor or provide notice thereof, to the Lenders.  The Lenders acknowledge that, pursuant to
such activities, CUSA and its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or an Affiliate) and
acknowledge that the Administrative Agent shall not be under any obligation to
provide such information to them.

 

Section 7.04  Lender
Credit Decision. 
Each Lender acknowledges that it has, independently and without reliance
upon any Agent or any other Lender and based on the financial statements
referred to, and the representations and warranties contained, in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

 

Section 7.05  Indemnification.  The Lenders agree to indemnify the Agents (to
the extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Advances then held by each of them (or if no such
Advances are at the time outstanding or if any such Advances are held by
Persons which are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against any such Agent in any way relating to or
arising out of any of the Loan Documents or any action taken or omitted by such
Agent under any of the Loan Documents, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent’s gross negligence or willful misconduct.  Without limitation of the foregoing, each
Lender agrees to reimburse such Agent promptly upon demand for its ratable
share of any reasonable out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, syndication, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, the Loan Documents, to the extent
that such Agent is not reimbursed for such expenses by the Borrower.

 

Section 7.06  Successor
Administrative Agent. 
The Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower and may be removed at any time with or
without cause by the Requisite Lenders. 
Upon any such resignation or removal, the Requisite Lenders shall have
the right to appoint a successor Administrative Agent (such Administrative
Agent, so long as no Event of Default has occurred and is continuing, being
reasonably acceptable to the Borrower). 
If no successor

 

36

 

Administrative Agent shall have been so appointed by the Requisite
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent’s giving of notice of resignation or the
Requisite Lenders’ removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof or any Bank
and, in each case having a combined capital and surplus of at least
$100,000,000 (and so long as no Event of Default has occurred and is
continuing, that is reasonably acceptable to the Borrower).  Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents.  After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under the Loan Documents.

 

Section 7.07  Other Agents.  None of the Lenders identified on the facing
page of this Agreement or elsewhere herein as a “Syndication Agent”, a
“Documentation Agent”, or an “Arranger” shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. 
Without limiting the foregoing, none of the Lenders so identified shall
have or be deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.

 

ARTICLE VIII

MISCELLANEOUS

 

Section 8.01  Amendments, Etc. 
No amendment or waiver of any provision of this Agreement, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Borrower and the
Requisite Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders, do any of the following:  (a) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (b) reduce
the principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, (c) postpone any date fixed for any payment of
principal of, or interest on, the Advances or any fees or other amounts payable
hereunder, (d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action
hereunder or (e) amend Section 2.14 or this Section 8.01; and provided,
further, that no amendment, waiver or consent shall, unless in writing
and signed by an Agent in addition to the Lenders required above to take such
action, affect the rights or duties of such Agent under this Agreement.

 

37

 

Section 8.02  Notices
and Other Communications; Facsimile Copies

 

(a)   General.  Unless otherwise expressly provided in the
Loan Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile transmission).  All such written notices shall be mailed, faxed or delivered to
the applicable address, facsimile number or (subject to Section 8.13)
electronic mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

 

(i)            if to the Borrower, at
its address at 1 Hormel Place, Austin, Minnesota  55912-3690, Attn: Treasurer, Telecopier (507) 434-6731, Telephone
(507) 437-5922 or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by Borrower in a notice to
the other parties;

 

(ii)           if to the
Administrative Agent at its address at Citicorp USA, Inc., Global Loans
Operations, 2 Penns Way, Suite 200, New Castle, Delaware 19720; Attention:
Brian Maxwell, Telecopier (302) 894-6120, Telephone (302) 894-6023 (with copy
of notices, other than those given pursuant to Sections 2.1 through 2.13
hereof, to Citicorp USA, Inc., 500 W. Madison Street, 7th Floor,
Chicago, Illinois; Attention:  Shafique
Janmohamed), Telecopier (312) 876-3288, Telephone (312) 876-3272 or to such
other address, facsimile number, electronic mail address or telephone number as
shall be designated by Administrative Agent in a notice to the other parties;
and

 

(iii)          if to any Lender, at its
Domestic Lending Office specified opposite its name on Schedule I hereto
or to such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower and the
Administrative Agent.

 

(b)   Timing.  All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of (i) actual
receipt by the relevant party hereto and (ii) (A) if delivered by hand or by
courier, when signed for by or on behalf of the relevant party hereto; (B) if
delivered by mail, four Business Days after deposit in the United States mail,
postage prepaid; (C) if delivered by facsimile, when sent and receipt has been
confirmed by telephone; and (D) if delivered by electronic mail (subject to the
provisions of Sections 8.13(d) and (e)) when received; provided,
however, that notices and other communications to the Administrative
Agent pursuant to Article II shall not be effective until actually
received by such Person.  In no event
shall a voicemail message be effective as a notice, communication or
confirmation hereunder.

 

(c)   Effectiveness of Facsimile
Documents and Signatures.  Loan
Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
manually-signed originals and shall be binding on the Borrower, the Administrative
Agent and the Lenders.  The
Administrative Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however,
that the failure to

 

38

 

request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.

 

(d)   Reliance by the
Administrative Agent and Lenders. 
The Administrative Agent and the Lenders shall be entitled to rely and
act upon any notices purportedly given by or on behalf of the Borrower even if
(i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.  The Borrower
shall indemnify each Lender and Administrative Agent from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

Section 8.03  No Waiver;
Remedies.  No failure
on the part of any Lender or the Administrative Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.

 

Section 8.04  Costs,
Expenses and Indemnification.

 

(a)   The Borrower agrees, regardless
of whether the Effective Date occurs, to pay promptly on demand all reasonable
costs and out-of-pocket expenses of the Administrative Agent in connection with
the preparation, execution, delivery, administration, syndication, modification
and amendment of this Agreement, and the other documents to be delivered
hereunder or thereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent (including the
allocated time charges of the Administrative Agent’s legal departments, as
their respective internal counsel) with respect thereto and with respect to
advising the Administrative Agent as to its rights and responsibilities under
this Agreement.  The Borrower further
agrees to pay promptly on demand all costs and expenses of the Agents and of
each Lender, if any (including, without limitation, reasonable counsel fees and
out-of-pocket expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
documents to be delivered hereunder or thereunder, including, without
limitation, reasonable counsel fees and out-of-pocket expenses in connection
with the enforcement of rights under this Section 8.04(a).

 

(b)   If any payment of principal of
any Eurodollar Rate Advance is made or any Eurodollar Rate Advance is assigned
pursuant to Section 2.15  other than on the last day of the interest
period for such Advance, as a result of a payment pursuant to Section 2.05
or acceleration of the maturity of the Advances pursuant to Section 6.01 or for
any other reason, the Borrower shall, upon demand by any Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses which it may reasonably incur as a
result of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or

 

39

 

other funds acquired by any Lender to fund or maintain such Advance; provided
that conversion of a Eurodollar Rate Advance to a Base Rate Advance in
accordance with the provisions of Section 2.02(b)(iii) shall not be considered
a payment for purposes of this Section 8.04(b).

 

(c)   The Borrower agrees to
indemnify and hold harmless each Agent, each Lender and each director, officer,
employee, agent, attorney and affiliate of each Agent and each Lender (each an
“indemnified person”) in connection with any expenses, losses, claims, damages
or liabilities to which an Agent, a Lender or such indemnified persons may
become subject, insofar as such expenses, losses, claims, damages or
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) arise out of the transactions referred to in this Agreement or arise
from any use or intended use of the proceeds of the Advances, or in any way
arise out of activities of the Borrower that violate Environmental Laws, and to
reimburse each Agent, each Lender and each indemnified person, upon their
demand, for any reasonable legal or other out-of-pocket expenses incurred in
connection with investigating, defending or participating in any such loss,
claim, damage, liability, or action or other proceeding, whether commenced or
threatened (whether or not such Agent, such Lender or any such person is a
party to any action or proceeding out of which any such expense arises).  Notwithstanding the foregoing, the Borrower
shall have no obligation hereunder to an indemnified person with respect to
indemnified liabilities which have resulted from the gross negligence, bad
faith or willful misconduct of such indemnified person.

 

(d)   To the extent permitted by law,
the Borrower shall not assert, and hereby waives, any claim against any
indemnified person, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with or as a result of this Agreement, any other
Loan Document, any transaction contemplated by the Loan Documents, any Advance
or the use of proceeds thereof.

 

Section 8.05  Right of Set-off.  Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each of the Administrative Agent, the Lenders and
their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (time or demand, provisional or final, or general, but not special) at
any time held and other indebtedness at any time owing by such Person to or for
the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement that
are then due and payable, whether or not the Administrative Agent or such
Lender shall have made any demand under this Agreement.  Each of the Administrative Agent and the
Lenders agrees promptly to notify the Borrower after any such set-off and
application made by such Person; provided that the failure to give such
notice shall not affect the validity of such set-off and application.  The rights of the Administrative Agent and
each Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.

 

40

 

Section 8.06  Binding
Effect; Entire Agreement.

 

(a)   This Agreement shall be deemed
to have been executed and delivered when it shall have been executed by the
Borrower and the Administrative Agent and when the Administrative Agent shall
have been notified by each Bank that such Bank has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the
Administrative Agent and each Lender and their respective successors and
permitted assigns, except that the Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent
of all Lenders.

 

(b)   This Agreement (including the
Schedules and Exhibits attached hereto) shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, among the parties with respect to such subject matter.

 

Section 8.07  Assignments
and Participations.

 

(a)   Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Advances owing to it); provided, however, that
(i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender’s rights and obligations under this
Agreement, (ii) after giving effect to any such assignment, (1) the
assigning Lender shall no longer have any Commitment or (2) the amount of
the Commitment of both the assigning Lender and the Eligible Assignee party to
such assignment (in each case determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall not be less than $5,000,000
and assigned amounts must be in increments of $1,000,000, (iii) each such
assignment shall be to an Eligible Assignee, (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, and a
processing and recordation fee of $3,500 to the Administrative Agent, and (v)
the Borrower (unless an Event of Default shall exist and be continuing) and the
Administrative Agent shall have consented to such assignment, which consent
shall not be unreasonably withheld, unless such assignment is to an Affiliate
of a Lender, in which case no such consent shall be necessary (but such Lender
shall notify the Borrower and the Administrative Agent of any such assignment
to an Affiliate of an Assigning Lender). 
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and
(y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto); provided
that with respect to any amounts payable as of the date of such assignment
pursuant to Sections 2.09, 2.11 or 8.04, the Borrower shall have no greater
obligation to the assignee than it had to the assignor.  Any Lender may at any time pledge or assign
all or any portion of its rights

 

41

 

hereunder to a Federal Reserve Bank; provided, that no such
pledge or assignment shall release such Lender from any of its obligations
hereunder.

 

(b)   By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows:  (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any of
the Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any of the Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under any
of the Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee confirms that it has received a
copy of the Loan Documents, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agents, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Administrative
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

 

(c)   Within five (5) days of its
receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee (together with a
processing and recordation fee of $3,500 with respect thereto) and upon
evidence of consent of the Borrower (if no Event of Default has occurred and is
continuing) and the Administrative Agent thereto, which consent shall not be
unreasonably withheld, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (1) accept such Assignment and Acceptance and (2) record the
information contained therein in the Register. 
All communications with the Borrower with respect to such consent of the
Borrower shall be sent pursuant to Section 8.02.

 

(d)   The Administrative Agent shall
maintain at its address referred to in Section 8.02 a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Lenders and the Commitment of, the Commitment
Termination Date of, and principal amount of the Advances owing to, each such
Lender from time to time (the “Register”).  The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of the Loan Documents.  The Register shall

 

42

 

be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(e)   Each Lender may sell
participations to one or more banks or other entities in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Advances owing to it; provided,
however, that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such
Lender shall remain the holder of any such Advance for all purposes of this
Agreement, (iv) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under the Loan Documents,
(v) no Lender shall grant any participation under which the participant
shall have rights to require such Lender to take or omit to take any action
hereunder or under the other Loan Documents or approve any amendment to or
waiver of this Agreement or the other Loan Documents, except to the extent such
amendment or waiver would: 
(A) extend the Commitment Termination Date; or (B) reduce the
interest rate or the amount of principal or fees applicable to Advances or the
Commitment in which such participant is participating or change the date on
which interest, principal or fees applicable to Advances or the Commitment in
which such participant is participating are payable, and (vi) the Person
purchasing such participation shall agree to customary provisions relating to
the confidentiality of non-public information received by such Person in
connection with its purchase of the participation.

 

(f)    Any Lender may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 8.07, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that,
prior to any such disclosure, the assignee or Participant or proposed assignee
or participant shall agree to preserve the confidentiality of any confidential
information relating to the Borrower received by it from such Lender.

 

(g)

 

(i)            Notwithstanding
anything to the contrary contained herein, any Lender (a “Designating Lender”)
may grant to one or more special purpose funding vehicles (each, an “SPV”),
identified as such in writing from time to time by the Designating Lender to
the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Designating Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (1) nothing herein shall constitute a commitment by any SPV to
make any Loan, (2) if an SPV elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Designating Lender shall be
obligated to make such Loan pursuant to the terms hereof and (3) the
Designating Lender shall remain liable for any indemnity or other payment
obligation with respect to its Commitment hereunder. The making of a Loan by an
SPV hereunder shall utilize the Commitment of the Designating Lender to the
same extent, and as if, such Loan were made by such Designating Lender;

 

43

 

(ii)           As to any Loans or
portion thereof made by it, each SPV shall have all the rights that a Lender
making such Loans or portion thereof would have had under this Agreement;
provided, however, that each SPV shall have granted to its Designating Lender
an irrevocable power of attorney to deliver and receive all communications and
notices under this Agreement (and any related documents) and to exercise on
such SPV’s behalf, all of such SPV’s voting rights under this Agreement. No
additional Note shall be required to evidence the Loans or portion thereof made
by an SPV; and the related Designating Lender shall be deemed to hold its Note
(if any) as agent for such SPV to the extent of the Loans or portion thereof
funded by such SPV. In addition, any payments for the account of any SPV shall
be paid to its Designating Lender as agent for such SPV;

 

(iii)          Each party hereto hereby
agrees that no SPV shall be liable for any indemnity or payment under this
Agreement for which a Lender would otherwise be liable; if an SPV, but for the
operation of this sentence, would have liability for any such indemnity or
payment, the Designating Lender shall be liable;

 

(iv)          In addition,
notwithstanding anything to the contrary contained in this Section 8.07(g) or
otherwise in this Agreement, any SPV may (1) at any time and without paying any
processing fee therefore, assign or participate all or a portion of its
interest in any Loans to the Designating Lender or to any financial
institutions providing liquidity and/or credit support to or for the account of
such SPV to support the funding or maintenance of Loans; provided that the
Designating Lender in the event of an assignment or participation to any other
financial institution shall remain liable for any indemnity or other payment
obligation with respect to its Commitment, and shall be obligated to make such
Loan pursuant to the terms hereof and of its Commitment and (2) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancements to such SPV.

 

Section 8.08  Confidentiality.  Each Agent and each Lender agrees, insofar
as is legally possible, to use its reasonable best efforts to keep in
confidence all financial data and other information relative to the affairs of
the Borrower heretofore furnished or which may hereafter be furnished to it
pursuant to the provisions of this Agreement; provided, however,
that this Section 8.08 shall not be applicable to information which is or
becomes available to a Lender from a source other than the Borrower; and provided
further that such obligation of each Agent and each Lender shall be
subject to each Agent’s and each Lender’s (a) obligation to disclose such
information pursuant to a request or order under applicable laws and
regulations or pursuant to a subpoena or other legal process, (b) right to
disclose any such information to bank examiners, its affiliates, bank auditors,
accountants and its counsel and other Agents and Lenders, and (c) right to
disclose any such information, (i) in connection with the transactions set
forth herein including assignments and sales of participation interests
pursuant to Section 8.07 hereof or (ii) in or in connection with any
litigation or dispute involving the Agents, the Lenders and the Borrower or any
transfer or other disposition by such Lender of any of its Advances or other
extensions of credit by such Lender to the Borrower or any of its Subsidiaries,
provided that information disclosed pursuant to this proviso shall be so
disclosed subject to such procedures as are reasonably calculated to maintain
the confidentiality thereof.

 

44

 

Notwithstanding any other
provision in this agreement, each party hereto (and each employee,
representative, or other agent of each such party) may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the transaction and all materials of any kind (including opinions
or other tax analyses) that are provided to either party relating to such U.S.
tax treatment and U.S. tax structure, other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.

 

Section 8.09  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

 

Section 8.10  Execution
in Counterparts.  This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.

 

Section 8.11  Consent to Jurisdiction; Waiver of
Immunities. 
The Borrower hereby irrevocably submits to the jurisdiction of any New
York state or Federal court sitting in New York, New York in any action or
proceeding arising out of or relating to this Agreement, and the Borrower
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York state or Federal
court.  The Borrower hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.  The Borrower agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Section 8.11 shall
affect the right of any Lender or Agent to serve legal process in any other
manner permitted by law or affect the right of any Lender or Agent to bring any
action or proceeding against the Borrower or its property in the courts of any
other jurisdiction.

 

Section 8.12  Waiver of
Trial by Jury.  THE
BORROWER, THE BANKS, THE AGENTS AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
OTHER LENDERS EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT.  The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. 
The Borrower, the Banks, the Agents and, by its acceptance of the
benefits hereof, other Lenders each (i) acknowledges that this waiver is a
material inducement for the Borrower, the Lenders and the Agents to enter into
a business relationship, that the Borrower, the Lenders and the Agents have
already relied on this waiver in entering into this Agreement or accepting the
benefits thereof, as the case may be, and that each will continue to rely on
this waiver in their related future dealings and (ii) further warrants and
represents that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel.  THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL

 

45

 

APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.  In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.

 

Section 8.13  Website Communications.

 

(a)   The Borrower hereby agrees that
it will provide to the Administrative Agent all information, documents and
other materials that it is obligated to furnish to the Administrative Agent
pursuant to this Agreement and the other Loan Documents, including, without
limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of an
existing, borrowing or other extension of credit (including any election of an
interest rate or interest period relating thereto), (ii) relates to the payment
of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (iii) provides notice of any default or event of
default under this Agreement, (iv) is required to be delivered to satisfy any
condition precedent to the effectiveness of this Agreement and/or any borrowing
or other extension of credit thereunder, or (v) involves the delivery of securities,
instruments or other similar documents requiring signatures or endorsement (all
such non-excluded communications being referred to herein collectively as “Communications”),
by transmitting the Communications in an electronic/soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citigroup.com.  In addition, the Borrower agrees to continue
to provide the Communications to the Administrative Agent in the manner
specified in the Loan Documents but only to the extent requested by the
Administrative Agent.

 

(b)   The Borrower further agrees
that the Administrative Agent may make the Communications available to the
Lenders by posting the Communications on Intralinks, Fixed Income Direct or a
substantially similar electronic transmission systems (the “Platform”).  The Borrower acknowledges that the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution.

 

THE PLATFORM IS PROVIDED
“AS IS” AND “AS AVAILABLE”.  THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS,  OR THE ADEQUACY OF THE
PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
COMMUNICATIONS.  NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.

 

IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO ANY OBLIGOR, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING,

 

46

 

WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF ANY OBLIGOR’S OR THE ADMINISTRATIVE AGENT’S
TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE
LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A
COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT
PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(c)   The Administrative Agent agrees
that the receipt of the Communications by the Administrative Agent at its e-mail
address set forth above shall constitute effective delivery of the
Communications to the Administrative Agent for purposes of this Agreement and
the Loan Documents.

 

(d)   Each Lender agrees that notice
to it (as provided in the next sentence) specifying that the Communications
have been posted to the Platform shall constitute effective delivery of the
Communications to such Lender for purposes of this Agreement and the Loan
Documents.  Each Lender agrees to notify
the Administrative Agent in writing (including by electronic communication)
from time to time of such Lender’s e-mail address to which the foregoing notice
may be sent by electronic transmission and that the foregoing notice may be
sent to such e-mail address.

 

Nothing herein shall
prejudice the right of the Administrative Agent or any Lender to give any
notice or other communication pursuant to any Credit Document in any other
manner specified in such Credit Document.

 

[Remainder of page
intentionally left blank]

 

47

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.

 

	
   

  	
  HORMEL FOODS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Joel W. Johnson

  	
   

  
	
   

  	
  Title:

  	
  Chairman, President
  & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Attn:  Treasurer

  	
   

  
	
   

  	
  1 Hormel Place

  	
   

  
	
   

  	
  Austin, Minnesota
  55912-3690

  	
   

  
						

 

S-1

 

	
   

  	
  CITICORP USA, INC., as Administrative

  Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Global Loans Operations

  	
   

  
	
   

  	
  Attn: Brian Maxwell

  	
   

  
	
   

  	
  2 Penns Way, Suite 200

  	
   

  
	
   

  	
  New Castle, Delaware
  19702

  	
   

  
						

 

S-2

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
  (As a Lender)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Attn: Hugh Brown

  	
   

  
	
   

  	
  303 Peachtree Street

  	
   

  
	
   

  	
  Third Floor

  	
   

  
	
   

  	
  Atlanta, Georgia 30308

  	
   

  
					

 

S-3

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Attn: 800 Nicollet Mall

  	
   

  
	
   

  	
  BC-MN-H03N

  	
   

  
	
   

  	
  Minneapolis, MN 55402

  	
   

  
	
   

  	
  Attention:  Christine Geer

  	
   

  
					

 

S-4

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Wells Fargo Bank,
  National Association

  	
   

  
	
   

  	
  6th and Marquette

  	
   

  
	
   

  	
  MAC N9305-031

  	
   

  
	
   

  	
  Minneapolis, MN 55479

  	
   

  
	
   

  	
  Telephone: 
  612-316-1402

  	
   

  
	
   

  	
  Facsimile: 
  612-667-2276

  	
   

  

 

S-5

 

	
   

  	
  BANK ONE, NA (Main Office Chicago)

  
	
   

  	
  (As a Lender)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Joseph Pinzone

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  
	
   

  	
  Bank One NA

  	
   

  
	
   

  	
  Attn: Karen Hannusch

  	
   

  
	
   

  	
  1 Bank One Plaza, Suite
  IL1-0011

  	
   

  
	
   

  	
  Chicago, IL 60670

  	
   

  
						

 

S-6

 

SCHEDULE
I

 

APPLICABLE LENDING OFFICES

 

	
  Bank

  	
   

  	
  Domestic Lending Office

  	
   

  	
  Eurodollar Lending Office

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citicorp USA,
  Inc.

  	
   

  	
  Citicorp USA, Inc.

  	
   

  	
  Citicorp USA, Inc.

  
	
   

  	
   

  	
  Citibank Agency
  Services

  	
   

  	
  Citibank Agency
  Services

  
	
   

  	
   

  	
  2 Penns Way, Suite 200

  	
   

  	
  2 Penns Way, Suite 200

  
	
   

  	
   

  	
  New Castle, DE 19720

  	
   

  	
  New Castle, DE 19720

  
	
   

  	
   

  	
  Telephone: (302)
  894-6023

  	
   

  	
  Telephone: (302)
  894-6023

  
	
   

  	
   

  	
  Facsimile:  (302) 894-6120

  	
   

  	
  Facsimile:  (302) 894-6120

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank

  	
   

  	
  SunTrust Bank

  	
   

  	
  SunTrust Bank

  
	
   

  	
   

  	
  25 Park Place

  	
   

  	
  25 Park Place

  
	
   

  	
   

  	
  MC 1941, 21st
  Floor

  	
   

  	
  MC 1941, 21st
  Floor

  
	
   

  	
   

  	
  Attention: Barbara
  Thomas

  	
   

  	
  Attention: Barbara
  Thomas

  
	
   

  	
   

  	
  Atlanta, GA 30302

  	
   

  	
  Atlanta, GA 30302

  
	
   

  	
   

  	
  Telephone: (404)
  658-4237

  	
   

  	
  Telephone: (404)
  658-4237

  
	
   

  	
   

  	
  Facsimile:  (404) 230-1940

  	
   

  	
  Facsimile:  (404) 230-1940

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Bank National

  	
   

  	
  U.S. Bank National
  Association

  	
   

  	
  U.S. Bank National
  Association

  
	
  Association

  	
   

  	
  800 Nicollet Mall

  	
   

  	
  800 Nicollet Mall

  
	
   

  	
   

  	
  BC-MN-H03N

  	
   

  	
  BC-MN-H03N

  
	
   

  	
   

  	
  Minneapolis, MN 55402

  	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
   

  	
  Attention:  Christine Geer

  	
   

  	
  Attention:  Christine Geer

  
	
   

  	
   

  	
  Telephone: (612)
  303-3769

  	
   

  	
  Telephone: (612)
  303-3769

  
	
   

  	
   

  	
  Facsimile: (612)
  303-2265

  	
   

  	
  Facsimile: (612)
  303-2265

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank One, NA

  	
   

  	
  Bank One, NA

  	
   

  	
  Bank One, NA

  
	
  (Main Office
  Chicago)

  	
   

  	
  1 Bank One Plaza

  	
   

  	
  1 Bank One Plaza

  
	
   

  	
   

  	
  Suite IL1-0011

  	
   

  	
  Suite IL1-0011

  
	
   

  	
   

  	
  Chicago, IL 60670

  	
   

  	
  Chicago, IL 60670

  
	
   

  	
   

  	
  Attention:  Karen Hannusch

  	
   

  	
  Attention:  Karen Hannusch

  
	
   

  	
   

  	
  Telephone: (312)
  385-7035

  	
   

  	
  Telephone: (312)
  385-7035

  
	
   

  	
   

  	
  Facsimile:  (312) 385-7108

  	
   

  	
  Facsimile:  (312) 385-7108

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo
  Bank,

  National Association

  	
   

  	
  Wells Fargo Bank,
  National

  Association

  	
   

  	
  Wells Fargo Bank,
  National

  Association

  
	
   

  	
   

  	
  201 Third Street, 8th Floor

  	
   

  	
  201 Third Street, 8th Floor

  
	
   

  	
   

  	
  San Francisco, CA 94103

  	
   

  	
  San Francisco, CA 94103

  
	
   

  	
   

  	
  Attention: Nanci Mullen

  	
   

  	
  Attention: Nanci Mullen

  
	
   

  	
   

  	
  Telephone: 
  (415) 477-5447

  	
   

  	
  Telephone: 
  (415) 477-5447

  
	
   

  	
   

  	
  Facsimile:  (415) 979-0675

  	
   

  	
  Facsimile:  (415) 979-0675

  

 

I-1

 

SCHEDULE
II

 

BANKS’ COMMITMENTS

Hormel Foods Corporation

$150,000,000 Revolving Credit
Agreement

 

	
  BANK

  	
   

  	
  COMMITMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citicorp USA, Inc.

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  US Bank National Association

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank One, NA (Main Office Chicago)

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo Bank, National Association

  	
   

  	
  $

  	
  25,000,000

  	
   

  

 

II-1

 

SCHEDULE 4.01(a)

MATERIAL SUBSIDIARIES

 

 

1.      Hormel Financial
Services Corporation, a Minnesota corporation

 

2.      Hormel Foods, LLC, a
Minnesota Limited Liability Company

 

3.      Jennie-O Turkey Store,
Inc., a Minnesota corporation

 

4.      Hormel Foods
International Corporation, a Delaware corporation

 

5.      Vista International
Packaging Company, a Wisconsin corporation

 

6.      Dan’s Prize, a Minnesota
corporation

 

7.      Mountain
Prairie, LLC, a Colorado Limited Liability Company

 

8.      Diamond Crystal Brands,
Inc., a Delaware corporation

 

9.     Beijing Hormel Foods Co.
Ltd., incorporated under the Joint

Venture Law of the People’s Republic of China

 

10.  Shanghai Hormel Foods Limited
Corporation, incorporated under the Joint

Venture Law of the People’s Republic of China

 

 

SCHEDULE 4.01(c)

GOVERNMENT CONSENTS

 

None.

 

 

EXHIBIT A

 

[FORM OF
ASSIGNMENT AND ACCEPTANCE]

 

Dated as of
               ,
    

 

Reference
is made to that certain Revolving Credit Agreement, dated as of October 20,
2003 (the “Credit Agreement”), among HORMEL FOODS CORPORATION (the “Borrower”),
the Lenders party thereto, Citicorp USA, Inc., as Administrative Agent (the “Administrative
Agent”), and the other Agents party thereto. 
Terms defined in the Credit Agreement are used herein with same meaning.

 

[                                 ]
(the “Assignor”) and [                                 ]
(the “Assignee”) agree as follows:

 

1.         The Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, without recourse, that interest in and to all of the Assignor’s
rights and obligations under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Section 1 of Schedule 1 of the
outstanding rights and obligations of all Lenders under the Credit Agreement,
including, without limitation, such interest in the Assignor’s Commitment and
in all outstanding Advances (if any) owing to the Assignor.  After giving effect to such sale and
assignment, the Assignee’s Commitment and the aggregate principal amount of
Advances outstanding on the date hereof and owing to the Assignee will be as
set forth in Section 2 of Schedule 1.

 

2.         The Assignor
(i) represents and warrants that it is the legal and beneficial owner of
the interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; (ii) makes no representation or warranty
(except as provided in clause (i) above) and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or any other instrument or document
furnished pursuant thereto or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto; and
(iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower, any guarantor or any
other person or the performance or observance by the Borrower, any guarantor or
any other party of any of its obligations under the Credit Agreement or any
other instrument or document furnished pursuant thereto.

 

3.         (a)  The Assignee (i) confirms and agrees
that it has received a copy of the Credit Agreement, any amendments or waivers
thereto and any other documents furnished pursuant thereto, which in each case
have been requested by it, together with copies of any financial statements
requested by it, and that it has, independently and without reliance on the
Assignor, the Administrative Agent or any other Agent or Lender and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Assignment and Acceptance and
agrees that it shall have no recourse against the Assignor with respect to any
matters relating thereto; (ii) agrees that it will, independently and
without reliance upon the Assignor, any Administrative Agent or 

 

A-1

 

any other Agent or Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement
and any other documents or instruments furnished pursuant thereto;
(iii) appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement
as are delegated to the Administrative Agent, by the terms thereof, together
with such powers as are reasonably incidental thereto; (iv) confirms that
it is an Eligible Assignee; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender; [and]
(vi) specifies as its Domestic Lending Office and Eurodollar Lending
Office and address for notices the respective offices previously notified to
the Administrative Agent pursuant to the Credit Agreement[; and
(vii) attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee’s status for the purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement or such other
documents as are necessary to indicate that all such payments are subject to
withholding taxes at a rate reduced by any applicable tax treaty].

 

(b)         If the Assignee is a person subject to ERISA, the Assignee
represents and warrants that the execution, delivery and performance of this
Assignment and Acceptance, and the purchase of the interest being assigned to
it hereby, will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code, other than a prohibited
transaction which is covered by a currently effective class exemption granted
by the U.S. Department of Labor pursuant to Section 408(a) of ERISA and Section
4975(C)(2) of the Code.

 

4.         Following the execution
of this Assignment and Acceptance by the Assignor and the Assignee, the
Assignor will deliver this Assignment and Acceptance to the Administrative
Agent for acceptance and recording.  The
effective date for this Assignment and Acceptance shall be the date of
acceptance hereof by the Administrative Agent unless otherwise specified on
Schedule 1 hereto (the “Assignment Effective Date”).

 

5.         Upon such acceptance and
recording by the Administrative Agent, as of the Assignment Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in the Credit Agreement and in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent provided in the Credit Agreement and in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement and the other instruments and documents
furnished pursuant thereto.  The
Assignee hereby acknowledges that the other parties to the Credit Agreement are
intended third-party beneficiaries of this Assignment and Acceptance insofar
as, after giving effect to this Assignment and Acceptance, the Assignee shall
have the obligations of a Lender thereunder.

 

6.         Upon such acceptance and
recording by the Administrative Agent, from and after the Assignment Effective
Date, the Administrative Agent shall make all payments under the Credit
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and fees with respect thereto)
to the Assignee.

 

A-2

 

The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Assignment Effective Date directly between themselves.

 

7.         This Assignment and
Acceptance shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

8.         This Assignment and
Acceptance may be executed in any number of counterparts and by different
parties on separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance
to be executed by their respective officers thereunto duly authorized, as of
the date first above written, such execution being made on Schedule 1 hereto.

 

 

[Remainder of page
intentionally left blank]

 

A-3

 

SCHEDULE 1

TO

ASSIGNMENT AND
ACCEPTANCE

Dated as of              ,
20     

 

Section 1

 

	
  Percentage interest

  	
   

  	
          %

  
	
  (as
  percentage of total

  Credit Agreement Advances/

  Commitments of all Lenders)

  	
   

  	
   

  

 

Section 2

 

	
  Assignee’s Commitment

  	
   

  	
  $          

  
	
   

  	
   

  	
   

  
	
  Aggregate
  Outstanding Principal

  Amount of Advances Owing to Assignee

  	
   

  	
  $         

  

 

Section 3

 

	
  Assignment Effective
  Date:

  	
   

  	
                           ,
  20     

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [                              ],

  
	
   

  	
   

  	
  as Assignor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [                              ],

  
	
   

  	
   

  	
  as Assignee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
    Title:

  	
   

  	
   

  
							

 

 

[Remainder of page
intentionally left blank]

 

A-4

 

	
  Accepted this             
  day of

  
	
                             ,
         

  
	
   

  
	
  Citicorp USA, Inc., as
  Administrative Agent

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  Accepted this             
  day of

  
	
                             ,
         

  
	
   

  
	
   

  
	
  Hormel Foods
  Corporation, as Borrower

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
				

 

A-5

 

EXHIBIT B

 

[FORM OF
COMPLIANCE CERTIFICATE]

 

COMPLIANCE CERTIFICATE

 

THE UNDERSIGNED HEREBY
CERTIFY THAT:

 

(1)        I am the duly elected
[Title] of HORMEL FOODS CORPORATION, a Delaware corporation (“Company”);

 

(2)        I have reviewed the terms
of that certain Revolving Credit Agreement, dated as of October 20, 2003, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the “Credit
Agreement”, the terms defined therein and not otherwise defined in
this Certificate (including Attachment No. 1 annexed hereto and made a
part hereof) being used in this Certificate as therein defined), by and among
the Company, the financial institutions listed therein as Lenders, Citicorp
USA, Inc., as Administrative Agent, and the other Agents party thereto and the
terms of the other Loan Documents, and I have made, or have caused to be made
under my supervision, a review in reasonable detail of the transactions and
condition of the Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and

 

(3)        The examination described
in paragraph (2) above did not disclose, and I have no knowledge of, the
existence of any condition or event which constitutes an Event of Default or
Potential Event of Default during or at the end of the accounting period covered
by the attached financial statements or as of the date of this Certificate[,
except as set forth below].

 

 

[Set
forth [below] [in a separate attachment to this Certificate] are all exceptions
to paragraph (3) above listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which the Company
has taken, is taking, or proposes to take with respect to each such condition
or event:

 

                                                                                                                                                                                                            ]

 

The
foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this                    
day of                     ,
             
pursuant to subsection 5.01(b)(iii) of the Credit Agreement.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Hormel Foods Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
												

 

B-1

 

ATTACHMENT NO. 1

TO COMPLIANCE
CERTIFICATE

 

This
Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of                    ,
         and pertains to the
period from                       ,
        to                       ,
       .  Subsection references herein relate to subsections of the Credit
Agreement.

 

Ratio of Net Debt to EBITDA, Section
5.02(d)

 

	
  a. 

  	
   

  	
  Indebtedness for
  borrowed money or for the deferred purchase price of property or services.

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  Obligations under
  Capital Leases

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.

  	
   

  	
  Outstanding Debt at end
  of period (a plus b)

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  d.

  	
   

  	
  Cash and Cash
  Equivalents

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e.

  	
   

  	
  Net Debt (c minus d)

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  f.

  	
   

  	
  Consolidated Net Income

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  g.

  	
   

  	
  Provision for taxes

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  h.

  	
   

  	
  Interest expense

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  i.

  	
   

  	
  Depreciation and
  amortization

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  j.

  	
   

  	
  Extraordinary losses

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  k.

  	
   

  	
  Extraordinary gains

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  l.

  	
   

  	
  EBITDA for four fiscal
  quarter period

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f plus g plus h plus i
  plus j minus k)

  	
   

  	
  $                       

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  m.

  	
   

  	
  Ratio of Net Debt to
  EBITDA (ratio of e to l)

  	
   

  	
     :
  1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  n.

  	
   

  	
  Maximum permitted Net
  Debt ratio

  	
   

  	
  2.5:1.00

  

 

B-2

 

EXHIBIT C

 

[FORM OF NOTICE OF
CONVERSION/CONTINUATION]

 

NOTICE OF CONVERSION/CONTINUATION

 

 

Pursuant
to that certain Revolving Credit Agreement, dated as of October 20, 2003, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the “Credit
Agreement”, the terms defined therein and not otherwise defined
herein being used herein as therein defined), by and among HORMEL FOODS
CORPORATION, a Delaware corporation, as Borrower, the financial institutions
listed therein as Lenders, Citicorp USA, Inc., as Administrative Agent, and the
other Agents party thereto, this represents Company’s request to convert or
continue Loans as follows:

 

1.             Date of conversion/continuation:                              ,
             

 

2.             Amount of Loans being
converted/continued:  $              

 

3.             Nature of conversion/continuation:

 

	
  [   ] a.

  	
   

  	
  Conversion of Base Rate
  Loans to Eurodollar Rate Loans

  
	
  [   ] b.

  	
   

  	
  Conversion of
  Eurodollar Rate Loans to Base Rate Loans

  
	
  [   ] c.

  	
   

  	
  Continuation of
  Eurodollar Rate Loans as such

  

 

4.             If Loans are being continued as or
converted to Eurodollar Rate Loans, the duration of the new Interest Period
that commences on the conversion/ continuation date:                       
month(s)

 

In the
case of a conversion to or continuation of Eurodollar Rate Loans, the
undersigned officer, to the best of his or her knowledge, and the Borrower
certifies that no Event of Default or Potential Event of Default has occurred
and is continuing under the Credit Agreement.

 

	
  DATED: 

  	
   

  	
   

  	
  Hormel Foods
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
														

 

C-1

 

EXHIBIT D

 

[FORM OF NOTICE OF
BORROWING]

 

[Date]

 

Citicorp USA., Inc., as
Administrative Agent

  for the Lenders parties to the Credit
Agreement

  referred to below

 

Ladies and Gentlemen:

 

The
undersigned Hormel Foods Corporation (the “Borrower”) refers to the Revolving
Credit Agreement, dated as of October 20, 2003 (the “Credit Agreement”), the
terms defined therein being used herein as therein defined, among the Borrower,
the Lenders party thereto, Citicorp USA, Inc., as Administrative Agent, and the
other Agents party thereto, and hereby gives you notice pursuant to Section
2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the “Proposed Borrowing”) as required
by Section 2.02(a) of the Credit Agreement:

 

(i)         The Business Day of the
Proposed Borrowing is                        
20   .

 

(ii)        The Type of Advances
comprising the Proposed Borrowing is a [Base Rate Advance][Eurodollar Advance].

 

(iii)       The aggregate amount of the
Proposed Borrowing is $                  .

 

(iv)       The Interest Period for
each Advance made as part of the Proposed Borrowing is      
[months] [days].

 

In
accordance with Section 3.02 of the Credit Agreement, the undersigned hereby
certifies, on behalf of the Borrower, that as of the date hereof and the date
of the Advance hereby requested:

 

1.          The representations and
warranties contained in Section 4.01 of the Credit Agreement (excluding those
contained in paragraph (e)(ii) thereof) are true and accurate as though made on
and as of such dates;

 

D-1

 

2.          No event
has occurred and is continuing or would result from such Borrowing which
constitutes an Event of Default under the Credit Agreement or which would
constitute such an Event of Default but for the requirement that notice be
given or time elapse or both.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Hormel Foods
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

D-2

 

EXHIBIT E

 

[FORM OF PROMISSORY NOTE]

HORMEL FOODS
CORPORATION

PROMISSORY NOTE

 

                   ,
       

 

For value received,
Hormel Foods Corporation (the “Borrower”), hereby promises to pay to the order
of                                                           
(the “Lender”), for the account of its Applicable Lending Office, the unpaid
principal amount of each Advance made by the Lender to the Borrower pursuant to
the Credit Agreement referred to below on the last day of the Interest Period
relating to such Advance.  The Borrower
promises to pay interest on the unpaid principal amount of each such Advance on
the dates and at the rate or rates provided for in the Credit Agreement.  All such payments of principal and interest
shall be made in United States dollars in same day funds at the Administrative
Agent’s office, as specified in the Credit Agreement.

 

All Advances made by the
Lender, the respective maturities thereof and all repayments of principal
thereof shall be recorded by the Lender and, prior to any transfer hereof,
appropriate notations to evidence the foregoing information with respect to
each such Advance then outstanding shall be endorsed by the Lender on the
schedule attached hereto, or on a continuation of such schedule attached to and
made a part hereof, or in the records of such Lender in accordance with its
usual practice; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.

 

This promissory note is
one of the promissory notes referred to in Section 2.13 of the Revolving Credit
Agreement, dated as of October 20, 2003, among Hormel Foods Corporation, the
Lenders named therein, Citicorp USA, Inc., as Administrative Agent, and the
other Agents party thereto (said Credit Agreement, as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are
used herein with the same meanings.

 

[Remainder of page
intentionally left blank]

 

E-1

 

Reference is hereby made
to the Credit Agreement for provisions relating to this promissory note,
including, without limitation, the mandatory and optional prepayment hereof and
the acceleration of the maturity hereof.

 

	
   

  	
  Hormel Foods
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

E-2

 

Schedule to Promissory
Note

 

ADVANCES AND
PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of

  Advance

  	
   

  	
  Type of

  Advance

  	
   

  	
  Amount of

  Principal

  Repaid

  	
   

  	
  Maturity

  Date

  	
   

  	
  Notation

  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

E-3

 

EXHIBIT F

 

[FORM OF OPINION OF COUNSEL TO BORROWER]

 

 

[Date]

 

Citicorp USA, Inc., as

Administrative Agent

                                   

                                   

                                   

and

 

The Lenders

and Arranger Listed

on Schedule I Hereto

 

Re:          Hormel Foods Corporation
Revolving Credit Agreement dated as of October 20, 2003

 

Ladies and Gentlemen:

 

As General Counsel of
Hormel Foods Corporation, a Delaware corporation (the “Company”), I am familiar
with the Revolving Credit Agreement dated as of October 20, 2003, among the
Company, the Lenders named therein, Citicorp USA, Inc., as Administrative Agent
and the other Agents party thereto (the “Credit Agreement”).  All terms used herein that are defined in
the Credit Agreement have the meanings specified in the Credit Agreement.  This letter is being delivered to you in
satisfaction of the condition set forth in Section 3.1(a)(vi) of the Credit
Agreement and with the understanding that you are entering into the Credit
Agreement in reliance on the opinions expressed herein.

 

In this connection,  I
have examined such certificates of public officials, certificates of officers
of the Company and its Subsidiaries and copies certified to my satisfaction of
corporate documents, records and of other papers of the Company and its
Subsidiaries, and have made such other investigations, as I have deemed
relevant and necessary as a basis for my opinion hereinafter set forth.

 

Based on the foregoing
and subject to the qualifications, limitations and assumptions contained
herein, it is my opinion that:

 

1.           The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware and has qualified to do business as a foreign
corporation and is in good standing under the laws of the State of
Minnesota.  The Company has all
requisite corporate power and corporate authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted 

 

F-1

 

and to execute, deliver
and perform the Credit Agreement and any Notes issued pursuant thereto.

 

2.           The execution, delivery
and performance of the Credit Agreement and any Notes issued pursuant thereto
have been duly authorized by all requisite corporate action on the part of the
Company.  The Credit Agreement has been
duly executed and delivered by an authorized officer of the Company and,
assuming proper authorization and execution by the other parties thereto,
constitutes the legally valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as enforceability
may be limited by (a) bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors’ rights generally and (b) general
principles of equity and commercial reasonableness (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

3.           The Company is not an
“investment company” nor a company “controlled” by an “investment company” as
such terms are defined in the Investment Company Act of 1940, as amended.

 

4.           The extension,
arranging and obtaining of the credit represented by the Credit Agreement do
not result in any violation of Regulation T, U and X of the Board of Governors
of the Federal Reserve System.

 

5.           None of the execution
and delivery of the Credit Agreement, the making of any Advances thereunder or
compliance with the provisions thereof (A) conflicts with, or results in a
breach or violation of the certificate of incorporation or bylaws of the
Company, (B) results in a material breach or violation of, or constitutes a
material default under, the terms, conditions or provisions of (i) any material
loan agreement or other contract to which the Company or any of its
Subsidiaries is a party, (ii) any order, writ, judgment or decree that the
Company or any of its Subsidiaries is a party to or by which any of the
Company’s or any of its Subsidiaries’ assets or properties are bound and which
is material to the Company and its Subsidiaries, taken as a whole, or (iii) any
present United States federal, Delaware corporate or Minnesota statute, rule or
regulation, known to me to be applicable to or binding on the Company and of a
type commonly applicable to transactions of the type contemplated by the Credit
Agreement or (C) results in the creation of any Lien upon any of the assets or
properties of either the Company or any of its Subsidiaries under any agreement
or contract referred to in clause (B)(i) above.

 

6.           No governmental
consents, approvals, registrations, declarations or filings are required to be
obtained or made by the Company in connection with the execution and delivery
of the Credit Agreement or any Notes issued pursuant thereto.

 

7.           To the best of my
knowledge, after due inquiry, there are no actions, suits or proceedings
(administrative, judicial or otherwise) pending or threatened against the
Company or any of its Subsidiaries that have a significant likelihood of
materially and adversely affecting (a) the business, operations, prospects or
condition (financial or otherwise) of the Company or any of its Subsidiaries,
taken as a whole, or (b) the ability of the Company to perform its obligations
under the Credit Agreement or any Notes issued pursuant thereto.

 

F-2

 

My opinion as to the
enforceability of the Credit Agreement is subject to:

 

(i)            public
policy considerations, statutes or court decisions that may limit the rights of
a party to obtain indemnification against its own negligence or willful
misconduct; and

 

(ii)           the
unenforceability under certain circumstances of broadly or vaguely stated
waivers or waivers of rights granted by law where the waivers are against
public policy or prohibited by law.

 

In
addition, I express no opinion as to the effect of non-compliance by any party
(other than the Company) with any state or federal laws or regulations applicable
to the transactions contemplated by the Credit Agreement because of the nature
of such party’s business.

 

The
law covered by this opinion is limited to present federal law, present
corporate law of the State of Delaware and present law of the State of
Minnesota.  I express no opinion as to
the laws of the any other jurisdiction and no opinion regarding the statutes,
administrative decisions, rules, regulation or requirements or any country,
municipality, subdivision or local authority or any jurisdiction.

 

I note that the Credit Agreement provides that it shall
be governed by, and construed in accordance with, the laws of the State of New
York, and that I express no opinion herein under the laws of the State of New
York.  With your permission, for
purposes of my opinion set forth in paragraph 3, I have assumed that the laws
of the State of Minnesota are identical to the laws of the State of New York.

 

This
opinion is being delivered upon the express instructions of the Company to
Citicorp USA, Inc., as Administrative Agent, and the Lenders under the Credit
Agreement and is solely for their benefit in connection with the transactions
contemplated thereby.  This opinion may
not be relied upon by, filed with, disclosed to, quoted in any manner to, referenced
in any written report, financial statement or other document to, or delivered
to any other person, firm or corporation for any purpose, without my prior
written consent, except that the Administrative Agent and each Lender may use
this opinion (i) in connection with a review of the Credit Agreement and
transactions related thereto by a regulatory agency having supervisory
authority over any such Person for the purpose of confirming the existence of
this opinion, (ii) in connection with the assertion of a defense as to which
this opinion is relevant and necessary, (iii) in response to a court order or
(iv) in connection with any assignment of any Advances or Commitment in
accordance with the provisions of the Credit Agreement, and any Eligible Assignee
may rely on this opinion as if it were addressed and had been delivered to such
assignee on the date hereof.

 

Very truly yours,

 

F-3

 

EXHIBIT
G

 

[FORM OF OPINION OF O’MELVENY & MYERS
LLP]

 

 

 

 

155,076-033

 

Citicorp USA, Inc.,

 

 

Re:          Revolving Credit
Agreement dated as of October 20, 2003 among Hormel Foods Corporation, the
Banks named therein, and Citicorp USA, Inc. as Administrative Agent

 

Ladies and Gentlemen:

 

We have acted as counsel to Citicorp USA, Inc., as
Administrative Agent, in connection with the preparation and delivery of a
Revolving Credit Agreement, dated as of October 20, 2003 (the “Credit
Agreement”), among Hormel Foods Corporation, a Delaware corporation (the
“Company”), the Banks named therein, Citicorp USA, Inc., as Administrative
Agent, and the other Agents party thereto. 
Unless otherwise indicated, capitalized terms used herein but not
otherwise defined herein have the respective meanings set forth in the Credit
Agreement.

 

We have participated in various conferences with
representatives of the Company and the Administrative Agent during which the
Credit Agreement and related matters have been discussed.  We have reviewed the forms of the Credit Agreement
and the exhibits thereto, including the form of the promissory notes annexed
thereto (the “Notes”) and the opinion of Mahlon C. Schneider, Senior Vice
President and General Counsel to the Company (the “Opinion”) and the officer’s
certificates and other documents delivered on the date hereof.  We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals or
copies and the due authority of all persons executing the same, and we have
relied as to factual matters on the documents that we have reviewed.

 

On the basis of
the foregoing, we are of the opinion that the Credit Agreement constitutes the
legally valid and binding obligation of the Company and each Note when issued
in accordance with the terms of the Credit Agreement constitutes the legally
valid and binding obligation of the Company, enforceable in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors’
rights generally (including, without limitation, fraudulent conveyance laws)
and by general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific 

 

G-1

 

performance
or injunctive relief, regardless of whether considered in a proceeding in
equity or at law.

 

In giving the foregoing opinion, we have assumed,
without independent investigation, that the Credit Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company and have been duly executed and delivered by the Company and that it is
a corporation duly organized, validly existing and in good standing under the
jurisdiction of its incorporation.  We
understand that you are relying on the Opinion with respect to such matters.

 

Our opinion as to the enforceability of the Credit
Agreement is subject to:

 

(i)         public
policy considerations, statutes or court decisions that may limit the rights of
a party to obtain indemnification against its own negligence of willful
misconduct; and

 

(ii)        the
unenforceability under certain circumstances of broadly or vaguely stated
waivers or waivers of rights granted by law where the waivers are against
public policy or prohibited by law.

 

In addition, we express no opinion as to the effect of
non-compliance by you with any state or federal laws or regulations applicable
to the transactions contemplated by the Credit Agreement because of the nature
of your business.

 

The law covered by this opinion is limited to present
federal law and the present law of the State of New York.  We express no opinion as to the laws of the
any other jurisdiction and no opinion regarding the statutes, administrative
decisions, rules, regulation or requirements or any country, municipality,
subdivision or local authority or any jurisdiction.

 

This opinion is furnished by us as special counsel for
the Administrative Agent and may be relied upon by you only in connection with
the Credit Agreement.  It may not be
used or relied upon by you for any other purpose or by any other person, nor
may copies be delivered to any other person, without in each instance our prior
written consent other than to attorneys for and auditors of the Lenders and the
Administrative Agent, to governmental officials with regulatory authority with
respect to the business of the Lenders, the Administrative Agent, Arranger and
to bona fide prospective purchasers of assignments of or participations in the
debt arising under the Loan Documents.

 

Respectfully submitted,

 

G-2EXHIBIT 10.31

 

EMPLOYMENT AGREEMENT

 

 

AGREEMENT, dated effective as of August 1, 2002
(“Effective Date”), between KMG CHEMICALS, INC., a Texas corporation
(the “Company”), with an office at 10611 Harwin,
Suite 402, Houston, Texas 77036 and ROGER C. JACKSON (“Executive”), with an
address at 9019 Linkmeadow, Houston, Texas 77025.

 

WITNESSETH:

 

WHEREAS, the Executive has been an employee of Company
and Company wishes to continue to employ the Executive to perform executive
duties for the Company and its subsidiaries, and the Executive wishes to accept
such employment, all on the terms and conditions set forth below;

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the mutual
obligations herein set forth, the parties agree as follows:

 

1.                                       Employment.  The Company hereby employs Executive under
this Agreement as of the Effective Date to serve as General Counsel and Vice
President of the Company and the Executive hereby accepts such employment, on
the terms and conditions set forth in this Agreement.

 

2.                                       Term
of Employment.  The term of
employment under this Agreement shall be for the period commencing on the
Effective Date and ending July 31, 2005, subject to earlier termination as
provided herein.  The term of employment
under this Agreement shall be automatically extended for an additional one (1)
year period at the end of the initial term of employment and at the end of any
renewal term of employment unless the Company gives notice at least sixty (60)
days prior to the end of the employment period that the Executive’s employment
under this Agreement shall not be so extended; provided, however, that such
automatic extensions of the term of employment shall not extend beyond the
Executive attaining age 65.

 

3.                                       Duties.

 

(a)                                  The
Executive shall perform such duties of an executive nature for the Company and
its subsidiaries as may be assigned to him from time to time by the President
of the Company and that are customarily performed by an executive holding
positions similar to that of the Executive which shall include acting as legal
counsel generally in charge of all legal matters and advice, including all
regulatory matters and compliance.  The
Executive shall serve the Company and its subsidiaries faithfully and to the
best of his ability and shall devote his full business and professional time
and attention to the affairs of the Company and its subsidiaries, subject to
reasonable absences for vacation and illness in accordance with then current
Company policy and service in such community, charitable and personal investment
activities as do not materially detract from the discharge by Executive of his
duties.  The Executive shall be subject
at all times to the direction and control of the President.  The Executive shall give the President
periodic reports on and keep him informed on a current basis on the affairs of
the Company and its subsidiaries subject to the control and direction of
Executive.

 

(b)                                 The
headquarters for the performance of the Executive’s duties during the term of
this Agreement shall be the principal executive offices of the Company in
Houston, Texas, subject to such 

 

 

reasonable travel as the performance of the Executive’s duties in the
business of the Company or its subsidiaries may require.

 

4.                                       Compensation.

 

(a)                                  As
compensation for all of the duties to be performed by the Executive hereunder,
the Company shall pay the Executive:

 

(i)                                     A
base salary, payable in accordance with the Company’s normal payroll practices,
at a rate per annum equal to $120,000 (“Base Salary”), or such greater amount
as shall be approved by the Board of Directors of the Company in its sole
discretion from time to time;

 

(ii)                                  Annual
Incentive compensation (“Incentive Compensation”) under the Company’s current
incentive program for Company executives (“Executive Incentive Plan”) as such
plan shall be in effect from time to time; and

 

(iii)                               As of the Effective
Date, an option to purchase 150,000 shares of the common stock, $.01 par value,
of the Company at exercise prices as follows: (A) 50,000 shares at $4.00, (B)
50,000 shares at $6.00, and (C) 50,000 shares at $8.00, in each case such
grants being effected pursuant to Stock Option Agreements in the form of
Exhibit A hereto; (collectively, the options are referred to as the “Stock
Options”), subject to vesting and the other terms and conditions set forth in
such Stock Options Agreements.

 

(b)                                 The
Company shall have the unrestricted right to modify, amend, terminate or change
the Executive Incentive Plan at any time during the term of this Agreement,
provided, that the during the term of employment the Company shall provide the
Executive with the opportunity to receive Incentive Compensation targeted at
fifty percent (50%) of Base Salary (“Targeted Percentage”) when performance
goals established by the Company are met; provided, further, that the amount of
Incentive Compensation will vary in the sole discretion of the Company above
and below the Targeted Percentage as achievement of the performance goals
varies above and below the goals.  The
maximum award payable will not exceed seventy-five percent (75%) of Base Salary
in any fiscal year unless a greater percent is approved by the Company.

 

5.                                       Expenses.  The Company shall reimburse the Executive
for any out-of-pocket expenses reasonably incurred by the Executive in the
performance of his duties to the Company upon receipt of appropriate vouchers
therefor, in accordance with the Company’s current practices as such practices
may be changed from time to time by the Company provided that any expenditure
or group of expenditures in excess of an amount established by Company policy
shall receive prior written approval as required thereunder.

 

6.                                       Benefits.  The Executive shall be entitled to the
following benefits:

 

(a)                                  Group
health (including family major medical plans), life insurance, pension,
profit-sharing, stock purchase or stock option plan, annuity or other benefit
programs that may, from time to time, be available to employees of the Company
generally, subject to eligibility, vesting requirements and other terms and
conditions from time to time in effect in respect of such benefit programs;
provided, however, that nothing herein shall require the Company at any time to
create or continue any such plan, program or arrangement;

 

(b)                                 one
week paid vacation for calendar year 2002 and three (3) weeks for every year
thereafter; and

 

(c)                                  Reimbursement
of all continuing legal education and professional fees.

 

2

 

7.                                       Copyright,
Patents, Trademarks.

 

(a)                                  All
right, title and interest, of every kind whatsoever, in the United States and
throughout the world, in (i) any work, including the copyright thereof (for the
full terms and extensions thereof in every jurisdiction), created by the
Executive at any time during the term hereof and all material embodiments of
the work subject to such rights; and (ii) all inventions, ideas, discoveries,
designs and improvements, patentable or not, made or conceived by the Executive
at any time during the term of his employment under this Agreement, shall be and
remain the sole property of the Company without the payment to the Executive or
any other person of any further consideration, and each such work shall, for
United States copyright law (“Copyright Law”) purposes, be deemed created by
the Executive pursuant to his duties under this Agreement and within the scope
of his employment and shall be deemed a work made for hire; and the Executive
agrees to assign, at the Company’s expense, and the Executive does hereby
assign, all of his right, title and interest in and to all such works, copy­rights,
materials, inventions, ideas, discoveries, designs and improvements, patentable
or not, and any copyrights, letters patent, trademarks, trade secrets, and
similar rights, and the applications therefor, which may exist or be issued
with respect thereto.  For the purposes
of this Section 7, “works” shall include all materials created during the term
hereof, whether or not ever used by or submitted to the Company, including,
without limitation, any work which may be the subject matter of copyright under
the Copyright Law of the United States. 
In addition to its other rights, the Company may copyright any such work
in its name in the United States in accordance with the requirements of the
United States Copyright Law and the Universal Copyright Convention and any
other Convention or treaty to which the United States is or may become a party.

 

(b)                                 Whenever
the Company shall so request, whether during or after the term of this
Agreement, the Executive shall execute, acknowledge and deliver all
applications, assignments or other instruments; make or cause to be made all
rightful oaths; testify in all legal proceedings; communicate all known facts
which relate to such works, copyrights, inventions, ideas, discoveries, designs
and improvements; perform all lawful acts and otherwise render all such
assistance as the Company may deem necessary to apply for, obtain, register,
enforce and maintain any copyrights, letters patent and trademark registrations
of the United States or any foreign jurisdiction or under the Universal
Copyright Convention (or any other convention or treaty to which the United
States is or may become a party), or otherwise to protect the Company’s
interests therein, including any which the Company shall deem necessary in
connection with any proceeding or litigation involving the same.  The Company shall reimburse the Executive
for all reasonable out-of-pocket costs incurred by the Executive in testifying
at the Company’s request or in rendering any other assistance requested by the
Company pursuant to this subparagraph 7(b). 
All registration and filing fees and similar expense shall be paid by
the Company.

 

8.                                       Confidential
Information; Non-competition.

 

(a)                                  Company
and its affiliates shall disclose to Executive, or place Executive in a
position to have access to or develop, trade secrets or confidential
information of Company or its affiliates; and/or shall entrust Executive with
business opportunities of Company or its affiliates; and/or shall place
Executive in a position to develop business good will on behalf of Company or
its affiliates.  Executive recognizes
and acknowledges that Executive will have access to certain information of
Company and its affiliates and that such information is confidential and constitutes
valuable, special and unique property of Company or its affiliates .  Executive shall not at any time, either
during or subsequent to the term of employment with Company, disclose to
others, use, copy or permit to be copied, except in pursuance of Executive’s
duties for and on behalf of Company and its affiliates, successors, assigns or
nominees, any Confidential Information of Company or its affiliates (regardless
of whether developed by Executive) without the prior written consent of
Company.  The Executive may make
disclosure of Confidential Information if, and solely to the extent that, the

 

3

 

Executive is advised in writing by legal counsel prior to disclosure
that such disclosure is required by law or court order and a copy of such
advice is provided to the Company.  The
term “Confidential Information” means any secret or confidential information or
know-how and shall include, but shall not be limited to, the plans, customers,
costs, prices, uses, corporate opportunities, research, financial data,
evaluations, prospects, and applications of products and services, results of
investigations or studies owned or used by Company or its affiliates, and all
apparatus, products, processes, compositions, samples, formulas, computer
programs, computer hardware designs, computer firmware designs, and servicing,
marketing or manufacturing methods and techniques at any time used, developed,
investigated, made or sold by Company or its affiliates, before or during the
term of employment with Company, that are not generally available to the
public.  Executive shall maintain in
confidence any Confidential Information of third parties received as a result
of Executive’s employment with Company in accordance with Company’s obligations
to such third parties and the policies established by Company.  Executive acknowledges that all books,
records, documents, manuals, computer data, notes, files, customer lists,
marketing studies and any other similar or dissimilar information or data,
whether or not containing Confidential Information, that are used by the
Executive or other employees or affiliates of the Company during Executive’s
term of employment are the exclusive property of the Company or its affiliates
and shall be delivered by Executive to Company on termination of Executive’s
term of employment for whatever reason, or at any earlier time requested by
Company.

 

(b)                                 As
part of the consideration for the compensation and benefits to be paid to
Executive hereunder; to protect the Confidential Information of Company and its
affiliates that has been and will in the future be disclosed or entrusted to
Executive, the business goodwill of Company and its affiliates that has been
and will in the future been developed in Executive, or the business
opportunities that have been and will in the future be disclosed or entrusted
to Executive by Company and its affiliates; and as an additional incentive for
Company to enter into this Agreement, Company and Executive agree to the non-competition
obligations hereunder.  During the term
of employment under this Agreement and for a period of one year thereafter, the
Executive shall not, without the Company’s prior written consent, directly or
indirectly engage or be interested in any business which is then competitive to
the business of the Company or the business of any of its subsidiaries in the
United States or Canada.  For the
purpose of this paragraph, the Executive will be considered to have been
directly or indirectly engaged or interested in a business if the Executive is
engaged or interested in such business as a stockholder, director, officer,
employee, agent, broker, partner, individual proprietor, lender, consultant,
licensor, independent contractor or otherwise, except that nothing herein will
prevent the Executive from owning or participating as a member of a group which
owns less than a five percent (5%) block of equity or debt securities of any
company traded on a national securities exchange or in any established over-the-counter
securities market.  For the purpose of
this paragraph, the term “any business then competitive” to the business of the
Company or its subsidiaries shall be deemed to include, without limitation, any
business which manufactures, sells or distributes chemicals manufactured, sold
or distributed by the Company or any of its affiliates for which, during the
one year immediately preceding the termination of the Executive’s term of
employment under this Agreement, the Executive provided substantial executive
services.  The foregoing covenant shall
not apply to Executive pursuing gainful employment pursuant to the part time or
full time practice of law in a private law firm or in a corporate legal
department of a corporation not in substantial competition with the Company.

 

(c)                                  In
the event the Executive shall breach any provisions of this paragraph 8
(which provisions the Executive hereby acknowledges are reasonable and
equitable), the Company shall be entitled to terminate any payments then owing
to the Executive under this Agreement and/or to seek specific performance and
injunctive relief for such breach or threatened breach.  This termination of payments shall be in
addition to and not in substitution for any and all other rights of the Company
at law or in equity against the Executive arising out of any such breach.  The Executive acknowledges that his breach
or attempted or threatened breach of any provisions of this paragraph 8 would
cause irreparable injury to the Company not compensable in money damages and
that the Company shall be entitled, in addition to all other applicable
remedies, to obtain a

 

4

 

temporary and a permanent injunction and a decree for specific
performance of paragraph 8 without being required to prove damages or furnish
any bond or other security.

 

(d)                                 Executive
understands that the restrictions set forth in this paragraph 8 may limit
Executive’s ability to engage in certain businesses anywhere in the world
during the period provided for above, but acknowledges that Executive will
receive sufficiently high remuneration and other benefits under this Agreement
to justify such restriction.  It is
expressly understood and agreed that Company and Executive consider the
restrictions contained in this paragraph 8 to be reasonable and necessary
to protect the Confidential Information of Company.  Nevertheless, if any of the aforesaid restrictions are found by a
court having jurisdiction to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such court so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.

 

9.                                       Termination.  The Executive’s employment under this
Agreement shall terminate as provided in paragraph 2 and under the
following circumstances:

 

(a)                                  Death
or Disability.  The Executive’s
employment shall terminate upon the death or Disability of Executive.  For purposes of this Agreement, “Disability”
shall be the inability to perform executive-level services, combined with
eligibility to receive disability benefits under the standards used by the
Company’s long-term disability benefit plan. 
In the event Executive is a “Qualified Individual with a Disability,” as
such term is defined in the Americans with Disabilities Act, the Company shall
not terminate Executive’s employment hereunder if Executive is able to perform
the essential functions of Executive’s job with reasonable accommodation from
the Company.

 

(b)                                 With
“Cause”.  For purposes of this
Agreement, the Company shall have “Cause” to terminate Executive’s employment
hereunder upon the occurrence of any of the following: (i) embezzlement, theft
or other misappropriation of any property of the Company or any of its
subsidiaries by Executive, (ii) gross negligence or willful misconduct by
Executive resulting in loss to the Company or any of its subsidiaries or damage
to the reputation of the Company or any of its subsidiaries, (iii) any act by
Executive that results in a conviction of, or a pleading nolo contendere to, a
felony or other crime involving moral turpitude, fraud or misrepresentation,
(iv) willful and continued failure or neglect by Executive, after five (5) days
written notice and opportunity to cure, to substantially perform his assigned
duties for the Company or any of its subsidiaries, (v) breach of Executive’s
fiduciary obligations to the Company or any of its subsidiaries, and (vi) any
chemical dependence which affects the Executive’s performance of duties and
responsibilities to the Company or any of its subsidiaries.

 

(c)                                  Without
“Cause”.  Notwithstanding any
provisions of this Agreement to the contrary, the Company may terminate
Executive’s employment hereunder for any reason other than those specified in
the foregoing paragraphs (a) and (b), or for no reason, at any time, effective
upon delivery of sixty (60) day’s notice by the Company.

 

(d)                                 Voluntary
Resignation.  Executive may
terminate his employment hereunder at any time during the Term subject only to
the requirement that Executive shall provide the Company with a minimum of
sixty (60) days prior written notice (a “Voluntary Resignation”).

 

(e)                                  With
“Good Reason”.  Notwithstanding any
provision of this Agreement to the contrary, Executive may terminate his
employment hereunder for Good Reason, subject to the requirement that Executive
shall provide the Company with a minimum of sixty (60) days prior written
notice and subject to the requirement that such notice is given within
thirty (30) days (plus the applicable cure period, if any)  after the occurrence of the events
constituting a Good Reason.  For
purposes of this Agreement, Executive shall have

 

5

 

“Good Reason” to terminate his employment hereunder upon the
occurrence, without Executive’s written consent, of any of the following: (i) a
failure by the Company to pay to Executive any amounts due to Executive
(including but not limited to Base Salary and incentive compensation payable
under the Company’s Executive Incentive Compensation Plan), which failure is
not cured within thirty (30) days following receipt by the Company of written
notice from Executive of such failure; (ii) demotion of Executive from his position
as Vice President and General Counsel or a change in his reporting relationship
such that he no longer reports to the Chief Executive Officer of the Company;
(iii)  a relocation of the headquarters
for the performance of the Executive’s duties during the term of this Agreement
more than fifty miles outside the limits of Houston, Texas, or (iv) any other
material breach by the Company of this Agreement that remains uncured for
thirty (30) days after written notice thereof by Executive to the Company.

 

10.                                 Compensation
upon Termination.  Executive shall
be entitled to the following compensation from Company, in lieu of all
compensation or other sums or benefits owed or payable to Executive under
paragraph 4 of this Agreement, upon the termination of Executive’s
employment during the term of this Agreement. 
Except as may be specifically provided to the contrary in subparagraphs
(a) and (f) of this paragraph 10, Executive shall also be entitled to the
compensation or benefits payable to Executive, if any, on termination of
Executive’s employment under the terms and conditions of the Supplemental
Executive Retirement Plan or other benefit plan.

 

(a)                                  Death
or Disability.  In the event of the
death or Disability of Executive during the term of this Agreement, except for
amounts of Base Salary and accrued vacation time earned by Executive as of the
date of termination but not yet paid by the Company, the Company shall have no
obligation to make payments to Executive or his estate for the periods after
the date Executive’s employment with the Company terminates on account of death
or Disability.

 

(b)                                 With
Cause.  In the event that
Executive’s employment is terminated by the Company for Cause, except for the
amounts of Base Salary and accrued vacation time earned by Executive as of the
date of termination but not yet paid by the Company, the Company shall have no
obligation to make payments to Executive for the periods before or after the
date Executive’s employment with the Company terminates for Cause.

 

(c)                                  Without
Cause or on a Failure to Extend.  In
the event that Executive’s employment is terminated by the Company without
Cause at any time during the term of this Agreement or if the Executive’s
employment is terminated because the Company elects not to extend the
Executive’s term of employment at the end of the initial term or any renewal
term, Executive shall be entitled to receive (A) if the termination was not
within one year after a Change of Control, (i) the amounts of Base Salary and
accrued vacation time earned by Executive as of the date of termination but not
yet paid by the Company, (ii) an amount equal to three times the Base Salary
then in effect in three equal installments each payable 45 days, one year and
45 days and two years and 45 days after the date of termination, and (iii) the
Stock Options that are vested as of the date of termination may be exercised
within two years of such termination as provided therein; or (B)  if the termination was within one year after
a Change of Control (as hereinafter defined), (i) the amounts of Base Salary
and accrued vacation time earned by Executive as of the date of termination but
not yet paid by the Company, (ii) an amount equal to three times the Base
Salary then in effect in a lump sum 45 days after the date of termination, and
(iii) the Stock Options shall be deemed fully vested as of the date of
termination and may be exercised within two years of such termination as
provided therein.

 

(d)                                 Voluntary
Resignation.

 

(i)                                     Without
Good Reason.  In the event that Executive’s
employment is terminated by Executive as a Voluntary Resignation pursuant to
paragraph 9(d), except for amounts

 

6

 

of Base Salary and
accrued vacation time earned by Executive as of the date of termination but not
yet paid by the Company, the Company shall have no obligation to make payments
to Executive for the periods after the date Executive’s employment with the
Company terminates on account of Voluntary Resignation.

 

(ii)                                  With
Good Reason.  Notwithstanding any
provision of this Agreement to the contrary, if Executive’s employment with the
Company terminates on account of Voluntary Resignation for Good Reason,
Executive shall be entitled to receive (1) if the termination was not within
one year after a Change of Control, (a) the amounts of Base Salary and accrued
vacation time earned by Executive as of the date of termination but not yet
paid by the Company, (b) an amount equal to three times the Base Salary then in
effect in then in effect in three equal installments each payable  45 days, one year and 45 days and two years
and 45 days after the date of termination, and (c) the Stock Options that are
vested as of the date of termination may be exercised within two years of such
termination as provided therein; or (2) 
if the termination was within one year after a Change of Control, (a)
the amounts of Base Salary and accrued vacation time earned by Executive as of
the date of termination but not yet paid by the Company, (b) an amount equal to
three times the Base Salary then in effect in a lump sum 45 days after the date
of termination, and (c) the Stock Options shall be deemed fully vested as of
the date of termination and may be exercised within two years of such
termination as provided therein.

 

(e)                                  Change
of Control.  For purposes of this
Agreement, a “Change of Control” shall be deemed to exist upon the occurrence
of any of the following:

 

(i)                                     any
“person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (“Act”) (other than (i) the Company, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, (iii) any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the
common stock of the Company) is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities;

 

(ii)                                  a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person, not already the beneficial owner
of less than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities, acquires more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities shall not
constitute a Change in Control of the Company; and provided, further, a merger
or consolidation in which the Company is the surviving entity (other than as a
wholly owned subsidiary or another entity) and in which the Board of the
Company after giving effect to the merger or consolidation is comprised

 

7

 

of a majority of members
who are either (x) directors of the Company immediately preceding the merger or
consolidation, or (y) appointed to the Board of the Company by the Company (or
its Board) as an integral part of such merger or consolidation, shall not
constitute a Change in Control of the Company; or

 

(iii)                               the
consummation of a plan of complete liquidation of the Company or of a sale or
disposition by the Company of all or substantially all of the Company’s assets
other than (i) the sale or disposition of all or substantially all of the
assets of the Company to a person or persons who beneficially own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the
outstanding voting securities of the Company at the time of the sale or (ii)
pursuant to a dividend in kind or spin-off type transactions, directly or
indirectly, of such assets to the stockholders of the Company.

 

(f)                                    Mutual
Release.  Payment of the amounts
payable on the termination of the employment of the Executive under this
paragraph 10,  other than Base
Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, shall be conditioned upon the
execution by the Executive and the Company of a valid mutual release, pursuant
to which the Executive and the Company shall each mutually release each other,
to the maximum extent permitted by law, from any and all claims either party
may have against the other as of the date of termination that relate to or
arise out of the employment or termination of employment of the Executive,
except such claims arising under this Agreement, any employee benefit plan, or
any other written plan or agreement (a 
“Mutual Release”).

 

11.                                 Arbitration.  The parties will attempt to promptly resolve
any dispute or controversy arising out of or relating to this Agreement or
termination of the Executive by the Company. 
Any negotiations pursuant to this paragraph 11 are confidential and will
be treated as compromise and settlement negotiations for all purposes.  If the parties are unable to reach a
settlement amicably, the dispute will be submitted to binding arbitration
before a single arbitrator in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association. 
The arbitrator will be instructed and empowered to take reasonable steps
to expedite the arbitration and the arbitrator’s judgment will be final and
binding upon the parties subject solely to challenge on the grounds of fraud or
gross misconduct.  The parties agree
that the arbitrator shall not be empowered to award punitive or exemplary
damages each party hereby irrevocably waives any such damages.  The arbitration will be held in Harris County,
Texas.  Judgment upon any verdict in
arbitration may be entered in any court of competent jurisdiction and the
parties hereby consent to the jurisdiction of, and proper venue in, the federal
and state courts located in Harris County, Texas.  Each party will bear its own costs in connection with the
arbitration and the costs of the arbitrator will be borne by the party who the
arbitrator determines did not prevail in the matter.  Unless otherwise expressly set forth in this Agreement, the
procedures specified in this paragraph 11 will be the sole and exclusive
procedures for the resolution of disputes and controversies between the parties
arising out of or relating to this Agreement. 
Notwithstanding the foregoing, a party may seek a preliminary injunction
or other provisional judicial relief if in such party’s judgment such action is
necessary to avoid irreparable damage or to preserve the status quo.

 

12.                                 Miscellaneous.

 

(a)                                  Any
notice required or permitted under this Agreement shall be in writing and shall
be deemed given when delivered personally or three days after being sent by
first-­class registered or certified mail, return receipt requested, to the
party for which intended at its or his address set forth at the beginning of
this Agreement (which, in the case of the Company, shall be sent “Attention:
President”) or to such other address as either party may hereafter specify by
similar notice to the other.

 

8

 

(b)                                 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas governing contracts made and to be performed in Texas.

 

(c)                                  This
Agreement supersedes all prior agreements between the parties, written or oral,
and cannot be amended or modified except by a writing signed by both
parties.  It may be executed in one or
more counterpart copies, each of which shall be deemed an original, but all of
which shall constitute the same instrument.

 

(d)                                 This
Agreement, which is personal in nature, may not be assigned by either party
without the prior written consent of the other party, but the Executive may,
upon reasonable prior notice to the Company, assign his right to receive any
payment previously due and owing provided, that, such assignment shall be
subject to all claims and defenses of the Company against the Executive.

 

(e)                                  This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.  The
term “personal representative” as used in this Agreement with respect to an
individual shall mean such individual’s guardian, committee, executor,
administrator or other legal representative duly empowered to act on his behalf
following his death or legal incapacity.

 

(f)                                    Captions
used in this Agreement are for con­venience of reference only and shall not be
deemed a part of this Agreement nor used in the construction of its
meaning.  Exhibits attached to this
Agreement shall be deemed as fully a part of this Agreement as if set forth in
full herein.

 

(g)                                 The
Company may setoff any amounts owed by it or its subsidiaries to the Executive
(or to the personal representative of the Executive’s estate), including but
not limited to amounts owed hereunder, against amounts owed by the Executive or
his estate to the Company or any of its subsidiaries under a promissory note or
for any loans or advances made by the Company or its subsidiaries to the
Executive, including but not limited to loans or advances of compensation
hereunder.

 

(h)                                 This
Agreement has a term co-extensive with the term of employment provided in
paragraph 2.  Termination shall not
affect any right or obligation of any party which is accrued or vested prior to
such termination.  Without limiting the
scope of the preceding sentence, the provisions of paragraphs 8 and 11 shall
survive the termination of the employment relationship and/or of this
Agreement.

 

(i)                                     If
any provision of this Agreement shall be deemed invalid or unenforceable as
written it shall be construed, to the greatest extent possible, in a manner
which shall render it valid and enforceable and any limitations on the scope or
duration of any such provision necessary to make it valid and enforceable shall
be deemed to be part thereof; no invalidity or unenforceability shall affect
any other portion of this Agreement unless the provision deemed to be so
invalid or unenforceable is a material element of this Agreement, taken as a
whole.

 

[signature
page follows]

 

9

 

IN WITNESS WHEREOF, the parties have executed this
Agreement effective as of the day and year first above written but signed this
the 19th day of June 2003.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  KMG CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Hatcher

  	
   

  
	
   

  	
   

  	
  David L.
  Hatcher, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Roger C. Jackson

  	
   

  
	
   

  	
  Roger C. Jackson

  

 

10

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