Commitment Letter, dated December 17, 2004

  Exhibit 10.1

 

EXECUTION COPY

 

MORGAN STANLEY SENIOR FUNDING, INC.        UBS LOAN FINANCE LLC      1585
Broadway        UBS SECURITIES LLC      New York, New York 10036        677
Washington Blvd.               Stamford, Connecticut 06901     

 

December 17, 2004

 

Trump Hotels & Casino Resorts, Inc.

Trump Atlantic City Associates

Trump Casino Holdings, LLC

725 Fifth Avenue

New York, NY 10022

 

Attention:

   Mr. Scott C. Butera      President and Chief Operating Officer, Trump Hotels
& Casino Resorts, Inc.

 

Ladies and Gentlemen:

 

You, each a debtor and debtor-in-possession under chapter 11 (“Chapter 11”) of
title 11 of the United States Code (the “Bankruptcy Code”) (collectively, the
“Company” or “you”), have advised Morgan Stanley (as hereinafter defined) and
UBS (as hereinafter defined) (together with Morgan Stanley, “we” or “us”) that
you, together with your respective direct and indirect subsidiaries, each a
debtor and debtor-in-possession under Chapter 11, have commenced a case under
Chapter 11 in order to implement a prearranged plan of reorganization containing
terms and conditions previously disclosed by you to the Joint Lead Arrangers and
agreed to by you and certain of your creditors (the “Prearranged Plan”). In this
connection, you have requested that (a) Morgan Stanley provide you with its
financing commitment for up to 80% of the Senior Bank Financing (as hereinafter
defined) described in this letter and in the summary of terms and conditions
attached as Exhibit A (the “Summary of Terms” and, together with this letter,
this “Commitment Letter”), (b) UBS provide you with its financing commitment for
up to 20% of the Senior Bank Financing and (c) Morgan Stanley and UBSS (as
hereinafter defined) provide you with their best efforts undertaking to arrange
a syndicate (in such capacity, the “Joint Lead Arrangers”) of Lenders (as
defined under the section “Lenders” in the Summary of Terms) for the Senior Bank
Financing. The Prearranged Plan, the refinancing of any debtor-in-possession
facility under the Bankruptcy Code (the “DIP Facility”) provided to Trump Hotels
& Casino Resorts, Inc. (the “Borrower”) and its subsidiaries, the construction
of a new tower (the “New Tower”) at the Trump Taj Mahal Casino Resort in
Atlantic City, New Jersey and the debt financing contemplated by the foregoing
are collectively referred to as the “Transaction”.

 

For purposes of this Commitment Letter, (i) “Morgan Stanley” shall mean Morgan
Stanley Senior Funding, Inc. and/or any affiliate thereof as Morgan Stanley
shall determine to be appropriate to provide the services contemplated herein
and (ii) “UBS” shall mean UBS Loan Finance LLC and/or any affiliate thereof,
including UBS Securities LLC (“UBSS”), as UBS shall determine to be appropriate
to provide the services contemplated herein.

 

                       

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

We understand that the funding required to (i) refinance all amounts outstanding
under the DIP Facility, (ii) to fund the construction of the New Tower, (iii) to
pay the fees and expenses incurred in connection with the Transaction and (iv)
to provide for the ongoing working capital and general corporate needs of the
Borrower and its subsidiaries shall be provided from the incurrence by the
Borrower of the Senior Bank Financing and cash generated by the Borrower and its
subsidiaries.

 

We further understand that the senior secured bank financing (the “Senior Bank
Financing”) will be in an aggregate amount of up to $500 million and will be in
the form of (i) a single draw term loan facility in the amount of $150 million
(the “Tranche B-1 Term Loan Facility”), (ii) a delayed draw term loan facility
in the amount of $150 million (the “Tranche B-2 Term Loan Facility”, together
with the Tranche B-1 Term Loan Facility, the “Term Loan Facilities”) and (iii) a
revolving credit facility in the amount of $200 million (the “Revolving Credit
Facility”, together with the Term Loan Facilities, the “Credit Facilities”).

 

We also understand that the Company has entered into that certain Restructuring
Support Agreement dated as of October 20, 2004 (as amended, the “Restructuring
Support Agreement”) with certain subsidiaries of the Company, Donald J. Trump
and certain holders of existing debt securities (the “Existing Notes”) of the
Company and its subsidiaries providing, in part, for the exchange of the
Existing Notes with new debt securities (the “New Notes”), upon consummation of
the Prearranged Plan, such New Notes to be secured on a second priority basis to
the Senior Bank Financing.

 

Subject to and upon the terms and conditions set forth herein and in the Summary
of Terms, Morgan Stanley is pleased to commit to provide, severally and not
jointly, up to 80% of the Senior Bank Financing and UBS is pleased to commit to
provide, severally and not jointly, up to 20% of the Senior Bank Financing. It
is understood that (i) Morgan Stanley and UBSS shall act as exclusive joint lead
arrangers and joint book-runners for the Senior Bank Financing and (ii) Morgan
Stanley shall act as administrative agent for the Senior Bank Financing. It is
further understood that the Joint Lead Arrangers shall be permitted to designate
one or more Lenders as agents or co-agents, as the case may be, with respect to
the Senior Bank Financing in consultation with you, and that no titles may be
given, or compensation paid, to Lenders without the consent of the Joint Lead
Arrangers. Fees payable to the syndicate shall be payable from the amounts
payable to the Joint Lead Arrangers and any other co-arrangers as described in
the fee letter (the “Fee Letter”) executed simultaneously herewith.

 

In connection with the Senior Bank Financing, (i) the name of Morgan Stanley
will appear first in order and on the left of UBS, (ii) the names of Morgan
Stanley and UBS will appear on the left of or above the names of all other
arrangers, underwriters, syndication or placement agents on the cover of any
information memorandum or other syndication materials that describe the Senior
Bank Financing and (iii) the name of each arranger, underwriter, syndication or
placement agent shall otherwise appear as designated by the Joint Lead
Arrangers. In addition, Morgan Stanley, in consultation with UBS, will maintain
the syndication book and allocate commitments to Lenders.

 

Each of Morgan Stanley and UBS reserves the right, prior to or after execution
of the definitive credit documentation for the Senior Banking Financing, to
syndicate all or part of its commitment for the Senior Bank Financing to one or
more lending institutions that will become parties to such definitive credit
documentation pursuant to a syndication to be managed by Morgan Stanley and UBS,
and the commitments of Morgan Stanley and UBS hereunder shall be reduced as and
when commitments are received from the Lenders in a manner to be agreed between
Morgan Stanley and UBS; it being understood that the commitment of each of
Morgan Stanley and UBS hereunder is not subject to such syndication. Morgan
Stanley and UBS shall commence syndication efforts promptly after the

 

                 2     

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

execution of this letter by you and you agree actively to assist the Joint Lead
Arrangers in achieving a syndication that is satisfactory to Morgan Stanley.
Such syndication will be accomplished by a variety of means, including direct
contact during the syndication between senior management and advisors of the
Company and the proposed syndicate members. To assist the Joint Lead Arrangers
in their syndication efforts, you hereby agree (a) to provide and cause your
advisors to provide the Joint Lead Arrangers and the other syndicate members
upon reasonable request with all information reasonably deemed necessary by
Morgan Stanley to complete syndication, including but not limited to information
and evaluations prepared by you and your advisors or on your behalf relating to
the Transaction, (b) to assist the Joint Lead Arrangers upon reasonable request
in the preparation of an Information Memorandum to be used in connection with
the syndication of the Senior Bank Financing, (c) to use your best efforts to
ensure that the syndication efforts of the Joint Lead Arrangers benefit
materially from your existing lending relationships, (d) to make available your
senior officers and representatives, in each case from time to time and to
attend and make presentations regarding the business and prospects of the
Borrower at a meeting or meetings of lenders or prospective lenders and (e) to
obtain ratings (prior to the commencement of syndication) of the Senior Bank
Financing from Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”). You
hereby agree that the general bank meeting in respect of the Senior Bank
Financing shall be held no later than the date that is 35 days prior to the
confirmation hearing for the Prearranged Plan. In addition, you agree that no
other financing (other than financing referred to in the Prearranged Plan) for
any of you or any of your respective subsidiaries or affiliates shall be
syndicated, privately placed or publicly offered in respect of the Prearranged
Plan or otherwise to the extent that such financing could have an adverse effect
on the syndication of the Senior Bank Financing.

 

Please note, however, that the terms and conditions of this commitment are not
limited to those set forth in this Commitment Letter. Those matters that are not
covered or made clear herein or in the attached Summary of Terms are subject to
mutual agreement of the parties. The terms and conditions of this commitment may
be modified only in writing. In addition, this commitment is subject to (a) the
approval of this Commitment Letter by the Bankruptcy Court (as hereinafter
defined), (b) the preparation, execution and delivery of mutually acceptable
loan documentation, including a credit agreement incorporating substantially the
terms and conditions outlined herein and in the Summary of Terms, (c) the
absence of (i) a material adverse change in the business, condition (financial
or otherwise), operations, performance or properties of the Borrower and its
subsidiaries, taken as a whole, since December 31, 2003, other than (x) any
change disclosed in publicly filed documents of the Borrower or any of its
subsidiaries prior to the date hereof or (y) any change of the type which
customarily occurs as a result of events leading up to and following the
commencement of a proceeding under Chapter 11 and the commencement of the
Chapter 11 cases before the applicable bankruptcy court (the “Bankruptcy
Court”), and (ii) any material adverse change in loan syndication or financial
or capital market conditions generally from those currently in effect which
could reasonably be expected to impair the syndication of the Senior Bank
Financing, (d) completion by the Joint Lead Arrangers of (i) confirmatory
business due diligence and (ii) legal and environmental due diligence, in each
case of the Borrower and its subsidiaries in scope, and with results,
satisfactory to them, and (e) the accuracy and completeness in all material
respects of all representations contained in, and your compliance with the terms
of, this Commitment Letter. The commitment of each of Morgan Stanley and UBS set
forth in this Commitment Letter will terminate at 5:00 p.m. (New York City time)
on the earliest of (i) May 1, 2005, (ii) the date on which the Restructuring
Support Agreement is terminated by holders of the requisite aggregate principal
face amount of the Existing Notes pursuant to Section 5 of the Restructuring
Support Agreement (unless otherwise agreed in writing by the Joint Lead
Arrangers) and (iii) the date, if any, on which the Restructuring Support
Agreement is otherwise terminated or ceases to be in effect (unless otherwise
agreed in writing by the Joint Lead Arrangers), unless, in either case, the
Transaction is consummated on

 

                 3     

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

or before such date. Furthermore, if the Joint Lead Arrangers discover
information (whether as a result of the performance of the Joint Lead Arrangers’
ongoing business due diligence or otherwise) not previously disclosed to them on
or prior to the date of this letter which the Joint Lead Arrangers reasonably
believe to be inconsistent in a material and adverse manner with the
understanding of the Joint Lead Arrangers, based on information provided to them
on or prior to the date hereof, with respect to the Transaction or the condition
(financial or otherwise), business, properties, operations, results of
operations, performance, assets or liabilities (contingent or otherwise) of the
Borrower and its subsidiaries taken as a whole, the Joint Lead Arrangers may, in
their sole discretion, suggest alternative financing amounts or structures that
assure adequate protection for the Lenders or decline to provide or participate
in the proposed financing.

 

To induce the Joint Lead Arrangers to issue this letter and to continue with
their due diligence efforts, you hereby agree that all reasonable out-of-pocket
fees and expenses (including the reasonable fees and expenses of counsel and
consultants) of the Joint Lead Arrangers and their respective affiliates arising
in connection with this letter (and their due diligence and syndication efforts
in connection herewith) and in connection with the Senior Bank Financing and the
other transactions described herein shall be for your account, whether or not
the Transaction is consummated, the Senior Bank Financing is made available or
definitive credit documents are executed; provided, however, that, except as
otherwise approved by the Bankruptcy Court, the aggregate amount of such fees
and expenses payable by you prior to the date of the closing of the Credit
Facilities (the “Closing Date”) shall not exceed $500,000. In addition, you
hereby agree to pay when and as due the fees described in the Fee Letter.

 

You further agree to indemnify and hold harmless the Joint Lead Arrangers and
each of the Lenders (including, in any event, Morgan Stanley and UBS) and each
director, officer, employee and affiliate thereof (each an “Indemnified Person”)
from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve any such Indemnified Person as a result of or arising out of or in any
way related to or resulting from this letter, the Transaction or the extension
or syndication of the Senior Bank Financing contemplated by this letter, or in
any way arise from any use or intended use of this letter or the proceeds of the
Senior Bank Financing contemplated by this letter, and you agree to reimburse
each Indemnified Person upon demand for any reasonable legal or other
out-of-pocket expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any inquiry or
investigation) or claim (whether or not any Joint Lead Arranger or any such
other Indemnified Person is a party to any action or proceeding out of which any
such expenses arise) (collectively, an “Action”); provided, however, that you
shall not have to indemnify any Indemnified Person against any loss, claim,
damage, expense or liability to the extent finally determined by a court of
competent jurisdiction to have resulted directly and primarily from the gross
negligence or willful misconduct of such Indemnified Person. This letter is
issued for your benefit only and no other person or entity may rely hereon;
provided, however, that the Joint Lead Arrangers acknowledge that this letter
may be disclosed to the Bankruptcy Court in connection with obtaining approval
of this letter and in connection with obtaining approval of the Prearranged
Plan. Neither any Joint Lead Arranger nor any Lender shall be responsible or
liable to any of you or any other person for consequential damages which may be
alleged as a result of this letter.

 

Each Joint Lead Arranger reserves the right to employ the services of its
affiliates in providing services contemplated by this letter and to allocate, in
whole or in part, to such affiliates certain fees payable to such Joint Lead
Arranger in such manner as such Joint Lead Arranger and such affiliates may
agree in their sole discretion. You acknowledge that each Joint Lead Arranger
may share with any of its affiliates, and such affiliates may share with such
Joint Lead Arranger, any information related to

 

                 4     

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

the Transaction, you or any of your respective subsidiaries or any of the
matters contemplated hereby in connection with the Transaction.

 

The provisions of the immediately preceding three paragraphs shall survive any
termination of this letter; provided, however, that such provisions (other than
the provisions of the immediately preceding paragraph) shall automatically
terminate and be superseded by the definitive documentation relating to the
Senior Bank Financing upon execution thereof and you shall be released from all
liability in connection therewith at such time.

 

You represent and warrant that (a) all information (other than the Projections
referred to below) (the “Information”) that has been or will hereafter be made
available by or on behalf of you or by any of your representatives in connection
with the Transaction and the other transactions contemplated hereby, taken as a
whole, to any Joint Lead Arranger or any of its affiliates or representatives or
to any Lender or any potential Lender is and will be complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the
circumstances under which such statements were or are made and (b) all financial
projections (the “Projections”), if any, that have been or will be prepared by
you or on your behalf or by any of your representatives and made available to
any Joint Lead Arranger or any of its affiliates or representatives or to any
Lender or any potential Lender in connection with the Transaction and the other
transactions contemplated hereby have been or will be prepared in good faith
based upon assumptions that were believed to be reasonable at the time such
assumptions were made (it being understood that such projections are subject to
significant uncertainties and contingencies, many of which are beyond your
control, and that no assurance can be given that any particular projections will
be realized). You agree to supplement the information and projections from time
to time so that the representations and warranties contained in this paragraph
remain complete and correct.

 

In issuing this commitment, each of Morgan Stanley and UBS is relying on the
accuracy of the information furnished to it by you or on your behalf
(collectively, the “Pre-Commitment Information”). The obligations of each Joint
Lead Arranger under this Commitment Letter and of any Lender that issues a
commitment for the Senior Bank Financing are made solely for your benefit and
may not be relied upon or enforced by any other person or entity.

 

You are not authorized to show or circulate this letter to any other person or
entity (other than (i) to your legal and financial advisors in connection with
your evaluation hereof, (ii) to the Bankruptcy Court in connection with
obtaining approval of this letter and (iii) except as required by law or stock
exchange requirements) until such time as you have accepted this letter as
provided in the immediately succeeding paragraph. Each Joint Lead Arranger
hereby acknowledges that the Company may file a copy of this Commitment Letter
(including the Summary of Terms) with the Bankruptcy Court in connection with
obtaining approval of this letter and in connection with the consummation of the
Prearranged Plan under the Bankruptcy Code. If the letter is not accepted by you
as provided in the second succeeding paragraph, you are to immediately return
this letter (and any copies hereof) to the undersigned. This letter may be
executed in any number of counterparts, and by the different parties hereto on
separate counterparts, each of which counterpart shall be an original, but all
of which shall together constitute one and the same instrument.

 

You acknowledge that any of us may provide debt financing, equity capital or
other services (including financial advisory services) to parties whose
interests regarding the transactions described herein or otherwise may conflict
with your interests. Consistent with each our respective

 

                 5     

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

policies to hold in confidence the affairs of our clients, we will not furnish
confidential information obtained from you or your affiliates to any of our
other clients. Furthermore, none of us will use in connection with the
transactions contemplated hereby, or furnish to you, confidential information
obtained by us from any other person. In addition to the Senior Bank Financing,
each Joint Lead Arranger and its affiliates have and may in the future seek to
have a significant position in the debt or equity securities or senior loans of
the Company. The Company agrees that it will not assert any damage, conflict of
interest or other claim against any Joint Lead Arranger or its affiliates
arising out of such a position on the basis of a conflict of interest or
otherwise.

 

If you are in agreement with the foregoing, please sign and return to each of
Morgan Stanley and UBS (including by way of facsimile transmission) the enclosed
copies of this letter, together with the Fee Letter, no later than 5:00 P.M.,
New York time, on December 17, 2004. Our commitments set forth in this letter
shall terminate at the time and on the date referenced in the immediately
preceding sentence unless this letter and the Fee Letter are executed and
returned by you as provided in such sentence. The Joint Lead Arrangers
acknowledge that notwithstanding your execution of this letter and delivery of a
counterpart hereof to Morgan Stanley and UBS, none of your obligations under
this letter shall be binding on you until the approval of this letter by the
Bankruptcy Court.

 

This letter and the Fee Letter shall be governed by, and construed in accordance
with the laws of the state of New York, and any right to trial by jury with
respect to any claim, action, suit or proceeding arising out of or contemplated
by this letter and/or the related Fee Letter is hereby waived. The parties
hereto hereby submit to the non-exclusive jurisdiction of the federal and New
York State courts located in the City of New York in connection with any dispute
related to this letter or the Fee Letter or any matters contemplated hereby or
thereby. Delivery of an executed counterpart of this Commitment Letter by
telecopier shall be effective as delivery of a manually executed counterpart of
this Commitment Letter.

 

[Rest of this page intentionally left blank.]

 

                 6     

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

Please confirm that the foregoing is in accordance with your understanding by
signing and returning to us an executed duplicate of this letter. Upon your
acceptance hereof, this letter will constitute a binding agreement among us.

 

Very truly yours, MORGAN STANLEY SENIOR FUNDING, INC. By        

Title:

UBS LOAN FINANCE LLC By        

Title:

By        

Title:

UBS SECURITIES LLC By        

Title:

By        

Title:

 

                 7     

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

Agreed to and Accepted this

17th day of December, 2004

TRUMP HOTELS & CASINO RESORTS, INC. By        

Title:

TRUMP ATLANTIC CITY ASSOCIATES By        

Title:

TRUMP CASINO HOLDINGS, LLC By        

Title:

 

                 8     

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

 

EXHIBIT A

 

SUMMARY OF CERTAIN TERMS AND CONDITIONS*

 

I. The Parties

 

Borrower:    Trump Hotels & Casino Resorts, Inc., a Delaware corporation, a
debtor and debtor-in-possession under Chapter 11. Joint Lead Arrangers and Joint
Book-runners:    Morgan Stanley and UBSS. Administrative Agent:    Morgan
Stanley. Syndication Agent:    UBSS. Lenders:    Morgan Stanley and UBS and a
syndicate of financial institutions and institutional lenders arranged by the
Joint Lead Arrangers in consultation with and reasonably acceptable to the
Borrower. Guarantors:    All obligations under the Senior Bank Financing shall
be unconditionally guaranteed by each of the Borrower’s direct and indirect
wholly-owned subsidiaries (other than any entity that is a controlled foreign
corporation (“CFC”) under Section 957 of the Internal Revenue Code), each a
debtor and debtor-in-possession under Chapter 11 (all of such subsidiaries
being, collectively, the “Guarantors”), subject to customary exceptions and
exclusions and release mechanics for transactions of this type.

 

II. Description of Credit Facilities Comprising the Senior Bank Financing

 

A. Term Loan Facilities

 

Tranche B-1 Term Loan Facility:    $150 million Tranche B-1 Term Loan Facility.
Maturity and Amortization:    The final maturity of the Tranche B-1 Term Loan
Facility shall be the date which occurs seven years after the Closing Date. The
loans under the Tranche B-1 Term Loan Facility (the “Tranche B-1 Loans”) shall
be repaid during the final year of the Tranche B-1 Loans in equal quarterly
amounts, subject to amortization of approximately 1% per year prior to such
final year. Tranche B-1 Loans Availability:   

 

The Tranche B-1 Loans may only be borrowed on the Closing Date. No amount of
Tranche B-1 Loans once repaid may be reborrowed.

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

* Capitalized terms used herein and not defined herein shall have the meanings
provided in the commitment letter (the “Commitment Letter”) to which this
summary is attached.

 

                       

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

Tranche B-2 Term Loan Facility:    $150 million Tranche B-2 Term Loan Facility.
Maturity and Amortization:    The final maturity of the Tranche B-2 Term Loan
Facility shall be the date which occurs seven years after the Closing Date. The
loans under the Tranche B-2 Term Loan Facility (the “Tranche B-2 Loans,”
together with the Tranche B-1 Loans, the “Term Loans”) shall be repaid during
the final year of the Tranche B-2 Term Loans in equal quarterly amounts, subject
to amortization of approximately 1% per year prior to such final year. Tranche
B-2 Loans Availability:   

 

The Tranche B-2 Loans may be borrowed in multiple drawings during the period
(the “Tranche B-2 Availability Period”) commencing on the Closing Date through
the date that is twelve months following the Closing Date in minimum amounts to
be agreed. No amount of the Tranche B-2 Loans once repaid may be reborrowed.

Use of Proceeds:    The Term Loans shall only be utilized solely to (i)
refinance all amounts outstanding under the DIP Facility, (ii) to fund the
construction of the New Tower, (iii) to pay the fees and expenses incurred in
connection with the Transaction and (iv) to provide for the ongoing working
capital and general corporate needs (including capital expenditures) of the
Borrower and its subsidiaries.

 

B. Revolving Credit Facility

 

Revolving Credit Facility:    $200 million Revolving Credit Facility, with a
letter of credit sublimit and a swingline to be agreed upon. Maturity:    The
final maturity of the Revolving Credit Facility shall be the date which occurs
five years after the Closing Date. Loans made pursuant to the Revolving Credit
Facility (the “Revolving Loans”, and together with the Term Loans, the “Loans”)
shall be repaid in full on the fifth anniversary of the Closing Date, and all
letters of credit issued thereunder shall terminate prior to such time. Use of
Proceeds:    The Revolving Loans shall be utilized solely for the Borrower’s and
its subsidiaries’ working capital requirements and other general corporate
purposes. Availability:    Revolving Loans may be borrowed, repaid and
reborrowed on and after the Closing Date. No Revolving Loans may be used to fund
the Transaction.

 

                 2     

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

III. Terms Applicable to the Entire Senior Bank Financing

 

Closing Date    On or before May 1, 2005. Security:    The Borrower and each of
the Guarantors shall grant the Administrative Agent and the Lenders a valid and
perfected first priority (subject to certain exceptions to be set forth in the
loan documentation) lien and security interest in all of the following:     

(a)    Subject to necessary regulatory approval, all shares of capital stock of
(or other ownership interests in) and intercompany debt of the Borrower and each
present and future subsidiary of the Borrower or such Guarantor, limited, in the
case of each CFC, to 66% of the voting stock of such entity.

    

(b)    Substantially all present and future property and assets, real and
personal, of the Borrower or such Guarantor, including, but not limited to,
machinery and equipment, inventory and other goods, accounts receivable, owned
real estate, leaseholds, fixtures, bank accounts, general intangibles, license
rights, patents, trademarks, tradenames, copyrights, insurance proceeds,
contract rights, hedge agreements, documents, instruments, indemnification
rights, tax refunds and cash.

    

(c)    All proceeds and products of the property and assets described in clauses
(a) and (b) above.

Interest Rates:    At the option of the Borrower, Loans may be maintained from
time to time as (x) Base Rate Loans which shall bear interest at the Applicable
Margin in excess of the Base Rate in effect from time to time or (y) Eurodollar
Loans which shall bear interest at the Applicable Margin in excess of the
Eurodollar Rate (adjusted for maximum reserves) as determined by the
Administrative Agent for the respective interest period, provided that until the
earlier to occur of (x) the 30th day following the Closing Date and (y) that
date upon which Morgan Stanley has determined (and notifies the Borrower) that
the primary syndication of the Senior Bank Financing (and the resultant addition
of institutions as Lenders) has been completed Eurodollar Loans shall have an
interest period of one month.      “Base Rate” shall mean the higher of (x) 1/2
of 1% in excess of the federal funds rate and (y) the rate that the
Administrative Agent announces from time to time as its prime or base commercial
lending rate, as in effect from time to time.      The “Applicable Margin” means
at any time (i) in respect of the Revolving Credit Facility, (x) for the first
six months after the Closing Date, 1.50% per annum in respect of Base Rate Loans
and 2.50% per annum in respect of Eurodollar Loans, and (y) thereafter, the
applicable

 

                 3     

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

     percentage determined in accordance with a pricing grid based on leverage
to be determined and (ii) in respect of the Tranche B-1 Term Loan Facility and
the Tranche B-2 Term Loan Facility, 1.75% per annum in respect of Base Rate
Loans and 2.75% per annum in respect of Eurodollar Loans.      During the
continuance of any default under the loan documentation, the Applicable Margin
on all obligations owing under the loan documentation shall increase by 2% per
annum.      Interest periods of 1, 2, 3 and 6 months shall be available in the
case of Eurodollar Loans.      Interest in respect of Base Rate Loans shall be
payable quarterly in arrears on the last business day of each quarter. Interest
in respect of Eurodollar Loans shall be payable in arrears at the end of the
applicable interest period and every three months in the case of interest
periods in excess of three months. Interest will also be payable at the time of
repayment of any Loans, and at maturity. All interest and commitment fee and
other fee calculations shall be based on a 360-day year. Joint Lead Arrangers
and Administrative Agent Fees:   

 

The Joint Lead Arrangers and the Administrative Agent shall receive such fees as
have been separately agreed upon with the Borrower.

Unused

Commitment Fees:

   Tranche B-2 Term Loan Facility: 1.00% per annum on the unused portion of each
Lender’s share of the Tranche B-2 Term Loan Facility, payable (a) quarterly in
arrears during the Tranche B-2 Availability Period and (b) on the last day of
the Tranche B-2 Availability Period.      Revolving Credit Facility: 1/2 of 1%
per annum on the unused portion of each Lender’s share of the Revolving Credit
Financing, payable (a) quarterly in arrears and (b) on the date of termination
or expiration of the commitments. Letter of Credit Fees:    Applicable Margin
for Eurodollar Loans which are Revolving Loans on the aggregate outstanding
stated amounts of letters of credit plus an additional 1/4 of 1% on the
aggregate outstanding stated amounts of letters of credit to be paid as a
fronting fee to the issuing bank. Voluntary Commitment Reductions:   

 

Voluntary reductions to the unutilized portion of the Senior Bank Financing,
including the Revolving Credit Facility, may be made from time to time by the
Borrower without premium or penalty.

Voluntary Prepayment:    The Borrower may, upon at least one business day’s
notice in the case of Base Rate Loans and three business days’ notice in the
case of

 

                 4     

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

     Eurodollar Loans, prepay, in full or in part, the Senior Bank Financing
without premium or penalty; provided, however, that each partial prepayment
shall be in an amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof; provided further that any such prepayment of Eurodollar Loans
shall be made together with reimbursement for any funding losses of the Lenders
resulting therefrom.

Mandatory Prepayment

and Commitment Reduction:

  

 

The Borrower shall prepay the Senior Bank Financing, ratably to the principal
repayment installments of each of the Term Facilities on a pro rata basis and
then to the Revolving Credit Facility, with (a) all net cash proceeds (i) from
sales of property and assets of the Borrower and its subsidiaries (excluding
sales of inventory in the ordinary course of business and subject to a
reinvestment provision and minimum thresholds to be negotiated), (ii) of
Extraordinary Receipts* (to be defined in the loan documentation, to exclude
cash receipts in the ordinary course of business and with step-downs (to zero)
to be agreed based on leverage) and (iii) from the issuance after the Closing
Date of additional debt of the Borrower and its subsidiaries otherwise permitted
under the loan documentation (with step-downs (to zero) to be agreed based on
leverage), in each case under this clause (a) with exceptions to be agreed, (b)
commencing after the first full year of the Senior Bank Financing, 50% of Excess
Cash Flow (to be defined in the loan documentation and to include exclusions for
certain committed capital expenditures) of the Borrower and its subsidiaries
(with step-downs (to zero) to be agreed based on leverage) and (c) 50% of the
net cash proceeds from the issuance of equity (with step-downs (to zero) to be
agreed based on leverage and other exceptions to be agreed). Mandatory
prepayments in respect of the Revolving Credit Facility shall not be subject to
a corresponding reduction in the Commitments thereunder.

Documentation:    The commitments of Morgan Stanley and UBS will be subject to
the negotiation, execution and delivery of definitive financing agreements (and
related security documentation, guaranties, etc.) consistent with the terms of
this letter, in each case prepared by counsel to the Joint Lead Arrangers.

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

* This would include items such as tax refunds, indemnity payments, pension
reversions and certain insurance proceeds that are not covered as “asset sale”
proceeds.

 

                 5     

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

Conditions Precedent to Initial Extension of Credit:  

 

Those customarily found in credit agreements for similar secured financings and
others appropriate in the judgment of the Joint Lead Arrangers for the
Transaction, including, without limitation, the following:

   

(a)     The final terms and conditions of the Transaction, including, without
limitation, all legal and tax aspects thereof, shall be (i) as described in the
Commitment Letter and otherwise consistent with the description thereof received
in writing as part of the Pre-Commitment Information and (ii) otherwise
satisfactory to the Joint Lead Arrangers. The Joint Lead Arrangers shall be
reasonably satisfied with the Prearranged Plan and the disclosure statement with
respect to the Prearranged Plan (the “Disclosure Statement”) (including all
schedules and exhibits thereto) and none of the Prearranged Plan, the Disclosure
Statement or the Restructuring Support Agreement shall be altered, amended or
otherwise changed or supplemented in any material respect or any material
condition therein waived without the prior written consent of the Joint Lead
Arrangers, which consent shall not be unreasonably withheld. An order of the
Bankruptcy Court, in form and substance reasonably satisfactory to the Joint
Lead Arrangers, confirming the Prearranged Plan, approving the Transaction and
authorizing the Company to execute, deliver and perform under all documents
contemplated by the Transaction (the “Confirmation Order”) shall have been
entered and shall have become a final order of the Bankruptcy Court. The
Prearranged Plan shall have become effective in accordance with the terms
thereof and in compliance with applicable law, Bankruptcy Court and regulatory
approvals.

   

(b)     All documentation relating to the Senior Bank Financing, including a
credit agreement incorporating substantially the terms and conditions outlined
herein, and the other parts of the Transaction shall be in form and substance
satisfactory to the Joint Lead Arrangers.

   

(c)     The Joint Lead Arrangers shall be reasonably satisfied with the
corporate and legal structure and the terms and conditions of the capitalization
of the Borrower and each of the Guarantors, including, without limitation, the
charter and bylaws of the Borrower and each such Guarantor and each agreement or
instrument relating thereto.

   

(d)     All capital stock of the Borrower’s subsidiaries shall be owned by the
Borrower or one or more of the Borrower’s subsidiaries, in each case free and
clear of any lien, charge or encumbrance, other than the liens and security
interests created under the loan documentation and liens in respect of the New
Notes (which liens shall rank junior in priority to the Senior Bank Financing);
the Administrative Agent for itself (in such capacity) and for the benefit of
the Lenders shall have a valid and perfected first priority (subject to (i)
certain exceptions to be set forth in the loan documentation and (ii) applicable
regulatory requirements) lien and security interest in such capital stock and in
the other

 

                 6     

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

   

collateral referred to under the section “Security” above; all filings,
recordations and searches necessary or desirable in connection with such liens
and security interests shall have been duly made; all filing and recording fees
and taxes shall have been duly paid; and the Administrative Agent shall have
entered into intercreditor arrangements with the holders of the New Notes on
terms satisfactory to the Joint Lead Arrangers.

   

(e)     There shall have occurred no material adverse change in the business,
condition (financial or otherwise), operations, performance or properties of the
Borrower and its subsidiaries, taken as a whole, other than (x) any change
disclosed in publicly filed documents of the Borrower or any of its subsidiaries
prior to the date hereof or (y) any change of the type which customarily occurs
as a result of events leading up to and following the commencement of a
proceeding under Chapter 11 and the commencement of the Chapter 11 cases before
the Bankruptcy Court.

   

(f)     There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental or regulatory agency or authority that (i) could reasonably be
expected to (A) have a material adverse effect on the business, condition
(financial or otherwise), operations, performance or properties of the Borrower
and its subsidiaries, taken as a whole, (B) adversely affect the ability of the
Borrower or any material Guarantor to perform its obligations under the loan
documentation or (C) materially and adversely affect the rights and remedies of
the Administrative Agent and the Lenders under the loan documentation
(collectively, a “Material Adverse Effect”) or (ii) purports to adversely affect
the Transaction or the Senior Bank Financing.

   

(g)     All governmental, bankruptcy court and third party consents and
approvals necessary in connection with the Transaction and the Senior Bank
Financing (including, without limitation, approval of this Commitment Letter by
the Bankruptcy Court) shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Joint Lead Arrangers) and
shall remain in effect; all applicable waiting periods shall have expired
without any adverse action being taken by any competent authority; and no law or
regulation shall be applicable in the reasonable judgment of the Joint Lead
Arrangers that restrains, prevents or imposes materially adverse conditions upon
the Transaction or the Senior Bank Financing.

   

(h)     All Pre-Commitment Information shall be true and correct in all material
aspects; and no additional information shall have come to the attention of the
Administrative Agent or the Lenders that

 

                 7     

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

   

is inconsistent in any material respect with the Pre-Commitment Information or
that could reasonably be expected to have a Material Adverse Effect.

   

(i)      All loans made by the Lenders to the Borrower or any of its affiliates
shall be in full compliance with the Federal Reserve’s Margin Regulations.

   

(j)      The Borrower and each Guarantor shall have delivered certificates, in
form and substance satisfactory to the Joint Lead Arrangers, attesting to the
solvency of the Borrower and such Guarantor, as the case may be, in each case
individually and together with its subsidiaries, taken as a whole, after giving
effect to the Prearranged Plan, from their respective chief financial officers;
and the Joint Lead Arrangers acknowledge that such certificates will not contain
financial or valuation calculations.

   

(k)     The Joint Lead Arrangers shall have received such information and
reports with respect to compliance by the Borrower and its subsidiaries with,
and liabilities of the Borrower and its subsidiaries under, environmental laws
as the Joint Lead Arrangers shall reasonably request, and the Joint Lead
Arrangers shall be satisfied with the compliance by, and the nature and amount
of any environmental liability of, the Borrower and its subsidiaries and with
the Borrower’s plans with respect thereto.

   

(l)      The Joint Lead Arrangers shall be satisfied that (i) the Borrower and
its subsidiaries will be able to meet their obligations under all employee and
retiree welfare plans (other than any such obligations that, if not met, would
not be reasonably expected to have a Material Adverse Effect), (ii) the employee
benefit plans of the Borrower and its ERISA affiliates are, in all material
respects, funded in accordance with the minimum statutory requirements, (iii) no
“reportable event” (as defined in ERISA, but excluding events for which
reporting has been waived) has occurred as to any such employee benefit plan and
(iv) no termination of, or withdrawal from, any such employee benefit plan has
occurred or is contemplated that could reasonably be expected to result in a
material liability.

   

(m)    The Joint Lead Arrangers shall be satisfied with the amount, types and
terms and conditions of all insurance maintained by the Borrower and its
subsidiaries, and the Administrative Agent shall have received endorsements
naming the Administrative Agent, on behalf of the Lenders, as an additional
insured under all insurance policies to be maintained with respect to the
properties of the Borrower and its subsidiaries forming part of

 

                 8     

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

    

the Lenders’ collateral described under the section “Security” above.

    

(n)     The Joint Lead Arrangers shall have completed (i) confirmatory business
due diligence and (ii) legal and environmental due diligence, in each case of
the Company and its subsidiaries in scope, and with results, satisfactory to the
Lenders and shall have received such financial, business and other information
regarding the Borrower and its subsidiaries as they shall have reasonably
requested.

    

(o)     The Joint Lead Arrangers shall have received (i) reasonably satisfactory
opinions of counsel for the Borrower and the Guarantors and of local counsel for
the Lenders as to the Transaction (including, without limitation, compliance
with all applicable securities laws) and (ii) such corporate resolutions,
certificates and other documents as the Joint Lead Arrangers shall reasonably
request.

    

(p)     There shall exist no default under any of the loan documentation, and
the representations and warranties of the Borrower, each of the Guarantors and
each of their respective subsidiaries therein shall be true and correct in all
material respects immediately prior to, and after giving effect to, the initial
extension of credit under the loan documentation.

    

(q)     All accrued fees and expenses of the Administrative Agent, the Joint
Lead Arrangers and the Lenders (including the fees and expenses of counsel for
the Joint Lead Arrangers and local counsel for the Lenders) shall have been
paid.

    

(r)     The Borrower shall have obtained ratings of the Senior Bank Financing
from Moody’s and S&P.

Conditions Precedent to Subsequent Extensions of Credit:   

 

 

There shall exist no default under any of the loan documentation, and the
representations and warranties of the Borrower, each of the Guarantors and each
of their respective subsidiaries therein shall be true and correct all material
respects immediately prior to, and after giving effect to, such extension of
credit.

Representations and Warranties:   

 

Those customarily found in credit agreements for similar secured financings and
others appropriate in the reasonable judgment of the Joint Lead Arrangers for
the Transaction, including, without limitation, absence of any material adverse
change in the business, condition (financial or otherwise), operations,
performance or properties of the Borrower and its subsidiaries, taken as a
whole, other than (x) any

 

                 9     

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

     change disclosed in publicly filed documents of the Borrower or any of its
subsidiaries prior to the date hereof or (y) any change of the type which
customarily occurs as a result of events leading up to and following the
commencement of a proceeding under Chapter 11 and the commencement of the
Chapter 11 cases before the Bankruptcy Court. Covenants:    Those affirmative,
negative and financial covenants (applicable to the Borrower and its
subsidiaries) customarily found in credit agreements for similar secured
financings and others appropriate in the reasonable judgment of the Joint Lead
Arrangers for the Transaction (with appropriate materiality standards and
appropriate carve-outs), including, without limitation, the following:     

(a)     Affirmative Covenants - (i) Compliance with laws and regulations
(including, without limitation, ERISA and environmental laws); (ii) payment of
taxes and other obligations; (iii) maintenance of appropriate and adequate
insurance; (iv) preservation of corporate existence, rights (charter and
statutory), franchises, permits, licenses and approvals; (v) preparation of
environmental reports (upon the reasonable request of the Administrative Agent
during the continuance of an Event of Default); (vi) visitation and inspection
rights; (vii) keeping of proper books in accordance with generally accepted
accounting principles; (viii) maintenance of properties; (ix) performance of
leases, related documents and other material agreements; (x) conducting
transactions with affiliates on terms equivalent to those obtainable on an
arm’s-length basis; (xi) further assurances as to perfection and priority of
security interests; (xii) grant of security on additional property and assets
upon the occurrence of an Event of Default; and (xiii) customary financial and
other reporting requirements (including, without limitation, audited annual
financial statements and quarterly unaudited financial statements, in each case
prepared on a consolidated basis, notices of defaults, compliance certificates,
annual business plans and forecasts, reports to shareholders and other creditors
and other business and financial information as any Lender shall reasonably
request).

    

(b)     Negative Covenants - Restrictions on (i) liens (other than (x) liens
securing the Senior Bank Financing and the New Notes (on a second priority basis
to the Senior Bank Financing) and (y) other liens to be agreed); (ii) debt,
guaranties or other contingent obligations (including, without limitation, the
subordination of all intercompany indebtedness on terms reasonably satisfactory
to the Joint Lead Arrangers); (iii) mergers and consolidations; (iv) sales,
transfers and other dispositions of assets (other than sales of inventory in the
ordinary course of business); (v) loans, acquisitions, joint ventures and other
investments; (vi) dividends and other distributions to stockholders; (vii)
creating new

 

                 10     

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

    

subsidiaries; (viii) becoming a general partner in any partnership; (ix)
repurchasing shares of capital stock; (x) prepaying, redeeming or repurchasing
debt; (xi) capital expenditures; (xii) granting negative pledges other than to
the Administrative Agent and the Lenders; (xiii) changing the nature of its
business; (xiv) amending organizational documents, or amending or otherwise
modifying any debt, any related document or any other material agreement; and
(xv) changing accounting policies or reporting practices; in each of the
foregoing cases, with such exceptions as may be agreed upon in the loan
documentation.

    

(c)     Financial Covenants – The definitive documentation for the Senior Bank
Financing shall contain only the following financial covenants: total leverage
(total debt to EBITDA), total first lien leverage (total first-lien debt to
EBITDA) and interest coverage (EBITDA to cash interest expense). All of the
financial covenants will be calculated on a consolidated basis and for each
consecutive four fiscal quarter period.

Events of Default:    Those customarily found in credit agreements for similar
secured financings and others appropriate in the reasonable judgment of the
Joint Lead Arrangers for the Transaction, including, without limitation, (a)
failure to pay principal when due, or to pay interest or other amounts within
two business days after the same becomes due, under the loan documentation; (b)
any representation or warranty proving to have been materially incorrect when
made or confirmed; (c) failure to perform or observe covenants set forth in the
loan documentation within a specified period of time, where customary and
appropriate, after notice or knowledge of such failure; (d) cross-defaults to
other indebtedness in an amount to be agreed in the loan documentation; (e)
bankruptcy and insolvency defaults (with grace period for involuntary
proceedings); (f) monetary judgment defaults in an amount to be agreed in the
loan documentation and nonmonetary judgment defaults that could reasonably be
expected to have a Material Adverse Effect; (g) impairment of loan documentation
or security; (h) change of control; and (i) standard ERISA defaults. Expenses:
   The Borrower shall pay all of the Administrative Agent’s and the Joint Lead
Arrangers’ due diligence, syndication (including printing, distribution and bank
meetings), search, filing and recording fees and all other reasonable
out-of-pocket expenses incurred by the Administrative Agent or the Joint Lead
Arrangers (including the fees and expenses of counsel for the Joint Lead
Arrangers), whether or not any of the transactions contemplated hereby are
consummated, as well as all reasonable expenses of the Administrative Agent in
connection with the administration of the loan documentation. The Borrower shall
also pay the reasonable expenses of the Administrative Agent, the Joint Lead
Arrangers and the Lenders in connection with the enforcement of any of the loan
documentation.

 

                 11     

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

Indemnity:    The Borrower will indemnify and hold harmless the Administrative
Agent, each Joint Lead Arranger, each Lender and each of their affiliates and
their officers, directors, employees, agents and advisors from claims and losses
relating to the Transaction or the Senior Bank Financing. Required Lenders:   
Lenders holding loans and commitments representing more than 50% of the
aggregate amount of loans and commitments under the Senior Bank Financing.
Waivers & Amendments:    Amendments and waivers of the provisions of the loan
agreement and other definitive credit documentation will require the approval of
the Required Lenders, except that the consent of all affected Lenders be
required with respect to (i) increases in commitment amounts, (ii) reductions of
principal, interest, or fees, (iii) extensions of scheduled maturities or times
for payment, (iv) releases of all or substantially all of the collateral or the
value associated with the guarantees and (v) changes to the order of application
of prepayments. Assignments and Participations:   

 

Assignments may be non-pro rata and must be to Eligible Assignees (to be defined
in the definitive loan documentation) and, in each case other than an assignment
to a Lender or an assignment of the entirety of a Lender’s interest in the
Senior Bank Financing, in a minimum amount equal to $1 million. Each Lender will
also have the right, without consent of the Borrower or the Administrative
Agent, to assign (i) as security all or part of its rights under the loan
documentation to any Federal Reserve Bank and (ii) all or part of its rights or
obligations under the loan documentation to any of its affiliates. No
participation shall include voting rights, other than for reductions or
postponements of amounts payable or releases of all or substantially all of the
collateral.

Taxes:    All payments to be free and clear of any present or future taxes,
withholdings or other deductions whatsoever (other than income taxes in the
jurisdiction of the Lender’s applicable lending office). The Lenders will use
reasonable efforts (consistent with their respective internal policies and legal
and regulatory restrictions and so long as such efforts would not otherwise be
disadvantageous to such Lenders) to minimize to the extent possible any
applicable taxes and the Borrower will indemnify the Lenders and the
Administrative Agent for such taxes paid by the Lenders or the Administrative
Agent. Miscellaneous:    Standard yield protection (including compliance with
risk-based capital guidelines, increased costs, payments free and clear of
withholding taxes and interest period breakage indemnities), eurodollar
illegality and similar provisions, defaulting lender provisions, waiver of jury
trial and submission to jurisdiction provisions. Governing Law:    New York.
Counsel for the Joint Lead Arrangers:    Shearman & Sterling LLP

 

                 12