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FIRST LIEN CREDIT AGREEMENT

Loan Agreement

FIRST LIEN CREDIT AGREEMENT | Document Parties: Field Point I, LTD | FREEDOM RINGS, LLC | GOLDEN GATE DOUGHNUTS, LLC | HD CAPITAL CORPORATION | HDN DEVELOPMENT CORPORATION | KRISPY KREME CANADA, INC | KRISPY KREME COFFEE COMPANY, LLC | KRISPY KREME DISTRIBUTING COMPANY | KRISPY KREME DOUGHNUT CORPORATION | KRISPY KREME DOUGHNUTS, INC | KRISPY KREME MOBILE STORE COMPANY | PANHANDLE DOUGHNUTS, LLC | SILVER POINT FINANCE, LLC | SPCP Group III LLC | SPCP Group LLC | WELLS FARGO FOOTHILL, INC You are currently viewing:
This Loan Agreement involves

Field Point I, LTD | FREEDOM RINGS, LLC | GOLDEN GATE DOUGHNUTS, LLC | HD CAPITAL CORPORATION | HDN DEVELOPMENT CORPORATION | KRISPY KREME CANADA, INC | KRISPY KREME COFFEE COMPANY, LLC | KRISPY KREME DISTRIBUTING COMPANY | KRISPY KREME DOUGHNUT CORPORATION | KRISPY KREME DOUGHNUTS, INC | KRISPY KREME MOBILE STORE COMPANY | PANHANDLE DOUGHNUTS, LLC | SILVER POINT FINANCE, LLC | SPCP Group III LLC | SPCP Group LLC | WELLS FARGO FOOTHILL, INC

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Title: FIRST LIEN CREDIT AGREEMENT
Governing Law: New York     Date: 4/7/2005
Industry: Restaurants     Law Firm: Cahill Gordon;Kilpatrick Stockton;Andrews Kurth;Stites Harbison     Sector: Services

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Exhibit 10.1

EXECUTION COPY

 

 

 

FIRST LIEN

CREDIT AGREEMENT

dated as of

April 1, 2005

among

KRISPY KREME DOUGHNUT CORPORATION

KRISPY KREME DOUGHNUTS, INC.

The SUBSIDIARY GUARANTORS Party Hereto

The LENDERS Party Hereto

CREDIT SUISSE FIRST BOSTON

as Administrative Agent and Issuing Lender

and

WELLS FARGO FOOTHILL, INC.,

as Collateral Agent, Issuing Lender and Swingline Lender

 

 

Arranged by

CREDIT SUISSE FIRST BOSTON

as Sole Bookrunner and Sole Lead Arranger

WELLS FARGO FOOTHILL, INC.,

as Syndication Agent

and

SILVER POINT FINANCE, LLC

as Co-Arranger and Documentation Agent

______________

$75,000,000

______________

 

 

 

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TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS

SECTION 1.01. Defined Terms...........................................1

SECTION 1.02. Terms Generally........................................25

SECTION 1.03. Accounting Terms; GAAP; Historical Financial

Calculations.........................................25

SECTION 1.04. Classification of Loans and Borrowings.................26

ARTICLE II

THE CREDITS

SECTION 2.01. The Commitments........................................26

SECTION 2.02. Loans and Borrowings...................................26

SECTION 2.03. Requests for Syndicated Borrowings.....................27

SECTION 2.04. Swingline Loans........................................28

SECTION 2.05. Letters of Credit......................................29

SECTION 2.06. Funding of Borrowings..................................33

SECTION 2.07. Interest Elections.....................................34

SECTION 2.08. Termination and Reduction of the Commitments...........35

SECTION 2.09. Repayment of Loans; Evidence of Debt...................36

SECTION 2.10. Prepayment of Loans....................................37

SECTION 2.11. Fees...................................................39

SECTION 2.12. Interest...............................................40

SECTION 2.13. Alternate Rate of Interest.............................41

SECTION 2.14. Increased Costs........................................42

SECTION 2.15. Break Funding Payments.................................43

SECTION 2.16. Taxes..................................................43

SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of

Set-offs.............................................45

SECTION 2.18. Mitigation Obligations; Replacement of Lenders.........47

ARTICLE III

GUARANTEE

SECTION 3.01. The Guarantee..........................................48

SECTION 3.02. Obligations Unconditional..............................49

SECTION 3.03. Reinstatement..........................................49

SECTION 3.04. Subrogation............................................50

SECTION 3.05. Remedies...............................................50

SECTION 3.06. Instrument for the Payment of Money....................50

 

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SECTION 3.07. Continuing Guarantee...................................50

SECTION 3.08. Rights of Contribution.................................50

SECTION 3.09. General Limitation on Guarantee Obligations............51

SECTION 3.10. No Reliance............................................51

SECTION 3.11. Release of Subsidiary Guarantors.......................52

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Organization; Powers...................................52

SECTION 4.02. Authorization; Enforceability..........................52

SECTION 4.03. Governmental Approvals; No Conflicts...................52

SECTION 4.04. Financial Condition; No Material Adverse Change........53

SECTION 4.05. Properties.............................................53

SECTION 4.06. Litigation.............................................53

SECTION 4.07. Environmental Matters..................................54

SECTION 4.08. Compliance with Laws and Agreements....................55

SECTION 4.09. Investment and Holding Company Status..................55

SECTION 4.10. Taxes..................................................55

SECTION 4.11. ERISA..................................................55

SECTION 4.12. Disclosure.............................................55

SECTION 4.13. Use of Credit..........................................56

SECTION 4.14. Material Agreements and Liens..........................56

SECTION 4.15. Montana Mills..........................................56

SECTION 4.16. Subsidiaries and Investments...........................56

SECTION 4.17. Real Property..........................................57

SECTION 4.18. Solvency...............................................58

SECTION 4.19. Labor Matters..........................................58

ARTICLE V

CONDITIONS

SECTION 5.01. Effective Date.........................................58

SECTION 5.02. Each Credit Event......................................62

ARTICLE VI

AFFIRMATIVE COVENANTS

SECTION 6.01. Financial Statements and Other Information.............62

SECTION 6.02. Notices of Material Events.............................66

SECTION 6.03. Existence; Conduct of Business.........................67

SECTION 6.04. Payment of Obligations.................................67

SECTION 6.05. Maintenance of Properties; Insurance...................67

SECTION 6.06. Books and Records; Inspection Rights...................68

 

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SECTION 6.07. Compliance with Laws...................................68

SECTION 6.08. Use of Proceeds and Letters of Credit..................69

SECTION 6.09. Hedging Agreements.....................................70

SECTION 6.10. Certain Obligations Respecting Subsidiaries; Further

Assurances...........................................70

SECTION 6.11. Ownership of the Borrower..............................72

SECTION 6.12. Collection of Accounts and Payments; Creation of

Depositary Account...................................72

SECTION 6.13. Ratings................................................72

SECTION 6.14. Separateness...........................................72

SECTION 6.15. Pledge of Equity Interests in Consolidated Joint

Ventures.............................................72

SECTION 6.16. Post Closing Appraisals................................73

SECTION 6.17. Post Closing Mortgages.................................73

SECTION 6.18. Post Closing Environmental Surveys.....................74

SECTION 6.19. Issuance of Subsidiary Stock Certificate...............74

ARTICLE VII

NEGATIVE COVENANTS

SECTION 7.01. Indebtedness...........................................75

SECTION 7.02. Liens..................................................76

SECTION 7.03. Fundamental Changes....................................77

SECTION 7.04. Lines of Business......................................79

SECTION 7.05. Investments............................................79

SECTION 7.06. Restricted Payments....................................80

SECTION 7.07. Transactions with Affiliates...........................81

SECTION 7.08. Restrictive Agreements.................................81

SECTION 7.09. Certain Financial Covenants............................82

SECTION 7.10. Sale-Leasebacks; Synthetic Leases......................83

SECTION 7.11. Parent Guarantor as Holding Company....................83

SECTION 7.12. Limitations on Voluntary Prepayments of Certain

Other Indebtedness...................................84

SECTION 7.13. Modifications of Certain Documents.....................84

SECTION 7.14. Change in Fiscal Year; Accounting Policies; Capital

Stock................................................84

SECTION 7.15. No New Bank Accounts Without Prior Written Notice......84

ARTICLE VIII

EVENTS OF DEFAULT

 

ARTICLE IX

THE ADMINISTRATIVE AGENT, COLLATERAL AGENT,

LENDERS AND ARRANGER

 

ARTICLE X

MISCELLANEOUS

 

 

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SECTION 10.01. Notices; Electronic Communications.....................90

SECTION 10.02. Waivers; Amendments....................................91

SECTION 10.03. Expenses; Indemnity; Damage Waiver.....................93

SECTION 10.04. Successors and Assigns.................................95

SECTION 10.05. Survival...............................................97

SECTION 10.06. Counterparts; Integration; Effectiveness...............97

SECTION 10.07. Severability...........................................98

SECTION 10.08. Right of Setoff........................................98

SECTION 10.09. Governing Law; Jurisdiction; Etc.......................98

SECTION 10.10. WAIVER OF JURY TRIAL...................................99

SECTION 10.11. Headings...............................................99

SECTION 10.12. Treatment of Certain Information; Confidentiality......99

SECTION 10.13. USA PATRIOT Act........................................100

 

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SCHEDULE I - Commitments

SCHEDULE II - Material Agreements and Liens

SCHEDULE III - Restrictive Agreements

SCHEDULE IV - Litigation

SCHEDULE V - Environmental Matters

SCHEDULE VI - Subsidiaries and Investments

SCHEDULE VII - Real Property

SCHEDULE VIII - Labor Matters

SCHEDULE IX - Specified Contingent Obligations

SCHEDULE X - Transactions with Affiliates

SCHEDULE XI - Certain Real Property

SCHEDULE XII Borrowing Base Pro Forma Components

EXHIBIT A - Form of Assignment and Acceptance

EXHIBIT B - Form of Borrowing Base Certificate

EXHIBIT C - Form of Security Agreement

EXHIBIT D - Form of Guarantee Assumption Agreement

EXHIBIT E - Form of Intercreditor Agreement

EXHIBIT F - Form of Concentration Account Control Agreement

EXHIBIT G - Form of Investment Account Control Agreement

EXHIBIT H - Form of Request for Loan

EXHIBIT I - Form of Interest Election Request

EXHIBIT J - Form of Subordination, Non-Disturbance and

Attornment Agreement

EXHIBIT K - Form of Promissory Note

 

 

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FIRST LIEN CREDIT AGREEMENT dated as of April 1, 2005, among KRISPY KREME

DOUGHNUT CORPORATION, a North Carolina corporation (the "Borrower"), KRISPY

KREME DOUGHNUTS, INC., a North Carolina corporation (the "Parent Guarantor"),

the SUBSIDIARY GUARANTORS (as defined below), the LENDERS (as defined below),

CREDIT SUISSE FIRST BOSTON, as Administrative Agent and Issuing Lender, and

WELLS FARGO FOOTHILL, INC., as Collateral Agent, Issuing Lender and Swingline

Lender.

Each of the Parent Guarantor and the Borrower has requested that the

Lenders extend credit to the Borrower, under the guarantee of the Guarantors (as

defined below), in an aggregate principal or face amount not exceeding

$75,000,000, to finance the operations of the Borrower and the Guarantors and

for other purposes. The Lenders are prepared to extend such credit upon the

terms and conditions hereof, and, accordingly, the parties hereto agree as

follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Defined Terms.As used in this Agreement, the following terms

have the meanings specified below:

"ABR", when used in reference to any Loan or Borrowing, means that such

Loan, or the Loans constituting such Borrowing, are bearing interest at a rate

determined by reference to the Alternate Base Rate.

"Acceptable Appraisal" means with respect to any land, buildings,

improvements, fixtures and other equipment, an appraisal of the value thereof

(as determined on any reasonable basis) performed by an MAI-designated member of

the Appraisal Institute according to MAI standards.

"Adjusted LIBO Rate" means, for the Interest Period for any Eurodollar

Borrowing, an interest rate per annum equal to (a) the LIBO Rate for such

Interest Period multiplied by (b) the Statutory Reserve Rate for such Interest

Period.

"Administrative Agent" means CSFB, in its capacity as administrative agent

for the Lenders hereunder.

"Administrative Questionnaire" means an Administrative Questionnaire in a

form supplied by the Administrative Agent.

"Affiliate" means, with respect to a specified Person, another Person that

directly, or indirectly through one or more intermediaries, Controls or is

Controlled by or is under common Control with the Person specified.

"Affiliated Parties" means the Parent Guarantor and its Subsidiaries.

"Agents" means the Administrative Agent and the Collateral Agent.

 

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"Alternate Base Rate" means, for any day, a rate per annum equal to the

greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds

Effective Rate for such day plus 1/2 of 1%. Any change in the Alternate Base

Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall

be effective from and including the effective date of such change in the Prime

Rate or the Federal Funds Effective Rate, as the case may be.

"Applicable Margin" means: (a) with respect to any ABR Loan, 1.75% per

annum; and (b) with respect to any Eurodollar Loan, 2.75% per annum.

"Applicable Percentage" means, with respect to any Lender, the percentage

of the total Commitments represented by such Lender's Commitment. If the

Commitments have terminated or expired, the Applicable Percentages shall be

determined based upon the Commitments most recently in effect, giving effect to

any assignments.

"Arranger" means CSFB.

"Asset Prepayment Event" means a Disposition or a Casualty Event.

"Assignment and Acceptance" means an assignment and acceptance entered into

by a Lender and an assignee (with the consent of any party whose consent is

required by Section 10.04), and accepted by the Administrative Agent, in the

form of Exhibit A or any other form approved by the Administrative Agent.

"Availability Period" means the period from and including the first

Business Day after the Effective Date to but excluding the earlier of the

Commitment Termination Date and the date of termination of the Commitments.

"Board" means the Board of Governors of the Federal Reserve System of the

United States of America.

"Borrower" has the meaning assigned to such term in the recital of parties

hereto.

"Borrowing" means (a) all Syndicated ABR Loans made, converted or continued

on the same date, (b) all Eurodollar Loans that have the same Interest Period or

(c) a Swingline Loan.

"Borrowing Base" means, as at any date, (x) the aggregate amount of

Consolidated EBITDA for the most recent twelve consecutive month period just

ended for which financial statements pursuant to Section 6.01(a), (b) or (c)

have been, or should have been, delivered times (y) 1.5. On the Effective Date

the Borrowing Base shall be computed using monthly Consolidated EBITDA amounts

set forth below and the amounts set forth below shall continue to be utilized to

compute twelve month Consolidated EBITDA for Borrowing Base purposes only

notwithstanding any restatement of Consolidated EBITDA for such month that

occurs in the future. Until a month set forth below is eliminated from the

calculation of twelve month Consolidated EBITDA by passage of time and the

delivery of a calculation of Consolidated EBITDA for such month pursuant to

Section 6.01, the Consolidated EBITDA amount for such month shall be deemed for

Borrowing Base purposes to be as set forth on Schedule XII.

 

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"Borrowing Base Certificate" means a certificate of a Financial Officer of

the Borrower, substantially in the form of Exhibit B and appropriately

completed.

"Business Day" means any day (a) that is not a Saturday, Sunday or other

day on which commercial banks in New York City are authorized or required by law

to remain closed and (b) if such day relates to a borrowing of, a payment or

prepayment of principal of or interest on, a continuation or conversion of or

into, or the Interest Period for, a Eurodollar Borrowing, or to a notice by the

Borrower with respect to any such borrowing, payment, prepayment, continuation,

conversion, or Interest Period, that is also a day on which dealings in Dollar

deposits are carried out in the London interbank market.

"Capital Expenditures" means, for any period, expenditures (including the

aggregate amount of Capital Lease Obligations incurred during such period) made

by any member of the Financial Test Group to acquire or construct fixed assets,

plant and equipment (including renewals, improvements and replacements, but

excluding repairs) during such period computed in accordance with GAAP.

"Capital Lease Obligations" of any Person means the obligations of such

Person to pay rent or other amounts under any lease of (or other arrangement

conveying the right to use) real or personal property, or a combination thereof,

which obligations are required to be classified and accounted for as capital

leases on a balance sheet of such Person under GAAP, and the amount of such

obligations shall be the capitalized amount thereof determined in accordance

with GAAP.

"Casualty Event" means, with respect to any property of any Person, any

loss of or damage to, or any condemnation or other taking of, such property for

which such Person or any of its Included Subsidiaries receives insurance

proceeds, or proceeds of a condemnation award or other compensation.

"CERCLA" means the Comprehensive Environmental Response, Compensation and

Liability Act of 1980 (42 USC ss. 9601 et seq.), as amended from time to time,

and any regulations promulgated with respect thereto and any state or local

counterparts thereto.

"Change in Control" means (a) any Person or two or more Persons acting in

concert shall have acquired beneficial ownership (within the meaning of Rule

13d-3 of the Securities and Exchange Commission under the Securities Exchange

Act of 1934) of 20% or more of the outstanding shares of the voting stock of the

Parent Guarantor; or (b) as of any date a majority of the Board of Directors of

the Parent Guarantor consists of individuals who were not either (i) directors

of the Parent Guarantor as of the corresponding date of the previous year, (ii)

selected or nominated to become directors by the Board of Directors of the

Parent Guarantor of which a majority consisted of individuals described in

clause (i), or (iii) selected or nominated to become directors by the Board of

Directors of the Parent Guarantor of which a majority consisted of individuals

described in clause (i) and individuals described in clause (ii).

"Change in Law" means (a) the adoption of any law, rule or regulation after

the date of this Agreement, (b) any change in any law, rule or regulation or in

the interpretation or application thereof by any Governmental Authority after

the date of this Agreement or

 

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(c) compliance by any Lender or the Issuing Lender (or, for purposes of Section

2.14(b), by any lending office of such Lender or by such Lender's or the Issuing

Lender's holding company, if any) with any request, guideline or directive

(whether or not having the force of law) of any Governmental Authority made or

issued after the date of this Agreement.

"Class", when used in reference to any Loan or Borrowing, means that such

Loan, or the Loans constituting such Borrowing, are Syndicated Loans or

Swingline Loans.

"Code" means the Internal Revenue Code of 1986, as amended from time to

time.

"Collateral" has the meaning assigned to such term in the Intercreditor

Agreement.

"Collateral Account" has the meaning assigned to such term in Section 4.01

of the Security Agreement.

"Collateral Agent" means Wells Fargo Foothill, Inc., a California

corporation, in its capacity as collateral agent for the Administrative Agent

and the Lenders under the Security Documents.

"Commitment" means, with respect to each Lender, the commitment of such

Lender to make Syndicated Loans and to acquire participations in Letters of

Credit and Swingline Loans hereunder, expressed as an amount representing the

maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,

as such commitment may be (a) reduced from time to time pursuant to Section 2.08

or 2.10 or (b) reduced or increased from time to time pursuant to assignments by

or to such Lender pursuant to Section 10.04. The initial amount of each Lender's

Commitment is set forth on Schedule I, or in the Assignment and Acceptance

pursuant to which such Lender shall have assumed its Commitment, as applicable.

The initial aggregate amount of the Lenders' Commitments is $75,000,000.

"Commitment Termination Date" means the third anniversary of the date

hereof.

"Concentration Account Bank" means each bank at which a Concentration

Account or a Depositary Account is maintained.

"Concentration Account Control Agreement" means a Control Agreement

substantially in the form of Exhibit F among the Borrower, the Collateral Agent

and a Concentration Account Bank or such other form as may be reasonably

acceptable to the Collateral Agent.

"Concentration Accounts" means (a) account number 2000014820290 maintained

at Wachovia Bank, National Association, (b) account number 5118565578 and

account number 5199249934 maintained at Branch Banking & Trust and (c) any other

account that the Administrative Agent agrees, at the request of the Borrower, to

designate as a "Concentration Account"; provided that any such account shall be

deemed to be a "Concentration Account" only if it is held in the name of the

Borrower and, pursuant to a Concentration Account Control Agreement, controlled

by the Shared Lien Collateral Agent. Any such account shall cease to be a

"Concentration Account" if the Borrower and the Administrative Agent shall so

agree.

 

 

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"Consolidated EBITDA" means the sum of the following, calculated on a

consolidated basis in accordance with GAAP for the Financial Test Group, for the

relevant fiscal period: Consolidated Net Income plus, (i) to the extent deducted

in determining Consolidated Net Income, (a) Depreciation and Amortization, (b)

Consolidated Interest Expense less Consolidated Interest Income, (c) income tax

expense, (d) extraordinary (it being understood that for the purposes of this

clause (d), "extraordinary" shall not mean extraordinary as determined in

accordance with GAAP) professional fees and expenses (including legal fees and

Kroll fees (including any success fee, the cash portion of which was permitted

by Section 7.07(g))), (e) store closure costs, and (f) costs, fees and expenses

incurred in connection with the shareholder litigations, SEC investigation and

the other Disclosed Matters (including settlement and judgment costs), (g) the

aggregate amount of all other non-cash charges reducing Consolidated Net Income

(excluding any non-cash charge that results in an accrual of a reserve for cash

charges in any future period) for such period and (h) fees and expenses incurred

in connection with the Transactions (including (x) in connection with the

delivery of the Mortgages and environmental reports following the Effective Date

and the termination of the Hedging Agreement with Wachovia Bank, National

Association and (y) the fees and expenses of Wachovia Bank National Association

and the fees of the lenders party to the Existing Credit Agreement in connection

with the waivers and consents obtained from such parties) less (ii) the

aggregate amount of all non-cash items increasing Consolidated Net Income (other

than the accrual of revenue or recording of receivables in the ordinary course

of business) for such period.

"Consolidated Interest Coverage Ratio" means, for any Test Period, the

ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated

Interest Expense less Consolidated Interest Income for such Test Period.

"Consolidated Interest Expense" means, for any period, interest, whether

expensed or capitalized, in respect of Indebtedness of any member of the

Financial Test Group outstanding during such period; provided that Consolidated

Interest Expense shall (i) exclude the write-off of deferred financing charges

as a result of the Transactions and the amortization of deferred financing

charges arising from the Transactions and (ii) be calculated after giving effect

to Hedging Agreements (including associated costs), but excluding unrealized

gains and losses with respect to Hedging Agreements.

"Consolidated Interest Income" means, for any period, interest income of

any member of the Financial Test Group during such period.

"Consolidated Joint Venture" means any Consolidated Subsidiary that is (a)

not a Wholly Owned Subsidiary and (b) engaged in Krispy Kreme franchisee or

doughnut and bakery store operations. On the date hereof Freedom Rings, LLC; New

England Dough LLC; KremeKo Inc. and Glazed Investments, LLC constitute all of

the Consolidated Joint Ventures.

"Consolidated Leverage Ratio" means, for any Test Period, the ratio of (a)

Consolidated Total Debt on the last day of such Test Period to (b) Consolidated

EBITDA for such Test Period.

"Consolidated Net Income" means, for any period, the Net Income of the

Financial Test Group determined on a consolidated basis in accordance with GAAP,

but (without

 

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duplication), excluding, but only to the extent otherwise included in the

calculation of Net Income, (i) the income (or deficit) of any Person accrued

prior to the date it became a Subsidiary of the Parent Guarantor or is merged

into or consolidated with the Parent Guarantor or any of its Subsidiaries, (ii)

the income (or deficit) of any Person (other than members of the Financial Test

Group that are Obligors) in which the Parent Guarantor or any of its

Subsidiaries has an ownership interest, except to the extent that any such

income is actually received by a member of the Financial Test Group in the form

of cash dividends or cash distributions, (iii) the undistributed positive

earnings of any Subsidiary of the Parent Guarantor to the extent that the

declaration or payment of dividends or similar distributions by such Subsidiary

is not at the time permitted by the terms of any contract or agreement binding

on such Subsidiary (other than under any Loan Document), any constitutive

document of such Subsidiary or any law, regulation or other legal restriction

applicable to such Subsidiary, (iv) unrealized gains and losses with respect to

obligations under Hedging Agreements for such period and (v) gains and losses

from the early extinguishment of Indebtedness.

"Consolidated Subsidiary" means a Subsidiary, the accounts of which are

customarily consolidated with those of the Parent Guarantor in accordance with

GAAP for the purpose of reporting to stockholders of the Parent Guarantor or, in

the case of a Subsidiary acquired after the Effective Date, the accounts of

which would, in accordance with GAAP, be so consolidated for that purpose.

"Consolidated Total Debt" means at any date the aggregate principal amount

of all Indebtedness of the Financial Test Group (excluding obligations of the

Financial Test Group with respect to Hedging Agreements), determined on a

consolidated basis in accordance with GAAP as of such date.

"Control" means the possession, directly or indirectly, of the power to

direct or cause the direction of the management or policies of a Person, whether

through the ability to exercise voting power, by contract or otherwise.

"Controlling" and "Controlled" have meanings correlative thereto.

"Covered Property Value" means, on any date, the sum of the Median Desktop

Analysis Values for all Real Property listed in the Desktop Analysis where both

(a) such Real Property is covered by Mortgages that have been duly recorded and

in respect of each of which the Agents and the Lenders have received a legal

opinion satisfactory in form and substance to the Administrative Agent in its

reasonable judgment (provided that a legal opinion substantially in the form of

the legal opinions addressing certain real estate matters delivered pursuant to

Section 5.01(b) on the Effective Date, with such modifications as are necessary

for the relevant jurisdictions, shall be deemed to be satisfactory in form and

substance to the Administrative Agent) and (b) the Shared Lien Collateral Agent

has received title insurance commitments for such Real Property and Mortgages,

for 115% of the Median Desktop Analysis Value of such Real Property,

satisfactory in form and substance to the Administrative Agent in its reasonable

judgment, and the Borrower has caused the removal of any Liens on such Real

Property identified in such title insurance commitments to the extent that such

Liens are not permitted by Section 7.02, unless such Liens are otherwise

acceptable to the Administrative Agent, in its sole discretion. In the event

that any such title insurance commitment contains a legal description of any

Real Property that is different from the legal description set forth in a

recorded Mortgage for

 

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such property, clause (a) of this definition shall not be deemed satisfied with

respect to such property unless and until a new Mortgage or amendment to the

applicable recorded Mortgage has been duly recorded reflecting the legal

description contained in such title insurance commitment.

"Credited Institutions" means (a) CSFB in its capacities as sole bookrunner

and sole lead arranger for the financing contemplated hereby, (b) Silver Point

Finance, LLC in its capacities as co-arranger and documentation agent for the

financing contemplated hereby and (c) WFF in its capacity as syndication agent

for the financing contemplated hereby.

"CSFB" means Credit Suisse First Boston, acting through one or more of its

branches, and any Affiliate thereof.

"Debt Incurrence" means the incurrence by any member of the Financial Test

Group after the Effective Date of any Indebtedness, other than Indebtedness

incurred as permitted by any of paragraphs (a) through (l) of Section 7.01.

"Default" means any event or condition which constitutes an Event of

Default or which upon notice, lapse of time or both would, unless cured or

waived, become an Event of Default.

"Depositary Account" has the meaning assigned to such term in Section

6.12(b).

"Depositary Effective Date" has the meaning assigned to such term in

Section 6.12(b).

"Depreciation and Amortization" means for any period the sum of all

depreciation and amortization expense of the Financial Test Group for such

period, as determined in accordance with GAAP.

"Desktop Analysis" means that certain Desktop Analysis of Real Properties

performed by Keen Consultants, LLC dated March 18, 2005 and furnished to the

Lenders prior to the date hereof.

"Disclosed Matters" means the actions, suits, investigations and

proceedings disclosed in Schedule IV and the environmental matters disclosed in

Schedule V.

"Disposition" means any sale, assignment, transfer or other disposition of

any property (whether now owned or hereafter acquired) by any member of the

Financial Test Group to any other Person excluding any sale, assignment,

transfer or other disposition of any property permitted by Section 7.03 (other

than pursuant to clauses (d), (f) or (g) thereof).

"Dollars" or "$" refers to lawful money of the United States of America.

"Domestic Subsidiaries" means all Subsidiaries other than Foreign

Subsidiaries.

"Effective Date" means the date on which the conditions specified in

Section 5.01 are satisfied (or waived in accordance with Section 10.02).

 

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"Environmental Claim" means any claim, action, suit or notice by or from

any Person as a result of or in connection with any violation of or liability

under any Environmental Law.

"Environmental Laws" means all laws (including all common law), rules,

regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices

or binding agreements issued, promulgated or entered into by any Governmental

Authority, relating in any way to pollution, the environment, health and safety

(as relating to exposure to Hazardous Materials), and the preservation or

reclamation of natural resources, including without limitation any of the

foregoing relating to the management, use, disposal, arrangement for disposal,

Release or threatened Release of any Hazardous Materials.

"Environmental Liability" means any liability, contingent or otherwise

(including any liability for damages, costs of environmental remediation, fines,

penalties or indemnities, and including any Lien filed against any property

covered by the Mortgages thereunder in favor of any governmental entity),

resulting from or based upon (a) a violation of any Environmental Law, (b)

arising under any Environmental Law with respect to (i) the generation, use,

handling, transportation, storage, treatment, arrangement for disposal or

disposal of any Hazardous Materials, (ii) exposure to any Hazardous Materials,

or (iii) the Release or threatened Release of any Hazardous Materials or (c) any

contract, agreement or other consensual arrangement pursuant to which liability

under any Environmental Law is assumed or imposed with respect to any of the

foregoing.

"Equity Issuance" means (a) any issuance or sale by the Parent Guarantor or

any of its Subsidiaries after the Effective Date of (i) any of its capital

stock, (ii) any warrants or options (other than convertible Indebtedness)

exercisable in respect of its capital stock (other than any warrants or options

issued to directors, officers or employees of the Parent Guarantor or any of its

Subsidiaries pursuant to employee benefit plans established in the ordinary

course of business and any capital stock of the Parent Guarantor or any of its

Subsidiaries issued upon the exercise of such warrants or options) or (iii) any

other security or instrument representing an equity interest (or the right to

obtain any equity interest) in the Parent Guarantor or any of is Subsidiaries or

(b) the receipt by the Parent Guarantor or any of its Subsidiaries after the

Effective Date of any capital contribution (whether or not evidenced by any

equity security issued by the recipient of such contribution). The term "Equity

Issuance" shall not include any such issuance or sale to the Parent Guarantor or

any of its Subsidiaries or the receipt of any capital contribution from the

Parent Guarantor or any of its Subsidiaries.

"Equity Rights" means, with respect to any Person, any subscriptions,

options, warrants, commitments, preemptive rights or agreements of any kind

(including any shareholders' or voting trust agreements) for the issuance, sale,

registration or voting of, or securities convertible into, any additional shares

of capital stock of any class, or partnership or other ownership interests of

any type in, such Person.

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended from time to time.

 

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"ERISA Affiliate" means any trade or business (whether or not incorporated)

that, together with the Borrower and/or the Parent Guarantor, is treated as a

single employer under Section 414(b) or (c) of the Code, or, solely for purposes

of Section 302 of ERISA and Section 412 of the Code, is treated as a single

employer under Section 414 of the Code.

"ERISA Event" means (a) any "reportable event", as defined in Section 4043

of ERISA or the regulations issued thereunder with respect to a Plan (other than

an event for which the 30-day notice period is waived); (b) the existence with

respect to any Plan of an "accumulated funding deficiency" (as defined in

Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the

filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an

application for a waiver of the minimum funding standard with respect to any

Plan; (d) the incurrence by the Parent Guarantor or any of its ERISA Affiliates

of any liability under Title IV of ERISA with respect to the termination of any

Plan; (e) the receipt by the Parent Guarantor or any its ERISA Affiliates from

the PBGC or a plan administrator of any notice relating to an intention to

terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)

the incurrence by the Parent Guarantor, the Borrower or any of their ERISA

Affiliates of any liability with respect to the withdrawal or partial withdrawal

from any Plan or Multiemployer Plan; or (g) the receipt by the Parent Guarantor,

the Borrower or any their ERISA Affiliates of any notice, or the receipt by any

Multiemployer Plan from the Parent Guarantor, the Borrower or any their ERISA

Affiliates of any notice, concerning the imposition of Withdrawal Liability or a

determination that a Multiemployer Plan is, or is expected to be, insolvent or

in reorganization, within the meaning of Title IV of ERISA.

"Eurodollar", when used in reference to any Loan or Borrowing, means that

such Loan, or the Loans constituting such Borrowing, are bearing interest at a

rate determined by reference to the Adjusted LIBO Rate.

"Event of Default" has the meaning assigned to such term in Article VIII.

"Excluded Real Property" means real property interests of the Obligors in

the property identified in Schedule VII as Excluded Real Property.

"Excluded Taxes" means, with respect to the Administrative Agent, the

Collateral Agent, the Issuing Lender, any Lender or any other recipient of any

payment to be made by or on account of any obligation of the Borrower hereunder,

(a) taxes measured by net income, net profits or overall gross receipts, capital

or net worth (including, without limitation, branch profits or similar taxes) by

the United States of America, or by any jurisdiction, that are imposed solely as

a result of (I) the Administrative Agent, the Collateral Agent, the Issuing

Lender or any Lender (as the case may be) being or having been organized or

resident in, having or having had an office in, or doing or having done business

in such jurisdiction (other than a business that is or was deemed to arise

solely by reason of the Transactions) and (II) the Borrower being organized or

resident, maintaining an office or conducting business in such jurisdiction) and

(b) in the case of a Foreign Lender (other than an assignee pursuant to a

request by the Borrower under Section 2.18(b)), any withholding tax that is

imposed pursuant to a law in effect at the time such Foreign Lender becomes a

party to this Agreement except to the extent that such Foreign Lender's assignor

(if any) was entitled, at the time of assignment, to receive additional amounts

from the Borrower with respect to such withholding tax pursuant to Section

2.16(a) or is

 

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attributable to such Foreign Lender's failure or inability (other than as a

result of a Change in Law after such Lender becomes a party to this Agreement)

to comply with Section 2.16(e).

"Existing Credit Agreement" means the Credit Agreement dated as of October

31, 2003, as amended, among the Borrower, the lenders party thereto, Wachovia

Bank, National Association, as administrative agent, and the syndication agent

and the co-documentation agents referred to therein.

"Federal Funds Effective Rate" means, for any day, the weighted average of

the rates on overnight federal funds transactions with members of the Federal

Reserve System arranged by federal funds brokers, as published on the next

succeeding Business Day by the Federal Reserve Bank of New York, or, if such

rate is not so published for any day that is a Business Day, the average

(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for

such day for such transactions received by the Administrative Agent from three

federal funds brokers of recognized standing selected by it.

"Financial Officer" means, with respect to any Obligor, the chief financial

officer, principal accounting officer, treasurer or controller of such Obligor.

"Financial Test Group" means the Parent Guarantor and the Consolidated

Subsidiaries, but excluding the Consolidated Joint Ventures. In determining the

Financial Test Group for any date or period of time, only entities that are

members of the Financial Test Group as of such date or during such period of

time, as the case may be, shall be included.

"First Lien Secured Obligations" means, collectively, (i) the Obligations

and (ii) all obligations of the Obligors to make payments under Hedging

Agreements relating to interest with any or all of the Administrative Agent, the

Issuing Lender, the Arranger, any Lender or any Affiliate of the Administrative

Agent, the Issuing Lender, the Arranger or any Lender, whether direct or

indirect, absolute or contingent. For purposes hereof, it is understood that any

First Lien Secured Obligations to any Person arising under an agreement entered

into at a time such Person (or an Affiliate thereof) is party hereto as the

Administrative Agent, the Issuing Lender or a Lender shall continue to

constitute First Lien Secured Obligations, notwithstanding that such Person (or

its Affiliate) has ceased to be the Administrative Agent, the Issuing Lender or

a Lender, as the case may be, party hereto (by assigning all of its Commitment,

Revolving Credit Exposure and other interests herein, or otherwise) at the time

a claim is to be made in respect of such First Lien Secured Obligations.

"Fiscal Quarter" means a fiscal quarter of the Parent Guarantor.

"Fiscal Year" means a fiscal year of the Parent Guarantor.

"Foreign Lender" means any Lender that is organized under the laws of a

jurisdiction other than that in which the Borrower is located. For purposes of

this definition, the United States of America, each State thereof and the

District of Columbia shall be deemed to constitute a single jurisdiction.

"Foreign Subsidiary" means any Subsidiary that is organized under the laws

of a jurisdiction outside the United States of America.

 

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"GAAP" means generally accepted accounting principles in the United States

of America.

"Governmental Authority" means the government of the United States of

America, or of any other nation, or any political subdivision thereof, whether

state or local, and any agency, authority, instrumentality, regulatory body,

court, central bank or other entity exercising executive, legislative, judicial,

taxing, regulatory or administrative powers or functions of or pertaining to

government.

"Guarantee" of or by any Person (the "guarantor") means any obligation,

contingent or otherwise, of the guarantor guaranteeing or having the economic

effect of guaranteeing any Indebtedness or other obligation of any other Person

(the "primary obligor") in any manner, whether directly or indirectly, and

including any obligation of the guarantor, direct or indirect, (a) to purchase

or pay (or advance or supply funds for the purchase or payment of) such

Indebtedness or other obligation or to purchase (or to advance or supply funds

for the purchase of) any security for the payment thereof, (b) to purchase or

lease property, securities or services for the purpose of assuring the owner of

such Indebtedness or other obligation of the payment thereof, (c) to maintain

working capital, equity capital or any other financial statement condition or

liquidity of the primary obligor so as to enable the primary obligor to pay such

Indebtedness or other obligation or (d) as an account party in respect of any

letter of credit or letter of guaranty issued to support such Indebtedness or

obligation; provided, that the term Guarantee shall not include endorsements for

collection or deposit in the ordinary course of business.

"Guarantee Assumption Agreement" means a Guarantee Assumption Agreement

substantially in the form of Exhibit D by an entity that, pursuant to Section

6.10(a) is required to become a "Subsidiary Guarantor" hereunder in favor of the

Administrative Agent.

"Guarantors" means the Parent Guarantor and the Subsidiary Guarantors.

"Hazardous Materials" means all explosive or radioactive substances or

wastes and all hazardous or toxic substances, wastes or other pollutants,

including petroleum or petroleum distillates, asbestos or asbestos containing

materials, polychlorinated biphenyls, radon gas, infectious or medical wastes

and all other substances or wastes of any nature regulated pursuant to or with

respect to which liability is imposed under any Environmental Law.

"Hedging Agreement" means any interest rate protection agreement, foreign

currency exchange agreement, commodity price protection agreement or other

interest or currency exchange rate or commodity price hedging arrangement. The

amount of any Indebtedness or Other Pari Passu Obligations arising from

obligations of any Person under any Hedging Agreement at any time shall be the

maximum aggregate amount (giving effect to any netting agreements) that such

Person would be required to pay if such Hedging Agreement were terminated at

such time.

"Immaterial Subsidiary" means (x) any Subsidiary of Borrower that owns

assets constituting no more than 2.5% of the book value of the assets of the

Parent Guarantor and its Consolidated Subsidiaries, taken as a whole; provided

that any Subsidiary that, when such

 

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Subsidiary's assets are aggregated with those of all other Immaterial

Subsidiaries as to which (i) any event described in clause (h), (i), (j), (k),

(l) or (m) of Article VIII has occurred and is continuing or (ii) their

Guarantees are being or have been released in accordance with Section

10.02(b)(viii), would collectively own aggregate assets constituting more than

5.0% of the book value of the assets of the Parent Guarantor and its

Consolidated Subsidiaries, taken as a whole, shall not be considered an

Immaterial Subsidiary and (y) any Prohibited Subsidiary.

"Inactive Company" means any Person that conducts no business activity

(other than any unwinding or liquidation activities), has no income and has

assets with a value that does not exceed $1,000 (or, in the case of Montana

Mills and its Subsidiaries, cash in an aggregate amount not exceeding $100,000

to the extent that such cash is to be used for costs and expenses relating to

Montana Mills or its Subsidiaries' unwinding).

"Included Subsidiaries" means all Consolidated Subsidiaries, except that no

Consolidated Joint Venture other than Freedom Rings, LLC shall be an Included

Subsidiary.

"Indebtedness" of any Person means, without duplication, (a) all

obligations of such Person for borrowed money or with respect to deposits or

advances of any kind, (b) all obligations of such Person evidenced by bonds,

debentures, notes or similar instruments, (c) all obligations of such Person

upon which interest charges are customarily paid, (d) all obligations of such

Person under conditional sale or other title retention agreements relating to

property acquired by such Person, (e) all obligations of such Person in respect

of the deferred purchase price of property or services (excluding current

accounts payable incurred in the ordinary course of business), (f) all

Indebtedness of others secured by (or for which the holder of such Indebtedness

has an existing right, contingent or otherwise, to be secured by) any Lien on

property owned or acquired by such Person, whether or not the Indebtedness

secured thereby has been assumed, (g) all Guarantees by such Person of

Indebtedness of others, giving effect to any limitations upon such Person's

liability for such Indebtedness of others as may be set forth in such Guarantee,

(h) all Capital Lease Obligations of such Person, (i) all obligations,

contingent or otherwise, of such Person as an account party in respect of

letters of credit and letters of guaranty, (j) all obligations, contingent or

otherwise, of such Person in respect of bankers' acceptances, (k) all Redeemable

Preferred Stock of such Person (in the event that such Person is a corporation),

(l) all obligations of such Person with respect to Hedging Agreements, (m) all

obligations which are payable prior to the Commitment Termination Date in

respect of unsecured structured settlements of Disclosed Matters or other

actions, suits, proceedings or governmental enforcement actions arising in

connection with the historical financial statements of Parent Guarantor and its

Consolidated Subsidiaries under review (as the date hereof) by the Special

Committee of the Board of Directors of the Parent Guarantor, and (n) all

obligations of such Person to purchase securities or other property prior to the

Commitment Termination Date arising out of or in connection with the sale of the

same or substantially similar securities or property. The Indebtedness of any

Person shall include the Indebtedness of any other entity (including any

partnership in which such Person is a general partner) to the extent such Person

is liable therefor as a result of such Person's ownership interest in or other

relationship with such entity, except to the extent the terms of such

Indebtedness provide that such Person is not liable therefor.

 

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"Indemnified Taxes" means Taxes imposed on or incurred by any Agent, the

Issuing Lender or any Lender with respect to any payment under any Loan Document

other than Excluded Taxes.

"Intellectual Property" has the meaning given to such term in the Security

Agreement.

"Intercreditor Agreement" means a Collateral Agency and Intercreditor

Agreement substantially in the form of Exhibit E among the Obligors, the

Collateral Agent, and CSFB as collateral agent under the Second Lien Loan

Documents, and CSFB, as paying agent for the Lenders under the Second Lien

Documents.

"Interest Election Request" means a request by the Borrower to convert or

continue a Syndicated Borrowing in accordance with Section 2.07.

"Interest Payment Date" means (a) with respect to any Syndicated ABR Loan,

each Quarterly Date, (b) with respect to any Eurodollar Loan, the last day of

each Interest Period therefor and, in the case of any Interest Period of more

than three months' duration, each day prior to the last day of such Interest

Period that occurs at three-month intervals after the first day of such Interest

Period and (c) with respect to any Swingline Loan, the first Business Day of

each calendar month.

"Interest Period" means, for any Eurodollar Loan or Borrowing, the period

commencing on the date of such Loan or Borrowing and ending on the numerically

corresponding day in the calendar month that is one, two, three or six months

thereafter, as specified in the applicable Request for Loan or Interest Election

Request; provided, that (i) if any Interest Period would end on a day other than

a Business Day, such Interest Period shall be extended to the next succeeding

Business Day unless such next succeeding Business Day would fall in the next

calendar month, in which case such Interest Period shall end on the immediately

preceding Business Day, and (ii) any Interest Period that commences on the last

Business Day of a calendar month (or on a day for which there is no numerically

corresponding day in the last calendar month of such Interest Period) shall end

on the last Business Day of the last calendar month of such Interest Period. For

purposes hereof, the date of a Loan initially shall be the date on which such

Loan is made and thereafter shall be the effective date of the most recent

conversion or continuation of such Loan, and the date of a Syndicated Borrowing

comprising Loans that have been converted or continued shall be the effective

date of the most recent conversion or continuation of such Loans.

"Investment" means any investment in any Person, whether by means of: (a)

the acquisition (whether for cash, property, services or securities or

otherwise) of capital stock, bonds, notes, debentures, partnership or other

ownership interests or other securities of any other Person or any agreement to

make any such acquisition (including any "short sale" or any sale of any

securities at a time when such securities are not owned by the Person entering

into such sale); (b) the making of any deposit with, or advance, loan or other

extension of credit to, any other Person (including the purchase of property

from another Person subject to an understanding or agreement, contingent or

otherwise, to resell such property to such Person), but excluding any such

advance, loan or extension of credit having a term not exceeding 90 days

 

<PAGE>

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arising in connection with the sale of inventory or supplies by such Person in

the ordinary course of business; (c) the entering into of any Guarantee of, or

other contingent obligation with respect to, Indebtedness or other liability of

any other Person and (without duplication) any amount committed to be advanced,

lent or extended to such Person; provided that the making of any payment in

accordance with the terms of any Guarantee or other contingent obligation

permitted under this Agreement shall not be considered an Investment; (d) the

entering into of any Hedging Agreement; (e) any purchase or other acquisition of

Indebtedness or the assets of such Person or (f) any capital contribution to

such Person; (g) any other direct or indirect investment in such Person,

including any acquisition by way of a merger or consolidation, and any

arrangement pursuant to which the investor incurs Indebtedness of the type

referred to in clause (g) of the definition of "Indebtedness" in respect of such

Person. The amount of any Investment shall be the amount actually invested, less

any return of capital, without adjustment for subsequent increases or decreases

in the market value of such Investment.

"Investment Account" means any account that the Administrative Agent

agrees, at the request of the Borrower, to designate as an "Investment Account";

provided that any such account shall be deemed to be an "Investment Account"

only if it is held in the name of the Borrower and, pursuant to the Investment

Account Control Agreement, controlled by the Shared Lien Collateral Agent. Any

such account shall cease to be an "Investment Account" if the Borrower and the

Administrative Agent shall so agree.

"Investment Account Control Agreement" means a Control Agreement

substantially in the form of Exhibit G among the Borrower, the Shared Lien

Collateral Agent and an Investment Account Intermediary or such other form as

may be reasonably acceptable to the Shared Lien Collateral Agent.

"Investment Account Intermediary" means a securities intermediary at which

an Investment Account is maintained.

"Issuing Lender" means CSFB or WFF, as applicable, in their respective

capacities as the issuer of Letters of Credit hereunder, and their successors in

such capacity as provided in Section 2.05(j).

"Joint Venture" means (i) any entity in which the Parent Guarantor, the

Borrower or any of their Subsidiaries has made any Investment that would be, in

conformity with GAAP, set forth opposite the caption "Investment in

unconsolidated joint ventures" (or any like caption) on a consolidated balance

sheet of the Financial Test Group and (ii) any Consolidated Joint Venture.

"Kroll" means Kroll Zolfo Cooper LLC.

"LC Disbursement" means a payment made by the Issuing Lender pursuant to a

Letter of Credit.

"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn

amount of all outstanding Letters of Credit at such time plus (b) the aggregate

amount of all LC Disbursements that have not yet been reimbursed by or on behalf

of the Borrower at such

 

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time. The LC Exposure of any Lender at any time shall be its Applicable

Percentage of the total LC Exposure at such time.

"Lenders" means the Persons listed on Schedule I and any other Person that

shall have become a party hereto pursuant to an Assignment and Acceptance, other

than any such Person that ceases to be a party hereto pursuant to an Assignment

and Acceptance. Unless the context otherwise requires, the term "Lenders"

includes the Swingline Lender.

"Letter of Credit" means any letter of credit issued pursuant to this

Agreement.

"Letter of Credit Documents" means, with respect to any Letter of Credit,

collectively, any application therefor and any other agreements, instruments,

guarantees or other documents (whether general in application or applicable only

to such Letter of Credit) governing or providing for (a) the rights and

obligations of the parties concerned or at risk with respect to such Letter of

Credit or (b) any collateral security for any of such obligations, each as the

same may be modified and supplemented and in effect from time to time.

"LIBO Rate" means, with respect to any LIBOR Borrowing for any Interest

Period, the rate per annum determined by the Administrative Agent at

approximately 11:00 a.m. (London time) on the date that is two Business Days

prior to the beginning of the relevant Interest Period by reference to the

British Bankers' Association Interest Settlement Rates for deposits in Dollars

(as set forth by the Bloomberg Information Service or any successor thereto or

any other service selected by the Administrative Agent which has been nominated

by the British Bankers' Association as an authorized information vendor for the

purpose of displaying such rates) for a period equal to such Interest Period;

provided that, to the extent that an interest rate is not ascertainable pursuant

to the foregoing provisions of this definition, the "LIBO Rate" shall be the

interest rate per annum determined by the Administrative Agent to be the average

of the rates per annum at which deposits in Dollars are offered for such

relevant Interest Period to major banks in the London interbank market in

London, England by the Administrative Agent at approximately 11:00 a.m. (London

time) on the date that is two Business Days prior to the beginning of such

Interest Period.

"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,

lien, pledge, hypothecation, encumbrance, charge or security interest in, on or

of such asset, (b) the interest of a vendor or a lessor under any conditional

sale agreement, capital lease or title retention agreement (or any financing

lease having substantially the same economic effect as any of the foregoing)

relating to such asset and (c) in the case of securities, any purchase option,

call or similar right of a third party with respect to such securities.

"Liquidity Trigger Event" shall be deemed to have occurred and be

continuing on any date if the Net Liquidity on such date is less than

$20,000,000.

"Loan Documents" means, collectively, this Agreement, the Letter of Credit

Documents, the Intercreditor Agreement and the Security Documents and each other

agreement or written undertaking delivered to the Administrative Agent, the

Collateral Agent, the Issuing Lender or any other Lender, acting in such

capacities, in furtherance or pursuant to any of the foregoing.

 

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"Loans" means the loans made by the Lenders to the Borrower pursuant to

this Agreement.

"Majority-Owned Joint Venture" means each Joint Venture in which the Parent

Guarantor and/or one of its Included Subsidiaries owns not less than 50% of the

capital stock, including Freedom Rings, LLC; New England Dough LLC; and Glazed

Investments, LLC.

"Margin Stock" means "margin stock" within the meaning of Regulations T, U

and X of the Board.

"Material Adverse Effect" means a material adverse effect on (a) the

business, assets, operations, prospects or condition, financial or otherwise, of

the Financial Test Group taken as a whole, (b) the ability of any Obligor to

perform any of its obligations under this Agreement or any of the other Loan

Documents to which it is a party or (c) the rights of or benefits available to

the Lenders under this Agreement or any of the other Loan Documents.

"Material Indebtedness" means Indebtedness (other than the Loans and

Letters of Credit) of the Borrower, the Parent Guarantor or any Subsidiary

Guarantor in an aggregate principal amount exceeding $1,000,000.

"Median Desktop Analysis Value" means, for any Real Property listed in the

Desktop Analysis, the average of the high and low appraised values for such Real

Property set forth in such Desktop Analysis.

"Modified Financial Statements" means, with respect to any period, the

consolidated balance sheet and related statements of operations, stockholders'

equity (if applicable) and cash flows of the Financial Test Group as of the end

of and for such period, in each case in substantially similar form, scope and

detail as the Projections.

"Montana Mills" means Montana Mills Bread Co., Inc., a Delaware

corporation.

"Moody's" means Moody's Investors Services, Inc.

"Mortgage" means an instrument of Mortgage or Deed of Trust, Assignment of

Rents, Security Agreement and Fixture Filing or other similar instrument,

satisfactory in form and substance to the Collateral Agent and the

Administrative Agent, executed by an Obligor in favor of the Collateral Agent

for the benefit of the Claimholders (as defined in the Intercreditor Agreement),

granting a mortgage over the respective properties identified therein to secure

the obligations of such Obligor under the Loan Documents and the Second Lien

Loan Documents to which it is a party.

"Multiemployer Plan" means a multiemployer plan as defined in Section

4001(a)(3) of ERISA.

"Net Available Proceeds" means:

(a) in the case of any Disposition, the aggregate amount of all cash

payments received by the Parent Guarantor and/or any of its Included

Subsidiaries directly or

 

<PAGE>

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indirectly in connection with such Disposition; provided that (i) Net

Available Proceeds shall be net of (x) the amount of any legal, title and

recording tax expenses, commissions and other fees and expenses paid by the

Parent Guarantor and/or any of its Included Subsidiaries in connection with

such Disposition, (y) any federal, state, foreign and local income or other

taxes estimated to be payable by the Parent Guarantor and/or any of its

Included Subsidiaries as a result of such Disposition, and (z) reserves set

aside on its books with respect thereto in accordance with GAAP and (ii)

Net Available Proceeds shall be net of any repayments by the Parent

Guarantor and/or any of its Included Subsidiaries of Indebtedness

(including interest and any premiums or penalties), other than any

Indebtedness under the Second Lien Loan Documents (to which such netting

shall not apply), to the extent that such Indebtedness is secured by a Lien

on the property that is the subject of such Disposition;

(b) in the case of any Casualty Event, the aggregate amount of

proceeds of insurance, condemnation awards and other compensation received

by the Parent Guarantor and/or any of its Included Subsidiaries in respect

of such Casualty Event net of (i) reasonable expenses incurred by the

Parent Guarantor and/or any of its Included Subsidiaries in connection

therewith, (ii) contractually required repayments of Indebtedness

(including interest and any premiums or penalties), other than any

Indebtedness under the Second Lien Loan Documents (to which such netting

shall not apply), to the extent secured by a Lien on such property and any

income and transfer taxes payable by the Parent Guarantor and/or any of its

Included Subsidiaries in respect of such Casualty Event and (iii) reserves

set aside on its books with respect thereto in accordance with GAAP;

(c) in the case of any Equity Issuance, the aggregate amount of all

cash received by any member of the Financial Test Group (either directly or

through a distribution by any Consolidated Joint Venture) in respect of

such Equity Issuance net of customary fees, commissions and other expenses

including reserves set aside on its books with respect thereto in

accordance with GAAP incurred by the Parent Guarantor and/or any of its

Subsidiaries in connection therewith (it being understood that proceeds of

Equity Issuances by Consolidated Joint Ventures shall not constitute Net

Available Proceeds except to the extent any such proceeds are distributed

to and actually received by the Parent Guarantor or any of its Subsidiaries

(other than Consolidated Joint Ventures)); and

(d) in the case of any Debt Incurrence, the aggregate amount of all

cash received by the Parent Guarantor and/or any of its Included

Subsidiaries in respect of such Debt Incurrence net of customary fees,

commissions and other expenses including reserves set aside on its books

with respect thereto in accordance with GAAP incurred by the Parent

Guarantor and/or any of its Subsidiaries in connection therewith.

"Net Income" means, as applied to any Person for any period, the aggregate

amount of net income of such Person, after taxes, for such period, as determined

in accordance with GAAP.

"Net Liquidity" means, on any date, the result of the following calculation

on such date: (a) an amount equal to the lesser of the Borrowing Base and the

aggregate amount of

 

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the Lenders' Commitments plus (b) the aggregate amount of the "Tranche A Funding

Amounts" (as defined in the Second Lien Credit Agreement) minus (c) the

aggregate amount of the Revolving Credit Exposures of all of the Lenders minus

(d) the aggregate amount of the "Tranche A Exposures" (as defined in the Second

Lien Credit Agreement) of all of the Second Lien Lenders minus (e) the aggregate

amount of Specified Contingent Obligations (as set forth on the most recently

delivered Borrowing Base Certificate or as otherwise calculated by the

Administrative Agent as of the date such Borrowing Base Certificate should have

been delivered) plus (f) the aggregate cash balances of the Concentration

Accounts and the Depositary Account (i) determined at 1:30 p.m., New York City

time, on such date or if such date is not a Business Day, at 1:30 p.m., New York

City time, on the Business Day next occurring (in each case, after giving effect

to any prepayments that the Borrower is required to make pursuant to Section

2.10(b)(iii)) and (ii) not subject to any Lien other than (x) the Liens created

by the Loan Documents and the Second Lien Loan Documents and (y) set-off rights.

"Obligations" means, collectively, the obligations of the Obligors to pay

the principal of and interest on the Loans, reimbursement obligations with

respect to LC Disbursements and all fees, indemnification payments and other

amounts whatsoever, whether direct or indirect, absolute or contingent, now or

hereafter from time to time owing to the Lenders, the Issuing Lender, the

Administrative Agent, the Collateral Agent or any of them under the Loan

Documents.

"Obligors" means the Borrower and the Guarantors.

"Other Pari Passu Obligations" means, as at any date, the aggregate

outstanding amount of all net obligations of any Obligor owing on such date to

any Lender, the Arranger, or any Affiliate of any Lender or the Arranger in

respect of any Hedging Agreement to the extent that such obligations are secured

pursuant to the Security Documents.

"Other Taxes" means any and all present or future stamp or documentary

taxes or any other excise or property taxes, charges or similar levies arising

from any payment made under any Loan Document or from the execution, delivery or

enforcement of, or otherwise with respect to, any Loan Document.

"Parent Guarantor" has the meaning assigned to such term in the recital of

parties hereto.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and

defined in ERISA and any successor entity performing similar functions.

"Permitted Encumbrances" means:

(a) Liens imposed by law for taxes, assessments or other governmental

charges that are not yet due, payable or delinquent or are being contested

in compliance with Section 6.04;

(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,

landlord's and other like Liens imposed by law, arising in the ordinary

course of business

 

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and securing obligations that are not overdue by more than 30 days or are

being contested in compliance with Section 6.04;

(c) pledges and deposits made in the ordinary course of business in

compliance with workers' compensation, unemployment insurance and other

social security laws or regulations;

(d) cash deposits to secure the performance of bids, trade contracts,

leases, statutory obligations, surety and appeal bonds, performance bonds

and other obligations of a like nature, in each case in the ordinary course

of business;

(e) judgment Liens in respect of judgments that do not constitute an

Event of Default under clause (o) of Article VIII;

(f) easements, zoning and other restrictions, rights-of-way, covenants

and encroachments, Liens in favor of any landlord and similar encumbrances

on real property imposed by law or arising in the ordinary course of

business that do not secure any monetary obligations and do not materially

detract from the value of the affected property or interfere with the

ordinary conduct of business of the Parent Guarantor or any of its Included

Subsidiaries;

(g) Liens constituting leasehold interests made by the Parent

Guarantor or any of its Included Subsidiaries as lessor entered into in the

ordinary course of business;

(h) any right, title and interest of a landlord (including with

respect to association dues, maintenance fees and other similar items)

under any lease pursuant to which the Parent Guarantor or any of its

Included Subsidiaries has a leasehold interest in any property or assets

and any Liens that have been placed by such landlord on property over which

the Parent Guarantor or any of its Included Subsidiaries has any real

property interest; and

(i) restrictions on pledges or transfers of capital stock imposed by

partnership agreements, shareholders' agreements, limited liability company

agreements, joint venture agreements and similar agreements in existence on

the Effective Date or similar restrictions in amendments or restatements

thereof which are no more onerous than those included in such agreements on

the Effective Date;

provided that the term "Permitted Encumbrances" shall not include any Lien

securing Indebtedness.

"Permitted Investments" means:

(a) direct obligations of, or obligations the principal of and

interest on which are unconditionally guaranteed by, the United States of

America (or by any agency thereof to the extent such obligations are backed

by the full faith and credit of the United States of America), in each case

maturing within one year from the date of acquisition thereof;

 

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(b) marketable direct obligations issued by any State of the United

States of America or any political subdivision of any such State or any

public instrumentality thereof maturing within one year from the date of

acquisition thereof and, at the time of acquisition, having one of the two

highest ratings obtainable from either S&P or Moody's;

(c) investments in commercial paper maturing within 270 days from the

date of acquisition thereof and having, at such date of acquisition, the

highest credit rating obtainable from S&P or from Moody's;

(d) investments in certificates of deposit, banker's acceptances and

time deposits maturing within one year from the date of acquisition thereof

issued or guaranteed by or placed with, and money market deposit accounts

issued or offered by, any domestic office of any commercial bank organized

under the laws of the United States of America or any State thereof which

has a combined capital and surplus and undivided profits of not less than

$500,000,000;

(e) fully collateralized repurchase agreements with a term of not more

than 90 days for securities described in clause (a) of this definition and

entered into with a financial institution satisfying the criteria described

in clause (d) of this definition; and

(f) investments in money market funds which invest substantially all

their assets in securities of the types described in clauses (a) through

(e) above.

"Person" means any natural person, corporation, limited liability company,

trust, joint venture, association, company, partnership, Governmental Authority

or other entity.

"Phase I" has the meaning set forth in Section 5.01(m)(ii).

"Plan" means any employee pension benefit plan (other than a Multiemployer

Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code

or Section 302 of ERISA, and in respect of which the Parent Guarantor, the

Borrower or any of their ERISA Affiliates is (or, if such plan were terminated,

would under Section 4069 of ERISA be deemed to be) an "employer" as defined in

Section 3(5) of ERISA.

"Prime Rate" means the rate of interest per annum announced from time to

time by CSFB as its prime rate in effect at its principal office in New York

City; each change in the Prime Rate shall be effective from and including the

date such change is announced as being effective.

"Principal Facilities" means the mixing facility of the Borrower located in

Effingham, Illinois and the mixing facility and manufacturing plant of the

Borrower, each located in Winston-Salem, North Carolina.

"Prohibited Subsidiary" means, at the time of determination, a Consolidated

Joint Venture that is prohibited by its organizational documents or any

agreement governing its Indebtedness from becoming an Obligor hereunder;

provided that Freedom Rings, LLC shall not be a Prohibited Subsidiary.

 

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"Projections" means the financial projections of the Borrower and its

Consolidated Subsidiaries dated March 31, 2005 heretofore delivered by the

Borrower to the Administrative Agent.

"Property Designated For Sale" means real property and improvements

specifically designated as such and itemized on Schedule VII.

"Quarterly Dates" means the last Business Day of January, April, July and

October in each year, the first of which shall be the first such day after the

date hereof.

"Real Property" has the meaning set forth in Section 4.17.

"Redeemable Preferred Stock" of any Person means any preferred stock issued

by such Person which is at any time prior to the date falling six months after

the Commitment Termination Date either (i) mandatorily redeemable (by sinking

fund or similar payments or otherwise) or (ii) redeemable at the option of the

holder thereof.

"Register" has the meaning set forth in Section 10.04.

"Related Parties" means, with respect to any specified Person, such

Person's Affiliates and the respective directors, officers, employees, agents

and advisors of such Person and such Person's Affiliates.

"Release" means any release, spill, emission, leaking, pumping, injection,

deposit, disposal, discharge, dispersal, leaching or migration into the indoor

or outdoor environment, including the movement of Hazardous Materials through

ambient air, soil, surface water, ground water, wetlands, land or subsurface

strata.

"Request for Loan" means an executed request for loan substantially in the

form of Exhibit H hereto with all blanks completed by the Borrower.

"Required Lenders" means, at any time, two or more Lenders having Revolving

Credit Exposures and unused Commitments representing more than 50% of the sum of

the total Revolving Credit Exposures and unused Commitments at such time,

provided that if at any point in time there is only one Lender, then such Lender

shall be deemed to be the Required Lenders.

"Restatement Date" means the date on which the Parent Guarantor furnishes

to the Lenders (i) the audited consolidated balance sheet and related statements

of operations, stockholders' equity and cash flows of the Parent Guarantor and

its Consolidated Subsidiaries as of the end of and for all Fiscal Years

currently under review by the Special Committee of the Board of Directors of the

Parent Guarantor (including without limitation its 2004 and 2005 Fiscal Years),

reported on by PriceWaterhouseCoopers LLP or other independent public

accountants of recognized national standing (without a "going concern" or like

qualification or exception and without any qualification or exception as to the

scope of such audit) to the effect that such consolidated financial statements

present fairly in all material respects the financial condition and results of

operations of the Parent Guarantor and its Consolidated Subsidiaries on a

consolidated basis in accordance with GAAP consistently applied as of the end of

and for such Fiscal Year and (ii) the unaudited consolidated balance sheet and

related statements of

 

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operations, stockholders' equity and cash flows of the Parent Guarantor and its

Consolidated Subsidiaries as of the end of and for its first and second Fiscal

Quarters for its 2006 Fiscal Year.

"Restricted Payment" means (a) any dividend or other distribution (whether

in cash, securities or other property) with respect to any shares of any class

of capital stock of the Parent Guarantor or any of its Subsidiaries, or any

payment (whether in cash, securities or other property), including any sinking

fund or similar deposit, on account of the purchase, redemption, retirement,

acquisition, cancellation or termination of any such shares of capital stock of

the Parent Guarantor or any of its Subsidiaries or any option, warrant or other

right to acquire any such shares of capital stock of the Parent Guarantor or any

of its Subsidiaries or (b) any payment made by the Parent Guarantor or any of

its Subsidiaries to purchase, redeem, retire or otherwise acquire for value, or

set apart any money for a sinking, defeasance or other analogous fund for the

purchase, redemption, retirement or other acquisition of, or make any voluntary

payment or prepayment of the principal of or interest on, or any other amount

owing in respect of, any Subordinated Indebtedness, except for regularly

scheduled payments, prepayments or redemptions of principal and interest in

respect thereof required pursuant to the instruments evidencing such

Indebtedness.

"Revolving Credit Exposure" means, with respect to any Lender at any time,

the sum of the outstanding principal amount of such Lender's Syndicated Loans

and its LC Exposure and Swingline Exposure at such time.

"S&P" means Standard & Poor's Ratings Services, a Division of The

McGraw-Hill Companies, Inc.

"Second Lien Credit Agreement" means the Second Lien Credit Agreement dated

as of the date hereof between the Obligors, the Second Lien Lenders, CSFB as

administrative agent and paying agent for the Second Lien Lenders and CSFB as

collateral agent for such "Lenders" and CSFB as fronting bank, including any

replacement thereof entered into in connection with one or more refinancings

thereof permitted by the Intercreditor Agreement.

"Second Lien Lenders" means the Persons referred as "Lenders" in the Second

Lien Credit Agreement.

"Second Lien Loan Documents" means the "Loan Documents" referred to in the

Second Lien Credit Agreement.

"Security Agreement" means a Security Agreement substantially in the form

of Exhibit C among the Borrower, the Parent Guarantor, the Subsidiary Guarantors

and the Collateral Agent, as the same shall be modified and supplemented and in

effect from time to time.

"Security Documents" means the Security Agreement, the Mortgages and all

Uniform Commercial Code financing statements permitted by the Security

Agreement, the Mortgages to be filed with respect to the security interests in

personal property and fixtures created pursuant to the Security Agreement or the

Mortgages, the Concentration Account Control Agreements, any Investment Account

Control Agreement and all other agreements entered into to confer upon the

Shared Lien Collateral Agent or the Collateral Agent control over

 

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deposit accounts or securities accounts for purposes of the Uniform Commercial

Code and any other agreement, document, instrument or other writing providing

collateral for the Obligations whether now or hereafter in existence.

"Shared Lien Collateral Agent" has the meaning assigned to such term in the

Intercreditor Agreement.

"Specified Contingent Obligations" means the obligations listed on Schedule

IX, together with all other obligations of a similar nature binding on any

Obligor and all obligations of a similar nature that replace or supplement a

Specified Contingent Obligation in connection with a transaction that results in

a net reduction of Specified Contingent Obligations, from time to time

outstanding. The amount of any Specified Contingent Obligation shall be the

maximum amount that the Obligors upon which such Specified Contingent Obligation

is binding could be required to pay thereunder.

"Statutory Reserve Rate" means, for the Interest Period for any Eurodollar

Borrowing, a fraction (expressed as a decimal), the numerator of which is the

number one and the denominator of which is the number one minus the arithmetic

mean, taken over each day in such Interest Period, of the aggregate of the

maximum reserve percentages (including any marginal, special, emergency or

supplemental reserves) expressed as a decimal established by the Board to which

the Administrative Agent is subject for eurocurrency funding (currently referred

to as "Eurocurrency liabilities" in Regulation D of the Board). Such reserve

percentages shall include those imposed pursuant to such Regulation D.

Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be

subject to such reserve requirements without benefit of or credit for proration,

exemptions or offsets that may be available from time to time to any Lender

under such Regulation D or any comparable regulation. The Statutory Reserve Rate

shall be adjusted automatically on and as of the effective date of any change in

any reserve percentage.

"Subordinated Indebtedness" means Indebtedness (a) for which the Parent

Guarantor is directly and primarily liable, (b) in respect of which none of its

Subsidiaries is contingently or otherwise obligated and (c) that is subordinated

to the obligations of the Parent Guarantor hereunder (including in respect of

its Guarantee under Article III) on terms, and pursuant to documentation

containing other terms (including interest, amortization, covenants and events

of default), in form and substance satisfactory to the Required Lenders.

"Subsidiary" means, with respect to any Person (the "parent") at any date,

any corporation, limited liability company, partnership, association or other

entity the accounts of which would be consolidated with those of the parent in

the parent's consolidated financial statements if such financial statements were

prepared in accordance with GAAP as of such date, as well as any other

corporation, limited liability company, partnership, association or other entity

(a) of which securities or other ownership interests representing more than 50%

of the equity or more than 50% of the ordinary voting power or, in the case of a

partnership, more than 50% of the general partnership interests are, as of such

date, owned, controlled or held, or (b) that is, as of such date, otherwise

Controlled, by the parent or one or more subsidiaries of the parent or by the

parent and one or more subsidiaries of the parent. Unless otherwise specified,

"Subsidiary" means a Subsidiary of the Parent Guarantor. Notwithstanding

anything contained

 

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herein to the contrary, neither Montana Mills nor any of its Subsidiaries shall

be deemed to be a Subsidiary of the Parent Guarantor so long as Montana Mills or

such Subsidiary, as the case may be, is an Inactive Company.

"Subsidiary Guarantor" means each of the Subsidiaries of the Borrower

identified under the caption "GUARANTORS" on the signature pages hereto and each

Subsidiary of the Borrower that becomes a "Subsidiary Guarantor" after the date

hereof pursuant to Section 6.10(a).

"Swingline Exposure" means, at any time, the aggregate principal amount of

all Swingline Loans outstanding at such time. The Swingline Exposure of any

Lender at any time shall be its Applicable Percentage of the total Swingline

Exposure at such time.

"Swingline Lender" means WFF, in its capacity as lender of Swingline Loans

hereunder.

"Swingline Loan" means a Loan made pursuant to Section 2.04.

"Syndicated", when used in reference to any Loan or Borrowing, means that

such Loan, or the Loans constituting such Borrowing, are made pursuant to

Section 2.01.

"Synthetic Lease" means any synthetic lease, tax retention operating lease,

or off-balance sheet financing product where such transaction is considered

borrowed money indebtedness for tax purposes but which is classified as an

operating lease pursuant to GAAP.

"Taxes" means any and all present or future taxes, levies, imposts, duties,

deductions, charges or withholdings imposed by any Governmental Authority.

"Test Period" means, on any date of determination, the period of four

consecutive Fiscal Quarters (taken as one accounting period) ending with the

latest Fiscal Quarter or the Fiscal Year for which financial statements pursuant

to Section 6.01(a) or (b) have been, or should have been, delivered, as modified

pursuant to Section 1.03.

"Transactions" means the execution, delivery and performance by each

Obligor of this Agreement, the other Loan Documents and the Second Lien Loan

Documents to which such Obligor is intended to be a party, the borrowing of

Loans hereunder and loans under the Second Lien Loan Documents, the use of the

proceeds thereof and the issuance of Letters of Credit hereunder and the

issuance of letters of credit thereunder.

"Type", when used in reference to any Loan or Borrowing, refers to whether

the rate of interest on such Loan, or on the Loans constituting such Borrowing,

is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

"Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital

stock or other ownership interests of which (except directors' qualifying

shares) are at the time directly or indirectly owned by the Parent Guarantor.

 

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"Withdrawal Liability" means liability to a Multiemployer Plan as a result

of a complete or partial withdrawal from such Multiemployer Plan, as such terms

are defined in Part I of Subtitle E of Title IV of ERISA.

"WFF" means Wells Fargo Foothill, Inc., a California corporation.

SECTION 1.02. Terms Generally. The definitions of terms herein shall apply

equally to the singular and plural forms of the terms defined. Whenever the

context may require, any pronoun shall include the corresponding masculine,

feminine and neuter forms. The words "include", "includes" and "including" shall

be deemed to be followed by the phrase "without limitation". The word "will"

shall be construed to have the same meaning and effect as the word "shall".

Unless the context requires otherwise (a) any definition of or reference to any

agreement, instrument or other document herein shall be construed as referring

to such agreement, instrument or other document as from time to time amended,

supplemented or otherwise modified (subject to any restrictions on such

amendments, supplements or modifications set forth herein), (b) any reference

herein to any Person shall be construed to include such Person's successors and

assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar

import, shall be construed to refer to this Agreement in its entirety and not to

any particular provision hereof, (d) all references herein to Articles,

Sections, Exhibits and Schedules shall be construed to refer to Articles and

Sections of, and Exhibits and Schedules to, this Agreement and (e) the words

"asset" and "property" shall be construed to have the same meaning and effect

and to refer to any and all tangible and intangible assets and properties,

including cash, securities, accounts and contract rights. Any reference to

"Issuing Lender" shall mean any one, or all, of the Issuing Lenders, as

applicable.

SECTION 1.03. Accounting Terms; GAAP; Historical Financial Calculations.

Except as otherwise expressly provided herein, all terms of an accounting or

financial nature shall be construed in accordance with GAAP, as in effect from

time to time; provided that, if the Borrower notifies the Administrative Agent

that the Borrower requests an amendment to any provision hereof to eliminate the

effect of any change occurring after the date hereof in GAAP or in the

application thereof on the operation of such provision (or if the Administrative

Agent notifies the Borrower that the Required Lenders request an amendment to

any provision hereof for such purpose), regardless of whether any such notice is

given before or after such change in GAAP or in the application thereof, then

such provision shall be interpreted on the basis of GAAP as in effect and

applied immediately before such change shall have become effective until such

notice shall have been withdrawn or such provision amended in accordance

herewith. Except as may be otherwise expressly set forth herein, all financial

statements and certificates and reports as to financial matters required to be

delivered to the Lenders hereunder shall be prepared, and all calculations made

for purposes of determining compliance with Section 7.09 shall be made, as if

the Consolidated Joint Ventures were carried as equity investments by the

relevant members of the Financial Test Group. Notwithstanding anything contained

herein to the contrary: (a) (i) each calculation of a financial matter hereunder

that is otherwise to be made for any period of four Fiscal Quarters that

includes a portion of the Fiscal Year ending 2005 shall instead be made solely

by reference to the portion of such period comprised of Fiscal Quarters in the

Fiscal Year ending 2006 (the "2006 Fiscal Quarters") and (ii) for purposes of

completing such calculation, the result obtained for the 2006 Fiscal Quarters

shall be multiplied by a fraction the numerator of which is four and the

denominator of which is

 

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the number of 2006 Fiscal Quarters and (b) the financial statements,

certificates, reports and calculations referred to in the preceding sentence

shall not be required to be prepared or made in accordance with GAAP, but such

deviation from GAAP shall be solely in respect of the treatment of Consolidated

Joint Ventures as equity investments as provided above.

SECTION 1.04. Classification of Loans and Borrowings. For purposes of this

Agreement, Loans may be classified and referred to by Class (e.g. a "Syndicated

Loan"), by Type (e.g. an "ABR Loan") or by Class and Type (e.g. a "Syndicated

ABR Loan"). Borrowings may also be classified and referred to by Class (e.g. a

"Syndicated Borrowing"), by Type (e.g. an "ABR Borrowing") or by Class and Type

(e.g. a "Syndicated ABR Borrowing").

ARTICLE II

THE CREDITS

SECTION 2.01. The Commitments. Subject to the terms and conditions set

forth herein, each Lender agrees to make Syndicated Loans to the Borrower from

time to time during the Availability Period in an aggregate principal amount

that will not result in (a) such Lender's Revolving Credit Exposure exceeding

such Lender's Commitment or (b) the total Revolving Credit Exposures exceeding

the lesser of the total Commitments and the Borrowing Base then in effect.

Within the foregoing limits and subject to the terms and conditions set forth

herein, the Borrower may borrow, prepay and reborrow Syndicated Loans.

SECTION 2.02. Loans and Borrowings.

(a) Obligations of Lenders. Each Syndicated Loan shall be made as part of a

Borrowing consisting of Loans of the same Type made by the Lenders ratably in

accordance with their respective Commitments. The failure of any Lender to make

any Loan required to be made by it shall not relieve any other Lender of its

obligations hereunder; provided that the Commitments of the Lenders are several

and no Lender shall be responsible for any other Lender's failure to make Loans

as required.

(b) Type of Loans. Subject to Section 2.13, each Syndicated Borrowing shall

be constituted entirely of ABR Loans or of Eurodollar Loans as the Borrower may

request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each

Lender at its option may make any Eurodollar Loan by causing any domestic or

foreign branch or Affiliate of such Lender to make such Loan; provided that any

exercise of such option shall not affect the obligation of the Borrower to repay

such Loan in accordance with the terms of this Agreement.

(c) Minimum Amounts; Limitation on Number of Borrowings. Each Eurodollar

Borrowing shall be in an aggregate amount of $1,000,000 or a larger multiple of

$1,000,000. Each Syndicated ABR Borrowing shall be in an aggregate amount equal

to $1,000,000 or a larger multiple of $1,000,000; provided that a Syndicated ABR

Borrowing may be in any lesser aggregate amount that is equal to the entire

unused then available balance of

 

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the lesser of the total Commitments and the Borrowing Base then in effect. Each

Swingline Loan shall be in an amount equal to $500,000 or a larger multiple of

$250,000; provided that a Swingline ABR Borrowing may be in a lesser amount (i)

that is equal to entire unused then available balance of the lesser of the total

Commitments and the Borrowing Base then in effect, or (ii) as may be requested

by the Borrower at any time that the Borrower is required to prepay Loans

pursuant to Section 2.10(b)(iii). Borrowings of more than one Class and Type may

be outstanding at the same time; provided that there shall not at any time be

more than a total of six Eurodollar Borrowings outstanding.

(d) Limitations on Interest Periods. Notwithstanding any other provision of

this Agreement, the Borrower shall not be entitled to request (or to elect to

convert to or continue as a Eurodollar Borrowing) any Borrowing if the Interest

Period requested therefor would end after the Commitment Termination Date.

SECTION 2.03. Requests for Syndicated Borrowings.

(a) Notice by the Borrower. To request a Syndicated Borrowing, the

Borrower shall notify the Administrative Agent of such request by telephone

(i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New

York City time, three Business Days before the date of the proposed

Borrowing or (ii) in the case of a Syndicated ABR Borrowing, not later than

11:00 a.m., New York City time, one Business Day before the date of the

proposed Borrowing; provided that any such notice of a Syndicated ABR

Borrowing to finance the reimbursement of an LC Disbursement as

contemplated by Section 2.05(f) may be given not later than 10:00 a.m., New

York City time, on the date of the proposed Borrowing. Each such telephonic

request for a Loan shall be irrevocable and shall be confirmed promptly by

hand delivery or telecopy to the Administrative Agent of a Request for Loan

signed by the Borrower.

(b) Content of Request for Loans. Each telephonic request for a Loan

and written Request for Loan shall specify the following information in

compliance with Section 2.02:

(i) the aggregate amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a

Eurodollar Borrowing;

(iv) in the case of a Eurodollar Borrowing, the Interest Period

therefor, which shall be a period contemplated by the definition of

the term "Interest Period" and permitted under Section 2.02(d); and

(v) the location and number of the Borrower's account to which

funds are to be disbursed, which shall comply with the requirements of

Section 2.06.

(c) Notice by the Administrative Agent to the Lenders. Promptly

following receipt of a Request for Loan in accordance with this Section,

the Administrative Agent shall advise each Lender of the details thereof

and of the amount of such Lender's Loan to be made as part of the requested

Borrowing.

(d) Failure to Elect. If no election as to the Type of a Syndicated

Borrowing is specified, then the requested Borrowing shall be an ABR

Borrowing. If no Interest Period is

 

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specified with respect to any requested Eurodollar Borrowing, then the Interest

Period shall be one month.

SECTION 2.04. Swingline Loans.

(a) Agreement to Make Swingline Loans. Subject to the terms and conditions

set forth herein, the Swingline Lender agrees to make Swingline Loans to the

Borrower from time to time during the Availability Period, in an aggregate

principal amount at any time outstanding that will not result in (i) the

aggregate principal amount of outstanding Swingline Loans exceeding $7,500,000

or (ii) the total Revolving Credit Exposures exceeding the lesser of the total

Commitments and the Borrowing Base then in effect; provided that the Swingline

Lender shall not be required to make a Swingline Loan to refinance an

outstanding Swingline Loan. Within the foregoing limits and subject to the terms

and conditions set forth herein, the Borrower may borrow, prepay and reborrow

Swingline Loans.

(b) Notice of Swingline Loans by the Borrower. To request a Swingline Loan,

the Borrower shall notify the Swingline Lender of such request by telephone

(confirmed by telecopy of a Request for Loan to the Swingline Lender with an

information copy to the Administrative Agent), not later than 12:00 noon, New

York City time, on the day of a proposed Swingline Loan. Each such notice shall

be irrevocable and shall specify the requested date (which shall be a Business

Day) and the amount of the requested Swingline Loan. The Swingline Lender shall

make such Swingline Loan available to the Borrower by wire transfer to a

Concentration Account designated by the Borrower (or, in the case of a Swingline

Loan made to finance the reimbursement of an LC Disbursement as provided in

Section 2.05(f), by remittance to the Issuing Lender) by 3:00 p.m. New York City

time, on the requested date of such Swingline Loan.

(c) Participation by Lenders in Swingline Loans. The Swingline Lender may

by written notice given to the Administrative Agent not later than 10:00 a.m.,

New York City time, on any Business Day require the Lenders to acquire

participations on such Business Day in all or a portion of the Swingline Loans

outstanding. Such notice to the Administrative Agent shall specify the aggregate

amount of Swingline Loans in which Lenders will participate. Promptly upon

receipt of such notice, the Administrative Agent will give notice thereof to

each Lender, specifying in such notice such Lender's Applicable Percentage of

such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally

agrees, upon receipt of notice as provided above in this paragraph, to pay to

the Administrative Agent, for the account of the Swingline Lender, such Lender's

Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges

and agrees that its obligation to acquire participations in Swingline Loans

pursuant to this paragraph is absolute and unconditional and shall not be

affected by any circumstance whatsoever, including the occurrence and

continuance of a Default or reduction or termination of the Commitments, and

that each such payment shall be made without any offset, abatement, withholding

or reduction whatsoever. Each Lender shall comply with its obligation under this

paragraph by wire transfer of immediately available funds, in the same manner as

provided in Section 2.06 with respect to Loans made by such Lender (and Section

2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders),

and the Administrative Agent shall promptly pay to the Swingline Lender the

amounts so received by it from the Lenders. The Administrative Agent shall

notify the Borrower of any participations in any

 

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Swingline Loan acquired pursuant to this paragraph, and thereafter payments in

respect of such Swingline Loan shall be made to the Administrative Agent and not

to the Swingline Lender. Any amounts received by the Swingline Lender from the

Borrower (or other party on behalf of the Borrower) in respect of a Swingline

Loan after receipt by the Swingline Lender of the proceeds of a sale of

participations therein shall be promptly remitted to the Administrative Agent;

any such amounts received by the Administrative Agent shall be promptly remitted

by the Administrative Agent to the Lenders that shall have made their payments

pursuant to this paragraph and to the Swingline Lender, as their interests may

appear. The purchase of participations in a Swingline Loan pursuant to this

paragraph shall not relieve the Borrower of any default in the payment thereof.

Notwithstanding the foregoing, a Lender shall not have any obligation to acquire

a participation in a Swingline Loan pursuant to this paragraph if a Default

shall have occurred and be continuing at the time such Swingline Loan was made

and such Lender shall have notified the Swingline Lender in writing, at least

one Business Day prior to the time such Swingline Loan was made, that such

Default has occurred and that such Lender will not acquire participations in

Swingline Loans made while such Default is continuing.

SECTION 2.05. Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, in

addition to the Loans provided for in Section 2.01, the Borrower may request

that an Issuing Lender issue, and such Issuing Lender shall issue, at any time

and from time to time during the period commencing on the Effective Date and

ending on the date that is 30 days prior to the Commitment Termination Date,

Letters of Credit for its own account in such form as is acceptable to the

Issuing Lender in its reasonable determination (including, without limitation,

"auto-renewal" letters of credit); provided that the Issuing Lender shall not be

under any obligation to issue any Letter of Credit if the issuance of such

Letter of Credit would violate one or more policies of the Issuing Lender

generally applicable to the issuance of letters of credit. All Letters of Credit

issued hereunder by either Issuing Lender shall be issued for the account of the

Borrower as the named account party thereon, provided that Letters of Credit

may, in addition to showing the Borrower as account party, show any Guarantor as

a favoree under such Letter of Credit. Letters of Credit issued hereunder shall

constitute utilization of the Commitments.

(b) Notice of Issuance, Amendment, Renewal or Extension. To request the

issuance of a Letter of Credit (or the amendment, renewal or extension of an

outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or

transmit by electronic communication, if arrangements for doing so have been

approved by such Issuing Lender) to the Issuing Lender selected by Borrower and

to the Administrative Agent (not later than 11:00 a.m. on the fourth Business

Day preceding the requested date of issuance, amendment, renewal or extension) a

notice requesting the issuance of a Letter of Credit, or identifying the Letter

of Credit to be amended, renewed or extended, and specifying the date of

issuance, amendment, renewal or extension (which shall be a Business Day), the

date on which such Letter of Credit is to expire (which shall comply with

paragraph (d) of this Section), the amount of such Letter of Credit, the name

and address of the beneficiary thereof and such other information as shall be

necessary to prepare, amend, renew or extend such Letter of Credit. If requested

by the Issuing Lender, the Borrower also shall submit a letter of credit

application on the Issuing Lender's standard form in connection with any request

for a Letter of Credit. In the event of any inconsistency between the

 

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terms and conditions of this Agreement and the terms and conditions of any form

of letter of credit application or other agreement submitted by the Borrower to,

or entered into by the Borrower with, the Issuing Lender relating to any Letter

of Credit, the terms and conditions of this Agreement shall control. Each

Issuing Lender shall promptly notify the Administrative Agent of any Letters of

Credit issued, amended, renewed or extended by it hereunder and shall deliver a

report (in form and substance reasonably acceptable to the Administrative Agent)

on the last Business Day of each month after the Effective Date detailing such

Issuing Lender's letter of credit activity under this Agreement; provided that

if the last Business Day of such month coincides with the end of a Fiscal

Quarter, such report shall be delivered five Business Days prior to the last day

of such Fiscal Quarter, and each Issuing Lender shall promptly provide an update

report to the Administrative Agent of any letter of credit activity under this

Agreement during such five Business Day period.

(c) Limitations on Amounts. A Letter of Credit shall be issued, amended,

renewed or extended only if (and upon issuance, amendment, renewal or extension

of each Letter of Credit the Borrower shall be deemed to represent and warrant

that), after giving effect to such issuance, amendment, renewal or extension,

the total Revolving Credit Exposures shall not exceed the lesser of the total

Commitments and the Borrowing Base then in effect.

(d) Expiration Date. Each Letter of Credit shall expire (or provide that

the Issuing Lender shall have the option to refuse to renew such Letter of

Credit) at or prior to the close of business on the earlier of (i) the date

twelve months after the date of the issuance of such Letter of Credit (or, in

the case of any renewal or extension thereof, twelve months after the

then-current expiration date of such Letter of Credit, so long as such renewal

or extension occurs within three months of such then-current expiration date)

and (ii) the date that is five Business Days prior to the Commitment Termination

Date.

(e) Participations. By the issuance of a Letter of Credit (or an amendment

to a Letter of Credit increasing the amount thereof) by the Issuing Lender, and

without any further action on the part of the Issuing Lender or the Lenders, the

Issuing Lender hereby grants to each Lender, and each Lender hereby acquires

from the Issuing Lender, a participation in such Letter of Credit equal to such

Lender's Applicable Percentage of the aggregate amount available to be drawn

under such Letter of Credit. Each Lender acknowledges and agrees that its

obligation to acquire participations pursuant to this paragraph in respect of

Letters of Credit is absolute and unconditional and shall not be affected by any

circumstance whatsoever, including any amendment, renewal or extension of any

Letter of Credit or the occurrence and continuance of a Default or reduction or

termination of the Commitments.

In consideration and in furtherance of the foregoing, each Lender hereby

absolutely and unconditionally agrees to pay to the Administrative Agent, for

the account of the Issuing Lender, such Lender's Applicable Percentage of each

LC Disbursement made by the Issuing Lender promptly upon the request of the

Issuing Lender at any time from the time of such LC Disbursement until such LC

Disbursement is reimbursed by the Borrower or at any time after any

reimbursement payment is required to be refunded to the Borrower for any reason.

Such payment shall be made without any offset, abatement, withholding or

reduction whatsoever. Each such payment shall be made in the same manner as

provided in Section 2.06 with respect to Loans made by such Lender (and Section

2.06 shall apply, mutatis mutandis, to

 

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the payment obligations of the Lenders), and the Administrative Agent shall

promptly pay to the Issuing Lender the amounts so received by it from the

Lenders. Promptly following receipt by the Administrative Agent of any payment

from the Borrower pursuant to the next following paragraph, the Administrative

Agent shall distribute such payment to the Issuing Lender or, to the extent that

the Lenders have made payments pursuant to this paragraph to reimburse the

Issuing Lender, then to such Lenders and the Issuing Lender as their interests

may appear. Any payment made by a Lender pursuant to this paragraph to reimburse

the Issuing Lender for any LC Disbursement shall not constitute a Loan and shall

not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Reimbursement. If the Issuing Lender shall make any LC Disbursement in

respect of a Letter of Credit, then either (x) the Borrower shall directly

reimburse the Issuing Lender in respect of such LC Disbursement by paying to the

Administrative Agent for the account of the Issuing Lender an amount equal to

such LC Disbursement no later than 1:00 p.m., New York City time, on the

Business Day following the day that the LC Disbursement is made (the "Conversion

Date") or (y) if such LC Disbursement is not directly reimbursed prior to the

applicable Conversion Date, then upon the occurrence of the applicable

Conversion Date, the Borrower shall be irrevocably deemed to have requested that

the Lenders make Syndicated ABR Loans in the amount of their respective

Applicable Percentages for the purpose of repaying such LC Disbursement,

provided that if Borrower is not eligible to request a Syndicated ABR Loan, each

Lender shall perform its participation obligations in favor of the Issuing

Lender pursuant to Section 2.05(e) of this Agreement.

(g) Obligations Absolute. The Borrower's obligation to reimburse LC

Disbursements as provided in paragraph (f) of this Section shall be absolute,

unconditional and irrevocable, and shall be performed strictly in accordance

with the terms of this Agreement under any and all circumstances whatsoever and

irrespective of (i) any lack of validity or enforceability of any Letter of

Credit, or any term or provision therein, (ii) any draft or other document

presented under a Letter of Credit proving to be forged, fraudulent or invalid

in any respect or any statement therein being untrue or inaccurate in any

respect, (iii) payment by the Issuing Lender under a Letter of Credit against

presentation of a draft or other document that does not comply strictly with the

terms of such Letter of Credit, and (iv) any other event or circumstance

whatsoever, whether or not similar to any of the foregoing, that might, but for

the provisions of this Section, constitute a legal or equitable discharge of the

Borrower's obligations hereunder.

Neither the Administrative Agent, the Lenders nor the Issuing Lender, nor

any of their Related Parties, shall have any liability or responsibility by

reason of or in connection with the issuance or transfer of any Letter of Credit

by the Issuing Lender or any payment or failure to make any payment thereunder

(irrespective of any of the circumstances referred to in the preceding

sentence), or any error, omission, interruption, loss or delay in transmission

or delivery of any draft, notice or other communication under or relating to any

Letter of Credit (including any document required to make a drawing thereunder),

any error in interpretation of technical terms or any consequence arising from

causes beyond the control of the Issuing Lender; provided that the foregoing

shall not be construed to excuse the Issuing Lender from liability to the

Borrower to the extent of any direct damages (as opposed to consequential

damages, claims in respect of which are hereby waived by the Borrower to the

extent permitted

 

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by applicable law) suffered by the Borrower that are caused by the Issuing

Lender's gross negligence or willful misconduct when determining whether drafts

and other documents presented under a Letter of Credit comply with the terms

thereof. The parties hereto expressly agree that:

(i) the Issuing Lender may accept documents that appear on their face

to be in substantial compliance with the terms of a Letter of Credit

without responsibility for further investigation, regardless of any notice

or information to the contrary, and may make payment upon presentation of

documents that appear on their face to be in substantial compliance with

the terms of such Letter of Credit;

(ii) the Issuing Lender shall have the right, in its sole discretion,

to decline to accept such documents and to make such payment if such

documents are not in strict compliance with the terms of such Letter of

Credit; and

(iii) this sentence shall establish the standard of care to be

exercised by the Issuing Lender when determining whether drafts and other

documents presented under a Letter of Credit comply with the terms thereof

(and the parties hereto hereby waive, to the extent permitted by applicable

law, any standard of care inconsistent with the foregoing).

(h) Disbursement Procedures. The Issuing Lender shall, within a reasonable

time following its receipt thereof, examine all documents purporting to

represent a demand for payment under a Letter of Credit. The Issuing Lender

shall promptly after such examination notify the Administrative Agent and the

Borrower by telephone (confirmed by telecopy) of such demand for payment and

whether the Issuing Lender has made or will make an LC Disbursement thereunder;

provided that any failure to give or delay in giving such notice shall not

relieve the Borrower of its obligation to reimburse the Issuing Lender and the

Lenders with respect to any such LC Disbursement.

(i) Interim Interest. If the Issuing Lender shall make any LC Disbursement,

then, unless the Borrower shall reimburse (including through a Borrowing of

Syndicated ABR Loans) such LC Disbursement in full on the date such LC

Disbursement is made, the unpaid amount thereof shall bear interest, for each

day from and including the date such LC Disbursement is made to but excluding

the date that the Borrower reimburses such LC Disbursement, at the rate per

annum then applicable to Syndicated ABR Loans; provided that, if the Borrower

fails to reimburse such LC Disbursement when due pursuant to paragraph (f) of

this Section, then Section 2.12(c) shall apply. Interest accrued pursuant to

this paragraph shall be for the account of the Issuing Lender, except that

interest accrued on and after the date of payment by any Lender pursuant to

paragraph (e) of this Section to reimburse the Issuing Lender shall be for the

account of such Lender to the extent of such payment.

(j) Replacement of the Issuing Lender. The Issuing Lender may be replaced

at any time by written agreement between the Borrower, the Administrative Agent,

the replaced Issuing Lender and the successor Issuing Lender. The Administrative

Agent shall notify the Lenders of any such replacement of the Issuing Lender. At

the time any such replacement shall become effective, the Borrower shall pay all

unpaid fees accrued for account of the replaced

 

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Issuing Lender pursuant to Section 2.11(b). From and after the effective date of

any such replacement, (i) the successor Issuing Lender shall have all the rights

and obligations of the replaced Issuing Lender under this Agreement with respect

to Letters of Credit to be issued thereafter and (ii) references herein to the

term "Issuing Lender" shall be deemed to refer to such successor or to any

previous Issuing Lender, or to such successor and all previous Issuing Lenders,

as the context shall require. After the replacement of an Issuing Lender

hereunder, the replaced Issuing Lender shall remain a party hereto and shall

continue to have all the rights and obligations of an Issuing Lender under this

Agreement with respect to Letters of Credit issued by it prior to such

replacement, but shall not be required to issue additional Letters of Credit.

(k) Cash Collateralization. If either (i) an Event of Default shall occur

and be continuing and the Borrower receives notice from the Administrative Agent

or the Required Lenders (or, if the maturity of the Loans has been accelerated,

Lenders with LC Exposure representing more than 50% of the total LC Exposure)

demanding the deposit of cash collateral pursuant to this paragraph, or (ii) the

Borrower shall be required to provide cover for LC Exposure pursuant to Section

2.10(b), the Borrower shall immediately deposit into the Collateral Account an

amount in cash equal to, in the case of an Event of Default, 105% of the LC

Exposure as of such date plus any accrued and unpaid interest thereon and, in

the case of cover pursuant to Section 2.10(b), the amount required under Section

2.10(b), as the case may be; provided that the obligation to deposit such cash

collateral shall become effective immediately, and such deposit shall become

immediately due and payable, without demand or other notice of any kind, upon

the occurrence of any Event of Default with respect to the Borrower described in

clause (h) or (i) of Article VIII. Such deposit shall be held by the

Administrative Agent in the Collateral Account as collateral in the first

instance for the LC Exposure under this Agreement and thereafter for the payment

of the other First Lien Secured Obligations.

SECTION 2.06. Funding of Borrowings.

(a) Funding by Lenders. Each Lender shall make each Loan to be made by it

hereunder on the proposed date thereof by wire transfer of immediately available

funds by 12:00 noon, New York City time, to the account of the Administrative

Agent most recently designated by it for such purpose by notice to the Lenders;

provided that Swingline Loans shall be made as provided in Section 2.04. The

Administrative Agent will make such Loans available to the Borrower by promptly

transferring by wire transfer the amounts so received, in like funds, to a

Concentration Account of the Borrower designated by the Borrower in the

applicable Request for Loan; provided that Syndicated ABR Borrowings made to

finance the reimbursement of an LC Disbursement as provided in Section 2.05(f)

shall be remitted by the Administrative Agent to the Issuing Lender.

(b) Presumption by the Administrative Agent. Unless the Administrative

Agent shall have received notice from a Lender prior to the proposed date of any

Borrowing that such Lender will not make available to the Administrative Agent

such Lender's share of such Borrowing, the Administrative Agent may assume that

such Lender has made such share available on such date in accordance with

paragraph (a) of this Section and may, in reliance upon such assumption, make

available to the Borrower a corresponding amount. In such event, if a Lender has

not in fact made its share of the applicable Borrowing available to the

Administrative

 

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Agent, then the applicable Lender and the Borrower severally agree to pay to the

Administrative Agent forthwith on demand such corresponding amount with interest

thereon, for each day from and including the date such amount is made available

to the Borrower to but excluding the date of payment to the Administrative

Agent, at (i) in the case of such Lender, the Federal Funds Effective Rate or

(ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If

such Lender pays such amount to the Administrative Agent, then such amount shall

constitute such Lender's Loan included in such Borrowing.

SECTION 2.07. Interest Elections.

(a) Elections by the Borrower for Syndicated Borrowings. The Loans

constituting each Syndicated Borrowing initially shall be of the Type

specified in the applicable Request for Loan and, in the case of a

Eurodollar Borrowing, shall have the Interest Period specified in such

Request for Loan. Thereafter, the Borrower may elect to convert such

Borrowing to a Borrowing of a different Type or to continue such Borrowing

as a Borrowing of the same Type and, in the case of a Eurodollar Borrowing,

may elect the Interest Period therefor, all as provided in this Section.

The Borrower may elect different options with respect to different portions

of the affected Borrowing, in which case each such portion shall be

allocated ratably among the Lenders holding the Loans constituting such

Borrowing, and the Loans constituting each such portion shall be considered

a separate Borrowing. This Section shall not apply to Swingline Borrowings,

which may not be converted or continued.

(b) Notice of Elections. To make an election pursuant to this Section,

the Borrower shall notify the Administrative Agent of such election by

telephone by the time that a Request for Loan would be required under

Section 2.03 if the Borrower were requesting a Syndicated Borrowing of the

Type resulting from such election to be made on the effective date of such

election. Each such telephonic Interest Election Request shall be

irrevocable and shall be confirmed promptly by hand delivery or telecopy to

the Administrative Agent of a written Interest Election Request

substantially in the form of Exhibit I and signed by the Borrower.

(c) Content of Interest Election Requests. Each telephonic and written

Interest Election Request shall specify the following information in

compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies

and, if different options are being elected with respect to different

portions thereof, the portions thereof to be allocated to each

resulting Borrowing (in which case the information to be specified

pursuant to clauses (iii) and (iv) of this paragraph shall be

specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such

Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing

or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the

Interest Period therefor after giving effect to such election, which

shall be a period contemplated by the definition of the term "Interest

Period" and permitted under Section 2.02(d).

 

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(d) Notice by the Administrative Agent to the Lenders. Promptly

following receipt of an Interest Election Request, the Administrative Agent

shall advise each Lender of the details thereof and of such Lender's

portion of each resulting Borrowing.

(e) Failure to Elect; Events of Default. If the Borrower fails to

deliver a timely and complete Interest Election Request with respect to a

Eurodollar Borrowing prior to the end of the Interest Period therefor,

then, unless such Borrowing is repaid as provided herein, at the end of

such Interest Period such Borrowing shall be converted to a Syndicated ABR

Borrowing. Notwithstanding any contrary provision hereof, if an Event of

Default has occurred and is continuing and the Administrative Agent, at the

request of the Required Lenders, so notifies the Borrower, then, so long as

an Event of Default is continuing (i) no outstanding Syndicated Borrowing

may be converted to or continued as a Eurodollar Borrowing and (ii) unless

repaid, each Eurodollar Borrowing shall be converted to a Syndicated ABR

Borrowing at the end of the Interest Period therefor.

SECTION 2.08. Termination and Reduction of the Commitments.

(a) Scheduled Termination. Unless previously terminated, the Commitments

shall terminate on the Commitment Termination Date.

(b) Voluntary Termination or Reduction. The Borrower may at any time

terminate, or from time to time reduce, the Commitments; provided that (i) each

reduction of the Commitments pursuant to this Section shall be in an amount that

is $1,000,000 or a larger multiple of $1,000,000 (or, if less, the entire

remaining aggregate amount of Commitments) and (ii) the Borrower shall not

terminate or reduce the Commitments if, after giving effect to any concurrent

prepayment of the Syndicated Loans in accordance with Section 2.10, the total

Revolving Credit Exposures would exceed the total Commitments or, unless the

Borrower is terminating the Commitments in their entirety, the Net Liquidity

would be less than $20,000,000.

(c) Notice of Voluntary Termination or Reduction. The Borrower shall notify

the Administrative Agent of any election to terminate or reduce the Commitments

under paragraph (b) of this Section at least three Business Days prior to the

effective date of such termination or reduction, specifying such election and

the effective date thereof. Promptly following receipt of any notice, the

Administrative Agent shall advise the Lenders of the contents thereof. Each

notice delivered by the Borrower pursuant to this Section shall be irrevocable;

provided that a notice of termination of the Commitments delivered by the

Borrower may state that such notice is conditioned upon the issuance of

securities or the effectiveness of other credit facilities, in which case such

notice may be revoked by the Borrower (by notice to the Administrative Agent on

or prior to the specified effective date) if such condition is not satisfied.

(d) Effect of Termination or Reduction. Any termination or reduction of the

Commitments shall be permanent. Each reduction of the Commitments shall be made

ratably among the Lenders in accordance with their respective Commitments. Upon

any reduction of the Commitments pursuant to this Section 2.08 prior to the

first anniversary of the Effective Date, the Borrower shall pay to each Lender a

redeployment fee in an amount equal to 1% of the amount of such reduction

applied to such Lender's Commitment.

 

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SECTION 2.09. Repayment of Loans; Evidence of Debt.

(a) Repayment. The Borrower hereby unconditionally promises to pay the

Loans as follows:

(i) to the Administrative Agent for account of the Lenders the outstanding

principal amount of the Syndicated Loans on the Commitment Termination Date, and

(ii) to the Swingline Lender the then unpaid principal amount of each

Swingline Loan on the earlier of (a) the Commitment Termination Date or (b) the

date of demand for repayment by the Swingline Lender of such Swingline Loan;

provided that on each date that a Syndicated Borrowing is made, the Borrower

shall, to the extent of the proceeds of such Syndicated Borrowing, repay all

Swingline Loans then outstanding.

(b) Manner of Payment. Prior to any repayment or prepayment of any

Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to

be paid and shall notify the Swingline Lender or Administrative Agent, as

applicable, by telephone (confirmed by telecopy to the Administrative Agent and

if applicable the Swingline Lender) of such selection in accordance with Section

2.10(c); provided that each repayment of Borrowings shall be applied to repay

any outstanding ABR Borrowings before any other Borrowings. If the Borrower

fails to make a timely selection of the Borrowing or Borrowings to be repaid or

prepaid, such payment shall be applied, first, to pay any outstanding ABR

Borrowings and, second, to other Borrowings in the order of the remaining

duration of their respective Interest Periods (the Borrowing with the shortest

remaining Interest Period to be repaid first). Each payment of a Syndicated

Borrowing shall be applied ratably to the Loans included in such Borrowing.

(c) Maintenance of Records by Lenders. Each Lender shall maintain in

accordance with its usual practice records evidencing the indebtedness of the

Borrower to such Lender resulting from each Loan made by such Lender, including

the amounts of principal and interest payable and paid to such Lender from time

to time hereunder.

(d) Maintenance of Records by the Administrative Agent. The Administrative

Agent shall maintain records in which it shall record (i) the amount of each

Loan made hereunder, the Class and Type thereof and each Interest Period

therefor, (ii) the amount of any principal or interest due and payable or to

become due and payable from the Borrower to each Lender hereunder and (iii) the

amount of any sum received by the Administrative Agent hereunder for account of

the Lenders and each Lender's share thereof.

(e) Effect of Entries. The entries made in the records maintained pursuant

to paragraph (c) or (d) of this Section shall be prima facie evidence of the

existence and amounts of the obligations recorded therein; provided that the

failure of any Lender or the Administrative Agent to maintain such records or

any error therein shall not in any manner affect the obligation of the Borrower

to repay the Loans in accordance with the terms of this Agreement.

(f) Promissory Notes. Any Lender may request that Loans made by it be

evidenced by a promissory note. In such event, the Borrower shall prepare,

execute and deliver

 

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to such Lender a promissory note payable to such Lender (or, if requested by

such Lender, to such Lender and its registered assigns) and in substantially the

same form as Exhibit K.

SECTION 2.10. Prepayment of Loans.

(a) Optional Prepayments. The Borrower shall have the right at any

time and from time to time to prepay any Borrowing in whole or in part,

subject to the requirements of this Section.

(b) Mandatory Prepayments. The Borrower will prepay the Loans and/or

provide cover for LC Exposure as specified in Section 2.05(k) as follows:

(i) Casualty Events. Upon the receipt by the Parent Guarantor or

any of its Included Subsidiaries of the proceeds of insurance,

condemnation award or other compensation in respect of any Casualty

Event affecting any property of the Parent Guarantor or any of its

Subsidiaries, the Borrower shall prepay the Loans and/or provide cover

for LC Exposure as specified in Section 2.05(k) in an aggregate

amount, if any, equal to 100% of the Net Available Proceeds of such

Casualty Event, such prepayment and/or cash cover to be effected in

each case in the manner and to the extent specified in clause (vii) of

this paragraph.

(ii) Equity Issuance. Upon any Equity Issuance, the Borrower

shall prepay the Loans and/or provide cover for LC Exposure as

specified in Section 2.05(k) in an aggregate amount equal to 50% of

the Net Available Proceeds thereof, such prepayment and/or cash cover

to be effected in each case in the manner and to the extent specified

in clause (vii) of this paragraph; provided that, if after giving

effect to such Equity Issuance, the Net Liquidity exceeds $10,000,000,

then (x) the Borrower shall offer to apply an amount equal to 25% of

such Net Available Proceeds under Section 2.10(b) of the Second Lien

Credit Agreement and (y) the amount of such proceeds to be applied as

required by this paragraph (ii) shall be equal to (I) the amount of

such Net Available Proceeds so offered, but not accepted, under the

Second Lien Credit Agreement plus (II) 25% of such Net Available

Proceeds.

(iii) Cash Sweep. On each Business Day on which a Liquidity

Trigger Event shall have occurred and be continuing, the Borrower

shall prepay the principal of the Loans and interest on the amount of

such principal so prepaid to the extent required by Section 2.12(d)

and/or provide cover for LC Exposure as specified in Section 2.05(k)

in an aggregate amount (for both such principal and interest)

necessary to make such payments and provide such cover but not more

than the excess of (x) the amount of the cash balances then on deposit

in the Depositary Account (or, prior to the Depositary Effective Date,

the Concentration Accounts) at 1:30 p.m., New York City time, on such

Business Day over (y) the amount of interest and fees payable by the

Borrower under the Second Lien Credit Agreement on the next day

scheduled for payment of such interest and fees, such prepayment

and/or cash cover to be effected in each case in the manner and to the

extent specified in clause (vii) of this paragraph.

 

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(iv) Sale of Assets. Without limiting the obligation of the

Borrower to obtain the consent of the Required Lenders pursuant to

Section 7.03 to any Disposition not otherwise permitted hereunder, in

the event that the Net Available Proceeds of any Disposition (herein,

the "Current Disposition"), and of all such prior Dispositions (in

each case including, for avoidance of doubt, Properties Designated for

Sale) as to which a prepayment has not yet been made under this

paragraph, shall exceed $1,000,000 then, on the same day the Current

Disposition occurs, the Borrower will deliver to the Lenders a

statement, certified by a Financial Officer of the Borrower, in form

and detail satisfactory to the Administrative Agent, of the amount of

the Net Available Proceeds of the Current Disposition and of all such

prior Dispositions and will prepay the Loans and/or provide cover for

LC Exposure as specified in Section 2.05(k) in an aggregate amount

equal to 100% of the Net Available Proceeds of the Current Disposition

and such prior Dispositions, such prepayment and/or cash cover to be

effected in each case in the manner and to the extent specified in

clause (vii) of this paragraph.

(v) Debt Incurrence. Upon any Debt Incurrence, the Borrower shall

prepay the Loans and/or provide cover for LC Exposure as specified in

Section 2.05(k) in an aggregate amount equal to 100% of the Net

Available Proceeds thereof, such prepayment and/or cash cover to be

effected in each case in the manner and to the extent specified in

clause (vii) of this paragraph.

(vi) Borrowing Base. On each Business Day on which the aggregate

Revolving Credit Exposure of all Lenders exceeds the Borrowing Base,

the Borrower shall prepay the principal of the Loans and/or provide

cover for LC Exposure as specified in Section 2.05(k) in an aggregate

amount equal to the amount of such excess, such prepayment and/or cash

cover to be effected in each case in the manner and to the extent

specified in clause (vii) of this paragraph.

(vii) Application. Prepayments and/or cash cover pursuant to this

paragraph shall be applied, first, to prepay Swingline Loans, second,

to prepay Syndicated Loans and, third, to provide cover for LC

Exposure as specified in Section 2.05(k). Notwithstanding the

foregoing provisions of this Section 2.10: (x) provided that no Event

of Default has occurred and is continuing and, if after giving effect

to the Asset Prepayment Event, the Net Liquidity exceeds $25,000,000,

the Borrower may, at its option, offer to apply all or any portion of

the Net Available Proceeds from such Asset Prepayment Event under

Section 2.10(b) of the Second Lien Credit Agreement, in which case the

amount of such Net Available Proceeds to be applied as required by

this Section 2.10 shall be equal to the amount of such Net Available

Proceeds not so offered (or offered, but not accepted) and (y) after

the prepayment in full of the Loans under this Section 2.10, the

Borrower may, at its option, offer to apply all or any portion of the

remaining Net Available Proceeds from the relevant event under Section

2.10(b) of the Second Lien Credit Agreement, in which case the amount

of such Net Available Proceeds to be applied to provide cover for LC

Exposure as required by this Section 2.10 shall be equal to the amount

of such Net Available Proceeds not so offered (or offered, but not

accepted). It is acknowledged and agreed that the Commitments are not

required to be reduced by reason of any event requiring a prepayment

under this Section 2.10.

 

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(c) Notices, Etc. The Borrower shall notify the Administrative Agent

(and, in the case of prepayment of a Swingline Loan, the Swingline Lender)

by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the

case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m.,

New York City time, three Business Days before the date of prepayment, (ii)

in the case of prepayment of a Syndicated ABR Borrowing, not later than

11:00 a.m., New York City time, one Business Day before the date of

prepayment or (iii) in the case of prepayment of a Swingline Loan, not

later than 12:00 noon, New York City time, on the date of prepayment;

provided that notice of a prepayment pursuant to Section 2.10(b)(iii) shall

be delivered substantially simultaneously with such prepayment. Each such

notice shall be irrevocable and shall specify the prepayment date, the

principal amount of each Borrowing or portion thereof to be prepaid and, in

the case of a mandatory prepayment, a reasonably detailed calculation of

the amount of such prepayment; provided that, if a notice of prepayment is

given in connection with a conditional notice of termination of the

Commitments as contemplated by Section 2.08, then such notice of prepayment

may be revoked if such notice of termination is revoked in accordance with

Section 2.08. Promptly following receipt of any such notice relating to a

Syndicated Borrowing, the Administrative Agent shall advise the Lenders of

the contents thereof. Each partial prepayment of any Borrowing shall be in

an amount that would be permitted in the case of a Borrowing of the same

Type as provided in Section 2.02, except as necessary to apply fully the

required amount of a mandatory prepayment. Each prepayment of a Syndicated

Borrowing shall be applied ratably to the Loans included in the prepaid

Borrowing. Prepayments shall be accompanied by accrued interest to the

extent required by Section 2.12 and shall be made in the manner specified

in Section 2.09(b).

SECTION 2.11. Fees.

(a) Commitment Fee. The Borrower agrees to pay to the Administrative Agent

for the account of each Lender a commitment fee, which shall accrue at a rate

per annum equal to 1/2 of 1% on the average daily unused amount of the

Commitment of such Lender during the period from and including the date hereof

to but excluding the earlier of the date such Commitment terminates and the

Commitment Termination Date. Accrued commitment fees shall be payable on each

Quarterly Date and on the earlier of the date the Commitments terminate and the

Commitment Termination Date. All commitment fees shall be computed on the basis

of a year of 360 days and shall be payable for the actual number of days elapsed

(including the first day but excluding the last day). For purposes of computing

commitment fees, the Commitment of a Lender shall be deemed to be used to the

extent of the outstanding Syndicated Loans and LC Exposure of such Lender (and

the Swingline Exposure of such Lender shall be disregarded for such purpose).

(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the

Administrative Agent for the account of each Lender a participation fee with

respect to its participations in Letters of Credit, which shall accrue at a rate

per annum equal to the Applicable Margin applicable to interest on Eurodollar

Loans on the average daily amount of such Lender's LC Exposure (excluding any

portion thereof attributable to unreimbursed LC Disbursements) during the period

from and including the Effective Date to but excluding the later of the date on

which such Lender's Commitment terminates and the date on which such Lender

ceases to have any LC Exposure, and (ii) to the Issuing Lender a fronting fee,

which shall accrue at the rate or rates per annum separately agreed upon between

the Borrower and the Issuing Lender on the

 

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average daily amount of the LC Exposure (excluding any portion thereof

attributable to unreimbursed LC Disbursements) during the period from and

including the Effective Date to but excluding the later of the date of

termination of the Commitments and the date on which there ceases to be any LC

Exposure, as well as the Issuing Lender's standard fees with respect to the

issuance, amendment, renewal or extension of any Letter of Credit or processing

of drawings thereunder. Participation fees and fronting fees accrued through but

excluding each Quarterly Date shall be payable on such Quarterly Date; provided

that all such fees shall be payable on the date on which the Commitments

terminate and any such fees accruing after the date on which the Commitments

terminate shall be payable on demand. Any other fees payable to the Issuing

Lender pursuant to this paragraph shall be payable within 10 days after demand.

All participation fees and fronting fees shall be computed on the basis of a

year of 360 days and shall be payable for the actual numb


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