AMENDED & RESTATED LOAN AGREEMENT

EXECUTION VERSION

EXHIBIT 4.3

AMENDED & RESTATED

LOAN AGREEMENT

BY AND AMONG

J & J SNACK FOODS CORP.,

THE SUBSIDIARIES OF J & J SNACK FOODS CORP. SIGNATORY HERETO

THE BANKS SIGNATORY HERETO

AND

CITIZENS BANK OF PENNSYLVANIA

AS AGENT FOR SUCH BANKS

DECEMBER 1, 2006

TABLE OF CONTENTS

 

ARTICLE 1	Definitions		2
ARTICLE 2	Commitments; Loans		18
	Section 2.1	Loans.	18
	Section 2.2	Notices Relating to Loans.	19
	Section 2.3	Disbursement of Loan Proceeds.	19
	Section 2.4	Notes.	20
	Section 2.5	Payment Applications.	20
	Section 2.6	Interest.	21
	Section 2.7	Fees.	21
	Section 2.8	Changes in Commitment.	22
	Section 2.9	Use of Proceeds of Loans.	23
	Section 2.10	Computations.	23
	Section 2.11	Minimum Amounts of Borrowings, Conversions, Prepayments and Interest Periods.	23
	Section 2.12	Time and Method of Payments.	24
	Section 2.13	Applicable Lending Offices.	24
	Section 2.14	Several Obligations.	24
	Section 2.15	Letter of Credit Subfacility.	24
	Section 2.16	Intentionally Omitted.	28
	Section 2.17	Intentionally Omitted.	28
	Section 2.18	Pro Rata Treatment Among Banks.	29
	Section 2.19	Non-Receipt of Funds by the Agent.	29
	Section 2.20	Sharing of Payments and Set-Off Among Banks.	29
	Section 2.21	Conversions of Loans.	30
	Section 2.22	Additional Costs; Capital Requirements.	30
	Section 2.23	Limitation on Types of Loans.	32
	Section 2.24	Illegality.	32
	Section 2.25	Certain Conversions Pursuant to Sections 2.22 and 2.24.	32
	Section 2.26	Yield Maintenance.	33
ARTICLE 3	Representations and Warranties		34
	Section 3.1	Organization.	34
	Section 3.2	Power, Authority, Consents.	35
	Section 3.3	No Violation of Law or Agreements.	35
	Section 3.4	Due Execution, Validity, Enforceability.	36
	Section 3.5	Properties.	36
	Section 3.6	Judgments, Actions, Proceedings.	36
	Section 3.7	No Defaults, Compliance With Laws.	36
	Section 3.8	Burdensome Documents.	37
	Section 3.9	Financial Statements; Projections.	37

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	Section 3.10	Tax Returns.	37
	Section 3.11	Intangible Assets.	37
	Section 3.12	Regulation U.	38
	Section 3.13	Intentionally Omitted.	38
	Section 3.14	Full Disclosure.	38
	Section 3.15	Licenses and Approvals.	38
	Section 3.16	Labor Disputes; Collective Bargaining Agreements; Employee Grievances.	38
	Section 3.17	Intentionally Omitted.	39
	Section 3.18	ERISA.	39
ARTICLE 4	Conditions to the Loans		41
	Section 4.1	Conditions to Initial Loans.	41
	Section 4.2	Conditions to Subsequent Loans.	42
ARTICLE 5	Delivery of Financial Reports, Documents and Other Information		42
	Section 5.1	Annual Financial Statements and Projections.	42
	Section 5.2	Quarterly Financial Statements.	43
	Section 5.3	Compliance Information.	43
	Section 5.4	Covenant Compliance Certificate.	43
	Section 5.5	Intentionally Omitted.	43
	Section 5.6	Accountants’ Reports.	43
	Section 5.7	Copies of Documents.	43
	Section 5.8	Notices of Defaults.	44
	Section 5.9	ERISA Notices and Requests.	44
	Section 5.10	Intentionally Omitted	45
	Section 5.11	Additional Information	45
ARTICLE 6	Affirmative Covenants		45
	Section 6.1	Books and Records.	45
	Section 6.2	Inspections and Audits.	45
	Section 6.3	Maintenance and Repairs.	46
	Section 6.4	Continuance of Business.	46
	Section 6.5	Copies of Corporate Documents.	46
	Section 6.6	Perform Obligations.	46
	Section 6.7	Notice of Litigation.	46
	Section 6.8	Insurance.	47
	Section 6.9	Financial Covenants.	47
	Section 6.10	Notice of Certain Events.	47
	Section 6.11	Comply with ERISA.	48
	Section 6.12	Environmental Compliance.	48

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	Section 6.13	Certain Subsidiary Matters.	48
ARTICLE 7	Negative Covenants		49
	Section 7.1	Indebtedness.	49
	Section 7.2	Liens.	49
	Section 7.3	Guaranties.	50
	Section 7.4	Mergers, Acquisitions.	51
	Section 7.5	Redemptions; Distributions.	51
	Section 7.6	Stock Issuance.	51
	Section 7.7	Changes in Business.	51
	Section 7.8	Prepayments.	51
	Section 7.9	Investments.	52
	Section 7.10	Fiscal Year.	53
	Section 7.11	ERISA Obligations.	53
	Section 7.12	Amendments of Documents.	53
	Section 7.13	Additional Subsidiaries.	54
	Section 7.14	Double Negative Pledge.	54
	Section 7.15	Intentionally Omitted.	54
	Section 7.16	Intentionally Omitted.	54
	Section 7.17	Transactions with Affiliates.	54
	Section 7.18	Hazardous Material.	54
ARTICLE 8	Events of Default		55
	Section 8.1	Payments.	55
	Section 8.2	Certain Covenants.	55
	Section 8.3	Other Covenants.	55
	Section 8.4	Other Defaults.	56
	Section 8.5	Representations and Warranties.	56
	Section 8.6	Bankruptcy.	56
	Section 8.7	Judgments.	57
	Section 8.8	ERISA.	57
	Section 8.9	Ownership of Stock.	57
	Section 8.10	Management.	57
ARTICLE 9	The Agent		58
	Section 9.1	Appointment, Powers and Immunities.	58
	Section 9.2	Reliance by Agent.	58
	Section 9.3	Events of Default.	59
	Section 9.4	Rights as a Bank.	59
	Section 9.5	Indemnification.	59
	Section 9.6	Non-Reliance on Agent and other Banks.	59

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	Section 9.7	Failure to Act.	60
	Section 9.8	Resignation or Removal of Agent.	60
	Section 9.9	Sharing of Payments.	60
ARTICLE 10	Miscellaneous Provisions		62
	Section 10.1	Fees and Expenses; Indemnity.	62
	Section 10.2	Taxes.	63
	Section 10.3	Payments.	63
	Section 10.4	Survival of Agreements and Representations; Construction.	63
	Section 10.5	Set-off of Deposits.	64
	Section 10.6	Modifications, Consents and Waivers.	64
	Section 10.7	Remedies Cumulative, Counterclaims.	65
	Section 10.8	Further Assurances.	65
	Section 10.9	Notices.	66
	Section 10.10	Counterparts.	67
	Section 10.11	Severability.	67
	Section 10.12	Binding Effect; No Assignment or Delegation by Borrowers.	67
	Section 10.13	Assignments and Participations by Banks.	68
	Section 10.14	Delivery of Tax Forms.	71
	Section 10.15	GOVERNING LAW; CONSENT TO JURISDICTION, WAIVER OF TRIAL BY JURY.	71
	Section 10.16	Entire Agreement.	72
	Section 10.17	Interest Adjustment.	73
	Section 10.18	Lost Notes.	73
	Section 10.19	Joint and Several Basis; Notices Binding.	74

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EXCUTION VERSION

LOAN AGREEMENT

AGREEMENT , made this 1st day of December, 2006, by and among:

J & J SNACK FOODS CORP ., a New Jersey corporation;

The Subsidiary Borrowers of Parent that have executed the signature pages hereto; and

The several banks and other financial institutions as are, or may from time to time become, parties to this Agreement (each a “Bank” and, collectively the “Banks” ); and

CITIZENS BANK OF PENNSYLVANIA , a Pennsylvania state-chartered bank, as the sole administrative agent and arranger for the Banks.

BACKGROUND

WHEREAS, the Borrowers, the Agent, and the Existing Banks are presently parties to a certain Loan Agreement dated December 4, 2001 (as the same has been amended and modified to the date hereof, the “Original Loan Agreement” );

WHEREAS, pursuant to the terms and provisions of the Original Loan Agreement, the Existing Banks made available to the Borrowers a revolving line of credit in the aggregate amount of $50,000,000.00 (the “Original Revolving Credit Facility” );

WHEREAS, the Borrowers have requested that the Existing Banks and the Agent agree to amend and restate the Original Loan Agreement in its entirety to, among other things, (1) amend the Original Revolving Credit Facility to provide for a revolving credit facility having a maximum limit of $50,000,000.00 (subject to increase, under certain circumstances, to up to $100,000,000.00 and including a sublimit of $35,000,000.00 under such revolving credit facility for the issuance of standby letters of credit), and (2) to extend the maturity date of the Original Revolving Credit Facility, as amended herein, to November 30, 2011; and

WHEREAS, the Borrowers, the Existing Banks, and the Agent are entering into this Agreement for the purpose of amending and restating in its entirety the Original Loan Agreement so that, following the date hereof, all of the loans heretofore extended by the Existing Banks to the Borrowers pursuant to the Original Loan Agreement, all of the letters of credit heretofore issued by the Existing Banks for the benefit of the Borrowers pursuant to the Original Loan Agreement, all loans hereafter extended by the Banks to the Borrowers hereunder, and all letters of credit hereafter issued by the Banks for the benefit of the Borrowers hereunder shall be governed by the terms and provisions of this Agreement and the other Loan Documents (as such term is defined hereinafter).

NOW, THEREFORE , the parties hereto agree as follows:

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ARTICLE 1

Definitions

As used in this Agreement, terms defined in the recitals hereto shall have the meanings therein defined and the following terms shall have the following meanings:

ABR Loans : Loans that bear interest at a rate based upon the Alternate Base Rate.

Acquisition : any acquisition by any Borrower of all or a substantial portion of the Capital Stock, assets and/or properties of another Person, pursuant to and in accordance with the terms of an Acquisition Agreement.

Acquisition Agreement : any agreement by and between a Borrower and another Person with respect to such Borrower’s acquisition of all or a substantial portion of the assets and/or properties of such other Person and/or all or a substantial portion of the issued and outstanding Capital Stock of another Person owned by such other Person, including all exhibits, annexes and schedules thereto, and all amendments, modifications and supplements thereof.

Acquisition Cost : with respect to any otherwise Permitted Acquisition, the sum of (i) all cash consideration paid or agreed to be paid by the acquiror to make such Acquisition (inclusive of payments by such person of the seller’s professional fees and expenses and other out-of-pocket expenses in connection therewith), plus (ii) the fair market value of all non-cash consideration paid by such acquiror in connection therewith, plus (iii) an amount equal to the principal or stated amount of all liabilities assumed or incurred by such acquiror in connection therewith, plus (iv) any optional or mandatory capital contributions made to such entity by such acquiror. The principal or stated amount of any liability assumed or incurred by an acquiror in connection with an Acquisition which is a contingent liability shall be an amount equal to the stated amount of such liability or, if the same is not stated, the maximum reasonably anticipated amount payable by such acquiror in respect thereof as determined by such acquiror in good faith.

Additional Costs : as defined in Section 2.22(b) hereof.

Affected Loans : as defined in Section 2.25 hereof.

Affected Type : as defined in Section 2.25 hereof.

Affiliate : as to any Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event: (i) any Person that owns directly or indirectly 5% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person; and (ii) each controlling shareholder, director and officer of a Borrower shall be deemed to be an Affiliate of the Borrowers.

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Affiliate Advances : as to any Borrower, all loans, advances and other distributions to and Investments in any officer, director, employee, Affiliate and/or Subsidiary of such Borrower, excluding salary, bonuses and benefits paid to employees of such Borrower in the ordinary course of such Borrower’s business.

Agency Fee : as defined in Section 2.7(c) hereof.

Agent : Citizens Bank of Pennsylvania, in its capacity as the sole administrative agent and arranger for the Banks, together with its successors in such capacity.

Alternate Base Rate : the higher of (i) the Prime Rate and (ii) the Federal Funds Rate plus 0.50%.

Applicable Lending Office : with respect to each Bank, with respect to each type of Loan, the lending office as designated for such type of Loan below its name on the signature pages hereof or such other office of such Bank or of an affiliate of such Bank as such Bank may from time to time specify to the Agent and the Parent as the office at which its Loans of such type are to be made and maintained.

Applicable Margin : with respect to the unpaid principal balance of ABR Loans and LIBOR Loans, the face amount of all outstanding Letters of Credit and the calculation of the Commitment Fee, in each case at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level and under the applicable column:

 

Pricing Level		Applicable Margin for ABR Loans		Applicable Margin for LIBOR Loans		Applicable Margin for Letters of Credit		Applicable Margin for Commitment Fee
Pricing Level I		0.125		0.350		0.350		0.200
Pricing Level II		0.125		0.500		0.500		0.200
Pricing Level III		0.125		0.750		0.750		0.250
Pricing Level IV		0.250		0.875		0.875		0.250

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In each case, the determination of the Applicable Margin pursuant to the table set forth above shall be made on a quarterly basis based on an examination of the financial statements of the Borrowers delivered pursuant to and in compliance with Section 5.1 or Section 5.2 hereof, which financial statements, whether annual or quarterly, shall be (A) audited in the case of financial statements furnished pursuant to Section 5.1 and (B) certified by the chief financial officer of Parent in the case of financial statements furnished pursuant to Section 5.2 and shall indicate that there exists no Default or Event of Default hereunder. Each determination of the Applicable Margin shall be effective ten days following the date on which the financial statements on which such determination was based were received by the Agent. In the event that financial statements for the four full fiscal quarters most recently completed prior to such date of determination either: (i) have not been delivered to the Agent in compliance with Section 5.1 or 5.2 hereof, or (ii) if delivered, do not comply in form or substance with Section 5.1 or 5.2 hereof (in the sole judgment of the Agent), then the Agent may determine, in its reasonable judgment, the ratio referred to above that would have been in effect as at such date, and, consequently, the Applicable Margin in effect for the period commencing on such date.

Assignment and Acceptance : an agreement in the form of Exhibit B hereto.

Bank and Banks : the banks and other financial institutions that have executed the signature pages hereto together with each bank and any other financial institution that becomes a Bank pursuant to the terms of this Agreement.

Borrower : Parent or any Subsidiary Borrower.

Borrowers : Parent and the Subsidiary Borrowers collectively.

Borrowing Notice : as defined in Section 2.2 hereof.

Business Day : any day other than Saturday, Sunday or any other day on which commercial banks in Pennsylvania are authorized or required to close under the laws of the Commonwealth of Pennsylvania.

Capital Expenditures : for any period, the aggregate amount of all payments made during such period by any Borrower directly or indirectly for the purpose of acquiring, constructing or maintaining fixed assets, real property or equipment that, in accordance with GAAP, would be added as a debit to the fixed asset account of such Borrower, including, without limitation, all amounts paid or payable during such period with respect to Capitalized Lease Obligations and interest that are required to be capitalized in accordance with GAAP.

Capitalized Lease : any lease, the obligations to pay rent or other amounts under which, constitute Capitalized Lease Obligations.

Capitalized Lease Obligations : as to any Borrower, the obligations of such Borrower to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Borrower under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

4

Capital Stock : as to any Borrower or other Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Borrower’s or such other Person’s equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity.

Cash : as to any Borrower, such Borrower’s cash and cash equivalents, as defined in accordance with GAAP.

CERCLA : the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601, et seq.

Code : the Internal Revenue Code of 1986, as it may be amended from time to time.

Commitment : as to each Bank, the amount set forth opposite such Bank’s name on the signature pages hereof under the caption “Commitment” as such amount is subject to increase or reduction in accordance with the terms hereof.

Commitment Fee : as defined in Section 2.7(a) hereof.

Commitment Termination Date : November 30, 2011, subject to earlier termination as provided in this Agreement.

Compliance Certificate : a certificate executed by the president and chief financial or accounting officer of Parent to the effect that: (i) as of the effective date of the certificate, no Default or Event of Default under this Agreement exists or would exist after giving effect to the action intended to be taken by the Borrowers as described in such certificate, including, without limitation, that the covenants set forth in Section 6.9 hereof would not be breached after giving effect to such action, together with a calculation in reasonable detail, and in form satisfactory to the Agent, of such compliance, and (ii) the representations and warranties contained in Article 3 hereof are true and with the same effect as though such representations and warranties were made on the date of such certificate, except for changes in the ordinary course of business none of which, either singly or in the aggregate, have had a Material Adverse Effect.

Controlled Group : all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrowers, are treated as a single employer under Section 414(b), 414(c) or 414(m) of the Code and Section 4001 (a)(2) of ERISA.

5

Credit Period : the period commencing on the date of this Agreement and ending on the Commitment Termination Date.

Debt Instrument : as defined in Section 8.4(a) hereof.

Default : an event which with notice or lapse of time, or both, would constitute an Event of Default.

Defined Contribution Plan : a plan which is not covered by Title IV of ERISA or subject to the minimum funding standards of Section 412 of the Code and which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant’s account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant’s account.

Disposal : the discharge, deposit, injection, dumping, spilling, leaking or placing of any hazardous materials into or on any land or water so that such hazardous materials or constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.

Dollars and $ : lawful money of the United States of America.

Domestic Subsidiary : each direct and indirect Subsidiary of Parent organized under the laws of the United States of America or a state thereof.

Drawing Date : as defined in Section 2.15(c) hereof.

EBIT : the sum of the net income of Parent and its Subsidiaries on a consolidated basis (as determined in accordance with GAAP), plus , to the extent subtracted in determining such net income, the provision for income tax expense and the Interest Expense.

EBITDA : with respect to Parent and its Subsidiaries on a consolidated basis for any period, the sum of (i) net income (as determined in accordance with GAAP), (ii) Interest Expense, (iii) depreciation and amortization, and (iv) Federal, state and local income taxes, in each case of the Borrower and its Subsidiaries on a consolidated basis for such period, computed in accordance with GAAP.

Eligible Assignee : a commercial bank or other financial institution organized under the laws of the United States of America or any state and having a combined capital and surplus of at least $500,000,000.

Employee Benefit Plan : any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party or any ERISA Affiliate or (b) has at any time within the preceding six (6) years been maintained for employees of any Loan Party or any current or former ERISA Affiliate.

6

Employee Welfare Benefit Plan : any employee benefit plan within the meaning of Section 3(l) of ERISA.

Environmental Laws and Regulations : all federal, state and local environmental, health and safety laws, regulations, ordinances, orders, judgments and decrees applicable to any Borrower or any other Loan Party, or any of their respective assets or properties.

Environmental Liability : any liability under any applicable Environmental Laws and Regulations for any disposal, release or threatened release of a Hazardous Substance pollutant or contaminant as those terms are defined under CERCLA, and any liability which would require a removal, remedial or response action, as those terms are defined under CERCLA, by any Person or any environmental regulatory body having jurisdiction over any Borrower or any other Loan Party and/or any liability arising under any Environmental Laws and Regulations for any Borrower’s or any other Loan Party’s failure to comply with such laws and regulations, including without limitation, the failure to comply with or obtain any applicable environmental permit.

Environmental Proceeding : any judgment, action, proceeding or investigation pending before any court or governmental authority, with respect to any Borrower or any other Loan Party and arising under or relating to any Environmental Laws and Regulations.

ERISA : the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the regulations promulgated thereunder.

ERISA Affiliate : with respect to any Loan Party, any corporation, person or trade or business which is a member of a group which is under common control with any Loan Party, who together with any Loan Party, is treated as a single employer within the meaning of Sections 414(b) - (o) of the Code and, if applicable, Sections 4001(a)(14) and (b) of ERISA.

Event of Default : as defined in Article 8 hereof.

Existing Banks : Citizens Bank of Pennsylvania and Wachovia Bank, National Association.

Facility Usage : shall mean at any time the sum of the Loans outstanding and Letter of Credit Outstandings.

Federal Funds Rate : for any day, the weighted average of the rates on overnight federal funds transactions with member banks of the Federal Reserve System arranged by federal funds brokers as published by the Federal Reserve Bank of New York for such day, or if such day is not a Business Day, for the next preceding Business Day (or, if such rate is not so published for any such day, the average rate charged to the Agent on such day on such transactions as reasonably determined by the Agent).

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Fee and Fees : as defined in Section 2.7(d) hereof.

Financial Statements : with respect to Parent, its consolidated: (i) audited Balance Sheet as at September 30, 2005, together with the related audited Income Statement and Statement of Changes in Financial Position Cash Flow for the fiscal year then ended, and (ii) unaudited Balance Sheet as at June 30, 2006, together with the related unaudited Income Statement and Statement of Changes in Financial Position Cash Flow for the nine-month period then ended; provided that to the extent such financial statements are not the most recent financial statements furnished by the Borrowers pursuant to Section 5.1 or 5.2 of this Agreement, “Financial Statements” shall mean the most recent of the applicable consolidated and/or consolidating financial statements furnished by the Borrowers pursuant to such Section 5.1 or 5.2.

Fixed Base Rate : with respect to any LIBOR Loan for any Interest Period therefor, LIBOR, as reasonably determined by the Agent.

Fixed Charge Coverage Ratio : as at any time of determination, the ratio of the following for the most recently completed four fiscal quarters of Parent: (i) EBIT to (ii) Interest Expense, each with respect to such most recently completed four fiscal quarters of Parent.

Fixed Rate : for any LIBOR Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be equal to (i) the Fixed Base Rate for such Loan for such Interest Period; divided by (ii) 1.00 minus the Reserve Requirement, if any, for such Loan for such Interest Period. The Agent shall use its best efforts to advise Parent of the Fixed Rate as soon as practicable after each change in the Fixed Rate; provided however , that the failure of the Agent to so advise Parent on any one or more occasions shall not affect the rights of the Banks or the Agent or the obligations of the Borrowers hereunder.

Fixed Rate Election : as defined in Section 2.26 hereof.

Foreign Subsidiary : each direct and indirect Subsidiary of Parent that is not a Domestic Subsidiary.

Frontage Fee : as defined in Section 2.7(c) hereof.

GAAP : generally accepted accounting principles, consistently applied.

Governmental Acts : as defined in Section 2.15(k) hereof.

Hazardous Materials : any toxic chemical, Hazardous Substances, contaminants or pollutants, medical wastes, infectious wastes, or hazardous wastes.

Hazardous Substance : as set forth in Section 101(14) of CERCLA or comparable provisions of state or local law.

8

Hazardous Waste : as set forth in the Resource Conservation and Recovery Act, 42 U.S.C. §9603(5), and the Environmental Protection Agency’s implementing regulations, or state or local law.

Indebtedness : with respect to any Borrower, all: (i) liabilities or obligations, direct and contingent, which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Borrower at the date as of which Indebtedness is to be determined, including, without limitation, contingent liabilities that in accordance with such principles, would be set forth in a specific Dollar amount on the liability side of such balance sheet, and Capitalized Lease Obligations of such Borrower; (ii) liabilities or obligations of others for which such Borrower is directly or indirectly liable, by way of guaranty (whether by direct guaranty, suretyship, discount, endorsement, agreement to purchase or advance or keep in funds or other agreement having the effect of a guaranty) or otherwise; (iii) liabilities or obligations secured by Liens on any assets of such Borrower, whether or not such liabilities or obligations shall have been assumed by it; and (iv) liabilities or obligations of such Borrower, direct or contingent, with respect to letters of credit issued for the account of such Borrower and bankers acceptances created for such Borrower.

Insolvency Proceeding : with respect to any Person, (a) any case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of such Person or otherwise relating to liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.

Interest Expense : with respect to Parent and its Subsidiaries for the applicable period of determination thereof, the interest expense of Parent and its Subsidiaries during such period determined on a consolidated basis in accordance with GAAP.

Interest Period : with respect to any LIBOR Loan, each period commencing on the date such Loan is made or converted from a Loan or Loans of another type, or the last day of the next preceding Interest Period with respect to such Loan, and ending on the same day in the first, second, third or sixth calendar month thereafter, as the Borrowers may select as provided in Section 2.2 hereof, except that each such Interest Period that commences on the last LIBOR Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last LIBOR Business Day of the appropriate subsequent calendar month.

Notwithstanding the foregoing: (i) each Interest Period that would otherwise end on a day that is not a LIBOR Business Day shall end on the next succeeding LIBOR Business Day or, if such next succeeding LIBOR Business Day falls in the next succeeding calendar month, on the next preceding LIBOR Business Day); (ii) no more than seven Interest Periods shall be in effect at the same time; (iii) notwithstanding clause (iv) below, any Interest Period for any type of Loan that commences before the Commitment Termination Date shall end no later than the Commitment Termination Date; and (iv) no Interest Period shall have a duration of less than one month. In the event that the Borrowers fail to select the duration of any Interest Period for any Loan within the time period and otherwise as provided in Section 2.2 hereof, such Loan will be automatically converted into an ABR Loan on the last day of the preceding Interest Period for such Loan.

9

Interest Rate Contracts : interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, interest rate insurance and other agreements or arrangements designed to provide protection against fluctuation in interest rates, in each case, in form and substance satisfactory to the Agent and, in each case, with counter-parties satisfactory to the Agent.

Investment : by any Borrower:

(a) the amount paid or committed to be paid, or the value of property or services contributed or committed to be contributed, by such Borrower for or in connection with the acquisition by such Borrower of any stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person; and

(b) the amount of any advance, loan or extension of credit by such Borrower, to any other Person, or guaranty or other similar obligation of such Borrower with respect to any Indebtedness of such other Person, and (without duplication) any amount committed to be advanced, loaned, or extended by such Borrower to any other Person, or any amount the payment of which is committed to be assured by a guaranty or similar obligation by such Borrower for the benefit of, such other Person.

IRS : Internal Revenue Service.

Joinder : an agreement in the form of Exhibit C hereto.

Latest Balance Sheet : as defined in Section 3.9(a) hereof.

Law : any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree or award of any Official Body.

Leases : leases and subleases (other than Capitalized Leases), licenses for the use of real property, easements, grants, and other attachment rights and similar instruments under which a Borrower has the right to use real or personal property or rights of way.

Letter of Credit : as defined in Section 2.15 hereof.

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Letter of Credit Borrowing : an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made and shall not have been converted into an ABR Loan under Section 2.15(c).

Letter of Credit Fee : as defined in Section 2.7(c) hereof.

Letter of Credit Outstandings : at any time the sum of (i) the aggregate undrawn face amount of all then outstanding Letters of Credit and (ii) the aggregate amount of all unpaid and then outstanding Reimbursement Obligations.

Leverage Ratio : the ratio of (i) the Borrowers’ Total Funded Debt as at the time of determination, to (ii) the Borrowers’ EBITDA with respect to the most recently completed four fiscal quarters of Parent, each measured on a consolidated basis.

LIBOR : shall mean for any day during each Interest Period the per annum rate of interest (computed on a basis of a year of 360 days and actual days elapsed) estimated in good faith by the Agent in accordance with its usual procedures (which determination shall be conclusive) to be the average of the rate per annum for deposits, in an amount of U.S. Dollars comparable to the amount of principal relating to such Interest Period and having maturities comparable to such Interest Period, offered to major money center banks in the London interbank market at or about 11:00 a.m., London time, two (2) London business days prior to such Interest Period.

LIBOR Business Day : a Business Day on which dealings in Dollar deposits are carried out in the London interbank market.

LIBOR Loans : all Loans the interest on which is calculated on the basis of the rate referred to in the definition of Fixed Base Rate.

Lien : any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing), any conditional sale or other title retention agreement, any lease in the nature of any of the foregoing, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.

Loan and Loans : as defined in Section 2.1 hereof and including, without limitation, all ABR Loans made by the Banks pursuant to Section 2.15(c) hereof and all Letter of Credit Borrowings made pursuant to Section 2.15(e) hereof. Loans of different types made or converted from Loans of other types on the same day (or of the same type but having different Interest Periods) shall be deemed to be separate Loans for all purposes of this Agreement.

Loan Documents : this Agreement, the Notes and all other documents executed and delivered in connection herewith or therewith, including all amendments, modifications and supplements of or to all such documents.

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Loan Party : each Borrower, any Domestic Subsidiary of a Borrower that has not yet become a Borrower pursuant to Section 7.13 hereof, and any other Person (other than the Banks and the Agent) which now or hereafter executes and delivers to any Bank or the Agent any Loan Document.

Material Adverse Effect : a material adverse effect on: (i) the business, condition (financial or otherwise), assets, liabilities or operations of the Borrowers taken as a whole; (ii) the ability of the Borrowers (taken as a whole) to perform their obligations under any Loan Document to which the Borrowers are a party; or (iii) the validity or enforceability of this Agreement or the other Loan Documents or the rights or remedies of the Banks and/or the Agent hereunder or thereunder.

Multiemployer Plan : a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is making, or is accruing an obligation to make, contributions or has made, or been obligated to make, contributions within the preceding six (6) years.

New Type Loans : as defined in Section 2.25 hereof.

Non-Material Office : an office maintained by a Subsidiary of Parent that is utilized primarily as a sales office.

Note and Notes : as defined in Section 2.4 hereof.

Obligations : collectively, all of the Indebtedness, liabilities and obligations of the Borrowers to the Banks and the Agent, whether now existing or hereafter arising, whether or not currently contemplated, including, without limitation, those arising under the Loan Documents.

Official Body : any national, federal, state, local or other government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

Parent : J & J Snack Foods Corp., a New Jersey corporation.

Participation Advance : with respect to any Bank, such Bank’s payment in respect of its participation in a Letter of Credit Borrowing according to its Ratable Share pursuant to Section 2.15(e) hereof.

Payor : as defined in Section 2.19 hereof

PBGC: Pension Benefit Guaranty Corporation.

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Pension Plan : at any time an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is maintained either: (i) by a Borrower or any ERISA Affiliate for employees of such Borrower, or by such Borrower for any ERISA Affiliate, or (ii) pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which such Borrower or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding five (5) plan years made contributions.

Permitted Acquisition : an Acquisition that satisfies each of the following conditions: (i) the entire business or assets acquired or business of the entity whose Capital Stock is acquired shall be substantially similar to a Borrower’s line of business as conducted on the date hereof; (ii) at the time of such Acquisition no Default or Event of Default exists and no Default or Event of Default would occur after giving effect to such Acquisition; (iii) the Acquisition shall have the approval of the target company’s board of directors (or similar governing body); (iv) the applicable Borrower shall have complied with any applicable state takeover law and any applicable super majority charter provisions; (v) all governmental and third-party consents and approvals necessary in connection with each aspect of the Acquisition shall have been obtained (without the imposition of any unreasonable conditions) and shall remain in effect, except where the failure to obtain same could not reasonably be expected to have a Material Adverse Effect, all applicable waiting periods shall have expired or been terminated or waived without any material adverse action being taken by any authority having jurisdiction; and no law or regulation shall be applicable that restrains, prevents or imposes material adverse conditions upon any aspect of the Acquisition; and (vi) the Borrowers shall have delivered to the Agent, not less than ten days prior to the consummation of such Acquisition, a certificate of a financial officer of the Borrower, in all respects reasonably satisfactory to the Agent and dated the date of such consummation, attaching a pro-forma compliance certificate (in a format satisfactory to the Bank) evidencing compliance with Section 6.9 of this Agreement (except that, for purposes of Section 6.9(c), the pro forma Leverage Ratio after giving effect to the Acquisition shall not exceed 2.0 to 1.0) after giving effect to such Acquisition and based on the most recent financial statements delivered to the Bank pursuant to this Agreement; provided, that, as to such financial covenants (and any other financial covenants now or hereafter applying to the facilities described in this Agreement), all of such covenants shall be deemed amended to require compliance as to the Borrowers with the entity acquired in the Acquisition.

Permitted Liens : as to any Borrower: (i) pledges or deposits by such Borrower under workers’ compensation laws, unemployment insurance laws, social security laws, or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness of such Borrower), or leases to which such Borrower is a party, or deposits to secure public or statutory obligations of such Borrower or deposits of Cash or United States Government Bonds to secure surety, appeal, performance or other similar bonds to which such Borrower is a party, or deposits as security for contested taxes or import duties or for the payment of rent; (ii) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens, or Liens arising out of judgments or awards against such Borrower with respect to which such Borrower at the time shall currently be prosecuting an appeal or proceedings for review; (iii) Liens for taxes not yet subject to penalties for non-payment and Liens for taxes the payment of which is being contested as permitted by Section 6.6 hereof; (iv) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of, others for rights of way, highways and railroad crossings, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties; and (v) Liens incidental to the conduct of the business of such Borrower or to the ownership of such Borrower’s property that were not incurred in connection with Indebtedness of such Borrower, all of which Liens referred to in the preceding clause (v) do not in the aggregate materially detract from the value of the properties to which they relate or materially impair their use in the operation of the business taken as a whole of such Borrower, and as to all the foregoing only to the extent arising and continuing in the ordinary course of business.

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Person : an individual, a corporation, a limited liability company, a partnership, a joint venture, a trust or unincorporated organization, a joint stock company or other similar organization, a government or any political subdivision thereof, a court, or any other legal entity, whether acting in an individual, fiduciary or other capacity.

Plan : at any time an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either: (i) maintained by a Borrower or any member of the Controlled Group for employees of a Borrower, or by a Borrower for any other member of such Controlled Group, or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a Borrower or any member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

Post-Default Rate : (i) in respect of any Loans a rate per annum equal to: (x) if such Loans are ABR Loans, 2% above the Alternate Base Rate as in effect from time to time plus the Applicable Margin for ABR Loans (but in no event less than the interest rate in effect on the due date), or (y) if such Loans are LIBOR Loans, 2% above the rate of interest in effect thereon at the time of the Event of Default that resulted in the Post-Default Rate being instituted until the end of the then current Interest Period therefor and, thereafter, 2% above the Alternate Base Rate as in effect from time to time plus the Applicable Margin for ABR Loans (but in no event less than the interest rate in effect on the due date); and (ii) in respect of other amounts payable by the Borrowers hereunder (other than interest) not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum during the period commencing on the due date until such other amounts are paid in full equal to 2% above the Alternate Base Rate as in effect from time to time plus the Applicable Margin for ABR Loans (but in no event less than the interest rate in effect on the due date).

Pricing Level : Pricing Level I, Pricing Level II, Pricing Level III, or Pricing Level IV, as applicable.

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Pricing Level I : the applicable Pricing Level at any time when the Leverage Ratio is less than or equal to 0.75 to l.00.

Pricing Level II : the applicable Pricing Level at any time when the Leverage Ratio is greater than 0.75 to 1.00 but less than or equal to 1.25 to 1.00.

Pricing Level III : the applicable Pricing Level at any time when the Leverage Ratio is greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00.

Pricing Level IV : the applicable Pricing Level at any time when the Leverage Ratio is greater than 1.75 to 1.00 but less than or equal to 2.25 to 1.00.

Primary Subsidiary Borrowers : the Subsidiary Borrowers listed on Schedule 3.1 hereto as “Primary Subsidiary Borrowers”.

Prime Rate : the variable per annum rate of interest, calculated on the basis of a 360 day basis but charged on the actual number of days elapsed, equal to the rate of interest announced from time to time by Agent as its prime rate of interest at the Principal Office. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged by Agent to any borrower. Each Borrower acknowledges that Agent may regularly make domestic commercial loans at rates of interest less than the rate of interest referred to in the preceding sentence. Each change in any interest rate provided for herein based upon the Prime Rate resulting from a change in the Prime Rate shall take effect as of the effective date of such change in the Prime Rate.

Principal Office : the principal office of Agent presently located at Citizens Gateway Center, 3025 Chemical Road, Suite 300, Plymouth Meeting, Pennsylvania 19462-1739.

Projections : consolidated projections of Parent and its subsidiaries (in a format reasonably satisfactory to the Agent) prepared on the basis of the assumptions accompanying them and reflect as of the date thereof Parent’s good faith projections, after reasonable analysis, of the matters set forth therein, based on such assumptions.

Purchase Money Security Interest : as defined in Section 7.2(b) hereof.

Quarterly Dates : the first day of each January, April, July and October, the first of which shall be the first such day after the date of this Agreement, provided that , if any such date is not a LIBOR Business Day, the relevant Quarterly Date shall be the next succeeding LIBOR Business Day (or, if the next succeeding LIBOR Business Day falls in the next succeeding calendar month, then on the next preceding LIBOR Business Day).

Ratable Share : the proportion that a Bank’s Commitment bears to the Commitments of all of the Banks.

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Regulation D : Regulation D of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time.

Regulatory Change : as to any Bank, any change after the date of this Agreement in United States federal, state or foreign laws or regulations (including Regulation D and the laws or regulations that designate any assessment rate relating to certificates of deposit or otherwise (including the “Assessment Rate” if applicable to any Loan)) or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks, including such Bank, of or under any United States federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

Reimbursement Obligation : as defined in Section 2.15(c) hereof.

Release : as set forth in Section 101(22) of CERCLA or state or local law.

Required Banks : at any time while no Loans are outstanding hereunder, Banks having at least 51% of the aggregate amount of the Commitments and, at any time while Loans are outstanding hereunder, Banks holding at least 51% of the outstanding aggregate principal amount of the Loans hereunder.

Required Payment : as defined in Section 2.19 hereof.

Reserve Requirement : for any LIBOR Loans for any quarterly period (or, as the case may be, shorter period) as to which interest is payable hereunder, the rate (rounded upward to the nearest 1/100 of 1%), as determined in good faith by the Agent (which determination shall be conclusive), as representing for such period the maximum effective percentage (or if more than one such percentage shall be applicable for such period, the daily average of such percentages for those days in such period during which any such percentage shall be so applicable) as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including without limitation supplemental, marginal and emergency reserve requirements) for the Banks with respect to liabilities or assets consisting of or including “Eurocurrency Liabilities” (as such term is defined in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time). Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such depository institutions by reason of any Regulatory Change against: (i) any category of liabilities that includes deposits by references to which the Fixed Base Rate for LIBOR Loans is to be determined as provided in the definition of “Fixed Base Rate” in this Article 1, or (ii) any category of extensions of credit or other assets that include LIBOR Loans.

Standby Letter of Credit : a Letter of Credit issued to support obligations of one or more of the Borrowers, contingent or otherwise, which finance the working capital and business needs of such Borrower(s) incurred in the ordinary course of business.

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Subordinated Debt : unsecured Indebtedness for money borrowed in an amount satisfactory to the Required Banks which does not permit any payment or prepayment of the principal amount thereof or any interest accrued thereon prior to the payment in full of the Obligations and that is subordinated to such prior payment and is otherwise subordinated thereto under terms satisfactory in form and substance to the Required Banks, as evidenced by the Agent’s written consent thereto given prior to the creation of such Indebtedness.

Subsidiary : with respect to any Person, any corporation, partnership or joint venture whether now existing or hereafter organized or acquired: (i) in the case of a corporation, of which a majority of the securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) are at the time owned by such Person and/or one or more Subsidiaries of such Person, or (ii) in the case of a partnership or joint venture in which such Person is a general partner or joint venturer or of which a majority of the partnership or other ownership interests are at the time owned by such Person and/or one or more of its Subsidiaries. Unless the context otherwise requires, references in this Agreement to “Subsidiary” or “Subsidiaries” shall be deemed to be references to a direct or indirect Subsidiary or Subsidiaries of Parent.

Subsidiary Borrower and Subsidiary Borrowers : the Domestic Subsidiaries that have executed the signature pages hereto together with each Domestic Subsidiary that becomes a Borrower pursuant to the terms of this Agreement.

Tangible Net Worth : the sum of capital surplus, earned surplus, Subordinated Debt and capital stock, minus deferred charges, intangibles, Affiliate Advances and treasury stock, all as determined in accordance with GAAP.

Termination Event : any one of the following:

(a) a “Reportable Event” described in Section 4043 of ERISA and the regulations issued thereunder;

(b) the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA; or

(c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA;

(d) the institution of proceedings to terminate a Pension Plan by the PBGC;

(e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan;

(f) the partial or complete withdrawal of any Loan Party or any ERISA Affiliate from a Multiemployer Plan;

 

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(g) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA;

(h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or

(i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

Total Commitment : the aggregate obligation of the Banks to make Loans hereunder not exceeding Fifty Million and 00/100 ($50,000,000.00) Dollars, as the same shall and/or may be increased or reduced pursuant to Sections 2.1, 2.2 and 2.8 hereof.

Total Funded Debt : at any date of determination, the aggregate funded Indebtedness (as determined in accordance with GAAP) and Capitalized Lease Obligations of Parent and its Subsidiaries on a consolidated basis (as determined in accordance with GAAP), on such date.

Unused Commitment : as at any date, for each Bank, the difference, if any, between: (i) the amount of such Bank’s Commitment as in effect on such date, and (ii) the sum of (A) the then aggregate outstanding principal amount of all Loans made by such Bank and (B) such Bank’s Ratable Share of all Letter of Credit Outstandings.

Any accounting terms used in this Agreement that are not specifically defined herein shall have the meanings customarily given to them in accordance with GAAP as in effect on the date of this Agreement, except that references in Article 5 to such principles shall be deemed to refer to such principles as in effect on the date of the financial statements delivered pursuant thereto.

ARTICLE 2

Commitments; Loans

Section 2.1 Loans .

Each Bank hereby severally agrees, on the terms and subject to the conditions of this Agreement, to make loans (individually a “Loan” and, collectively, the “Loans” ) to the Borrowers during the Credit Period to and including the Commitment Termination Date in an aggregate principal amount at any one time outstanding up to, but not exceeding, the Commitment of such Bank as then in effect less such Bank’s Ratable Share of Letter of Credit Outstandings. Subject to the terms of this Agreement, during the Credit Period the Borrowers may borrow, repay ( provided that repayment of LIBOR Loans shall be subject to the provisions of Section 2.26 hereof and the term of any such LIBOR Loan shall be one, two, three or six months) and reborrow up to the amount of the Total Commitment (after giving effect to the voluntary increases, and/or the mandatory and voluntary reductions, required and permitted herein) by means of ABR Loans or LIBOR Loans, and during such period and thereafter until the date of the payment in full of all of the Loans, the Borrowers may convert Loans of one type into Loans of another type (as provided in Section 2.21 hereof).

 

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Section 2.2 Notices Relating to Loans.

A Borrower shall give the Agent written notice of each increase, termination or reduction of the Commitments, each borrowing, conversion and prepayment of each Loan, and of the duration of each Interest Period applicable to each LIBOR Loan (in each case, a “Borrowing Notice”). Each such written notice shall be irrevocable and shall be effective only if received by the Agent not later than 11 a.m., New Jersey time, on the date that is:

(a) In the case of each notice of increase of the Commitments, thirty days prior to the date of the related increase, and in the case of each notice of termination or reduction of the Commitments, three Business Days prior to the date of the related termination or reduction.

(b) In the case of each notice of borrowing or prepayment of, or conversion into, ABR Loans, one Business Day prior to the date of the related borrowing, prepayment or conversion; and

(c) In the case of each notice of borrowing or prepayment of, or conversion into, LIBOR Loans, or the duration of an Interest Period for LIBOR Loans, two LIBOR Business Days prior to the date of the related borrowing, prepayment, or conversion or the first day of such Interest Period.

Each such notice of increase, termination or reduction of the Commitments shall specify the amount thereof. Each such notice of borrowing, conversion or prepayment shall specify the amount (subject to Section 2.1 hereof) and type of Loans to be borrowed, converted or prepaid (and, in the case of a conversion, the type of Loans to result from such conversion), the date of borrowing, conversion or prepayment (which shall be: (x) a Business Day in the case of each borrowing or prepayment of ABR Loans, and (y) a LIBOR Business Day in the case of each borrowing or prepayment of LIBOR Loans and each conversion of or into a LIBOR Loan). Each such notice of the duration of an Interest Period shall specify the Loans to which such Interest Period is to relate. The Agent shall notify the Banks of the content of each such Borrowing Notice promptly after its receipt thereof.

Section 2.3 Disbursement of Loan Proceeds.

The Borrowers shall give the Agent notice of each borrowing hereunder as provided in Section 2.2 hereof. Not later than 11:00 a.m., Pennsylvania time, on the date specified for each borrowing hereunder, each Bank shall transfer to the Agent, by wire transfer or otherwise, but in any event in immediately available funds, the amount of the Loan to be made by it on such date, and the Agent, upon its receipt thereof, shall disburse such sum to the Borrowers by depositing the amount thereof in an account of any Borrower maintained with the Agent.

 

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Section 2.4 Notes.

(a) The Loans made by each Existing Bank shall be evidenced by a single amended and restated promissory note of the Borrowers, payable on a joint and several basis, in substantially the form of Exhibit A-1 hereto and the Loans made by each Bank that is not an Existing Bank shall be evidenced by a single promissory note of the Borrowers, payable on a joint and several basis, in substantially the form of Exhibit A-2 hereto (each such Note, including all amendments, modifications, restatements and supplements of or to such Notes, a “Note” and collectively, the “Notes” ). Each Note delivered to an Existing Bank shall be dated the date of the initial borrowing of the Loans under this Agreement, shall be payable to the order of such Existing Bank in a principal amount equal to such Existing Bank’s Commitment as originally in effect, and shall otherwise be duly completed. Each Note delivered to a Bank that is not an Existing Bank shall be dated the date on which such Bank becomes a party to this Agreement, shall be payable to the order of such Bank in a principal amount equal to such Bank’s Commitment as originally in effect, and shall otherwise be duly completed. The Notes shall be payable as provided in Sections 2.1 and 2.5 hereof.

(b) Each Bank shall enter on a schedule attached to its Note a notation with respect to each Loan made hereunder of (i) the date and principal amount thereof, (ii) each payment and prepayment of principal thereof, (iii) whether the interest rate is initially to be determined in accordance with subsection 2.6(a)(i) or 2.6(a)(ii) hereof, and (iv) the Interest Period, if applicable. The failure of any Bank to make a notation on the schedule to its Note as aforesaid shall not limit or otherwise affect the obligation of the Borrowers to repay the Loans in accordance with their respective terms as set forth herein.

Section 2.5 Payment Applications.

(a) The Loans: (i) shall be repaid as and when necessary to cause the aggregate principal amount of the Loans outstanding not to exceed each Bank’s Commitment, as increased or reduced pursuant to Section 2.8 hereof, and (ii) may be repaid at any time and from time to time, in whole or in part, without premium or penalty, upon prior written notice to the Agent as provided in Section 2.2 hereof, in integral multiples of $500,000 and any amount so repaid may, subject to the terms and conditions hereof, including the borrowing limitation imposed by the Commitments, be reborrowed hereunder during the Credit Period; provided however , that: (A) LIBOR Loans repaid prior to the last day of an Interest Period for such Loans shall be subject to the payment of any yield maintenance fee required by Section 2.26 hereof, and (B) all repayments of Loans or any portion thereof shall be made together with payment of all interest accrued on the amount repaid through the date of such repayment.

(b) Except as set forth in Sections 2.22, 2.23 and 2.25 hereof, all payments and repayments made pursuant to the terms hereof shall be applied first to ABR Loans, and shall be applied to LIBOR Loans only to the extent any such payment exceeds the principal amount of ABR Loans outstanding at the time of such payment.

(c) The Borrower may request a LIBOR Loan only if same would not result in the Interest Period with respect to such LIBOR Loan extending beyond the Commitment Termination Date.

 

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Section 2.6 Interest.

(a) The Borrowers shall pay to the Agent for the account of each Bank interest on the unpaid principal amount of each Loan made by such Bank for the period commencing on the date of such Loan until such Loan shall be paid in full, at the following rates per annum:

(i) During such periods that such Loan is an ABR Loan, the Alternate Base Rate plus the Applicable Margin; and

(ii) During such periods that such Loan is a LIBOR Loan, for each Interest Period relating thereto, the Fixed Rate for such Loan for such Interest Period plus the Applicable Margin for such Loan.

(b) Notwithstanding the foregoing, whenever an Event of Default has occurred and is continuing, the Borrowers shall pay interest on any Loan, and on any other amount payable by the Borrower hereunder (to the extent permitted by law) for the period commencing on the occurrence of such Event of Default until such Event of Default has been cured or waived as acknowledged in writing by the Agent at the applicable Post-Default Rate.

(c) Except as provided in the next sentence, accrued interest on each Loan shall be payable: (i) in the case of an ABR Loan, quarterly on each Quarterly Date commencing with the first such date occurring after the date of each such Loan, (ii) in the case of a LIBOR Loan, on the last day of each Interest Period for such Loan (and, if such Interest Period exceeds three months’ duration, quarterly, commencing on the first quarterly anniversary of the first day of such Interest Period), and (iii) in the case of any Loan, upon the payment or prepayment thereof or the conversion thereof into a Loan of another type (but only on the principal so paid, prepaid or converted). Interest that is payable at the Post-Default Rate shall be payable from time to time on demand of the Agent. Promptly after the establishment of any interest rate provided for herein or any change therein, the Agent will notify the Banks and a Borrower thereof; provided , however , the failure of the Agent to so notify a Borrower or the Banks shall not affect the obligations of the Borrowers hereunder or under any of the Notes in any respect.

Section 2.7 Fees.

(a) The Borrowers shall, jointly and severally, pay to the Agent for the account of each Bank a commitment fee (the “Commitment Fee” ) on the daily average amount of such Bank’s Unused Commitment, for the period from the date hereof to and including the earlier of the date such Bank’s Commitment is terminated or the Commitment Termination Date, in an amount equal to the total Unused Commitment for such Bank multiplied by the Applicable Margin for the Commitment Fee in effect on the date on which such fee payment is due. The accrued Commitment Fee shall be payable quarterly on the Quarterly Dates and on the earlier of the date the Commitments are terminated or the Commitment Termination Date, and, in the event the Borrowers reduce the Commitment as provided in Section 2.8 hereof, on the effective date of such reduction.

(b) The Borrowers shall, jointly and severally, pay to the Agent an agency fee (the “Agency Fee” ) for services rendered by the Agent in its capacity as Agent hereunder in the amount and in the manner provided in that certain letter agreement between Parent and the Agent dated November 15, 2001 (as such letter agreement may be amended, modified, replaced or supplemented from time to time).

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(c) The Borrowers shall, jointly and severally, pay (i) to the Agent for the ratable account of the Banks a fee (the “Letter of Credit Fee” ) equal to the Applicable Margin for Letters of Credit as calculated under Section 4.1.1(ii), and (ii) to the Agent for its own account a fronting fee (the “Frontage Fee” ) equal to 0.150% per annum, which fees shall be computed on the daily average Letters of Credit Outstanding based on a year of 360 days and shall be payable quarterly in arrears on the Quarterly Dates commencing with the first Quarterly Date following issuance of each Letter of Credit and on the Commitment Termination Date. The Borrowers shall also, jointly and severally, pay to the Agent for the Agent’s sole account the Agent’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit as the Agent may generally charge or incur from time to time in connection with the issuance, maintenance, modification (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.

(d) The Commitment Fee, the Agency Fee, the Frontage Fee and the Letter of Credit Fee are hereinafter sometimes referred to individually as a “Fee” and collectively as the “Fees” .

Section 2.8 Changes in Commitment

(a) The Borrowers shall be entitled to terminate or reduce the Commitments provided that Parent shall give notice of such termination or reduction to the Banks as provided in Section 2.2 hereof and that any partial reduction of the Commitments shall be in an aggregate amount equal to $5,000,000 or an integral multiple of $1,000,000 for amounts in excess thereof. Any such termination or reduction shall be permanent and irrevocable. Any reduction of the Total Commitment pursuant to this Section 2.8 shall reduce permanently, on a pro rata basis, the amount of each Bank’s Commitment then in effect, and (ii) shall be accompanied by a prepayment of the Loans outstanding and/or a termination and/or payment of the Letter of Credit Outstandings (as applicable) to the extent, if any, that the Facility Usage exceeds the amount of the Total Commitment as then reduced, together with payment in full of all accrued interest on the amount so prepaid to and including the dates of each such prepayment, and payment in full of any amounts payable pursuant to Section 2.26 in connection therewith, and the payment in full of any unpaid Fees then accrued hereunder. Any termination of the Total Commitment shall be accompanied by a prepayment in full of the Loans outstanding and a termination and/or payment in full of all Letter of Credit Outstandings (as applicable), together with payment in full of all accrued interest thereon to and including the date of prepayment, payment in full of any amounts payable pursuant to Section 2.26 in connection therewith, and payment in full of any unpaid Fees then accrued hereunder.

(b) The Borrowers shall have the right, at any time and from time to time (but not to exceed two (2) increases in the aggregate) prior to the Commitment Termination Date to increase the Total Commitment to an aggregate amount not to exceed $100,000,000.00, provided that (i) the Parent provides to Agent thirty days prior written notice of the exercise of each such option, (ii) no Event of Default or Default has occurred and/or is continuing as of the date of such increase, (iii) the Borrowers shall have received commitments from one or more existing Banks and, if necessary, one or more new Banks for such increase (with any new Bank to be reasonably acceptable to the Agent and the Borrowers), and (iv) the Agent shall have received a satisfactory legal opinion of counsel to the Borrowers and such agreements, amendments, and other documentation executed by the Borrowers and the Banks as the Agent determines necessary in its sole discretion to effectuate such increase. Each Bank shall have the right, but not the obligation, to commit to provide its Ratable Share of any such proposed increase.

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Section 2.9 Use of Proceeds of Loans.

The proceeds of the Loans hereunder may be used by the Borrowers to provide availability for general corporate purposes, including working capital, capital expenditures, Permitted Acquisitions, permitted stock repurchases, and permitted dividend payments.

Section 2.10 Computations.

Interest on all LIBOR Loans and each Fee shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last) occurring in the period for which payable. Interest on all ABR Loans shall be computed on the basis of a year of 365/366 days (as applicable) and actual days elapsed (including the first day but excluding the last) occurring in the period for which payable.

Section 2.11 Minimum Amounts of Borrowings, Conversions, Prepayments and Interest Periods.

Except for borrowings, conversions and prepayments that exhaust the full remaining amount of the Commitments (in the case of borrowings) or result in the conversion or prepayment of all Loans of a particular type (in the case of conversions or prepayments) or conversions made pursuant to Section 2.21, Section 2.22(b) or Section 2.24 hereof, each borrowing from each Bank, each conversion of Loans of one type into Loans of another type and each prepayment of principal of Loans hereunder shall be in an amount at least equal to $100,000 in the case of ABR Loans or in integral multiples of $100,000 for amounts in excess thereof and $500,000 in the case of LIBOR Loans or in integral multiples of $100,000 for amounts in excess thereof (borrowings, conversions and prepayments of different types of Loans at the same time hereunder to be deemed separate borrowings, conversions and prepayments for purposes of the foregoing, one for each type).

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Section 2.12 Time and Method of Payments.

All payments of principal, interest, Fees and other amounts (including indemnities) payable by the Borrowers hereunder shall be made in Dollars, in immediately available funds, to the Agent at the Principal Office not later than 11:00 a.m., New Jersey time, on the date on which such payment shall become due (and the Agent or any Bank for whose account any such payment is to be made may, but shall not be obligated to, debit the amount of any such payment that is not made by such time to any ordinary deposit account of any Borrower with the Agent or such Bank, as the case may be). Additional provisions relating to payments are set forth in Section 10.3 hereof. Each payment received by the Agent hereunder for the account of a Bank shall be paid promptly to such Bank, in like funds, for the account of such Bank’s Applicable Lending Office for the Loan in respect of which such payment is made.

Section 2.13 Applicable Lending Offices.

The Loans of each type made by each Bank shall be made and maintained at such Bank’s Applicable Lending Office for Loans of such type.

Section 2.14 Several Obligations.

The failure of any Bank to make any Loan to be made by it on the date specified therefor shall not relieve the other Banks of their respective obligations to make their Loans on such date, but no Bank shall be responsible for the failure of the other Banks to make Loans to be made by such other Banks.

Section 2.15 Letter of Credit Subfacility.

(a) A Borrower may request the issuance of a letter of credit (each a “Letter of Credit” ) on behalf of itself or another Borrower by delivering to the Agent a completed application and agreement for letter of credit in such form as the Agent may specify from time to time by no later than 10:00 a.m., Philadelphia time, at least three (3) Business Days, or such shorter period as may be agreed to by the Agent, in advance of the proposed date of issuance. Each Letter of Credit shall be a Standby Letter of Credit. Subject to the terms and conditions hereof and in reliance on the agreements of the other Banks set forth in this Section 2.15, the Agent will issue a Letter of Credit provided that each Letter of Credit shall (i) have a maximum maturity of twelve (12) months from the date of issuance ( provided , however , that any such Letter of Credit may be renewable annually thereafter subject to Section 2.15(a)(ii) hereof), and (ii) in no event expire later than five Business Days prior to the Commitment Termination Date and providing that in no event shall (x) the Letter of Credit Outstandings exceed, at any one time, $35,000,000.00 or (y) the Facility Usage exceed, at any one time, the aggregate Commitments of the Banks then in effect.

(b) Immediately upon the issuance of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Bank’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.

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(c) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Agent will promptly notify the Borrowers. The Borrowers shall, jointly and severally, reimburse (such obligation to reimburse the Agent shall sometimes be referred to as a “Reimbursement Obligation” ) the Agent prior to 12:00 noon, Philadelphia time on each date that an amount is paid by the Agent under any Letter of Credit (each such date, an “Drawing Date” ) in an amount equal to the amount so paid by the Agent. In the event the Borrowers fail to reimburse the Agent for the full amount of any drawing under any Letter of Credit by 11:00 a.m., Philadelphia time, on the Drawing Date, the Agent will promptly notify each Bank thereof, and the Borrowers shall be deemed to have requested that an ABR Loan be made by the Banks pursuant to Section 2.1 hereof in the full amount of the Reimbursement Obligation then outstanding, to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the aggregate Commitments of the Banks then in effect and subject to the conditions set forth in Section 4.2 hereof other than any notice requirements. Any notice given by the Agent pursuant to this Section 2.15(c) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(d) Each Bank shall upon any notice pursuant to Section 2.15(c) make available to the Agent an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participating Banks shall (subject to Section 2.15(e)) each be deemed to have made an ABR Loan to the Borrowers in that amount. If any Bank so notified fails to make available to the Agent for the account of the Agent the amount of such Bank’s Ratable Share of such drawing by 2:00 p.m., Philadelphia time on the Drawing Date, then interest shall accrue on such Bank’s obligation to make such payment, from the Drawing Date to the date on which such Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Agent will promptly give notice of the occurrence of the Drawing Date, but failure of the Agent to give any such notice on the Drawing Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligation under this Section 2.15(d) (other than interest during the period it was not aware of such drawing).

(e) With respect to any Reimbursement Obligation that is not converted into an ABR Loan to the Borrowers in whole or in part as contemplated by Section 2.15(c) because of the Borrowers’ failure to satisfy the conditions set forth in Section 4.2 (other than any notice requirements) or for any other reason, the Borrowers shall be deemed to have incurred from the Agent a Letter of Credit Borrowing in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the ABR Loans or, if applicable, the Default Rate. Each Bank’s payment to the Agent pursuant to Section 2.15(d) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a Participation Advance from such Bank in satisfaction of its participation obligation under this Section 2.15.

(f) Upon (and only upon) receipt by the Agent for its account of immediately available funds from the Borrowers (i) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Bank has made a Participation Advance to the Agent, or (ii) in payment of interest on such a payment made by the Agent under such a Letter of Credit, the Agent will pay to each Bank, in the same funds as those received by the Agent, the amount of such Bank’s Ratable Share of such funds, except the Agent shall retain the amount of the Ratable Share of such funds of any Bank that did not make a Participation Advance in respect of such payment by Agent.

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(g) If the Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by any Borrower to the Agent pursuant to Section 2.15(f) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent the amount of its Ratable Share of any amounts so returned by the Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent, at a rate per annum equal to the Federal Funds Rate in effect from time to time.

(h) Each Borrower agrees to be bound by the terms of the Agent’s application and agreement for letters of credit and the Agent’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Borrower’s own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

(i) In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

(j) Each Bank’s obligation in accordance with this Agreement to make the ABR Loans or Participation Advances, as contemplated by this Section 2.15, as a result of a drawing under a Letter of Credit, and the Obligations of the Borrowers to reimburse the Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.15 under all circumstances, including the following circumstances:

(i)

any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Agent, the Borrowers or any other Person for any reason whatsoever;

 

(ii)

the failure of any Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of an ABR Loan hereunder, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Banks to make Participation Advances under this Section 2.15;

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(iii)

any lack of validity or enforceability of any Letter of Credit;

 

(iv)

the existence of any claim, set-off, defense or other right which any Borrower or any Bank may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), the Agent or any Bank or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or Subsidiaries of a Borrower and the beneficiary for which any Letter of Credit was procured);

 

(v)

any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect even if the Agent has been notified thereof,

 

(vi)

payment by the Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

 

(vii)

any adverse change in the business, operations, properties, assets, condition (financial or otherwise)     or prospects of any Borrower or Subsidiaries of a Borrower;

 

(viii)

any breach of this Agreement or any other Loan Document by any party thereto;

 

(ix)

the occurrence or continuance of an Insolvency Proceeding with respect to any Borrower;

 

(x)

the fact that an Event of Default or a Default shall have occurred and be continuing;

 

(xi)

the fact that the Commitment Termination Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated; and

 

(xii)

any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; provided that each Bank’s obligation to make ABR Loans under this Section 2.15 is subject to the conditions set forth in Section 4.2.

(k) In addition to amounts payable as provided in Article 10 hereof, the Borrowers hereby, jointly and severally, agree to protect, indemnify, pay and save harmless the Agent and the Banks from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or the Banks may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Agent as determined by a final judgment of a court of competent jurisdiction or (B) subject to the following clause (ii), the wrongful dishonor by the Agent of a proper demand for payment made under any Letter of Credit (except upon the request of the Borrowers), or (ii) the failure of the Agent to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called “Governmental Acts” ).

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(l) (i) As between any Borrower and the Agent, such Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Agent shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Agent shall have been notified thereof); (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (H) any consequences arising from causes beyond the control of the Agent, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the Agent’s rights or powers hereunder.

(ii) In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Agent under any resulting liability to the Borrowers or any Bank.

Section 2.16 Intentionally Omitted.

Section 2.17 Intentionally Omitted.

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Section 2.18 Pro Rata Treatment Among Banks.

Except as otherwise provided herein: (i) each borrowing from the Banks under Section 2.1 hereof will be made from the Banks and each payment of each Fee (other than the Agency Fee and the Frontage Fee) shall be made for the account of the Banks pro rata according to their respective Unused Commitments; (ii) each partial reduction of the Total Commitment shall be applied to the Commitments of the Banks pro rata according to each Bank’s respective Commitment; (iii) each conversion of Loans of a particular type under Section 2.21 hereof (other than conversions provided for by Section 2.24 or 2.25 hereof) will be made pro rata among the Banks holding Loans of such type according to the respective unpaid principal amounts of such Loans held by such Banks; (iv) each payment and prepayment of principal of or interest on Loans of a particular type will be made to the Agent for the account of the Banks holding Loans of such type pro rata in accordance with the respective unpaid principal amounts of such Loans held by such Banks; and (v) Interest Periods for Loans of a particular type shall be allocated among the Banks holding Loans of such type pro rata according to the respective unpaid principal amounts of such Loans held by such Banks.

Section 2.19 Non-Receipt of Funds by the Agent.

Unless the Agent shall have been notified by a Bank or a Borrower (the “Payor” ) prior to the date on which such Bank is to make payment to the Agent of the proceeds of a Loan to be made by it hereunder or the Borrowers are to make a payment to the Agent for the account of one or more of the Banks, as the case may be (such payment being herein called the “Required Payment” ), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Agent, the Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient on such date and, if the Payor has not in fact made the Required Payment to the Agent, the recipient of such payment shall, on demand, repay to the Agent the amount made available to it together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day (when the recipient is a Bank) or equal to the rate of interest applicable to such Loan (when the recipient is a Borrower).

Section 2.20 Sharing of Payments and Set-Off Among Banks.

If a Bank shall effect payment of any principal of or interest on Loans held by it under this Agreement through the exercise of any right of set-off (including without limitation pursuant to Section 10.5 hereof), banker’s lien, counterclaim or similar right, it shall promptly purchase from the other Banks participations in the Loans held by the other Banks in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Banks shall share the benefit of such payment pro rata in accordance with the unpaid principal and interest on the Loans held by each of them. To such end, all the Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. Each Borrower agrees that any Bank so purchasing a participation in the Loans held by the other Banks may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Bank to exercise any such right or shall affect the right of any Bank to exercise and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrowers.

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Section 2.21 Conversions of Loans.

The Borrowers shall have the right to convert Loans of one type into Loans of another type from time to time, provided that : (i) a Borrower shall give the Agent n