AMENDED AND RESTATED CREDIT AGREEMENT
 

 
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 13, 2005, among
TASTY BAKING COMPANY a Pennsylvania corporation (the “Company”), the direct and
indirect subsidiaries of the Company from time to time parties hereto (the
“Subsidiary Borrowers” and with the Company, collectively, the “Borrowers”), the
several banks and other financial institutions from time to time parties hereto
(the “Banks”) and PNC BANK, NATIONAL ASSOCIATION, as agent for the Banks
hereunder (in such capacity, the “Agent”).
 
W I T N E S S E T H:
 
A. The Borrowers, the lenders from time to time party thereto and the Agent,
entered into that certain Credit Agreement dated as of January 31, 2002 (as
amended and modified prior to the date hereof, the “Existing Credit Agreement”).
 
B. The Borrowers have requested and the Lenders and the Agent have agreed to
modify and amend the credit facilities established under the Existing Credit
Agreement and to amend and restate the Existing Credit Agreement on the terms
and conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the promises and the agreements hereinafter
set forth, and intending to be legally bound hereby, the parties hereto hereby
agree that, upon the Effective Date, the Existing Credit Agreement shall be and
is hereby amended and restated to read in full as follows:
 
 
SECTION 1.   DEFINITIONS
 
1.1  Defined Terms
 
. As used in this Agreement, the following terms shall have the following
meanings:
 
“Affiliate”: as to any Person, any other Person which, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person and any member, limited liability company
manager, director, officer or employee of any such Person. For purposes of this
definition, “control” shall mean the power, directly or indirectly, either to
(a) vote 10% or more of the securities having ordinary voting power for the
election of directors or managers of such Person or (b) direct or in effect
cause the direction of the management and policies of such Person whether by
contract or otherwise.
 
“Agreement”: this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
 
“Anti-Terrorism Statute”: shall mean any laws relating to terrorism or money
laundering, including Executive Order No. 13224 and the USA Patriot Act.
 
 
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“Applicable Margin”: for any LIBOR Loan or Daily LIBOR Loan on any date, the
percentage per annum set forth below opposite the Leverage Ratio shown on the
last Compliance Certificate delivered by the Borrowers to the Agent pursuant to
subsection 5.2(b) prior to such date:
 

   
Applicable Margin
 
Level
 
Leverage Ratio
 
LIBOR Loan/Daily LIBOR
     
I
Less than 1.00 to 1.00
0.75%
     
II
Greater than or equal to 1.00 to 1.00 but less than 2.00 to 1.00
1.00%
     
III
Greater than or equal to 2.00 to 1.00
1.25%
     

 
; provided, however, that (a) adjustments, if any, to the Applicable Margin
resulting from a change in the Leverage Ratio shall be effective five Business
Days after the Agent has received a Compliance Certificate, (b) in the event
that no Compliance Certificate has been delivered for a fiscal quarter prior to
the last date on which it can be delivered without violation of subsection
5.2(b), the Applicable Margin from such date until such Compliance Certificate
is actually delivered shall be that applicable under Level III, (c) in the event
that the actual Leverage Ratio for any fiscal quarter is subsequently determined
to be greater than or less than that set forth in the Compliance Certificate for
such fiscal quarter, the Applicable Margin shall be recalculated for the
applicable period based upon such actual Leverage Ratio and (d) anything in this
definition to the contrary notwithstanding, until receipt by the Agent of the
Compliance Certificate for the fiscal year ending December 31, 2005, the
Applicable Margin shall be that applicable under Level III. Any additional
interest on the Loans resulting from the operation of clause (c) above shall be
payable by the Borrowers jointly and severally to the Banks within five (5) days
after receipt of a written demand therefor from the Agent. The Applicable Margin
for all Base Rate Loans shall be zero percent (0%).
 
“Application”: in respect of each Letter of Credit issued by the Issuing Bank,
an application, in such form as the Issuing Bank may specify from time to time,
requesting issuance of such Letter of Credit.
 
“Assignment and Acceptance”: an assignment and acceptance entered into by a Bank
and a Purchasing Bank, and accepted by the Agent pursuant to Section 9.6 hereof,
in the form of Exhibit B attached hereto, or such other form as shall be
approved by the Agent.
 
“Base Rate”: for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/100th of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Open Rate in effect on such day plus one half
of one percent (0.5%). If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest
 
 
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error) that it is unable to ascertain the Federal Funds Open Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the definition of such term, the Base Rate shall
be determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Open Rate shall be effective on the effective date of such change
in the Prime Rate or the Federal Funds Open Rate, as the case may be.
 
“Base Rate Loan”: any Loan bearing interest at a rate determined by reference to
the Base Rate.
 
“Borrowers’ Representative”: has the meaning assigned to such term in Section
2.20.
 
“Borrowing Date”: any Business Day on which a Loan is to be made at the request
of the Borrowers’ Representative under this Agreement.
 
“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in Philadelphia, Pennsylvania are authorized or required by law
to close and with respect to LIBOR Loans, such day shall also be a day on which
banks are open for dealings in dollar deposits in the London Interbank Market.
 
“Capital Expenditures”: expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including
Capital Lease Obligations, which, in accordance with GAAP, would be classified
as capital expenditures.
 
“Capital Lease”: at any time, a lease with respect to which the lessee is
required to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
 
“Capital Lease Obligations”: at any time, the amount of the obligations under
Capital Leases which would be shown at such time as a liability on a
consolidated balance sheet of the Company and its consolidated Subsidiaries
prepared in accordance with GAAP.
 
“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
 
“Cash Management Agreements”: has the meaning assigned to such term in Section
2.3(i).
 
“Change of Control”: an event or series of events by which (a) any “person” or
“group” (as such terms are defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under such Exchange Act, except that a Person shall be deemed to have
“beneficial ownership” of all shares that any such Person has the
 
 
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right to acquire without condition, other than passage of time, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 20% of the total voting power of the then outstanding
Voting Stock of the Company, or (b) from and after the date hereof, individuals
who on the date hereof constitute the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors on the date hereof or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
 
“Citizens Loan Agreement”: shall mean that certain Loan Agreement among the
Borrowers and Citizens Bank of Pennsylvania dated as of the date hereof,
pursuant to which Citizens Bank of Pennsylvania has agreed to make the Citizens
Secured Term Loan and the Citizens Unsecured Term Loan to the Borrowers.
 
“Citizens Loan Documents”: shall mean, collectively, the Citizens Loan
Agreement, the term notes evidencing the Citizens Secured Term Loan and the
Citizens Unsecured Term Loan executed in connection with the Citizens Loan
Agreement, the Hunting Park Mortgage and all other documents, instruments,
agreements or certificates delivered in connection therewith, in each case as
amended, supplemented or modified from time to time.
 
“Citizens Secured Term Loan”: shall mean the term loan secured by the Hunting
Park Mortgage to be loaned to the Borrowers, if at all, by no later than
December 31, 2005 in an aggregate principal amount not to exceed $2,150,000.
 
“Citizens Unsecured Term Loan”: shall mean the unsecured term loan to be made to
the Borrowers in an aggregate principal amount not to exceed $7,850,000 of which
$5,300,000 shall be loaned on the Effective Date and the remainder of which
shall be loaned to the Borrowers, if at all, by no later than December 31, 2005.
 
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
 
“Commitments”: the Revolver Commitments and the Swing Line Commitments, as the
context may require.
 
“Commitment Fees”: those certain fees payable to the Banks on the Revolver
Facility as defined in subsection 2.7(a).
 
“Commitment Fee Rate”: for the Revolver Facility on any date, the percentage per
annum set forth below opposite the Leverage Ratio shown on the last Compliance
Certificate delivered by the Borrowers to the Agent pursuant to subsection
5.2(b) prior to such date:
 
 
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Level
Leverage Ratio
Revolver Facility
     
I
Less than 1.00 to 1.00
0.10%
     
II
Greater than or equal to 1.00 to 1.00 but less than 2.00 to 1.00
0.175%
     
III
Greater than or equal to 2.00 to 1.00
0.25%
     

; provided, however, that, (a) adjustments, if any, to the Commitment Fee Rate
resulting from a change in the Leverage Ratio shall be effective five Business
Days after the Agent has received a Compliance Certificate, (b) in the event
that no Compliance Certificate has been delivered for a fiscal quarter prior to
the last date on which it can be delivered without violation of subsection
5.2(b), the Commitment Fee Rate from such date until such Compliance Certificate
is actually delivered shall be that applicable under Level III, (c) in the event
that the actual Leverage Ratio for any fiscal quarter is subsequently determined
to be greater than or less than that set forth in the Compliance Certificate for
such fiscal quarter, the Commitment Fee Rate shall be recalculated for the
applicable period based upon such actual Leverage Ratio and (d) anything in this
definition to the contrary notwithstanding, until receipt by the Agent of the
Compliance Certificate for the fiscal year ending December 31, 2005, the
Commitment Fee Rate shall be that applicable under Level III. Any additional
Commitment Fee that is due to the Banks resulting from the operation of clause
(c) above shall be payable by the Borrowers jointly and severally within five
(5) days after receipt of a written demand therefor from the Agent.
 
“Commitment Letter”: the letter, dated August 4, 2005, from the Agent to the
Company relating to the payment of certain fees and expenses in connection with
the transactions contemplated hereby, as amended, supplemented or otherwise
modified from time to time.
 
“Commitment Percentage”: at any time, the percentage which a Bank’s Revolver
Commitment constitutes of the aggregate of the Revolver Commitments of all Banks
at such time (or at any time after Revolver Commitments shall have expired or
terminated, the percentage which the amount of such Bank’s Revolver Exposure
constitutes of the aggregate amount of the Revolver Exposure of all Banks at
such time).
 
“Commonly Controlled Entity”: an entity, whether or not incorporated, which is
under common control with the Company within the meaning of Section 4001 of
ERISA or is part of a group which includes the Company and which is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.
 
“Compliance Certificate”: has the meaning assigned to such term in subsection
5.2(b).
 
 
 
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“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or any provision of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
 
“Daily LIBOR Loan”: any Swing Line Loan bearing interest at the Daily LIBOR
Rate.
 
“Daily LIBOR Rate”: the rate per annum determined by the Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%)
(x) the rate of interest published each Business Day in The Wall Street Journal
“Money Rates” listing (or in the event such rate is no longer available from
such source, from such other comparable publication as the Agent shall
reasonably determine) under the caption “London Interbank Offered Rates” for a
one month interest period by (y) one minus the percentage prescribed by the
Federal Reserve for determining the maximum reserve requirements with respect to
any eurocurrency funding by the Banks on such day. The rate of interest charged
shall be adjusted as of each Business Day based on changes in the Daily LIBOR
Rate without notice to the Borrowers, and shall be applicable to the then
outstanding balance under the Swing Line Loans from the effective date of such
change.
 
“Default”: any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition precedent therein set forth, has been satisfied.
 
“Distribution”: in respect of any Person, (a) dividends or other distributions
on Capital Stock of such Person (except distributions in Capital Stock of such
Person); (b) the redemption or acquisition of such Capital Stock or of warrants,
rights or other options to purchase such Capital Stock (except when solely in
exchange for Capital Stock of such Person); and (c) any payment on account of,
or the setting apart of any assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of any
share of any class of Capital Stock of such Person or any warrants or options to
purchase any such Capital Stock.
 
“Dollars” and “$”: dollars in lawful currency of the United States of America.
 
“EBITDA”: for any period of four (4) consecutive quarters, consolidated net
income (excluding extraordinary gains and losses), plus the sum of (a) income
tax expense, (b) interest expense, (c) depreciation and amortization, (d)
non-cash pension charges, but only to the extent such non-cash charges do not
exceed twenty percent (20%) of the Tangible Net Worth as determined as of the
end of such period and (e) any other non-cash gains to or non-cash charges
against net income acceptable to the Agent and the Required Banks (which shall
include a non-cash charge against net income in connection with stock-based
compensation), less any non-cash pension gains during such period, in each case
to the extent deducted in determining net income, as determined for the Company
and its consolidated Subsidiaries in accordance with GAAP.
 
“Effective Date”: has the meaning assigned to such term in Section 4.3.
 
 
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“Environmental Laws”: any and all Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees or binding
requirements of any Governmental Authority, or binding Requirement of Law
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment, as now or may at any time hereafter be in effect.
 
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.
 
“Eurocurrency Rate Reserve Percentage”: the maximum percentage (expressed as a
decimal rounded upward to the nearest 1/100 of 1%) as determined by the Agent
which is in effect during any relevant period: (i) as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”) of a member bank in such System; and (ii) to be
maintained by a Bank as required for reserve liquidity, special deposit, or a
similar purpose by any governmental or monetary authority of any country or
political subdivision thereof (including any central bank), against (A) any
category of liabilities that includes deposits by reference to which a LIBOR
Rate is to be determined, or (B) any category of extension of credit or other
assets that includes Loans or Tranches to which a LIBOR Rate applies.
 
“Event of Default”: any of the events specified in Section 7, provided that any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
 
“Executive Order No. 13224”: shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
 
“Existing Letters of Credit”: those Letters of Credit described in Schedule 1.1
attached hereto and incorporated herein by reference.
 
“Extensions of Credit”: the collective reference to Loans made and Letters of
Credit issued under this Agreement.
 
“Federal Funds Effective Rate”: 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 which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it.
 
“Federal Funds Open Rate” for any day shall mean the rate per annum determined
by the Agent in accordance with its usual procedures (which determination shall
be conclusive absent manifest error) to be the “open” rate for federal funds
transactions as of the opening of business for federal funds transactions among
members of the Federal Reserve System arranged by federal funds brokers on such
day, as quoted by Garvin Guybutler, any successor entity thereto, or any other
broker selected by the Agent, as set forth on the applicable Telerate display
 
 
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page; provided, however, that if such day is not a Business Day, the Federal
Funds Open Rate for such day shall be the Open Rate on the immediately preceding
Business Day, or if no such rate shall be quoted by a federal funds broker at
such time, such other rate as determined by the Agent in accordance with its
usual procedures.
 
“Fixed Charge Coverage Ratio”: for any period, the ratio of (i) EBITDA minus
capital expenditures incurred for maintenance of equipment (but in no event less
than $2,500,000 per four quarter period) to (ii) the sum of interest expenses,
income tax expenses, scheduled principal payments (other than principal payments
on the Revolver Facility), dividend Distributions and Distributions made in
connection with the repurchase or redemption of Capital Stock, in each case as
determined for the Company and its consolidated Subsidiaries in accordance with
GAAP.
 
“GAAP”: at any time with respect to the determination of the character or amount
of any asset or liability or item of income or expense, or any consolidation or
other accounting computation, generally accepted accounting principles as in
effect in the United States on the date of, or at the end of the period covered
by, the financial statements from which such asset, liability, item of income,
or item of expense, is derived, or, in the case of any such computation, as in
effect on the date when such computation is required to be determined,
consistently applied.
 
“Governmental Acts”: has the meaning assigned to such term in subsection 2.8(j).
 
“Governmental Authority”: any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
 
“Guaranty Obligation”: as to any Person, any guarantee of payment or performance
by such Person of any Indebtedness or other obligation of any other Person, or
any agreement to provide financial assurance with respect to the financial
condition, or the payment of the obligations of, such other Person (including,
without limitation, purchase or repurchase agreements, reimbursement agreements
with respect to letters of credit or acceptances, indemnity arrangements, grants
of security interests to support the obligations of another Person, keepwell
agreements and take-or-pay or through-put arrangements) which has the effect of
assuring or holding harmless any third Person against loss with respect to one
or more obligations of such third Person; provided, however, the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation of any Person shall be deemed to be the greater of (a) an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made and (b) the maximum amount for which
such contingently liable Person may be liable pursuant to the terms of the
instrument embodying such Guaranty Obligation, unless such primary obligation
and the maximum amount for which such contingently liable Person may be liable
are not stated or determinable, in which case the amount of such Guaranty
Obligation shall be such contingently liable Person’s maximum reasonably
anticipated liability in respect thereof as determined by the Company in good
faith. Guaranty Obligations of any Person shall include the amount of any future
“earn-out” or similar payments to be made to any
 
 
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other Person in connection with a Permitted Acquisition to the extent such
payments are required under GAAP to be reflected as indebtedness on the
financial statements of the contingently liable Person.
 
“Hunting Park Mortgage”: shall mean that certain mortgage granted by the Company
in favor of Citizens Bank of Pennsylvania as security for the Citizens Secured
Term Loan in accordance with the terms of the Citizens Loan Agreement.
 
“Hunting Park Property”: shall mean the real property located at 2801 Hunting
Park Avenue, Philadelphia, Pennsylvania 19129-1306.
 
“Increased Commitment and Acceptance”: shall mean any Increased Commitment and
Acceptance executed and delivered by a Bank, the Borrowers’ Representative and
the Agent, substantially in the form of Exhibit E hereto, as amended,
supplemented or otherwise modified from time to time.
 
“Indebtedness”: of any Person at any date, without duplication:
 
(a)  all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices), including earn-outs and similar obligations,
 
(b)  any other indebtedness which is evidenced by a note, bond, debenture or
similar instrument,
 
(c)  all Capital Lease Obligations of such Person,
 
(d)  all obligations of such Person in respect of outstanding letters of credit,
acceptances and similar obligations created for the account of such Person,
 
(e)  all liabilities secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof,
 
(f)  net liabilities of such Person under interest rate cap agreements, interest
rate swap agreements, foreign currency exchange agreements, netting agreements
and other hedging agreements or arrangements (calculated on a basis satisfactory
to the Agent and in accordance with accepted practice),
 
(g)  withdrawal liabilities of such Person or any Commonly Controlled Entity
under a Plan, and
 
(h)  all Guaranty Obligations of such Person with respect to liabilities of a
type described in any of clauses (a) through (g) of this definition.
 
The Indebtedness of any Person shall include any Indebtedness of any partnership
in which such Person is the general partner.
 
 
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“Insolvency”: with respect to any Multiemployer Plan, the condition that such
Plan is insolvent within the meaning of Section 4245 of ERISA.
 
“Insolvent”: pertaining to a condition of Insolvency.
 
“Intellectual Property”: has the meaning assigned to such term in Section 3.16.
 
“Intercreditor Agreement”: shall mean that certain Intercreditor Agreement dated
as of the date hereof among the Borrowers’ Representative, the Agent (on behalf
of the Banks) and Citizens Bank of Pennsylvania substantially in the form of
Exhibit G hereto, as amended, supplemented or otherwise modified from time to
time.
 
“Interest Payment Date”: (a) as to any Base Rate Loan, the last Business Day of
each March, June, September and December while such Loan is outstanding, (b) as
to any LIBOR Loan having an Interest Period of three months or less, the last
day of such Interest Period, and (c) as to any LIBOR Loan having an Interest
Period longer than three months, the day which is (i) three months after the
first day of such Interest Period and (ii) the last day of such Interest Period.
 
“Interest Period”: with respect to any LIBOR Loan:
 
(a)  initially the period commencing on the borrowing or continuation date, as
the case may be, and ending one, two, three or six months thereafter, as
selected by the Borrowers in their Notice of Borrowing, given with respect
thereto; and
 
(b)  thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Loan and ending one, two, three or six
months thereafter, as selected by the Borrowers by irrevocable notice to the
Agent in a Notice of Borrowing not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
 
provided, that the foregoing provisions relating to Interest Periods are subject
to the following:
 
(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 next preceding Business Day;
 
(ii)  any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
 
(iii)  no interest period shall extend beyond the Revolver Termination Date; and
 
 
 
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(iv)  the Borrowers shall select Interest Periods so as not to require a payment
or prepayment of any LIBOR Loan during an Interest Period for such Loan.
 
“Issuing Bank”: PNC Bank, National Association, or such other Bank as designated
by the Company to be the Issuing Bank and approved by the Required Banks, in its
capacity as issuer of any Letter of Credit.
 
“Joinder and Assumption Agreement”: a Joinder and Assumption Agreement
substantially in the form of Exhibit D hereto pursuant to which a Subsidiary
shall join this Agreement and other Loan Documents, as amended, supplemented or
otherwise modified from time to time.
 
“Law”: any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree or award of any Governmental Authority.
 
“Lending Office”: the lending office(s) of the Banks set forth on Schedule I
hereto or notice of which has been given to the Agent in accordance with the
provisions of this Agreement.
 
“Letter of Credit”: has the meaning assigned to that term in subsection 2.8(a).
 
“Letter of Credit Coverage Requirement”: with respect to each Letter of Credit
at any time, 102% of the maximum amount available to be drawn thereunder at such
time (determined without regard to whether any conditions to drawing could be
met at such time).
 
“Letter of Credit Fee”: has the meaning assigned to that term in subsection
2.8(b).
 
“Letter of Credit Fee Rate”: on any date, the percentage per annum set forth
below opposite the Leverage Ratio shown on the last Compliance Certificate
delivered by the Borrowers to the Agent pursuant to subsection 5.2(b) prior to
such date:
 
Level
Leverage Ratio
Letter of Credit Fee Rate
     
I
Less than 1.00 to 1.00
0.75%
     
II
Greater than or equal to 1.00 to 1.00 but less than 2.00 to 1.00
1.00%
     
III
Greater than or equal to 2.00 to 1.00
1.25%
     

; provided, however, that (a) adjustments, if any, to the Letter of Credit Fee
Rate resulting from a change in the Leverage Ratio shall be effective five
Business Days after the Agent has received a Compliance Certificate, (b) in the
event that no Compliance Certificate has been delivered for a
 
 
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fiscal quarter prior to the last date on which it can be delivered without
violation of subsection 5.2(b), the Letter of Credit Fee Rate from such date
until such Compliance Certificate is actually delivered shall be that applicable
under Level III, (c) in the event that the actual Leverage Ratio for any fiscal
quarter is subsequently determined to be greater than or less than that set
forth in the Compliance Certificate for such fiscal quarter, the Letter of
Credit Fee Rate shall be recalculated for the applicable period based upon such
actual Leverage Ratio and (d) anything in this definition to the contrary
notwithstanding, until receipt by the Agent of the Compliance Certificate for
the fiscal year ending December 31, 2005, the Letter of Credit Fee Rate shall be
that applicable under Level III. Any additional fees on the Letters of Credit
resulting from the operation of clause (c) above shall be payable by the
Borrowers jointly and severally to the Banks within five (5) days after receipt
of a written demand therefor from the Agent.
 
“Letter of Credit Obligations”: at any time, an amount equal to the sum of (a)
100% of the maximum amount available to be drawn under all Letters of Credit
outstanding at such time (determined without regard to whether any conditions to
drawing could be met at such time) and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant to
subsection 2.8(d)(i).
 
“Letter of Credit Participant”: in respect of each Letter of Credit, each Bank
(other than the Issuing Bank) in its capacity as the holder of a participating
interest in such Letter of Credit.
 
“Leverage Ratio” as of the last day of any fiscal quarter, the ratio of Total
Senior Funded Debt on such date to (ii) EBITDA on such date.
 
“LIBOR Loan”: any Loan bearing interest at a rate determined by reference to the
LIBOR Rate.
 
“LIBOR Rate”: with respect to the Revolving Loans comprising any Tranche to
which the LIBOR Rate applies for any Interest Period, the interest rate per
annum determined by the Agent by dividing (the resulting quotient rounded upward
to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by
the Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the London interbank offered rate of
interest per annum for Dollars quoted by the British Bankers’ Association set
forth on Moneyline Telerate (or appropriate successor, or if the British
Bankers’ Association or its successor ceases to provide such quotes, a
comparable replacement determined by the Agent), display page 3750 (or such
other display page on the Moneyline Telerate service as may replace display page
3750) at approximately 11:00 a.m., London time, two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such Tranche
and having a borrowing date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Eurocurrency Rate Reserve Percentage. Such
LIBOR Rate may also be expressed by the following formula:
 
 
 
LIBOR Rate =  
Average of London interbank offered rates quoted by British Bankers’ Association
or appropriate successor as shown on Moneyline
Telerate Service display page 3750                        
                                                          
1.00 - Eurocurrency Rate Reserve Percentage
 

 
 
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The LIBOR Rate shall be adjusted with respect to any LIBOR Loan outstanding on
the effective date of any change in the Eurocurrency Rate Reserve Percentage as
of such effective date. The Agent shall give prompt notice to the Borrowers of
the LIBOR Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
 
“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
 
“Loan Documents”: this Agreement, the Notes, the Joinder and Assumption
Agreements, the Intercreditor Agreement and the Applications and all other
documents, instruments, agreements or certificates delivered in connection
herewith, in each case, as the same may be supplemented or amended from time to
time in accordance herewith or therewith, and “Loan Document” shall mean any of
the Loan Documents.
 
“Loans”: the collective reference to the Revolving Loans and the Swing Line
Loans.
 
“Material Adverse Effect”: a material adverse effect on (a) the business,
operations, property or financial condition of the Borrowers taken as a whole,
(b) the ability of the Company and the other Borrowers to perform their
obligations under this Agreement, the Notes or any other Loan Document or (c)
the validity or enforceability of this Agreement, the Notes or any of the other
Loan Documents or the rights or remedies of the Agent or the Banks hereunder or
thereunder.
 
“Materials of Environmental Concern”: any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Law, including, without limitation, asbestos, polychlorinated
biphynels, and ureaformaldehyde insulation.
 
“Moody’s”: Moody’s Investors Services, Inc.
 
“Multiemployer Plan”: a Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
 
“New Bank”: has the meaning assigned to such term in Section 9.6(j).
 
“New Bank Joinder”: any New Bank Joinder executed and delivered by a financial
institution desiring to become a Bank hereunder, the Borrowers’ Representative
and the Agent, substantially in the form of Exhibit F hereto, as amended,
supplemented or otherwise modified from time to time.
 
“Notes”: means the Revolver Notes and the Swing Line Note.
 
 
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“Notice of Borrowing”: with respect to a Loan of any Type, a notice from the
Borrowers’ Representative in respect of such Loan, in the form of Notice of
Borrowing attached hereto as Exhibit C.
 
“Offered Amount”: has the meaning assigned to such term in Section 2.14(d).
 
“Participant”: has the meaning assigned to such term in subsection 9.6(f).
 
“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
 
“Permitted Acquisition”: an acquisition by a Borrower of all or substantially
all of the stock or assets of a Person engaged in business substantially similar
to the Company or another Borrower or a business related to the manufacture or
distribution of food products; provided that, at the time that any definitive
agreement is entered into in respect of such acquisition, no Default or Event of
Default shall exist or would exist if such acquisition were consummated on such
date (assuming for purposes of the covenants contained in Section 6.1 that
pro forma adjustments are made to the financial statements of the Company and
its Subsidiaries reflecting such acquisition); provided further, that, without
the consent of the Required Banks, no such acquisition may be made if, after
giving pro forma effect to such acquisition, (i) the Leverage Ratio as of the
end of the most recent fiscal quarter preceding such acquisition (the “Test
Date”) would be less than 2.25 to 1.0 and the aggregate consideration paid by
the Borrowers with respect to all Permitted Acquisitions (including the proposed
acquisition) (including earnouts, payments under non-compete arrangements and
assumption of Indebtedness) (“Consideration”) would exceed $10,000,000 during
the Revolver Commitment Period (the “Test Period”), or (ii) the Leverage Ratio
as of the Test Date would be less than 2.50 to 1.0, but greater than 2.25 to
1.0, and the Consideration during the Test Period would exceed $5,000,000; and
provided further, that if the Consideration to be paid by the Borrowers with
respect to any such acquisition shall equal or exceed $5,000,000, then the
Person to be acquired shall have positive operating income for the twelve month
period ending on the last day of the most recently completed fiscal quarter.
 
“Permitted Investments”: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or
instrumentality thereof or guaranteed by the United States of America or any
agency or instrumentality thereof, in each case maturing within one year from
the date of acquisition thereof;
 
(b)  marketable general 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 six months from the date of acquisition,
having one of the two highest ratings generally obtainable from either S&P or
Moody’s at the date of acquisition;
 
(c)  commercial paper maturing no more than six months from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 (or
the equivalent) or higher from S&P and P-1 (or the equivalent) or higher from
Moody’s;
 
(d)  money market mutual funds which make investments principally in securities
of the type described in clauses (a) through (c) above in accordance with the
 
 
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regulations of the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended; and
 
(e)  fully collateralized repurchase agreements with a term of not more than 30
days for underlying securities of the type described in paragraphs (a) and (b)
of this definition;
 
provided, that, in each case, such obligations are payable in U.S. Dollars.
 
“Permitted Liens”: (a) any Liens for current taxes, assessments and other
governmental charges not yet due and payable or being contested in good faith by
any Borrower by appropriate proceedings and for which adequate reserves have
been established by the Company and its Subsidiaries on a consolidated basis as
reflected in its financial statements;
 
(b)  any mechanic’s, landlord’s, materialman’s, carrier’s, warehousemen’s or
similar Liens for sums not yet due or being contested in good faith by the any
Borrower by appropriate proceedings and for which adequate reserves have been
established by the Company and its Subsidiaries on a consolidated basis as
reflected in its financial statements;
 
(c)  existing building restrictions, ordinances, privileges, rights of utility
companies, easements, rights-of-way, restrictions and other similar encumbrances
on the real property or fixtures of the Borrowers existing as of the date hereof
and such Liens hereafter incurred in the ordinary course of business, which
individually or in the aggregate are not substantial in amount and which do not
in any case materially detract from the value to the Borrowers of the property
subject thereto or interfere with the ordinary conduct of the business of the
Borrowers;
 
(d)  Liens (other than Liens imposed on any property of the Borrowers or any
ERISA Affiliate pursuant to ERISA or Section 412 of the Code) incurred or
deposits made in the ordinary course of business, including Liens in connection
with workers’ compensation, unemployment insurance and other types of social
security and Liens to secure performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases that are not Capital Leases, performance
bonds, sales contracts and other similar obligations, in each case, not incurred
in connection with the obtaining of credit or the payment of a deferred purchase
price, and which do not, in the aggregate, result in a Material Adverse Effect;
 
(e)  Purchase Money Security Interests or Liens created pursuant to Capital
Leases; provided, that (x) such Liens shall be created simultaneously with the
acquisition of the property which is subject to such Lien, (y) such Liens do not
at any time encumber any property other than such property and (z) the Liens are
not modified to secure any Indebtedness other than that used to acquire such
property;
 
(f)  Liens existing on real property or equipment of a Subsidiary which Lien
existed at the time of the acquisition of such Subsidiary;
 
(g)  Liens existing upon the date hereof as set forth in Schedule II hereto;
 
 
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(h)  judgment and other similar Liens arising in connection with court
proceedings, in existence less than thirty (30) days after entry thereof or with
respect to which execution has been stayed or the payment of which is covered in
full (subject to a customary deductible) by insurance maintained with
responsible insurance companies and the claims secured thereby are being
actively contested in good faith and by appropriate legal proceedings;
 
(i)  Liens in favor of any governmental agency or authority for the purpose of
financing, through industrial revenue bonds or notes, the construction,
acquisition or purchase of facilities, or machinery, equipment or other assets,
or of any air, water or solid waste pollution control facilities to be used in
connection with any such property;
 
(j)  other Liens incidental to the conduct of the Borrowers’ businesses
conducted in the ordinary course (including without limitation, Liens on goods
securing trade letters of credit issued in respect of importation of goods in
the ordinary course of business) or the ownership of any Borrower’s property and
assets which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit, except as provided herein, and which do not in
the aggregate materially detract from the value of such Borrower’s property or
assets or materially impair the use thereof in its business;
 
(k)  the Lien evidenced by the Hunting Park Mortgage;
 
(l)  Liens in favor of the Company or another Borrower on the assets of any
Borrower; and
 
(m)  any other Liens permitted under the terms of this Agreement.
 
“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
 
“Plan”: at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which any Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
 
“Prime Rate”: the rate of interest per annum publicly announced from time to
time by PNC Bank, National Association as its prime rate in effect at its
principal office in Philadelphia, Pennsylvania, which rate may not be the lowest
rate then being charged by the Bank to commercial borrowers; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
effective.
 
“Principal Office”: the main banking office of the Agent in Philadelphia,
Pennsylvania.
 
“Properties”: the collective reference to the facilities and properties owned,
leased or operated by the Borrowers.
 
“Proposed New Bank”: has the meaning assigned to such term in Section 2.14(d).
 
 
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“Publication 500”: has the meaning assigned to such term in subsection 2.8(f).
 
“Purchase Money Security Interest”: Liens upon tangible personal property
securing loans to the Borrowers or deferred payments by the Borrowers for the
purchase of such tangible personal property, in each case securing amounts which
do not exceed the purchase price of the property subject to such security
interests.
 
“Purchasing Bank”: has the meaning assigned to such term in subsection 9.6(b).
 
“Regulation U”: Regulation U of the Board of Governors of the Federal Reserve
System as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
 
“Regulation X”: Regulation X of the Board of Governors of the Federal Reserve
System as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
 
“Reimbursement Obligation”: in respect of each Letter of Credit, the obligation
of the Borrowers to reimburse the Issuing Bank for all drawings made thereunder
in accordance with subsection 2.8(d) and the Application related to such Letter
of Credit for amounts drawn under such Letter of Credit.
 
“Reorganization”: with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.
 
“Reportable Event”: any of the events set forth in Section 4043(c)(1), (2), (4),
(5), (6), (10) and (13) of ERISA.
 
“Requested Increase”: has the meaning assigned to such term in Section 2.14(d).
 
“Required Banks”: at any time, those Banks holding (a) 66⅔% of the Revolver
Commitments of all the Banks or (b) in the event the Revolver Commitments shall
have expired or been terminated, 66⅔% of the Revolver Exposure of all the Banks;
provided, that in the event any of the Banks shall have failed to make a
Revolving Loan or purchase participations in Letters of Credit or Swing Line
Loans required pursuant to the terms of this Agreement, for so long as such
failure continues there shall be excluded from the determination of Required
Banks the Revolver Commitment and Revolver Exposure of such bank at such time.
 
“Requirement of Law”: as to any Person, the Articles or Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
 
“Responsible Officer”: with respect to any Borrower, the chief executive
officer, president, vice president - finance, treasurer or chief financial
officer of such Borrower. Unless otherwise qualified, all references to a
“Responsible Officer” in this Agreement shall refer to a Responsible Officer of
the Borrowers’ Representative.
 
 
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“Revolver Commitment”: the obligation of any Bank to make Revolving Loans, issue
and/or acquire participating interests in Letters of Credit and make or
participate in Swing Line Loans hereunder, in an aggregate amount at any one
time outstanding not to exceed (a) as to any Bank which is an original signatory
to this Agreement, the amount set forth opposite such Bank’s name on Schedule I
hereto under the caption “Revolver Commitment”, as the same may be changed from
time to time in accordance with the provisions of this Agreement or (b) as to
any Bank which is not an original signatory to this Agreement but which becomes
a Bank by executing an Assignment and Acceptance or a New Bank Joinder, the
Revolver Commitment for such Bank set forth on Schedule I to such Assignment and
Acceptance or New Bank Joinder, as such amount may be changed from time to time
in accordance with the provisions of this Agreement. The aggregate amount of the
Revolver Commitments on the date hereof is $35,000,000.
 
“Revolver Commitment Period”: the period from and including the date hereof to
but not including the Revolver Termination Date.
 
“Revolver Exposure”: as to any Bank at any date, an amount equal to the sum of
(a) the aggregate amount of all Revolving Loans made by such Bank then
outstanding, (b) such Bank’s Commitment Percentage of the Letter of Credit
Obligations then outstanding and (c) such Bank’s Commitment Percentage of the
aggregate principal amount of Swing Line Loans then outstanding.
 
“Revolver Facility”: the revolving credit facility pursuant to which the Banks
have committed to make Revolving Loans, issue and/or acquire participating
interests in Letters of Credit hereunder and make or participate in Swing Line
Loans.
 
“Revolver Notes”: has the meaning assigned to such term in Section 2.6(b).
 
“Revolver Termination Date”: the earlier of (a) September 12, 2010 and (b) the
date the Revolver Commitments are terminated as provided herein.
 
“Revolving Loans”: has the meaning assigned to such term in Section 2.1(b).
 
“S&P”: Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc.
 
“Single Employer Plan”: any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.
 
“Subsidiary”: as to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other governing body of such entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of a Borrower.
 
 
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“Swing Line Bank”: PNC Bank, National Association, and any successor thereto, or
any other Bank to which the Swing Line Commitment is assigned.
 
“Swing Line Commitment”: the obligation of the Swing Line Bank to make Swing
Line Loans in an aggregate amount at any one time outstanding not to exceed the
amount set forth opposite the Swing Line Bank’s name on Schedule I hereto under
the caption “Swing Line Commitment”, as the same may be changed from time to
time in accordance with the provisions of this Agreement and/or any applicable
Assignment and Acceptance.
 
“Swing Line Conversion Date”: has the meaning assigned to such term in
subsection 2.3(d).
 
“Swing Line Loan”: has the meaning assigned to such term in subsection 2.3(a).
 
“Swing Line Note”: has the meaning assigned to such term in subsection 2.3(c).
 
“Swing Line Repayment Date”: has the meaning assigned to such term in subsection
2.3(b).
 
“Tangible Net Worth”: at any time, the net book value of the Shareholders’
equity of the Company as would be shown on a consolidated balance sheet at such
time minus all assets which would be considered intangible under GAAP minus any
additional paid in capital attributable to any stock based compensation .
 
“Taxes”: has the meaning assigned to such term in Section 2.17.
 
“Total Senior Funded Debt”: as of the last day of any fiscal quarter, without
duplication, the aggregate consolidated long term and short term senior
Indebtedness of the Company and its consolidated Subsidiaries.
 
“Tranche”: the collective reference to (a) LIBOR Loans whose Interest Periods
begin on the same date and end on the same later date (whether or not such Loans
originally were made on the same date), (b) Base Rate Loans and (c) Swing Line
Loans bearing interest at the Daily LIBOR Rate.
 
“Type”: when used in respect of any Loan, shall refer to the Rate by reference
to which interest on such Loan is determined. For purposes hereof, “Rate” shall
include the LIBOR Rate, the Base Rate and the Daily LIBOR Rate (in the case of
Swing Line Loans).
 
“USA Patriot Act”: shall mean the Uniting Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Title III of Pub. L., 107-56 (signed into law October 26, 2001), as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.
 
“Voting Stock”: Capital Stock of any class or classes of a Person the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the directors (or Persons performing similar functions).
 
 
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1.2  Other Definitional Provisions
 
(a)  Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes, the other Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
 
(b)  As used herein and in the Notes and the other Loan Documents, and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
 
(c)  The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise specified.
 
(d)  The meanings given to terms defined in this Agreement shall be equally
applicable to both the singular and plural forms of such terms.
 
 
SECTION 2.   LOANS AND TERMS OF COMMITMENTS
 
2.1  The Loans
 
(a)  Revolver Facility. Subject to the terms and conditions hereof including,
without limitation, the conditions at each Extension of Credit set forth in
Section 4.2 hereof, each Bank severally (and not jointly) agrees to make
revolving credit loans under the Revolver Facility (the “Revolving Loans”) to
the Borrowers on a joint and several basis from time to time during the Revolver
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the amount of such Bank’s Revolver Commitment minus the sum of
such Bank’s Commitment Percentage of (i) all Letter of Credit Obligations then
outstanding and (ii) the principal amount of all Swing Line Loans then
outstanding; provided, that after giving effect to each such Revolving Loan, the
aggregate Revolver Exposure of such Bank at such time shall not exceed such
Bank’s Revolver Commitment. The Revolver Commitments may be increased, reduced
or terminated from time to time pursuant to Section 2.14. Within the foregoing
limits, the Borrowers may during the Revolver Commitment Period borrow, repay
and reborrow under the Revolver Commitments, subject to and in accordance with
the terms and limitations hereof.
 
(b)  The Revolving Loans may from time to time be (A) LIBOR Loans, (B) Base Rate
Loans or (C) a combination thereof, as determined by the Borrowers and notified
to the Agent in accordance with Sections 2.4 and 2.5; provided, that no Loan
shall be made as a LIBOR Loan after the date that is one month prior to the
Revolver Termination Date.
 
 
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2.2  Procedure for Revolving Loans
 
(a)  Except as otherwise provided herein, the Borrowers may from time to time
prior to the Revolver Termination Date request the Banks to make Revolving Loans
by delivering to the Agent, not later than 10:00 a.m., Philadelphia time,
(i) three (3) Business Days prior to the proposed Borrowing Date with respect to
the making of Loans to which the LIBOR Rate applies and (ii) the Business Day of
the proposed Borrowing Date with respect to the making of a Loan to which the
Base Rate applies, of a duly completed Notice of Borrowing or a request by
telephone immediately confirmed in writing, it being understood that the Agent
may rely on the authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation. Each Notice of
Borrowing shall be irrevocable and shall specify (i) the proposed Borrowing
Date; (ii) the aggregate amount of the proposed Loans comprising each Tranche,
the amount of which shall be in integral multiples of $100,000 and not less than
$1,000,000 or, if less, the maximum amount under the Revolver Commitment;
(iii) whether the LIBOR Rate or the Base Rate shall apply to the proposed Loans
comprising the applicable Tranche; and (iv) in the case of a Tranche to which
the LIBOR Rate applies, the Interest Period for the proposed Loans comprising
such Tranche.
 
(b)  The Agent shall, promptly after receipt by it of a Notice of Borrowing
pursuant to this Section 2.2, notify the Banks of its receipt of such Notice of
Borrowing specifying: (i) the proposed Borrowing Date and the time and method of
disbursement of the Loans requested thereby; (ii) the amount and Type of each
such Loan and the applicable Interest Period (if any); and (iii) the
apportionment among the Banks of such Loans as determined by the Agent in
accordance with Section 2.5. Subject to the terms and conditions hereof, each
Bank shall remit the principal amount of each Loan to the Agent at the Principal
Office prior to 2:00 p.m., Philadelphia time on the Borrowing Date requested by
the Borrowers in funds immediately available to the Agent. Such borrowing will
then be made available to the Borrowers by the Agent crediting the account of
the Company on the books of the office specified in subsection 9.2 with the
aggregate of the amounts made available to the Agent by the Banks and in like
funds as received by the Agent. Unless the Agent shall have received notice from
a Bank prior to the date of any borrowing that such Bank will not make available
to the Agent such Bank’s portion of such borrowing, the Agent may assume that
such Bank has made such portion available in accordance with this
subsection 2.2(b) and the Agent may, in reliance upon such assumption, make
available to the Borrowers on such date a corresponding amount. If and to the
extent that any Bank shall not have made such Bank’s pro rata portion of such
borrowing available to the Agent, such Bank and the Borrowers (without prejudice
to the Borrowers’ rights against such Bank) severally agree to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrowers until the date such amount is repaid to the Agent at (i) in the case
of the Borrowers, the interest rate applicable at the time to the Loans
comprising such borrowing and (ii) in the case of such Bank, the Federal Funds
Effective Rate, provided, that, if such Bank shall not pay such amount within
three Business Days of such Borrowing Date, the interest rate on such overdue
amount shall, at the expiration of such three Business Day period, be the rate
per annum applicable to Base Rate Loans. If such Bank shall repay to the Agent
such corresponding amount, such amount shall constitute such Bank’s Loan as part
of such borrowing for purposes of this Agreement.
 
 
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(c)  If in a Notice of Borrowing no election as to the Type of Loan is specified
in any such notice, then the requested Loan shall be a Base Rate Loan. If a
LIBOR Loan is requested but no Interest Period with respect to such Loan is
specified in any such notice, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.
 
2.3  Swing Line Loans
 
(a)  Subject to the terms and conditions hereof, the Swing Line Bank may in its
discretion make swing line loans in Dollars (the “Swing Line Loans”) to the
Borrowers from time to time during the Revolver Commitment Period in an
aggregate outstanding principal amount up to the amount of the Swing Line
Commitment for periods not to exceed seven days as requested by the Borrowers
and agreed to by the Swing Line Bank; provided, that, no Swing Line Loan shall
be made if, after giving effect to the making of such Swing Line Loan and the
simultaneous application of the proceeds thereof, (x) the aggregate Revolver
Exposure of all the Banks would exceed the aggregate amount of the Revolver
Commitments of all of the Banks or (y) the aggregate amount of all Revolving
Loans made by a Bank plus such Bank’s Commitment Percentage of the amount of
Swing Line Loans and Letter of Credit Obligations then outstanding would exceed
its Revolver Commitment. Within the foregoing limits, the Borrowers may during
the Revolver Commitment Period borrow, repay and reborrow under the Swing Line
Commitment, subject to and in accordance with the terms and limitations hereof.
The interest rate for a Swing Line Loan shall be the Daily LIBOR Rate plus the
Applicable Margin (or such rate that is mutually agreed to by the Borrower’
Representative and the Swing Line Bank in writing at the time the Swing Line
Loan is made) or, if the Cash Management Agreement (as defined in clause (i)
below are in affect, at the rate determined in accordance with the Cash
Management Agreement.
 
(b)  The Borrowers may request a Swing Line Loan to be made on any Business Day.
Each request for a Swing Line Loan shall be in the form of a Notice of Borrowing
(or a request by telephone immediately confirmed in writing, it being understood
that the Swing Line Bank may rely on the authority of any individual making such
telephonic request without the necessity of receipt of such written
confirmation) and received by the Agent not later than 11:00 a.m. (Philadelphia
time) on the Business Day such Swing Line Loan is to be made, specifying in each
case (i) the amount to be borrowed, (ii) the requested borrowing date, and
(iii) the date such Swing Line Loan is to be repaid, if applicable (the “Swing
Line Repayment Date”). The request for such Swing Line Loan shall be
irrevocable. Provided that all applicable conditions precedent contained herein
have been satisfied, the Swing Line Bank shall, not later than 4:00 p.m.,
Philadelphia time, on the date specified in the Borrowers’ request for such
Swing Line Loan, make such Swing Line Loan by crediting the Borrowers’ deposit
account with the Swing Line Bank.
 
(c)  The obligation of the Borrowers to repay the Swing Line Loans shall be
evidenced by a promissory note of the Borrowers dated the date hereof, payable
to the order of the Swing Line Bank in the principal amount of the Swing Line
Commitment and substantially in the form of Exhibit A-2 (as amended,
supplemented or otherwise modified from time to time, the “Swing Line Note”).
 
 
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(d)  Swing Line Loans and accrued interest thereon shall be repaid on the
earlier of (1) the Revolver Termination Date, (2) the Swing Line Repayment Date
for such Swing Line Loan or (3) the seventh day after the date such Swing Line
Loan was made (any such date being the “Swing Line Conversion Date”). Unless the
Borrowers shall have notified the Agent prior to 11:00 a.m., Philadelphia time,
on such Swing Line Conversion Date that the Borrowers intend to repay such Swing
Line Loan with funds other than the proceeds of a Revolving Loan, the Borrowers
shall be deemed to have given notice to the Agent requesting the Banks to make
Revolving Loans which shall earn interest at the Base Rate in effect on the
Swing Line Conversion Date in an aggregate amount equal to the amount of such
Swing Line Loan plus interest thereon, and subject to satisfaction or waiver of
the conditions specified in Section 4.2, the Banks shall, on the Swing Line
Conversion Date, make Revolving Loans, which shall earn interest at the Base
Rate, in an aggregate amount equal to the amount of such Swing Line Loan plus
interest thereon, the proceeds of which shall be applied directly by the Agent
to repay the Swing Line Bank for such Swing Line Loan plus accrued interest
thereon; and provided, further, that if for any reason the proceeds of such
Revolving Loans are not received by the Swing Line Bank on the Swing Line
Conversion Date in an aggregate amount equal to the amount of such Swing Line
Loan plus accrued interest, the Borrowers shall reimburse the Swing Line Bank on
the day immediately following the Swing Line Conversion Date, in same day funds,
in an amount equal to the excess of the amount of such Swing Line Loan over the
aggregate amount of such Revolving Loans, if any, received plus accrued interest
thereon.
 
(e)  In the event that the Borrowers shall fail to repay the Swing Line Bank as
provided in this Section 2.3(e) in an amount equal to the amount required under
Section 2.3(d), the Agent shall promptly notify each Bank of the unpaid amount
of such Swing Line Loan and of such Bank’s respective participation therein in
an amount equal to such Bank’s pro rata share of such Swing Line Loan (based on
its Commitment Percentage). Each Bank shall make available to the Agent for
payment to the Swing Line Bank an amount equal to its respective participation
therein (including without limitation its pro rata share of accrued but unpaid
interest thereon), in same day funds, at the office of the Agent specified in
such notice, not later than 11:00 a.m., Philadelphia time, on the Business Day
after the date the Agent notifies each Bank. In the event that any Bank fails to
make available to the Agent the amount of such Bank’s participation in such
unpaid amount as provided herein, the Swing Line Bank shall be entitled to
recover such amount on demand from such Bank together with interest thereon at a
rate per annum equal to the Federal Funds Effective Rate for each day during the
period between the Swing Line Conversion Date and the date on which any Bank
makes available its participation in such unpaid amount. The failure of any Bank
to make available to the Agent its pro rata share of any such unpaid amount
shall not relieve any other Bank of its obligations hereunder to make available
to the Agent its pro rata share of such unpaid amount on the Swing Line
Conversion Date. The Agent shall distribute to each Bank which has paid all
amounts payable by it under this Section 2.3(e) with respect to the unpaid
amount of any Swing Line Loan, such Bank’s pro rata share of all payments
received by the Agent from the Borrowers in repayment of such Swing Line Loan
when such payments are received. Notwithstanding anything to the contrary
herein, each Bank which has paid all amounts payable by it under this Section
2.3(e) shall have a direct right to repayment of such amounts from the Borrowers
subject to the procedures for repaying Banks set forth in this Section 2.3(e)
and the provisions of Section 9.8.
 
 
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(f)  In the event the Revolver Commitments are terminated in accordance with the
terms hereof, the Swing Line Commitment shall also be terminated automatically.
In the event the Borrowers reduce the Revolver Commitment to less than the Swing
Line Commitment, the Swing Line Commitment shall immediately be reduced to an
amount equal to the Revolver Commitment. In the event the Borrowers reduce the
Revolver Commitment to less than the outstanding principal amount of the Swing
Line Loans, the Borrowers shall immediately repay the amount by which the
outstanding Swing Line Loans exceeds the Swing Line Commitment as so reduced
plus accrued interest thereon.
 
(g)  At no time shall there be more than two outstanding Swing Line Loans. Each
Swing Line Loan shall be in an original principal amount of $100,000 or a whole
multiple thereof.
 
(h)  The Borrowers shall have the right at any time and from time to time to
prepay the Swing Line Loans, in whole or in part, without premium or penalty
(but in any event subject to Section 2.18), upon prior written, facsimile or
telephonic notice to the Swing Line Bank given no later than 11:00 a.m.,
Philadelphia time, on the date of any proposed prepayment. Each notice of
prepayment shall specify the Swing Line Loan to be prepaid and the amount to be
prepaid (which shall be in the principal amount of $100,000 or in integral
amounts of $50,000 in excess thereof) , shall be irrevocable and shall commit
the Borrowers to prepay such amount on such date, with accrued interest thereon
and any amounts owed under Section 2.18 hereof.
 
(i)  In addition to making Swing Line Loans pursuant to the foregoing provisions
of this Section 2.3, without the requirement for a specific request from the
Borrowers pursuant to Section 2.3(b), the Swing Line Bank may make Swing Line
Loans to the Borrowers in accordance with the provisions of the agreements
between the Borrowers and the Swing Line Bank relating to the Borrowers’
deposit, sweep and other accounts at the Swing Line Bank and related
arrangements and agreements regarding the management and investment of the
Borrowers’ cash assets as in effect from time to time (the “Cash Management
Agreements”) to the extent of the daily aggregate net negative balance in the
Borrowers’ accounts which are subject to the provisions of the Cash Management
Agreements. Swing Line Loans made pursuant to this Section 2.3(i) in accordance
with the provisions of the Cash Management Agreements shall (i) be subject to
the limitations as to aggregate amount set forth in Section 2.3(a), (ii) not be
subject to the limitations as to number or individual amount set forth in
Sections 2.3(g) or the repayment provisions of Section 2.3(d), (iii) be payable
by the Borrowers, both as to principal and interest, at the times set forth in
the Cash Management Agreements (but in no event later than the Revolver
Termination Date), (iv) not be made at any time after the Swing Line Bank has
notice of the occurrence of a Default or Event of Default, (v) if not repaid by
the Borrowers in accordance with the provisions of the Cash Management
Agreements, be subject to each Bank’s obligation to purchase participating
interests therein pursuant to Section 2.3(e), and (vi) except as provided in the
foregoing subsections (i) through (v), be subject to all of the terms and
conditions of this Section 2.3.
 
2.4  Conversion and Continuation Options
 
. The Borrowers shall have the right at any time upon prior irrevocable notice
to the Agent (i) not later than 10:00 a.m., Philadelphia time, one Business Day
prior to conversion, to convert any LIBOR Loan to a Base Rate Loan and (ii) not
later than 10:00 a.m., Philadelphia time, three Business Days prior to
conversion or continuation to convert any Base Rate Loan
 
 
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into a LIBOR Loan or continue any LIBOR Loan as a LIBOR Loan for any additional
Interest Period, subject in each case to the following:
 
(a)  a LIBOR Loan may not be converted at a time other than the last day of the
Interest Period applicable thereto;
 
(b)  any portion of a Loan maturing or required to be repaid in less than one
month may not be converted into or continued as a LIBOR Loan;
 
(c)  no LIBOR Loan may be continued as such and no Base Rate Loan may be
converted to a LIBOR Loan when any Default has occurred and is continuing and
the Agent or the Required Banks have determined that such a continuation is not
appropriate; and
 
(d)  any portion of a LIBOR Loan that cannot be converted into or continued as a
LIBOR Loan by reason of subsection 2.4(b) or 2.4(c) or as to which the Borrowers
have failed to give notice of conversion or continuation automatically shall be
converted to a Base Rate Loan on the last day of the Interest Period in effect
for such Loan.
 
Each request by the Borrowers to convert or continue a Loan shall constitute a
representation and warranty that no Default shall have occurred and be
continuing. Accrued interest on a Loan (or portion thereof) being converted
shall be paid by the Borrowers at the time of conversion. In connection with
each such conversion or continuation requested by the Borrowers, the Borrowers
shall deliver to the Agent a Notice of Borrowing or shall make such request by
telephone immediately confirmed in writing, it being understood that the Agent
may rely on the authority of any individual making such telephonic request
without the necessity of receipt of such written confirmation.
 
2.5  Nature of Banks’ Obligations with Respect to Loans
 
. Each Bank shall be obligated to participate in each request for Loans pursuant
to Section 2.2 in accordance with its pro rata share (based on its Commitment
Percentage) of the applicable Facility. The obligations of each Bank hereunder
are several (and not joint). The failure of any Bank to perform its obligations
hereunder shall not affect the obligations of the Borrowers to any other party
nor shall any other party be liable for the failure of any Bank to perform its
obligations hereunder. The Banks shall have no obligation to make Revolving
Loans or Swing Line Loans hereunder on or after the Revolver Termination Date.
 
2.6  Notes
 
(a)  The Revolving Loans made by each Bank shall be evidenced by a promissory
note of the Borrowers, substantially in the form of Exhibit A-1, with
appropriate insertions as to payee, date and principal amount (each as amended,
supplemented or otherwise modified from time to time, a “Revolver Note”),
payable to the order of such Bank and in a principal amount equal to the amount
of the initial Revolver Commitment of such Bank. Each Bank is hereby authorized
to record the date, currency, Type and amount of each Revolving Loan made by
such Bank, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of LIBOR Loans, the length of each Interest
Period with respect thereto, on the schedule
 
 
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annexed to and constituting a part of its Revolver Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded in the absence of manifest error, provided, that the
failure of any Bank to make such recordation (or any error in such recordation)
shall not affect the obligations of the Borrowers hereunder or under such
Revolver Note. Each Revolver Note shall (a) be dated as of the Effective Date,
(b) be stated to mature on the Revolver Termination Date and (c) provide for the
payment of interest in accordance with Sections 2.9 and 2.10.
 
(b)  The Swing Line Loans shall be evidenced by the Swing Line Note, payable to
the order of the Swing Line Bank and in a principal amount equal to the amount
of the Swing Line Commitment. The Swing Line Bank is hereby authorized to record
the date, Type and amount of each Swing Line Loan made by such Bank and the date
and amount of each payment or prepayment of principal thereof on the schedule
annexed to and constituting a part of the Swing Line Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded in the absence of manifest error, provided, that the
failure of the Swing Line Bank to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrowers hereunder or
under the Swing Line Note. The Swing Line Note shall (a) be dated as of the
Effective Date, and (b) be stated to mature on the Revolver Termination Date.
 
2.7  Fees
 
(a)  The Borrowers jointly and severally agree to pay to the Agent for the
account of each Bank, on the last Business Day of each March, June, September
and December during the Revolver Commitment Period and on the date on which the
Revolver Commitments shall be permanently reduced or terminated as provided
herein, a commitment fee (the “Commitment Fee”) at a rate per annum equal to the
applicable Commitment Fee Rate in effect from time to time on the average daily
amount of the difference between (i) the Revolver Commitment of such Bank and
(ii) the Revolver Exposure of such Bank during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolver Termination
Date or the date on which such or Revolver Commitments shall be terminated or
reduced). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days and shall be paid in Dollars. The
Commitment Fees due to each Bank shall commence to accrue on the date hereof,
and shall cease to accrue on the Revolver Termination Date. The Agent shall
distribute the applicable Commitment Fees among the Banks pro rata in accordance
with their respective Commitment Percentages.
 
(b)  The Borrowers jointly and severally agree to pay the Agent, for its own
account, administrative and other fees at the times and in the amounts set forth
in the Commitment Letter.
 
(c)  The foregoing fees shall be paid on the dates due, in immediately available
funds, to the Agent for distribution, if and as appropriate, among the Banks.
Once paid, none of the foregoing fees shall be refundable under any
circumstances.
 
 
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2.8  Letter of Credit Subfacility
 
(a)  Letter of Credit Requests and Availability. In lieu of the Loans under the
Revolver Commitment, the Borrowers may request the issuance of a letter of
credit (each, a “Letter of Credit” and, collectively, the “Letters of Credit”)
by delivering to the Issuing Bank a completed Application and agreement for
letters of credit in such form and with such other certificates, documents and
information as the Issuing Bank may specify from time to time by no later than
10:00 a.m., Philadelphia time, at least five (5) Business Days, or such shorter
period as may be agreed to by the Issuing Bank, in advance of the proposed date
of issuance. Each Letter of Credit shall be denominated in Dollars. Subject to
the terms and conditions hereof and in reliance on the agreements of the other
applicable Banks set forth in this Section 2.8, the Issuing Bank will issue one
or more Letters of Credit, provided, that each Letter of Credit shall (A) have a
maximum maturity of twelve (12) months from the date of issuance, and (B) in no
event expire later than five (5) Business Days prior to the Revolver Termination
Date, and provided further, that in no event shall (i) the amount of the Letter
of Credit Obligations at any one time exceed the lesser of (x) $10,000,000, and
(y) the aggregate Revolver Commitments of all the Banks minus the aggregate
amount of the Revolving Loans and Swing Line Loans then outstanding or (ii) the
sum of the aggregate amount of all Revolving Loans made by a Bank plus such
Bank’s Commitment Percentage of the amount of Letter of Credit Obligations and
Swing Line Loans then outstanding exceed its Revolver Commitment. The Issuing
Bank shall not at any time be obligated to issue any Letter of Credit hereunder
if such issuance would conflict with, or cause the Issuing Bank or any Letter of
Credit Participant to exceed any limits imposed by any applicable Requirement of
Law. Notwithstanding the provisions of this subsection 2.8, the Banks and the
Borrowers hereby agree that the Issuing Bank may issue upon the Borrowers’
request, one or more Letter(s) of Credit which by its or their terms may be
extended for additional periods of up to one year each provided that (i) the
initial expiration date (or any subsequent expiration date) of each such Letter
of Credit is not later than five (5) Business Days prior to the Revolver
Termination Date, and (ii) renewal of such Letters of Credit, at the Issuing
Bank’s discretion, shall be available upon written request from the Borrowers to
the Issuing Bank at least thirty (30) days (or such other time period as agreed
by the Borrowers and the Agent) before the date upon which notice of renewal is
otherwise required.
 
(b)  Letter of Credit Fees. The Borrowers shall pay in Dollars (i) to the Agent
for the ratable account of the Banks a fee (the “Letter of Credit Fee”) computed
at the Letter of Credit Fee Rate in effect from time to time and (ii) to the
Agent for the account of the Issuing Bank a fronting fee equal to 0.125% per
annum, on the daily average undrawn face amount of outstanding Letters of Credit
(computed in each case on the basis of the actual number of days such Letters of
Credit are outstanding in a year of 360 days), which amounts shall be payable
quarterly in arrears commencing with the last Business Day of each March, June,
September and December following the issuance of a Letter of Credit and on the
Revolver Termination Date. The Borrowers shall also pay to the Agent in Dollars
for the sole account of the Issuing Bank, the Issuing Bank’s then in effect
customary fees and administrative expenses payable with respect to the Letters
of Credit as the Issuing Bank may generally charge or incur from time to time in
connection with the issuance, maintenance, modification (if any), assignment or
transfer (if any), negotiation, and administration of Letters of Credit. Once
paid, all of the above fees shall be nonrefundable under all circumstances. The
Agent shall, promptly
 
 
 
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following its receipt thereof, distribute to the Issuing Bank and the Banks all
fees and commissions received by the Agent for their respective accounts
pursuant to this subsection.
 
(c)  Letter of Credit Participation By Banks.
 
(i)  The Issuing Bank irrevocably grants to each Letter of Credit Participant,
and, to induce the Issuing Bank to issue Letters of Credit hereunder, each
Letter of Credit Participant irrevocably accepts and purchases from the Issuing
Bank, on the terms and conditions hereinafter stated, for such Letter of Credit
Participant’s own account and risk, an undivided interest equal to such Letter
of Credit Participant’s Commitment Percentage in the Issuing Bank’s obligations
and rights under each Letter of Credit issued by the Issuing Bank hereunder and
the amount of each draft paid by the Issuing Bank thereunder. Each Letter of
Credit Participant unconditionally and irrevocably agrees with the Issuing Bank
that, if a draft is paid under any Letter of Credit issued by the Issuing Bank
for which the Issuing Bank is not reimbursed in full by the Borrowers in
accordance with the terms of this Agreement, such Letter of Credit Participant
shall pay to the Issuing Bank upon demand at the Issuing Bank’s address for
notices specified herein an amount equal to such Letter of Credit Participant’s
Commitment Percentage of the amount of such draft or any part thereof, which is
not so reimbursed. Any action taken or omitted by the Issuing Bank under or in
connection with a Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Issuing Bank any
resulting liability to any Bank.
 
(ii)  If any amount required to be paid by any Letter of Credit Participant to
the Issuing Bank pursuant to subsection 2.8(c)(i) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
not paid to the Issuing Bank on the date such payment is due from such Letter of
Credit Participant, such Letter of Credit Participant shall pay to the Issuing
Bank on demand an amount equal to the product of (x) such amount, times (y) the
daily average Federal Funds Effective Rate, as quoted by the Issuing Bank,
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Bank, times
(z) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. A certificate of the Issuing
Bank submitted to any Letter of Credit Participant with respect to any amounts
owing under this subsection shall be conclusive in the absence of manifest
error.
 
(iii)  Whenever, at any time after the Issuing Bank has made payment under any
Letter of Credit and has received from any Letter of Credit Participant its
pro rata share of such payment in accordance with subsection 2.8(c)(i), the
Issuing Bank receives any payment related to such Letter of Credit (whether
directly from the Borrowers or otherwise, including by way of set-off or
proceeds of collateral applied thereto by the Issuing Bank), or any payment of
interest on account thereof, the Issuing Bank will distribute to such Letter of
Credit Participant
 
 
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its pro rata share thereof; provided, however, that in the event that any such
payment received by the Issuing Bank shall be required to be returned by the
Issuing Bank, such Letter of Credit Participant shall return to the Issuing Bank
the portion thereof previously distributed by the Issuing Bank to it.
 
(d)  Borrowers’ Reimbursement Obligation.
 
(i)  Each Borrower jointly and severally agrees to reimburse the Issuing Bank in
respect of a Letter of Credit on each date on which a draft presented under such
Letter of Credit is paid by the Issuing Bank for the amount of (i) such draft so
paid and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Bank in connection with such payment. Each such payment shall be
made to the Issuing Bank at its Principal Office in Dollars and in immediately
available funds.
 
(ii)  Interest shall be payable on any and all amounts remaining unpaid by the
Borrowers under this subsection from the date such amounts become payable until
payment in full (A) for the first three days at the per annum rate equal to the
Base Rate and (B) thereafter, at the per annum rate equal to the Base Rate plus
2.0%, and shall be payable on demand by the Issuing Bank.
 
(iii)  Obligations Absolute. The obligations of the Borrowers under this
subsection 2.8 shall be joint and several. The Borrowers (jointly and severally)
and the Banks agree with the Issuing Bank that the Issuing Bank shall not be
responsible for, and the Borrowers’ Reimbursement Obligations under subsection
2.8(d)(i) and the Banks’ obligations under Section 2.8(c) shall be absolute,
unconditional and irrevocable under all circumstances, and shall not be affected
by, among other things (1) the form of, any lack of power or authority of any
signer of or the lack of, validity, enforceability, sufficiency, accuracy or
genuineness of any document submitted by any party in connection with any Letter
of Credit otherwise complying with the terms of the Letter of Credit, or any
fraud or alleged fraud in connection with any Letter of Credit or any obligation
underlying any Letter of Credit, in each case, even if the Issuing Bank shall
have been notified thereof except if and to the extent the Issuing Bank is
directed by a court order not to honor the draw in connection with which any
such document has been submitted, (2) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit (but only to the extent such Letter of Credit is
transferable) or the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for any reason, (3) any
claim of the Borrowers against any beneficiary of such Letter of Credit, or any
other party to which such Letter of Credit may be transferred (but only to the
extent such Letter of Credit is transferable) except where such claim is the
result of the failure to comply fully with any conditions required in order to
draw upon such Letter of Credit, (4) any dispute between or among any Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred, (5) any claims whatsoever of any Borrower
against any beneficiary of such Letter of Credit or any such transferee, (6) any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, (7) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof except where such loss or delay is the result of the failure to
comply fully with the terms of the
 
 
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Letter of Credit, (8) errors in interpretation of technical terms, (9) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit, (10) any act or omission (including
the failure to honor a presentation complying with the terms of such Letter of
Credit as a result of Governmental Acts or otherwise) by the Issuing Bank in
connection with a Letter of Credit, (11) any consequences arising from causes
beyond the control of the Issuing Bank, including any Governmental Acts, (12)
any set-off, counterclaim, recoupment, defense or other right which any Bank may
have against the Issuing Bank, the Borrowers or any other Person for any reason
whatsoever, (13) the existence of any claim, set-off, defense or other right
which the Borrowers or any Bank may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the Issuing Bank or any Bank or any other Person or,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between the
Borrowers and the beneficiary for which any Letter of Credit was procured), (14)
any adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of the Borrowers, (15) any breach of this
Agreement or any other Loan Document by any of the Borrowers, (16) the
occurrence or continuance of an insolvency proceeding with respect to the
Borrowers, (17) the fact that an Event of Default or a Default shall have
occurred and be continuing and (18) the fact that the Revolver Termination Date
shall have passed or this Agreement or the Revolver Commitments hereunder shall
have been terminated, and none of the above shall affect or impair, or prevent
the vesting of, any of the Issuing Bank’s rights or powers hereunder, provided,
in each case, that a court of competent jurisdiction has not finally determined
that the reliance by the Issuing Bank on any of such documents, instruments or
acts, or any such action by or omission of the Issuing Bank, constituted gross
negligence or willful misconduct of the Issuing Bank.
 
Without limiting the generality of the foregoing, the Issuing Bank (i) may rely
on any oral or other communication believed in good faith by the Issuing Bank to
have been authorized or given by or on behalf of the Borrowers, (ii) may honor
any presentation if the documents presented appear on their face to comply with
the terms and conditions of relevant Letter of Credit, (iii) shall not be liable
to the Borrowers for any consequential, punitive or special damages, or for any
damages resulting from any change in the value of any property relating to a
Letter of Credit, (iv) may honor a previously dishonored presentation under a
Letter of Credit, whether such dishonor was pursuant to a court order, to settle
or compromise any claim of wrongful dishonor, or otherwise, and shall be
entitled to reimbursement to the same extent as if such presentation had
initially been honored, together with any interest paid by the Issuing Bank, (v)
may honor any drawing that is payable upon presentation of a statement from an
advising bank advising negotiation or payment, upon receipt of such statement
(even if such statement indicates that a draft or other document is being
separately delivered), and shall not be liable for any failure of any such draft
or other document to arrive, or to conform in any way with the relevant Letter
of Credit, and (vi) may pay any paying or negotiating bank claiming that it
rightfully honored under the laws or practices of the place where such bank is
located.
 
(e)  Law Governing Letters of Credit. (i) If any draft shall be presented for
payment to the Issuing Bank under any Letter of Credit, the Issuing Bank shall
promptly notify the Company of the date and amount thereof. The responsibility
of the Issuing
 
 
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Bank to the Borrowers in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit and any other obligation expressly imposed
by the provisions of the Uniform Customs and Practice for Documentary Credits,
1993 Revision, International Chamber of Commerce Publication No. 500
(“Publication 500”) or such other law as the Borrowers and the Issuing Bank
agree shall apply, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
 
(ii)  Each Borrower agrees jointly and severally to be bound by the terms of
each Application and the Issuing Bank’s written regulations and customary
practices relating to letters of credit, though such interpretation may be
different from such Borrower’s own. It is understood and agreed that, except in
the case of gross negligence or willful misconduct, the Issuing Bank and the
Agent shall not be liable for any error, negligence and/or mistakes, whether of
omission or commission, in following the Borrowers’ instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto. To the extent not otherwise inconsistent with this
Agreement, the provisions of Publication 500 (or any other law as the Borrowers
and the Issuing Bank agree shall apply) are hereby made a part of this Agreement
with respect to the obligations in connection with each Letter of Credit.
 
(f)  Indemnification of Issuing Bank and Banks. (i) In addition to amounts
payable as provided in Section 9.5, the Borrowers hereby agree to protect,
indemnify, pay and save harmless the Issuing Bank and the Banks and each of
their respective officers, directors, shareholders and employees harmless from
and against any and all claims, liabilities, losses, damages, taxes, penalties,
interest, judgments, costs and expenses (including reasonable legal fees and
costs, whether of internal or external counsel), which may be incurred by or
awarded against any of them, and which arise out of or in connection with
(a) any Letter of Credit, this Section 2.8, or the preparation for a defense of
any investigation, litigation, or proceeding arising out of or in connection
herewith or therewith (and irrespective of who may be the prevailing party); (b)
any payment or action taken in connection with any Letter of Credit, including,
without limitation, any action or proceeding seeking to restrain any drawing
under a Letter of Credit or to compel or restrain any payment or any other
action under a Letter of Credit or this Agreement (and irrespective of who may
be the prevailing party); (c) the enforcement of this Section 2.8 or the
collection or sale of any property or collateral; and (d) any Governmental Act
or other cause beyond the Issuing Bank’s reasonable control; except, in each
case, to the extent such claim, liability, loss, damage, tax, penalty, interest,
judgment, cost or expense is found by a final judgment of a court of competent
jurisdiction to have resulted from the Issuing Bank’s gross negligence or
willful misconduct.
 
(ii)  Each Bank shall ratably in accordance with its Commitment Percentage,
indemnify the Issuing Bank, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed by the Borrowers)
against any cost, expense (including reasonable counsel fees and expenses),
claim, demand, action, loss or liability (except any of the foregoing that
results from the indemnitees’ gross negligence or willful misconduct) that such
indemnities may suffer or incur in connection with this Section 2.8 or any
action taken or omitted by such indemnities hereunder.
 
 
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In furtherance and extension and not in limitation of the specific provisions
set forth above, any action taken or omitted by the Issuing Bank under or in
connection with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith, shall not
create any liability of the Issuing Bank to the Borrowers or any Bank.
 
2.9  Interest Rates and Payment Dates
 
. The Borrowers shall pay interest in respect of the outstanding unpaid
principal amount of the Revolving Loans as selected by it from the Base Rate or
LIBOR Rate set forth below applicable thereto, it being understood that, subject
to the provisions of this Agreement, the Borrowers may select different interest
rates and different Interest Periods to apply simultaneously to Revolving Loans
comprising different Tranches and may convert to or renew one or more applicable
interest rates with respect to all or any portion of Revolving Loans comprising
any Tranche, provided, that there shall not be at any one time outstanding more
than ten (10) Tranches in the aggregate (including one Base Rate Tranche and one
Swing Line Loan Tranche). If at any time the designated rate applicable to any
Loan made by any Bank exceeds such Bank’s highest lawful rate, the rate of
interest on such Bank’s Loan shall be limited to such Bank’s highest lawful
rate.
 
(a)  Subject to the provisions of Section 2.10, each Base Rate Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be) at a rate per annum equal to the Base
Rate plus the Applicable Margin for Base Rate Loans.
 
(b)  Subject to the provisions of Section 2.10, (i) each LIBOR Loan shall bear
interest at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the LIBOR Rate for the Interest Period
in effect for such LIBOR Loan plus the Applicable Margin and (ii) each Swing
Line Loan shall bear interest at the rate provided in Section 2.3; provided,
however, if the Swing Line Loan bears interest at the Daily LIBOR Rate, interest
shall be computed in accordance with clause (i) of this Section 2.9(b).
 
(c)  Interest on each Revolving Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan; provided, that (i) interest
accruing on overdue amounts pursuant to Section 2.10 shall be payable on demand
as provided in such Section and (ii) accrued and unpaid interest on such Loans
shall be payable on the Revolver Termination Date. Interest on each Swing Line
Loan shall be payable on the day such Swing Line Loan becomes due, including the
Revolver Termination Date.
 
(d)  As soon as practicable the Agent shall notify the Borrowers and the Banks
of (i) each determination of a LIBOR Rate or Daily LIBOR Rate and (ii) the
effective date and the amount of each change in the interest rate on a LIBOR
Loan, Daily LIBOR Loan or Base Rate Loan. Each determination of an interest rate
by the Agent, pursuant to any provision of this Agreement (including this
Section 2.9 and Section 2.10) shall be conclusive and binding on the Borrowers
and the Banks in the absence of clearly demonstrable error. At the request of
the Borrowers, the Agent shall deliver to the Borrowers a statement showing the
quotations used by it in determining any interest rate pursuant to subsections
2.9(a) and (b).
 
 
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2.10  Default Interest
 
. Upon the occurrence of and during the continuance of an Event of Default under
subsection 7.1(a) or (f), the outstanding principal amount of the Loans and, to
the extent permitted by law, accrued and unpaid interest thereon and any other
amount payable hereunder, shall bear interest from the date of such occurrence
at a rate per annum which is equal to two percent (2%) in excess of the Base
Rate (after as well as before judgment). Upon the occurrence of and during the
continuance of an Event of Default other than under subsection 7.1(a) or (f),
the outstanding principal amount of the Loans and, to the extent permitted by
law, accrued and unpaid interest thereon and any other amounts payable
hereunder, shall bear interest from the date that the Agent (at its discretion
if not otherwise directed by the Required Banks or at the direction of the
Required Banks) shall send notice to the Company of the application of the
default rate at a rate per annum which is equal to two percent (2%) in excess of
the Base Rate (after as well as before judgment).
 
2.11  Pro Rata Treatment of Loans and Payments; Commitment Fees
 
(a)  Except as required under Section 2.13 or as otherwise provided for Swing
Line Loans, each borrowing by the Borrowers hereunder, each payment or
prepayment of principal of the Loans, each payment of interest on such Loans,
each payment of Commitment Fees and Letter of Credit Fees, and each reduction of
the Revolver Commitments, shall be made pro rata among the Banks in accordance
with their respective Commitment Percentages.
 
(b)  Except as provided in subsection 2.3, each borrowing of a Swing Line Loan,
each payment or prepayment of principal of a Swing Line Loan, each payment of
interest on the Swing Line Loans and each reduction of the Swing Line Commitment
shall be for the sole account of the Swing Line Bank.
 
(c)  Each Bank agrees that in computing such Bank’s portion of any borrowing to
be made hereunder, the Agent may, in its discretion, round each Bank’s
percentage of such borrowing to the next higher or lower whole Dollar amount.
 
2.12  Payments
 
(a)  The Borrowers shall make each payment (including principal of or interest
on any borrowing or any fees or other amounts) hereunder not later than
11:00 a.m., Philadelphia time, on the date when due to the Agent at its offices
set forth in Section 9.2 for the ratable accounts of the Banks in Dollars in
immediately available funds. Such payments shall be made without set-off or
counterclaim of any kind. The Agent shall distribute to the Banks, as
applicable, any payments received by the Agent promptly upon receipt in
immediately available funds. The Agent’s and each Bank’s statement of account,
ledger or other relevant record shall, in the absence of manifest error, be
conclusive as the statement of the amount of principal of and interest on the
Loans and other amounts owing under this Agreement.
 
(b)  Whenever any payment (including principal of or interest on any borrowing
or any fees or other amounts) hereunder (other than payments on LIBOR Loans)
shall become due, or otherwise would occur, on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of interest or fees,
if applicable. Whenever any payment (including
 
 
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principal of or interest on any borrowing or any fees or other amounts)
hereunder on a LIBOR Loan shall become due, or otherwise would occur, on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
 
2.13  LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available
 
(a)  The Agent shall have the rights specified in subsection 2.13(c) if on any
date on which a LIBOR Rate or a Daily LIBOR Rate would otherwise be determined,
the Agent shall have determined (which determination shall upon notice thereof
to the Borrowers be conclusive and binding on the Borrowers) that:
 
(i)  adequate and reasonable means do not exist for ascertaining such LIBOR Rate
or Daily LIBOR Rate, or
 
(ii)  a contingency has occurred which materially and adversely affects the
secondary market for negotiable certificates of deposit maintained by dealers of
recognized standing relating to the London interbank LIBOR market relating to
the LIBOR Rate or the Daily LIBOR Rate.
 
(b)  The Agent shall have the rights specified in subsection 2.13(c) if at any
time any Bank shall have determined (which determination shall upon notice
thereof to the Agent and the Borrowers be conclusive and binding on the
Borrowers) that:
 
(i)  the making, maintenance or funding of any Loan to which a LIBOR Rate or a
Daily LIBOR Rate applies has been made impracticable or unlawful by compliance
by such Bank in good faith with any Law or any interpretation or application
thereof by any Governmental Authority or with any request or directive of any
such Governmental Authority (whether or not having the force of Law), or
 
(ii)  such LIBOR Rate or Daily LIBOR Rate will not adequately and fairly reflect
the cost to such Bank of the establishment or maintenance of any such Loan, or
 
(iii)  after making all reasonable efforts, deposits of the relevant amount for
the relevant Interest Period for a Loan to which a LIBOR Rate or a Daily LIBOR
Rate applies are not available to such Bank in the London interbank market.
 
(c)  In the case of any event specified in subsection 2.13(a) above, the Agent
shall promptly so notify the Banks and the Borrowers thereof, and in the case of
an event specified in subsection 2.13(b) above, such Bank shall promptly so
notify the Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the Agent shall promptly send copies of such
notice and certificate to the other Banks and the Borrowers. Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given), the obligation of (A) the Banks, in the case of such notice
given by the Agent, or (B) such Bank, in the case of such notice given by such
Bank, to allow the Borrowers to select a
 
 
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Daily LIBOR Rate, in the case of Swing Line Loans, or select, convert to or
renew a LIBOR Rate shall be suspended until the Agent shall have later notified
the Borrowers, or such Bank shall have later notified the Agent, of the Agent’s
or such Bank’s, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the Agent
makes a determination under subsection 2.13(a) and the Borrowers have previously
notified the Agent of their selection of a Daily LIBOR Rate Loan, in the case of
Swing Line Loans, or their selection, conversion to or renewal of a LIBOR Rate
and such interest rate has not yet gone into effect, such notification shall be
deemed to provide for selection of, conversion to or renewal of a Base Rate Loan
to the extent permitted hereunder. If any Bank notifies the Agent of a
determination under subsection 2.13(b), the Borrowers shall, subject to the
Borrowers’ indemnification obligations under subsection 2.18 as to any Loan of
the Bank to which a LIBOR Rate or a Daily LIBOR Rate applies, on the date
specified in such notice either (i) as applicable, convert such Loan to the Base
Rate, or (ii) prepay such Loan in accordance with Section 2.15. Absent due
notice from the Borrowers of conversion or prepayment, such Loan shall
automatically be converted to the Base Rate upon such specified date.
 
2.14  Termination, Reduction and Increase of Commitments
 
(a)  The Revolver Commitments and the Swing Line Commitment shall be
automatically terminated on the Revolver Termination Date whereupon all
Revolving Loans and Swing Line Loans and accrued interest thereon shall become
due and payable in full.
 
(b)  Upon at least five Business Days’ prior irrevocable written (including
facsimile) notice to the Agent, the Borrowers may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Revolver Commitments; provided, however, that each partial reduction of the
Revolver Commitments shall be in a minimum principal amount $3,000,000 or in a
whole multiple thereof, and (iii) the Revolver Commitments may not be reduced or
terminated if, after giving effect thereto and to any prepayments of the Loans
made on the effective date thereof the Revolver Exposure at such time would
exceed the aggregate amount of Revolver Commitments at such time.
 
(c)  Each reduction in the Revolver Commitments hereunder shall be made ratably
among the Banks in accordance with their respective Commitment Percentages. The
Borrowers shall pay to the Agent for the account of the Banks on the date of
each termination or reduction of the Revolver Commitments, the Commitment Fees
on the amount of such Revolver Commitments so terminated or reduced accrued to
the date of such termination or reduction.
 
(d)  (i)The Borrowers may at any time and from time to time, subject to the last
sentence hereof, request an increase in the Revolver Commitments by sending a
written notice thereof to all of the Banks and the Agent. Such notice shall
specify the total amount of the increase requested by the Borrowers (the
“Requested Increase”); provided that, (i) the Requested Increase shall be in an
amount equal to at least $5,000,000 and (ii) the maximum aggregate increase of
the Revolver Commitments shall be $10,000,000. Upon receipt of such notice from
the Borrower, the Agent shall promptly give notice thereof to the Banks. Each
Bank shall respond in writing to the Borrowers (with a copy simultaneously sent
to the Agent), within
 
 
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thirty (30) days of receipt of a Requested Increase (or such shorter period as
the Agent and the Borrowers shall agree), stating the maximum amount, if any, by
which such Bank is willing to increase its Revolver Commitment (the “Offered
Amount”). If the total of the Offered Amounts for all of the Banks is greater
than the Requested Increase, the Requested Increase shall be allocated amongst
the offering Banks as determined by the Agent or, pro rata based on each Bank’s
Commitment Percentage as in effect prior to any such increase. If the total of
the Offered Amount for all of the Banks is equal to or less than the Requested
Increase (x) each Bank’s Revolver Commitment shall increase by its Offered
Amount and (y) the Borrowers may, subject to the consent of the Agent, offer the
difference, if any, to one or more new banks or other financial institutions
(each a “Proposed New Bank”). If the Borrowers request that a Proposed New Bank
join this Agreement and provide a Revolver Commitment hereunder, the Borrowers
shall at least five (5) days prior to the date (or such other period as the
Agent and the Borrowers shall agree) on which such Proposed New Bank proposes to
join this Agreement notify the Agent of the name of the Proposed New Bank and
the amount of its proposed Revolver Commitment. Upon the consent of the Agent to
a Proposed New Bank joining this Agreement (which consent shall not be
unreasonably withheld or delayed), such Proposed New Bank shall join this
Agreement pursuant to the provisions of subsection 9.6(j), including that its
minimum Revolver Commitment be at least $5,000,000 or such lesser amount as the
Agent shall agree.
 
(ii)  Any Bank that increases its Revolver Commitment shall execute and deliver
an Increased Commitment and Acceptance prior to the effective date of such
increase. Any Proposed New Bank shall execute and deliver a duly completed New
Bank Joinder to the Agent at least five (5) days prior to the effective date of
such Proposed New Bank’s joinder hereto. Simultaneously with the execution and
delivery of a New Bank Joinder or an Increased Commitment and Acceptance, the
Borrower shall deliver a new Revolver Note for the applicable Bank.
 
(iii)  Following any increase in the Revolver Commitments pursuant to this
subsection 2.14(d), the Agent shall send to the Banks and the Borrowers a
revised Schedule I setting forth each Bank’s new Commitment. Such Schedule shall
replace the existing Schedule I if no Bank objects thereto within ten (10) days
of its receipt thereof.
 
(iv)  Notwithstanding anything to the contrary in this subsection 2.14(d), (x)
the Borrowers may not request an increase in the Revolver Commitments if at the
time of such request a Default or Event of Default shall exist and (y) no
increase in the Revolver Commitments (including by way of the addition of a
Proposed New Bank) shall become effective if on the date that such increase
would become effective, a Default or Event of Default shall then exist or occur
as a result thereof.
 
2.15  Prepayment of Loans
 
(a)  The Borrowers shall have the right at any time and from time to time to
prepay Loans, in whole or in part, without premium or penalty (but in any event
subject to subsection 2.18), upon prior written, telecopy or telephonic notice
to the Agent given, in the case of Base Rate Loans, no later than 11:00 am.,
Philadelphia time, one Business Day before any proposed prepayment, and in the
case of LIBOR Loans, no later than 11:00 a.m., Philadelphia time, three Business
Days before any such proposed prepayment. In each case the
 
 
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notice shall specify the date, amount of each such prepayment, whether the
prepayment is of LIBOR Loans or Base Rate Loans, or a combination thereof, and,
if a combination thereof, the amount allocable to each; provided, however, that
each such partial prepayment shall be in the principal amount of at least
(i) with respect to prepayments of Base Rate Loans, $1,000,000 or in whole
multiples of $100,000 in excess thereof, and (ii) with respect to prepayments of
Loans that bear interest at the LIBOR Rate, $1,000,000 or in whole multiples of
$500,000 in excess thereof.
 
(b)  On the date of any termination or reduction of the Revolver Commitments
pursuant to Section 2.14, the Borrowers shall pay or prepay so much of the Loans
as shall be necessary in order that the aggregate Revolver Exposure at such time
would not exceed the aggregate amount of the Revolver Commitments at such time.
 
(c)  All prepayment notices shall be irrevocable. The principal amount of the
Loans for which a prepayment notice is given, together with interest on such
principal amount except with respect to Base Rate Loans and all fees, costs and
expenses payable in connection therewith, shall be due and payable on the date
specified in such prepayment notice as the date on which the proposed prepayment
is to be made. If the Borrowers prepay a Revolver Loan, all outstanding Swing
Line Loans shall (unless the Swing Line Bank shall otherwise agree) first be
repaid from the proceeds thereof. If the Borrowers fail to specify the
applicable Tranche which the Borrowers are prepaying, the prepayment shall,
subject to the immediately prior sentence, be applied first to Base Rate Loans
and then to LIBOR Loans, with payments applied to LIBOR Loans being applied in
order of next maturing Interest Periods. Any prepayment hereunder shall be
subject to the Borrowers’ obligation to indemnify the Banks under Section 2.18.
 
(d)  Upon receipt of any notice of prepayment, the Agent shall promptly notify
each Bank thereof.
 
(e)  Amounts prepaid pursuant to this Section (other than subsection (b) hereof)
may be reborrowed, subject to the terms and conditions hereof.
 
2.16  Requirements of Law
 
(a)  In the event that any change in any Requirement of Law or in the
interpretation, or application thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
 
(i)  shall subject any Bank to any tax of any kind whatsoever with respect to
this Agreement, any Note, any Letter of Credit, any Application or any LIBOR
Loan made by it or payments by the Borrowers of principal, interest, fees or
other amounts due from the Borrowers hereunder, or change the basis of taxation
of payments to such Bank in respect thereof (except for taxes covered by Section
2.17 and changes in the rate of tax on the net income of such Bank);
 
(ii)  shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans, letters of credit or
other extensions of
 
 
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credit by, or any other acquisition of funds by, any Bank or any Lending Office
of any Bank which is not otherwise included in the determination of the interest
rate on such LIBOR Loan hereunder; or
 
(iii)  shall impose on any Bank or any Lending Office of any Bank any other
condition;
 
and the result of any of the foregoing is to increase the cost to such Bank or
its Lending Office, by an amount which such Bank deems in its sole but
reasonable discretion to be material, of making, converting into, continuing or
maintaining LIBOR Loans, maintaining any commitment hereunder or issuing or
participating in Letters of Credit or to reduce any amount receivable hereunder
in respect thereof then, in any such case, the Borrowers shall as promptly as
practicable pay such Bank, upon its demand, any additional amounts necessary to
compensate such Bank for such increased cost or reduced amount receivable. If
any Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall as promptly as practicable notify the Company, through the
Agent, of the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Bank, through the Agent, to the Company shall be conclusive in the absence
of clearly demonstrable error. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder.
 
(b)  In the event that any Bank shall have determined that any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Bank or any corporation controlling
such Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the rate of return on
such Bank’s or such corporation’s capital as a consequence of its obligations
hereunder or under any Letter of Credit to a level below that which such Bank or
such corporation could have achieved but for such change or compliance (taking
into consideration such Bank’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, the Borrowers shall as promptly as practicable pay such Bank, upon
its demand, such additional amount or amounts as will compensate such Bank for
such reduction. If any Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall as promptly as practicable notify the
Company, through the Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Bank, through the Agent, to the Company shall be
conclusive in the absence of clearly demonstrable error. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
 
(c)  Each Bank agrees that it will use reasonable efforts in order to avoid or
to minimize, as the case may be, the payment by the Borrowers of any additional
amount under subsections 2.16(a) or (b); provided, however, that no Bank shall
be obligated to incur any expense, cost or other amount in connection with
utilizing such reasonable efforts.
 
 
 
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2.17  Taxes
 
(i)  All payments made by the Borrowers under this Agreement and the Notes shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority
(excluding, in the case of the Agent and each Bank, net income taxes and
franchise or gross receipts taxes imposed on the Agent or such Bank, as the case
may be, as a result of a present or former connection between the jurisdiction
of the government or taxing authority imposing such tax and the Agent or such
Bank (excluding a connection arising solely from the Agent or such Bank having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or the Notes)) (all such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions and withholdings being hereinafter
called “Taxes”). If any Taxes are required to be withheld from any amounts
payable to the Agent or any Bank hereunder or under the Notes, the amounts so
payable to the Agent or such Bank shall be increased to the extent necessary to
yield to the Agent or such Bank (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Notes. Whenever any Taxes are payable by the Borrowers,
as promptly as possible thereafter, the Borrowers shall send to the Agent for
its own account or for the account of such Bank, as the case may be, a certified
copy of an original official receipt received by the Borrowers showing payment
thereof. If the Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fail to remit to the Agent the required receipts or other
required documentary evidence, the Borrowers shall indemnify (subject to
subsections 2.17(c) below) the Agent and the Banks for any incremental taxes,
interest or penalties that may become payable by the Agent or any Bank as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
 
(ii)  Each Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the Borrowers and the
Agent on or prior to the Effective Date in the case of each initial Bank and on
or prior to the effective date of the Assignment and Acceptance pursuant to
which it becomes a Bank in the case of each other Bank (i) two duly completed
copies of United States Internal Revenue Service Form W-8ECI or W-8BEN or
successor applicable form, as the case may be, and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form. Each such Bank also agrees
to deliver to the Borrowers and the Agent two further copies of the said Form
W-8ECI or W-BEN and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the Borrowers,
and such extensions or renewals thereof as may reasonably be requested by the
Borrowers or the Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank so advises the
Borrower and the Agent. Each such Bank shall certify (i) in the case of a Form
W-8ECI or W-BEN, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form
 
 
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W-8 or W-9 or successor applicable form, that it is entitled to an exemption
from United States backup withholding tax. If any form provided by a Bank at the
time such Bank first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from “Taxes” as defined in subsection 2.9(a). In
the event that any Bank receives a refund of any Taxes for which it has received
payment from the Borrowers under this Section 2.17, such Bank shall promptly pay
the amount of such refund to the Borrowers without interest.
 
(iii)  Notwithstanding the foregoing subsections of this Section 2.17, the
Borrowers shall not be required to pay any additional amounts to any Bank in
respect of United States withholding tax pursuant to such subsections if (i) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with the requirements of subsection 2.17(b) or
(ii) such Bank shall not have furnished the Borrowers with such forms listed in
subsection 2.17(b) and shall not have taken such other steps as reasonably may
be available to it under applicable tax laws and any applicable tax treaty or
convention to obtain an exemption from, or reduction (to the lowest applicable
rate) of, such United States withholding tax.
 
2.18  Indemnity
 
(a)  The Borrowers jointly and severally agree to indemnify each Bank and to
hold each Bank harmless from any loss or expense, including, without limitation,
reasonable attorneys’ fees and expenses which such Bank may sustain or incur as
a consequence of (i) default by the Borrowers in payment when due of the
principal amount of or interest on any LIBOR Loan or Swing Line Loan,
(ii) default by the Borrowers in making a borrowing of, conversion into or
continuation of LIBOR Loans or Swing Line Loans after the Borrowers have given a
notice requesting the same in accordance with the provisions of this Agreement,
(iii) default by the Borrowers in making any prepayment after the Borrowers have
given a notice thereof in accordance with the provisions of this Agreement or
(iv) the making of a prepayment (whether voluntary, mandatory, as a result of
acceleration or otherwise) of LIBOR Loans or Swing Line Loans on a day which is
not the last day of an Interest Period with respect thereto (or, in the case of
a Swing Line Loan on the date such Swing Line Loan is due), including, without
limitation, in each case, any such loss or expense arising from the reemployment
of funds obtained by it or from fees payable to terminate the deposits from
which such funds were obtained. A certificate as to any amounts that a Bank is
entitled to receive under this Section 2.18 submitted by such Bank, through the
Agent, to the Company shall be conclusive in the absence of clearly demonstrable
error and all such amounts shall be paid by the Borrowers promptly upon demand
by such Bank. This covenant shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder.
 
(b)  For the purpose of calculation of all amounts payable to a Bank under this
subsection, each Bank shall be deemed to have actually funded its relevant LIBOR
Loan or Swing Line Loan through the purchase of a deposit bearing interest at
the LIBOR Rate in an amount equal to the amount of that LIBOR Loan or Swing Line
Loan, as the case may be, and having a maturity comparable to the relevant
Interest Period or applicable period for such Swing Line Loan; provided,
however, that each Bank may fund each of its LIBOR Loans, and the Swing Line
Bank may fund its Swing Line Loans, in any manner it sees fit, and the foregoing
 
 
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assumptions shall be utilized only for the calculation of amounts payable under
this subsection. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
 
2.19  Intentionally Omitted
 
2.20  Borrowers’ Representative
 
. Each of the Borrowers hereby appoints the Company as its non-exclusive
representative, and grants to the Company an irrevocable power of attorney to
act as its attorney-in-fact, with regard to all matters relating to this
Agreement and each of the other Loan Documents, including, without limitation,
execution and delivery of any Notice of Borrowing, and amendments, supplements,
waivers or other modifications hereto or thereto, receipt of any notices
hereunder or thereunder and receipt of service of process in connection herewith
or therewith and making all elections as to interest rates and interest payment
dates. (In such capacity, the Company is herein referred to as the “Borrowers’
Representative.”) The Agent and the Banks shall be entitled to rely exclusively
on the Borrowers’ Representative’s authority so to act in each instance without
inquiry or investigation, and each of the Borrowers hereby agrees to indemnify
and hold harmless the Agent and the Banks for any losses, costs, delays, errors,
claims, penalties or charges arising from or out of the Borrowers’
Representative’s actions pursuant to this Section 2.20 and the Agent’s and the
Banks’ reliance thereon and hereon. Notice from the Borrowers’ Representative
shall be deemed to be notice from all of the Borrowers and notice to the
Borrowers’ Representative shall be deemed to be notice to all of the Borrowers.
Nothing in this Section 2.20 shall vitiate or be held contrary to the Borrowers’
representations and covenants regarding the Loans or the net worth or solvency
of the Borrowers made herein or in any of the Loan Documents.
 
 
SECTION 3.   REPRESENTATIONS AND WARRANTIES
 
To induce the Agent and the Banks to enter into this Agreement and to make the
Loans and issue or participate in the Letters of Credit, each of the Borrowers
hereby represents and warrants to the Agent and each Bank that:
 
3.1  Financial Condition
 
(a)  The consolidated balance sheet of the Company and its consolidated
Subsidiaries as at December 25, 2004 and the related consolidated statements of
income and of cash flows for the period ended on such date, copies of which have
heretofore been furnished to each Bank, present fairly the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the period then ended. All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved. Neither the Company
nor any of its consolidated Subsidiaries had, at the date of the most recent
balance sheet referred to above, any material Guaranty Obligation, liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, which is required by GAAP to be but is not reflected in
the foregoing statements or in the notes thereto.
 
 
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(b)  The unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at June 25, 2005 and the related unaudited
consolidated statements of income and of cash flows for the six-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Bank, are complete and correct and present
fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the nine-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved. Neither the Company
nor any of its consolidated Subsidiaries had, at the date of the balance sheet
referred to above, any material Guaranty Obligation, liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction,
which is required by GAAP to be but is not reflected in the foregoing statements
or in the notes thereto.
 
3.2  No Change
 
. Except as provided on Schedule 3.2, since December 25, 2004, there has been no
development or event nor any prospective development or event which has had or
could reasonably be expected to have a Material Adverse Effect.
 
3.3  Corporate Existence; Compliance with Law
 
. Each of the Borrowers and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or other power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified to transact business and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, and (d) is in compliance with all
Requirements of Law, in each case, except to the extent that its failure to have
such power, authority or legal right, to qualify to do business, or to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
3.4  Corporate Power; Authorization; Enforceable Obligations
 
. Each of the Borrowers has the corporate or other power, authority, and legal
right to make, deliver and perform this Agreement, the Applications and each
other Loan Document to which it is a party and to borrow hereunder and has taken
all necessary corporate or other action to authorize the Extensions of Credit on
the terms and conditions of this Agreement and each other Loan Document to which
it is a party and to authorize the execution, delivery and performance of this
Agreement and each other Loan Document to which it is a party. No consent or
authorization of, filing with or other act by or in respect of, any Governmental
Authority or any other Person (including stockholders and creditors of the
Borrowers) is required in connection with the Extensions of Credit hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes, the Applications or any other Loan Document. This
Agreement has been and each other Loan Document to which it is a party will be,
duly executed and delivered on behalf of such Borrower. This Agreement
constitutes and each other Loan Document when executed and delivered will
constitute, a legal, valid and binding obligation of the Borrowers party thereto
enforceable against such Borrowers in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws affecting the
enforcement of
 
 
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creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
 
3.5  No Legal Bar
 
. The execution, delivery and performance of this Agreement, the Notes, the
Applications and the other Loan Documents by the Borrowers, the Extensions of
Credit extended hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or Contractual Obligation of any Borrower and will not
result in, or require, the creation or imposition of any Lien on any properties
or revenues of any Borrower pursuant to any such Requirement of Law or
Contractual Obligation.
 
3.6  No Material Litigation
 
. Except as provided on Schedule 3.2, no litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrowers, threatened against any Borrower or against any of
its or their respective properties or revenues (a) with respect to this
Agreement, the Notes, the other Loan Documents or any of the transactions
contemplated hereby, or (b) as to which there is a reasonable likelihood of an
adverse determination and which, if adversely determined, would have a Material
Adverse Effect.
 
3.7  No Default
 
. Neither the Company nor any other Borrower is in default under or with respect
to any of its Contractual Obligations in any respect which would have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
 
3.8  Taxes
 
. Each of the Borrowers has filed or caused to be filed all tax returns which,
to its knowledge, are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves, if any, in conformity with GAAP
have been provided on the books of the Borrowers); no tax Lien has been filed
against any of the Borrowers, and, to the knowledge of each of the Borrowers, no
claim is being asserted, with respect to any such tax, fee or other charges.
 
3.9  Federal Regulations
 
. No part of the proceeds of any Loans will be used for “purchasing” or
“carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U or for any purpose which violates the provisions
of Regulation U of the Board of Governors of the Federal Reserve System. If
requested by any Bank or the Agent, the Borrowers will furnish to the Agent and
each Bank a statement to the foregoing effect in conformity with the
requirements of FR Form U-l referred to in said Regulation U. No part of the
proceeds of the Loans hereunder will be used for any purpose which violates, or
which is inconsistent with, the provisions of Regulation X.
 
3.10  ERISA
 
. Each Plan (such representations in respect of any Multiemployer Plan being
made to the best knowledge of each Borrower) has complied in all material
respects with the applicable provisions of ERISA and the Code. No prohibited
transaction (as defined in subsection 7.1(k)) or Reportable Event (other than
the Reportable Event resulting from the Amendment to the Company’s defined
benefit pension Plan, effective March 26, 2005, pursuant to which the Company
ceased the accrual of benefits under such Plan) has occurred during the
 
 
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five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan. The present value of all
accrued benefits under each Single Employer Plan of which any Borrower or a
Commonly Controlled Entity is a sponsor (based on those assumptions used to fund
the Plans), as calculated by such Borrower’s actuaries, did not, as of
January 1, 2001, exceed the value of the assets of the Plans allocable to such
benefits. Neither any Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan and neither any
Borrower nor any Commonly Controlled Entity would become subject under ERISA to
any liability if any Borrower or any such Commonly Controlled Entity were to
withdraw completely from any Multiemployer Plan as of the valuation date most
closely preceding the date this representation is made or deemed made. Such
Multiemployer Plans are neither in Reorganization as defined in Section 4241 of
ERISA nor Insolvent as defined in Section 4245 of ERISA. Neither any Borrower
nor any Commonly Controlled Entity has any or has received notice of any
liability under the Coal Industry Retiree Health Benefit Act of 1992. Neither a
Reportable Event nor an “accumulated funding deficiency” within the meaning of
Section 412 of the Code or Section 302 of ERISA has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan or Multiemployer Plan. No
termination of a Single Employer Plan has occurred, and no Lien on assets of any
of the Borrowers or any Commonly Controlled Entity in favor of the PBGC or a
Plan has arisen during such five-year period.
 
3.11  Investment Company Act
 
. None of the Borrowers is an “investment company”, or a company “controlled” by
an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.
 
3.12  Public Utility Holding Company Act
 
. No Borrower is subject to regulation as a “holding company”, subject to
regulation as an “affiliate” of a “holding company”, or subject to regulation as
a “subsidiary company” of a “holding company”, in each case under the Public
Utility Holding Company Act of 1935, as amended.
 
3.13  Environmental Matters
 
. Except to the extent that all of the following would not reasonably be
expected to have a Material Adverse Effect:
 
(a)  The Properties do not contain, and have not previously contained, in, on,
or under, including, without limitation, the soil and groundwater thereunder,
any Materials of Environmental Concern in amounts or concentrations that
constitute or constituted a violation of, and reasonably could give rise to
liability to the Borrowers under Environmental Laws.
 
(b)  The Properties and all operations and facilities at the Properties are in
substantial compliance, and have in the last five years been in substantial
compliance with all Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by any Borrower thereof which could
interfere with the continued operation of any of the Properties or impair the
fair saleable value of any thereof. None of the Borrowers has assumed any
liability of any Person under Environmental Laws.
 
 
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(c)  Neither the Company nor any other Borrower nor any of their Subsidiaries
has received or is aware of any claim, notice of violation, alleged violation,
non-compliance, investigation or advisory action or potential liability
regarding environmental matters or compliance of Environmental Law with regard
to the Properties which has not been satisfactorily resolved by the Company or
such other Borrower, nor is the Company nor any other Borrower aware or have
reason to believe that any such action is being contemplated, considered or
threatened.
 
(d)  Materials of Environmental Concern have not been generated, treated,
stored, transported, disposed of, at, on, from or under any of the Properties by
any of the Borrowers, nor have any Materials of Environmental Concern been
transferred by any of the Borrowers from the Properties to any other location
except in either case in the ordinary course of business of the Borrowers in
substantial compliance with all Environmental Laws and such that it would not
reasonably be expected to give rise to liability to the Borrowers under any
applicable Environmental Law.
 
(e)  There are no governmental, administrative actions or judicial proceedings
pending or, to the best knowledge of each Borrower after reasonable inquiry,
contemplated or threatened under any Environmental Laws to which the Company is
or will be named as a party with respect to the Properties, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to any of the Properties to the best knowledge of
each Borrower after reasonable inquiry.
 
(f)  There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operation of the Borrowers in connection with the Properties or otherwise in
connection with the business operated by the Borrowers in violation of or in
amounts or in a manner that could reasonably be expected to give rise to
liability to the Borrowers under any Environmental Law.
 
(g)  To the best knowledge of the Borrowers after reasonable inquiry, each of
the representations and warranties set forth in paragraphs 3.13(a) through
3.13(f) is true and correct with respect to each Property.
 
3.14  No Material Misstatements
 
. No financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Agent or any Bank in connection with the negotiation of this
Agreement, any Note or any other Loan Document contains any misstatement of
fact, or omitted or omits to state any fact necessary to make the statements
therein not misleading under the circumstances under which they were made or
given, where such misstatement or omission would be material to the interests of
the Banks with respect to the performance of one or more Borrowers of its or
their obligations hereunder or thereunder. Prior to the date hereof,  the
Borrowers have disclosed to the Banks in writing any and all facts which
materially and adversely affect (to the extent the Borrowers can as of the date
hereof reasonably foresee), the business, operations or financial condition of
the Company and its Subsidiaries taken as a whole, and the ability of the
Borrowers to perform their obligations under this Agreement, the Notes and the
other Loan Documents.
 
 
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3.15  Title to Properties
 
. The Borrowers have good and marketable title to or valid leasehold interest in
all material properties, assets and other rights which they purport to own or
lease, respectively, or which are reflected as owned or leased on their
respective books and records, free and clear of all Liens and encumbrances
except Permitted Liens, and subject to the terms and conditions of the
applicable leases, except for minor defects in title that do not interfere in
any material respect with their ability to conduct their businesses as presently
conducted. All leases of property are in full force and effect without the
necessity for any consent (which has not previously been obtained) upon
consummation of the transactions contemplated hereby unless the failure to
obtain or maintain such consent would not have a Material Adverse Effect.
 
3.16  Intellectual Property
 
. Each of the Borrowers owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted (the “Intellectual Property”), except for those
as to which the failure to own or license would not reasonably be expected to
have a Material Adverse Effect. No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property, nor
does such Borrower know of any valid basis for any such claim. The use of such
Intellectual Property by the Borrowers does not infringe the rights of any
Person, except for such claims and infringements that, in the aggregate, could
not have a Material Adverse Effect.
 
3.17  No Burdensome Restrictions; List of Subsidiaries
 
. No Requirement of Law or Contractual Obligation of any of the Borrowers could
reasonably be expected to have a Material Adverse Effect. All of the direct or
indirect Subsidiaries of the Company are Borrowers under this Agreement.
 
3.18  Solvency
 
. Each of the Borrowers is, and after receipt and application of the initial
Loans hereunder will be, solvent such that: (a) the fair value of its assets
(including without limitation the fair salable value of the goodwill and other
intangible property of such Borrower) is greater than the total amount of its
liabilities, including without limitation, Guaranty Obligations, (b) the present
fair salable value of its assets (including without limitation the fair salable
value of the goodwill and other intangible property of such Borrower) is not
less than the amount that will be required to pay the probable liability on its
debts as they become absolute and matured, and (c) it is able to realize upon
its assets and pay its debts and other liabilities and commitments (including
Guaranty Obligations) as they mature in the normal course of business; provided,
that with respect to the obligations outstanding under this Agreement and any
payments made with respect thereto, the common law right of and to contribution
and subrogation among the Borrowers and any other rights to payment between and
among any one or more of the Borrowers shall be taken into account in
determining whether each Borrower is solvent. Each Borrower (a) does not intend
to, and does not believe that it will, incur debts or liabilities beyond its
ability to pay as such debts and liabilities mature, and (b) is not engaged in a
business or transaction, or about to engage in a business or transaction, for
which its property would constitute unreasonably small capital after giving due
consideration to the prevailing practice and industry in which it is engaged;
provided, that with respect to the obligations outstanding under this Agreement
and any payments made with respect thereto, the common law right of and to
contribution and subrogation among the Borrowers and any other rights to payment
between and among any one or more of the Borrowers shall be taken into
 
 
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account in determining whether each Borrower is able to pay such debts and
liabilities as they mature or whether such Borrower’s property would constitute
sufficient capital.
 
3.19  Insurance
 
. The Borrowers currently maintain insurance which meets or exceeds the
requirements of Section 5.5 No notice has been given or claim made and no
grounds exist to cancel or avoid any insurance policies or other bonds to which
the Borrowers are a party or to reduce the coverage provided thereby or any
replacements thereof. Such policies and bonds or any replacements thereof
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of the Borrowers in accordance
with prudent business practice in the industry of the Borrowers.
 
3.20  Anti-Terrorism Laws
 
(a)  General. None of the Borrowers nor any Subsidiary or Affiliate of any of
the Borrowers is in violation of any Anti-Terrorism Law nor does any Borrower
engage in or conspire to engage in any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
 
(b)  Executive Order No. 13224. None of the Borrowers nor any of their
respective Subsidiaries, Affiliates or agents acting or benefiting in any
capacity in connection with the Loans made or the Letters of Credit issued
hereunder or other transactions contemplated by this hereby, is any of the
following (each a “Blocked Person”):
 
(i)  a Person that is listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224;
 
(ii)  a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224;
 
(iii)  a Person with which any Bank is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;
 
(iv)  a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224;
 
(v)  a Person that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list, or
 
(vi)  a Person who is an Affiliate of a Person listed above.
 
No Borrower, nor to the knowledge any Borrower, any of its Subsidiaries,
Affiliates or agents acting in any capacity in connection with the Loans made or
the Letters of Credit issued hereunder or other transactions contemplated hereby
(i) conducts any business with, or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any
 
 
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Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224.
 
 
SECTION 4.   CONDITIONS PRECEDENT
 
4.1  Conditions to Effectiveness
 
. This Agreement shall become effective upon, and the agreement of the Banks to
make any additional Extension of Credit shall be subject to, the satisfaction of
each of the following conditions precedent:
 
(a)  Credit Agreement and Notes. The Agent shall have received (i) this
Agreement, (A) executed and delivered by a duly authorized officer of each
Borrower, with a counterpart for each Bank, and (B) executed and delivered by a
duly authorized officer of each Bank, (ii) for the account of each Bank, a
Revolver Note and (iii) a Swing Line Note for the account of the Swing Line
Bank.
 
(b)  Corporate Proceedings; No Default. The Agent shall have received, with a
counterpart for each Bank, a certificate of the Secretary or an Assistant
Secretary of each Borrower dated as of the Effective Date certifying (A) that
attached thereto is a true and complete copy of the resolutions, in form and
substance satisfactory to the Agent, of the Board of Directors or other
governing body of such Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents to which
it is a party, and (ii) the Extensions of Credit contemplated hereunder and that
such resolutions attached thereto have not been amended, modified, revoked or
rescinded and (B) as to the incumbency and specimen signature of each officer
executing any Loan Document on behalf of a Borrower and (C) that the
representations contained in Section 3 are true and correct, that the Borrowers
are in compliance with all covenants contained herein and there exists no
Default or Event of Default as of the Effective Date after giving effect to any
additional Extension of Credit hereunder.
 
(c)  Corporate Documents. The Agent shall have received, with a counterpart for
each Bank, true and complete copies of the articles or certificate of
incorporation or other organizational documents certified by the Secretary of
State or similar official of the state of organization of each Borrower, and the
by-laws of each Borrower, in each case, certified as of the Effective Date as
complete and correct copies thereof by the Secretary or an Assistant Secretary
of such Borrower. The documents and certifications of the Secretary or an
Assistant Secretary contemplated in this subsection may be included within the
certificate contemplated by subsection 4.1(b) above.
 
(d)  Fees and Expenses. The Agent shall have received (i) the closing fee and
the fees required to be paid on the Effective Date pursuant to this Agreement
and the Commitment Letter and (ii) all other fees and expenses due and payable
hereunder on or before the Effective Date (if then invoiced), including, without
limitation, the reasonable fees and expenses accrued through the Effective Date
of Ballard Spahr Andrews & Ingersoll, LLP, counsel to the Agent in connection
with the transactions contemplated by the Loan Documents.
 
 
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(e)  Legal Opinion. The Agent shall have received the executed legal opinion of
Stradley Ronon Stevens & Young, LLP, counsel to the Borrowers covering such
matters as the Agent may reasonably require.
 
(f)  Insurance. The Agent shall have received Certificates of Insurance with
respect to each Borrower’s fire, casualty, liability and other insurance
covering its respective property and business.
 
(g)  Good Standing. The Agent shall have received certificates of good standing,
subsistence and/or status dated a recent date from the Secretary of State or
appropriate taxing or other authorities in the jurisdiction of incorporation or
organization of each Borrower and any other locations requested by the Agent.
 
(h)  Citizens Loan Documents. The Agent shall have received and reviewed to its
satisfaction final forms of the Citizens Loan Documents which are in effect on
the Effective Date.
 
4.2  Conditions to Each Extension of Credit
 
. The agreement of each Bank to make any Extension of Credit requested to be
made by it on any date (including, without limitation, the initial Extension of
Credit on or after the Effective Date) is subject to the satisfaction of the
following conditions precedent:
 
(a)  Representations and Warranties. Each of the representations and warranties
made by each Borrower herein or which are contained in any certificate, document
or financial or other statement furnished at any time under or in connection
herewith or therewith, shall be true and correct in all material respects on and
as of such date as if made on and as of such date.
 
(b)  No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the Extensions of Credit
requested to be made on such date.
 
(c)  Citizens Loan Documents. The Citizens Loan Documents in effect at the time
of such request for an Extension of Credit, are in form and substance
satisfactory to the Agent.
 
(d)  Additional Matters. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
 
 
Each request by the Borrowers for an Extension of Credit hereunder shall
constitute a representation and warranty by the Borrowers as of the date of such
Extension of Credit that the conditions contained in this Section 4.2 have been
satisfied.
 
 
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4.3  Effective Date; Transitional Arrangements
 
(a)  Subject to the satisfaction of the conditions of Sections 4.1 and 4.2, this
amendment and restatement of the Existing Credit Agreement shall become
effective on such date (the “Effective Date”) and at such time as may be
mutually agreeable to the parties following the execution and delivery hereof
(“Closing”) at the offices of the Agent’s counsel, Ballard Spahr Andrews &
Ingersoll, LLP, in Philadelphia, Pennsylvania.
 
(b)  On the Effective Date, without the necessity of further action by any
party: (i) the outstanding principal amount of the “364 Day Loans” and
“Revolving Loans” (each as defined in the Existing Credit Agreement) owed to the
Banks shall be converted and continued, together with any additional Revolving
Loan to be made on the Effective Date, as Revolving Loans as if made by the
Banks pursuant to this Agreement in accordance with their respective Commitment
Percentages and (iv) each Existing Letter of Credit shall continue in full force
and effect as a Letter of Credit issued under this Agreement for so long as such
Letter of Credit remains outstanding or any draft thereunder has not been
reimbursed, and all Loans shall be entitled to the security and subject to the
provisions set forth in this Agreement. Each Bank agrees to participate in all
such Letters of Credit in accordance with the terms of this Agreement as if each
such Letter of Credit were issued hereunder.
 
(c)  To the extent that a Bank’s Commitment Percentage has changed on the
Effective Date, the outstanding Revolving Loans (or portion thereof) owed to the
Banks will be reallocated so as to be consistent with the Commitment Percentages
as determined as of the Effective Date. Unless waived by the Banks, the
Borrowers agree to indemnify the Banks for all costs, charges, fees and
expenses, including, any breakage fees as set forth in Section 2.17 hereof,
incurred by any of the Banks in connection with such reallocation of the
Revolving Loans.
 
(d)  Except as otherwise provided herein, the Existing Credit Agreement and the
promissory notes issued thereunder shall be superseded by this Agreement, the
Notes and the other Loan Documents and shall be of no further force or effect
and such promissory notes issued under the Existing Credit Agreement shall be
surrendered by the lenders party thereto to the Agent and returned to the
Borrowers’ Representative. Notwithstanding the amendment and restatement of the
Existing Credit Agreement by this Agreement, the Borrowers shall continue to be
liable to the Agent and those lenders party to the Existing Credit Agreement
with respect to agreements on the part of the Borrowers under the Existing
Credit Agreement to pay all principal, interest, fees and other amounts that
have accrued on or before the date hereof and to indemnify and hold harmless the
Agent and such lenders from and against all claims, demands, liabilities,
damages, losses, costs, charges and expenses to which the Agent and such lenders
may be subject arising in connection with the Existing Credit Agreement and as
to which the Borrowers have agreed under the Existing Credit Agreement to
indemnify and hold harmless the Agent and such lenders. This Agreement is given
as a substitution of, and not as a payment of, the obligations of the Borrowers
under the Existing Credit Agreement and is not intended to constitute a novation
of the Existing Credit Agreement.
 
(e)  All interest and all commitment, facility and other fees and expenses owing
or accruing under or in respect of the Existing Credit Agreement shall be
 
 
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calculated as of the Effective Date (prorated in the case of any fractional
periods), and shall be paid on such date to the parties and in accordance with
the method specified in the Existing Credit Agreement, as if it were still in
effect.
 
 
SECTION 5.   AFFIRMATIVE COVENANTS
 
Each of the Borrowers hereby agrees that, so long as any of the Commitments
remain in effect, any Note or Letter of Credit remains outstanding and unpaid,
or any other amount is owing to any Bank or the Agent hereunder, such Borrower
shall:
 
5.1  Financial Statements
 
. Furnish to each Bank:
 
(a)  as soon as available, but in any event not later than 90 days after the
close of each fiscal year of the Company, an audited consolidated balance sheet
of the Company and its consolidated Subsidiaries as at the end of such fiscal
year, and related consolidated statements of income and retained earnings and
changes in cash flows of the Company and its consolidated Subsidiaries for such
fiscal year, all in reasonable detail, prepared in accordance with GAAP applied
on a basis consistently maintained throughout the period involved and with the
prior year with such changes thereon as shall be approved by the Company’s
independent certified public accountants, such financial statements to be
certified by PricewaterhouseCoopers L.L.P. or other nationally recognized
independent certified public accountants selected by the Company and reasonably
acceptable to the Agent, without a “going concern” or like qualification or
exception arising out of the scope of the audit; such financial statements shall
be accompanied by a certificate of a Responsible Officer of the Company stating
that the financial statements fairly present the financial condition of the
Company and its consolidated Subsidiaries as of the date and for the periods
covered thereby; and
 
(b)  as soon as available, but in any event not later than 45 days after the end
of each of the first three quarterly periods of each fiscal year of the Company,
unaudited consolidated financial statements of the Company and its consolidated
Subsidiaries, including therein (i) a consolidated balance sheet of the Company
and its consolidated Subsidiaries as at the end of such fiscal quarter, (ii) the
related consolidated statements of income and retained earnings of the Company
and its consolidated Subsidiaries, and (iii) the related consolidated statement
of changes in cash flows of the Company and its consolidated Subsidiaries all
for the period from the beginning of such fiscal quarter to the end of such
fiscal quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the corresponding
figures for the like period of the preceding fiscal year; all in reasonable
detail, prepared in accordance with GAAP applied on a basis consistently
maintained throughout the period involved and with prior periods and accompanied
by a certificate of a Responsible Officer of the Company stating that the
financial statements fairly present the financial condition of the Company and
its consolidated Subsidiaries as of the date and for the periods covered thereby
(subject to normal year-end audit adjustments).
 
5.2  Certificates; Other Information
. Furnish to each Bank:
 
(a)  concurrently with the delivery of the financial statements referred to in
subsection 5.1(a), a certificate of the Company’s independent certified public
accountants
 
 
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reporting on such financial statements stating that in making the examination
necessary for certifying such financial statements no knowledge was obtained of
any Default or Event of Default, except as specifically indicated;
 
(b)  concurrently with the delivery of the financial statements referred to in
subsections 5.1(a) and 5.1(b), a certificate of a Responsible Officer of the
Company (each a “Compliance Certificate”) showing in detail the calculations
demonstrating compliance with the financial covenants set forth in Section 6.1,
together with a certificate of a Responsible Officer of the Company stating
that, to the best of his or her knowledge, each of the Borrowers during such
period has kept, observed, performed and fulfilled each and every covenant and
condition contained in this Agreement and in the Notes and the other Loan
Documents to which it is a party and that such officer has obtained no knowledge
of any Default or Event of Default except as specifically indicated; if the
Compliance Certificate shall indicate that such officer has obtained knowledge
of a Default or Event of Default, such Compliance Certificate shall state what
efforts the Borrowers are making to cure such Default or Event of Default; and
 
(c)  promptly, such forecasts, budgets and additional financial information as
the Agent or any Bank may from time to time reasonably request.
 
5.3  Payment of Obligations
 
. Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its obligations of whatever nature
(including but not limited to all taxes, assessments and governmental charges
and levies upon them or upon any of their respective income, profits or property
prior to the date on which penalties attach thereto), except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company or its Subsidiaries, as the case may be.
 
5.4  Maintenance of Existence
 
. Preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; comply with all
Contractual Obligations and Requirements of Law, except to the extent that
failure to comply therewith would not individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
5.5  Maintenance of Insurance; Property
 
(a)  Insure its properties and assets against loss or damage by fire and such
other insurable hazards as such assets are commonly insured (including fire,
extended coverage, property damage, worker’s compensation, public liability and
business interruption insurance) and against other risks in such amounts as
similar properties and assets are insured by prudent companies in similar
circumstances carrying on similar businesses, and with reputable and financially
sound insurers, including self insurance to the extent customary. The Borrowers
shall deliver, at the request of the Agent or any Bank, from time to time a
summary schedule indicating all insurance then in force with respect to the
Borrowers.
 
(b)  Maintain in good repair, working order and condition (ordinary wear and
tear and casualty excepted) in accordance with the general practice of other
businesses
 
 
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of similar character and size, all of those properties useful or necessary to
its business, and, from time to time, each of the Company and its Subsidiaries
will make or cause to be made all appropriate repairs, renewals or replacements
thereof.
 
5.6  Inspection of Property; Books and Records; Discussions.
 
 Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and upon
reasonable notice permit representatives of any Bank to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
during normal business hours and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Company and its Subsidiaries with officers and employees of the Company
and its Subsidiaries.
 
5.7  Notices.
 
.Promptly give notice to the Agent and each Bank of:
 
(a)  the occurrence of any Default or Event of Default;
 
(b)  any (i) default or event of default under any Contractual Obligation of any
Borrower or (ii) litigation, investigation or proceeding which may exist at any
time between any Borrower and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, would have a
Material Adverse Effect;
 
(c)  any litigation, investigation or proceeding affecting any Borrower which,
if adversely determined, would have a Material Adverse Effect;
 
(d)  the following events, as soon as possible and in any event within 30 days
after any Borrower knows or has reason to know thereof: (i) the occurrence or
expected occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, any Lien in favor of PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or any Borrower or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan or (iii) an assessment of liability
under the Coal Industry Retiree Health Benefit Act of 1992; and
 
(e)  any other event which has had or would reasonably be expected to have a
Material Adverse Effect.
 
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrowers and their Subsidiaries propose to take
with respect thereto.
 
5.8  Environmental Laws
 
(a)  Comply with, and require compliance by all tenants and all subtenants, if
any, in all material respects with all Environmental Laws and obtain and comply
with and maintain, and require that all tenants and subtenants obtain and comply
in all material respects with and maintain, any and all licenses, approvals,
registrations or permits required by
 
 
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Environmental Laws, except in each case to the extent that failure to so comply
or obtain or maintain such documents could not reasonably be expected to have a
Material Adverse Effect;
 
(b)  Comply in all material respects with all lawful and binding orders and
directives of all Governmental Authorities respecting Environmental Laws; and
 
(c)  Defend, indemnify and hold harmless the Agent and the Banks, and their
respective employees, agents, officers, directors, successors and assigns from
and against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to any violation
of or noncompliance with or liability under any Environmental Laws, or any
orders, requirements or demands of Governmental Authorities related thereto
which in each case relate to or arise in connection with any Borrower, any
Property or any activities relating to any other property or business of a
Borrower or the enforcement of any rights provided herein or in the other Loan
Documents, including, without limitation, attorneys’ and consultants’ fees,
response costs, investigation and laboratory fees, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of any of the foregoing enumerated parties.
This indemnity shall continue in full force and effect regardless of the
termination of this Agreement and the payment of the Notes.
 
5.9  Notice and Joinder of New Subsidiaries.
 
Notify the Agent as soon as practicable of its ownership of any Subsidiary that
is not a Borrower and cause such Subsidiary to execute and deliver to the Agent
a Joinder and Assumption Agreement pursuant to which it shall, among other
things, become a Borrower hereunder.
 
5.10  Use of Proceeds.
 
Use the proceeds of the Loans (i) for working capital and general corporate
purposes in the ordinary course of business including to pay all or a portion of
the purchase price for Permitted Acquisitions and (ii) to repay Indebtedness
under the Existing Credit Agreement.
 
5.11  Tax Shelter Regulations.
 
None of the Borrowers intends to treat any Extension of Credit or other
transactions under this Agreement as being a “reportable transaction” (within
the meaning of Treasury Regulation Section 1.6011-4). In the event any of the
Borrowers determines to take any action inconsistent with such intention, such
Borrower will promptly (1) notify the Agent thereof, and (2) deliver to the
Agent a duly completed copy of IRS Form 8886 or any successor form. If any
Borrower so notifies the Agent, such Borrower acknowledges that one or more of
the Banks may treat its Extensions of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Bank or Banks, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.
 
5.12  Anti-Terrorism Laws.
 
The Borrowers and their respective Subsidiaries, Affiliates and agents shall not
(a) conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making of or receiving any contribution of funds,
goods or services to or for the benefit of any Blocked Person; (b) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224; or (c) engage in or
conspire to engage in any transaction that evades or avoids, or has
 
 
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the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or the USA Patriot Act. The
Borrowers shall deliver to the Banks any certification or other evidence
reasonably requested from time to time by any Bank, confirming the Borrowers’
compliance with this Section 5.12.
 
 
SECTION 6.   NEGATIVE COVENANTS
 
Each of the Borrowers hereby agrees that, so long as any Commitments remain in
effect, any Note or Letter of Credit remains outstanding and unpaid, or any
other amount is owing to any Bank or Agent hereunder, such Borrower shall not,
directly or indirectly:
 
6.1  Financial Condition Covenants
 
(a)  Minimum Tangible Net Worth. Permit the Tangible Net Worth of the Company
and its consolidated Subsidiaries at any time to be less than the sum of (i)
$38,500,000, plus (ii) on a cumulative basis any non-cash pension gains recorded
during any fiscal quarter commencing with the fiscal quarter ending September
30, 2005, minus (iii) on a cumulative basis any non-cash pension charges
recorded for any fiscal quarter commencing with the fiscal quarter ending
September 30, 2005, but only to the extent such charges do not exceed twenty
percent (20%) of Tangible Net Worth as determined as of the last day of any such
fiscal quarter plus (iv) on a cumulative basis fifty percent (50%) of net income
(or, in the case of a deficit, zero percent (0%)) for the Company and its
consolidated Subsidiaries in respect of each fiscal quarter commencing with the
Borrowers’ fiscal quarter ending June 30, 2005, with each increase or decrease
to be effective as of the last day of each such fiscal quarter.
 
(b)  Fixed Charge Coverage Ratio. Permit, as of the end of any fiscal quarter,
the Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.
 
(c)  Leverage Ratio. Permit, as of the end of any fiscal quarter, the Leverage
Ratio to exceed 3.00 to 1.00.
 
6.2  Limitation on Liens
 
. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, except for
Permitted Liens.
 
6.3  Limitations on Fundamental Changes
 
. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, except that:
 
(a)  any Subsidiary of the Company may be merged or consolidated with or into
the Company (provided that the Company shall be the continuing or surviving
corporation) or with or into any Borrower (provided that such Borrower shall be
the continuing or surviving corporation or such surviving or continuing
corporation becomes a Borrower hereunder pursuant to Section 5.9); and
 
 
 
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(b)  any Subsidiary of the Company may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
a Borrower;
 
provided, that immediately after any such transaction referred to in paragraphs
(a) and (b) above and after giving effect thereto, each of the Borrowers is in
compliance with this Agreement and no Default or Event of Default shall have
occurred and be continuing or result from such transaction.
 
6.4  Limitation on Indebtedness.
 
Create, incur, assume or suffer to exist, directly or indirectly any
Indebtedness except the following (“Permitted Indebtedness”): (a) the
obligations of the Borrowers to the Banks hereunder; (b) the Citizens Unsecured
Term Loan; (c) the Citizens Secured Term Loan, (d) Indebtedness secured by
Permitted Liens to the extent that any such Indebtedness secured by (i) Purchase
Money Security Interests does not exceed $5,000,000 in the aggregate, and (ii)
Liens created pursuant to Capital Leases (other than Liens existing or created
pursuant to the Capital Lease for the manufacturing facility located on the
Hunting Park Property) does not exceed $5,500,000 in the aggregate; (c)
Indebtedness existing on the date hereof and shown on Schedule 6.4; (d) current
trade accounts payable incurred in the ordinary course of business; and (e)
intercompany indebtedness to the extent permitted by Section 6.6.
 
6.5  Limitation on Sale of Assets.
 
Convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests and Capital Stock or equity interests in any Subsidiary that
is or is required to be a Borrower hereunder), whether now owned or hereafter
acquired, except:
 
(a)  any sale, transfer or lease of assets which are no longer necessary or
required in the conduct of the Borrowers’ business;
 
(b)  transactions involving the sale or lease of inventory in the ordinary
course of business;
 
(c)  the sale or discount without recourse of accounts receivable arising in the
ordinary course of business in connection with the compromise or collection in
the ordinary course of business of such accounts receivable; and
 
(d)  as permitted by Section 6.3.
 
6.6  Transactions with Affiliates.
 
Except as expressly permitted in this Agreement, directly or indirectly enter
into any transaction or arrangement whatsoever (including without limitations
any purchase, sale, lease or exchange of property or the rendering of any
service) or make any payment to or otherwise deal with any Affiliate, except, as
to all of the foregoing (i) in the ordinary course of and pursuant to the
reasonable requirements of such Borrower’s business and upon fair and reasonable
terms no less favorable to such Borrower than would be obtained in a comparable
arm’s length transaction with a Person not an Affiliate and (ii) intercompany
loans among the Borrowers in the ordinary course of and pursuant to the
reasonable requirements of such Borrowers’ business.
 
 
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6.7  Sale and Leaseback.
 
Enter into any arrangement with any Person providing for the leasing by such
Borrower of real or personal property which has been or is to be sold or
transferred by such Borrower to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations thereof.
 
6.8  Limitation on Acquisitions, Investments, Loans and Advances.
 
Purchase, hold or acquire beneficially any stock, other securities or evidences
of indebtedness of, or all or a substantial amount of the assets of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or acquire any interest whatsoever in, any other Person, except:
 
(a)  extensions of trade credit to customers in the ordinary course of business;
 
(b)  Permitted Investments;
 
(c)  Capital Stock of any Borrower;
 
(d)  loans and advances to or other investments in any Borrower;
 
(e)  loans and advances to employees of the Borrowers and their Subsidiaries for
travel and entertainment expenses in the ordinary course of business; and
 
(f)  Permitted Acquisitions.
 
6.9  No Negative Pledge.
 
 Enter into any agreement after the date hereof with any Person other than the
Agent on behalf of the Banks pursuant to which any Borrower covenants or agrees
to a prohibition upon creating, incurring, or suffering any Lien upon any of its
properties, assets or revenues, whether now owned or hereafter acquired, except
(a) the Citizens Loan Agreement and the Hunting Park Mortgage or (b) in
connection with a Capital Lease or Purchase Money Security Interest, in which
case such agreement shall be permitted but only with respect to the specific
asset or assets subject to such Capital Lease or Purchase Money Security
Interest.
 
6.10  Fiscal Year.
 
Permit the fiscal year of a Borrower to end on a day other than the last
Saturday of December.
 
6.11  Limitation on Conduct of Business.
 
Discontinue any substantial part of their existing businesses or enter into any
business except for businesses in which the Borrowers are engaged on the date of
this Agreement and businesses related to the manufacture or distribution of food
products.
 
6.12  Capital Expenditures.
 
Contract for, purchase or make any expenditure or commitments for Capital
Expenditures in an aggregate amount in excess of (a) $15,000,000 during any
fiscal year or (b) $55,000,000 during the Revolver Commitment Period.
 
 
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SECTION 7.   EVENTS OF DEFAULT
 
7.1  Events of Default.
 
 If any of the following events shall occur and be continuing:
 
(a)  A Borrower (i) shall fail to pay when due any principal on any Note or any
Reimbursement Obligation when due, or (ii) shall fail to pay any other amount
payable hereunder or thereunder (including without limitation any interest or
fees) within three (3) Business Days after the date due in accordance with the
terms thereof or hereof; or
 
(b)  Any representation or warranty made or deemed made by a Borrower herein or
in any other Loan Document or which is contained in any certificate or financial
statement furnished at any time under or in connection with this Agreement shall
prove to have been incorrect or misleading in any material respect on or as of
the date made or deemed made; or
 
(c)  A Borrower shall default in the observance or performance of any agreement
contained in Section 5.9 and Section 6 of this Agreement; or
 
(d)  A Borrower shall default in the observance or performance of any other
agreement contained in this Agreement (other than as provided in subsections (a)
through (c) above) or any other Loan Document, and such default shall continue
unremedied (if it is capable of being remedied in such period) for a period of
thirty (30) days after notice thereof; or
 
(e)  a default or event of default shall exist under the Citizens Loan
Documents; or
 
(f)  A Borrower shall (i) default in the payment of any principal of or interest
on or any other amount payable on any Indebtedness (other than the Notes) or in
the payment of any Guaranty Obligation, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guaranty Obligation was created and the aggregate amount of such Indebtedness
and/or Guaranty Obligations in respect of which such default or defaults shall
have occurred is at least $2,000,000; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guaranty Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guaranty Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due and payable prior
to its stated maturity or such Guaranty Obligation to become payable, in each
case, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness or Guaranty Obligation was created and
the aggregate amount of such Indebtedness and/or Guaranty Obligations in respect
of which such default or defaults shall have occurred is at least $2,000,000; or
 
(g)  (i) A Borrower shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief
 
 
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entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or a Borrower shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against a Borrower any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against a Borrower any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged,
satisfied, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) a Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) a Borrower shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they generally become due; or
 
(h)  One or more judgments or decrees shall be entered against a Borrower
involving in the aggregate a liability of $5,000,000 or more and all such
judgments or decrees shall not have been vacated, discharged, settled, satisfied
or paid, or stayed or bonded pending appeal, within 30 days from the entry
thereof; or
 
(i)  Any Change of Control shall occur; or
 
(j)  Without limiting the covenants and representations made herein relating to
environmental matters, any Borrower shall fail to (i) comply in all material
respects with all Environmental Laws or obtain and comply with and maintain any
and all licenses, approvals, registrations or permits required by Environmental
Laws except to the extent that failure to so comply or obtain or maintain such
documents would not reasonably be expected to have a Material Adverse Effect; or
(ii) comply in all material respects with all lawful and binding orders and
directives of all Governmental Authorities respecting Environmental Laws except,
in each case, (x) if and to the extent such Borrower is contesting the
application of any such Environmental Laws in good faith in appropriate
proceedings for which adequate reserves have been established on its books or
(y) if such Borrower is in the process of curing any such non-compliance as
permitted by the provisions of such Environmental Laws or Governmental
Authorities enforcing such Environmental Laws; or
 
(k)  Without limiting the covenants and representations made herein relating
ERISA matters (i) any Person shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or institution of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Banks, likely to result in the
termination of such Plan for purposes of Title IV of
 
 
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ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Banks is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist in
regard to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or
 
(l)  the Company shall cease to own, directly or indirectly, one hundred percent
(100%) of the legal and beneficial ownership of each other Borrower except
pursuant to a transaction permitted under Section 6.3 or Section 6.5;
 
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to a Borrower,
automatically the Commitments (including without limitation the obligations of
the Issuing Bank to issue Letters of Credit and the Banks to participate
therein) shall immediately terminate, and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement, the Notes
and the other Loan Documents shall automatically and immediately become due and
payable (including, without limitation, all Letter of Credit Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder), and (B) if such event is any
other Event of Default, with the consent of the Required Banks, the Agent may,
or upon the written request of the Required Banks, the Agent shall, (i) by
notice to the Company declare the Commitments to be terminated forthwith,
whereupon the Commitments and the obligations of the Banks to make Loans, and
the obligation of the Issuing Bank to issue Letters of Credit and of the Swing
Line Bank to make Swing Line Loans and the Banks to participate in any Letters
of Credit or Swing Line Loans thereafter issued shall immediately terminate;
(ii) by notice of default to the Company, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement, the
Notes and the other Loan Documents to be due and payable forthwith, whereupon
the same shall immediately become due and payable (including, without
limitation, all Letter of Credit Obligations, whether or not the beneficiaries
of the then outstanding Letters of Credit shall have presented the documents
required thereunder); and/or (iii) by notice to the Company require the
Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest
bearing account with the Agent, as cash collateral for their obligations under
this Agreement, the Notes and the Applications, an amount equal to the Letter of
Credit Coverage Requirement, and the Borrowers hereby pledge to the Agent and
the Banks, and grant to the Agent and the Banks a security interest in, all such
cash as security for such obligations. Amounts held in such cash collateral
account shall be applied by the Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrowers hereunder and under the Notes. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrowers hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Company. The Borrowers shall execute and deliver to the Agent, for the account
of the Issuing Bank and the Letter of Credit Participants, such further
documents and instruments as the Agent may request to evidence the creation and
perfection of the within security interest in such cash
 
 
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collateral account. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
 
 
SECTION 8.   THE AGENT
 
8.1  Appointment.
 
Each Bank hereby irrevocably designates and appoints PNC Bank, National
Association as the Agent of such Bank under this Agreement and the other Loan
Documents, and each such Bank irrevocably authorizes PNC Bank, National
Association, as the Agent for such Bank, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement and the other Loan Documents, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein or therein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement and the other Loan Documents or
otherwise exist against the Agent. PNC Bank, National Association agrees to act
as the Agent on behalf of the Banks to the extent provided in this Agreement and
the other Loan Documents.
 
8.2  Delegation of Duties.
 
The Agent may execute any of its duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
engage and pay for the advice and services of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible to the Banks for
the negligence or misconduct of any agents or attorneys in-fact selected by it
with reasonable care.
 
8.3  Exculpatory Provisions.
 
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or the other Loan Documents (except for its or such Person’s own
gross negligence or willful misconduct) or (b) responsible in any manner to any
of the Banks for any recitals, statements, representations or warranties made by
a Borrower or any officer thereof contained in this Agreement, the other Loan
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, the Notes or the other Loan Documents or for
any failure of the Borrowers (or any of them) to perform their obligations
hereunder or thereunder. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Borrowers (or
any of them).
 
8.4  Reliance by Agent.
 
The Agent shall be entitled to rely, and shall be fully protected in relying,
upon any Note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, facsimile, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed,
 
 
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sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to one or more of the
Borrowers), independent accountants and other experts selected by such Agent.
The Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or the other Loan
Documents unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement, the Notes or the other Loan Documents in
accordance with a request of the Required Banks, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Banks and
all future holders of the Notes.
 
8.5  Notice of Default.
 
The Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless it has received notice from a
Bank or a Borrower referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a “notice of default”. In the event
that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Banks; provided, that unless and until the Agent shall have received such
directions, it may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
 
8.6  Non-Reliance on Agent and Other Banks.
 
Each Bank expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the affairs of the
Borrowers, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Borrowers and made its own decision
to make its Loans hereunder and enter into this Agreement and each other Loan
Document to which it is a party. Each Bank also represents that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required to
be furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrowers which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
 
 
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8.7  Indemnification.
 
The Banks agree to indemnify the Agent in its capacity as such (to the extent
not reimbursed by the Borrowers and without limiting the obligation, if any, of
the Borrowers to do so), ratably according to their respective Commitment
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement, the other Loan Documents, or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Agent under or in connection with any of
the foregoing; provided, that no Bank shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent’s gross negligence or willful misconduct. The agreements in this Section
8.7 shall survive the payment of the Notes and all other amounts payable
hereunder.
 
8.8  Agent in Its Individual Capacity.
 
The Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrowers (or any of them) as
though the Agent were not the Agent hereunder. With respect to its Loans made or
renewed by it and any Note issued to it and with respect to any Letter of Credit
issued or participated in by it, the Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Bank and may exercise
the same as though it were not the Agent, and the terms “Bank” and “Banks” shall
include the Agent in its individual capacity.
 
8.9  Successor Agent.
 
The Agent may resign as Agent upon 30 days’ notice to the Banks and the
Borrowers. If the Agent shall resign as Agent under this Agreement, then the
Required Banks shall appoint from among the Banks a successor agent for the
Banks, which appointment shall be subject to the approval of the Borrowers
(which approval shall not be unreasonably withheld and shall not be required if
there shall then exist a Default or Event of Default) and such successor agent.
If no successor agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 60 days after the retiring Agent’s
giving of notice of resignation then the retiring Agent may, on behalf of the
Banks, appoint an interim successor agent. Any interim successor agent appointed
under the preceding sentence may be replaced at any time by a successor agent
designated by the Required Banks and subject to the approval of the Borrowers
(which approval shall not be unreasonably withheld and shall not be required if
there shall then exist a Default or Event of Default). Any such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
“Agent” shall mean such successor agent effective upon its appointment, and the
former Agent’s rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement or any holders of the Notes. After any retiring
Agent’s resignation as Agent, the provisions of this Section 8.9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
 
8.10  Beneficiaries.
 
Except as expressly provided herein, the provisions of this Section 8 are solely
for the benefit of the Agent and the Banks, and the Borrowers shall not have any
rights to rely on or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, the
Agent shall act solely as agent
 
 
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of the Banks and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for the Borrowers.
 
 
SECTION 9.   MISCELLANEOUS
 
9.1  Amendments and Waivers.
 
Neither this Agreement, any Note, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance with
the provisions of this Section. With the written consent of the Required Banks,
the Agent and the Borrowers may, from time to time, enter into written
amendments (including letter amendments), supplements or modifications hereto
and to the Notes and the other Loan Documents for the purpose of adding any
provisions to this Agreement, the Notes or any other Loan Document or changing
in any manner the rights of the Banks or of the Borrowers hereunder or
thereunder or waiving, on such terms and conditions as the Agent may specify in
such instrument, any of the requirements of this Agreement, the Notes or any
other Loan Document or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall directly or indirectly (a) reduce the amount or extend the
maturity of any Note or any installment thereof, or reduce the rate of interest
or extend the time of payment of interest thereon, or reduce any fee payable to
any Bank hereunder or extend the period for payment thereof, or change the
duration or the amount of any Bank’s Commitment Percentage in each case without
the consent of the Bank affected thereby or (b) or amend, modify or waive any
provision of this Section or reduce the percentage specified in the definition
of Required Banks, or consent to the assignment or transfer by the Borrowers of
any of their rights and obligations under this Agreement, the Notes and the
other Loan Documents, in each case without the written consent of all the Banks,
or (c) amend, modify or waive any provision of Section 2.3 or any other
provision affecting Swing Line Loans without the written consent of the then
Swing Line Bank, or (d) amend, modify or waive any provision of Section 2.8 or
any other provisions affecting Letters of Credit without the written consent of
the Issuing Bank, or (e) amend, modify or waive any provision of Section 8
without the written consent of the then Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Banks
and shall be binding upon the Borrowers, the Banks, the Agent and all future
holders of the Notes. In the case of any waiver, the Borrowers, the Banks and
the Agent shall be restored to their former position and rights hereunder and
under the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
 
9.2  Notices; Lending Offices.
 
All notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including electronic transmission, facsimile
transmission or posting on a secured Web site), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand, or three days after being deposited in the mail, postage prepaid, or,
in the case of facsimile transmission notice, when sent during normal business
hours with electronic confirmation or otherwise when received, or in the case of
electronic transmission, when received and in the case of posting on a secured
Web site, upon receipt of (i) notice of such posting and (ii) rights to access
such Web site, addressed as follows in the case of the Borrowers, and the Agent,
the Swing Line Bank or the Issuing Bank, and as set forth in Schedule I in the
case of the other
 
 
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parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
 
If to the Borrowers, to the Borrowers’ Representative:
Tasty Baking Company
 
2801 Hunting Park Avenue
 
Philadelphia, PA 19129
 
Attention: Eugene P. Malinowski, Treasurer
 
Facsimile: (215) 225-2511
   
with copies to:
Tastykake Investment Company
Suite 200
103 Foulk Road
Wilmington, DE 19803
Attention: Andrew T. Panaccione
Facsimile: (302) 652-8667
and
 
Tasty Baking Company
 
2801 Hunting Park Avenue
 
Philadelphia, PA 19129
 
Attention: Norma Carter, Esq.
 
Facsimile: (215) 225-2511
   
The Agent, the Swing Line Bank or the Issuing Bank:
PNC Bank, National Association
 
1000 Westlakes Drive, Suite 200
 
Berwyn, PA 19312
 
Attention: Forrest B. Patterson, Jr.
 
Facsimile: (610) 725-5799
   
with a copy to:
PNC Bank, National Association
 
Agency Services
 
PNC Firstside Center, 4th Floor
 
500 First Avenue
 
Pittsburgh, PA 15219
 
Attention: Lisa Pierce
 
Facsimile: (412) 762-8672
   

provided that (a) any notice, request or demand to or upon the Agent, the
Issuing Bank or the Banks pursuant to Sections 2.2, 2.3, 2.4, 2.8, 2.14 and 2.15
or to or upon the Swing Line Bank, shall not be effective until received and (b)
any notice of a Default or Event of Default hereunder shall be sent by facsimile
or nationally recognized overnight courier. Schedule I lists the Lending Offices
of each Bank. Each Bank may change its Lending Office by written notice to the
other parties hereto.
 
9.3  No Waiver; Cumulative Remedies.
 
No failure to exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder
 
 
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shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
 
9.4  Survival of Representations and Warranties.
 
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement, the Notes and the
other Loan Documents.
 
9.5  Payment of Expenses and Taxes.
 
Each of the Borrowers jointly and severally agrees (a) to pay or reimburse the
Agent and each of the Banks for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
the syndication of, this Agreement, the Notes, the other Loan Documents and any
other documents executed and delivered in connection herewith, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Agent, (b) to pay or reimburse the Agent and each of the Banks for all its
out-of-pocket costs and expenses incurred in connection with any amendment,
supplement or modification to this Agreement, the Notes and the other Loan
Documents and any other documents executed and delivered in connection
therewith, and the administration of the Revolver Facility, including without
limitation, the reasonable fees and disbursements of counsel, (c) pay or
reimburse the Bank and each Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the Notes, the other Loan Documents and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
the Agent and to the several Banks, (d) to pay, indemnify, and hold each Bank
and the Agent harmless from, any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the Notes, the
other Loan Documents and any such other documents, and (e) to pay, indemnify,
and hold each Bank and the Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions (whether sounding
in contract, in tort or on any other ground), judgments, suits, costs, expenses
including, without limitation, reasonable attorneys’ fees or disbursements of
any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of or in any other way arising out
of or relating to, this Agreement, the Notes, the other Loan Documents or any
such other documents contemplated by or referred to herein or therein or any
action taken by any Bank or the Agent with respect to the foregoing including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Laws applicable to the operations of the Borrowers or their
Subsidiaries (all the foregoing, collectively, the “indemnified liabilities”),
provided, that the Borrowers shall have no obligation hereunder to the Agent or
any Bank with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of such person. The agreements in this Section
shall survive repayment of the Notes and all other amounts payable hereunder.
 
 
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9.6  Successors and Assigns.
 
(a)  Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and permitted assigns of
such party; and all covenants, promises and agreements by or on behalf of a
Borrower, the Agent or the Banks that are contained in this Agreement shall bind
and inure to the benefit of their respective successors and assigns. The
Borrowers may not assign or transfer any of their rights or obligations under
this Agreement or the other Loan Documents without the prior written consent of
each Bank.
 
(b)  Each Bank may, in accordance with applicable law, sell to any Bank or
Affiliate thereof and, with the consent of the Company (which consent will not
be required if an Event of Default has occurred or is continuing) and the Agent
(which consents shall not be unreasonably withheld), to one or more banks or
other financial institutions (each, a “Purchasing Bank”) all or any part of its
interests, rights and obligations under this Agreement, the Notes and the other
Loan Documents (including all or a portion of its Revolver Commitment and Swing
Line Commitment and the Loans at the time owing to it and the Notes held by it);
provided, however, that (i) so long as the Commitments are in effect, such
assignment shall be in an amount not less than the lesser of all such Bank’s
interests, rights and obligations under this Agreement or $5,000,000 (or such
lesser amount as the Company and the Agent shall agree in their reasonable
discretion), (ii) the parties to each such assignment shall execute and deliver
to the Agent and the Company for its acceptance an Assignment and Acceptance,
together with the Notes subject to such assignment and a processing and
recordation fee of $3,000, (iii) unless otherwise agreed by the Agent and the
Company in their reasonable discretion and provided no Event of Default has
occurred and is continuing such assignment shall be of all or the same pro rata
portion of all of such assigning Bank’s Revolver Commitment hereunder and (iv)
the Swing Line Commitment and all outstanding Swing Line Loans may only be
assigned in their entirety to a Bank then having a Revolver Commitment. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.6, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof,
(A) such Purchasing Bank shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Bank under this Agreement and (B) the assigning Bank thereunder
shall, to the extent of the interest assigned by such Assignment and Acceptance,
be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Bank’s rights and obligations under this Agreement and the other Loan Documents,
such Bank shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.16, 2.17, 2.18, 5.8(c) and 9.5 (to the extent
that such Bank’s entitlement to such benefits arose out of such Bank’s position
as a Bank prior to the applicable assignment). Such Assignment and Acceptance
shall be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
amounts and percentages held by the Banks arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
assigning Bank under this Agreement, the Notes and the other Loan Documents.
Notwithstanding any provision of this Section 9.6, the consent of the Company
shall not be required for any assignment which occurs at any time when an Event
of Default shall have occurred and be continuing.
 
 
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(c)  By executing and delivering an Assignment and Acceptance, the assigning
Bank thereunder and the Purchasing Bank thereunder shall be deemed to confirm to
and agree with each other and the other parties hereto as follows: (i) such
assigning Bank warrants that it is the legal and beneficial owner of the
interest being assigned thereby, free and clear of any adverse claim and that
its Revolver Commitment and Swing Line Commitment, and the outstanding balances
of its Loans, without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto, or the financial
condition of the Borrowers or the performance or observance by the Borrowers of
any of its or their obligations under this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (iii)
such Purchasing Bank represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; (iv) such Purchasing Bank confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.1 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
Purchasing Bank will independently and without reliance upon the Agent, such
assigning Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement and the other Loan
Documents; (vi) such Purchasing Bank appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; and (vii) such Purchasing Bank agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Bank including, if it is organized under the laws of a jurisdiction outside the
United States, its obligation pursuant to Section 2.17 to deliver the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Purchasing Bank’s exemption from United States withholding taxes with
respect to all payments to be made to the Purchasing Bank under this Agreement.
 
(d)  The Agent shall maintain at one of its offices in Pennsylvania a copy of
each Assignment and Acceptance and the names and addresses of the Banks, and the
Revolver Commitments and Swing Line Commitments of, and principal amount of the
Loans owing to, each Bank pursuant to the terms hereof from time to time. Such
information maintained by the Agent shall be conclusive in the absence of
manifest error and the Borrowers, the Agent and the Banks may treat each Person
whose name is recorded pursuant to the terms hereof as a Bank hereunder for all
purposes of this Agreement.
 
(e)  Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Bank and a Purchasing Bank (and in the case of a Purchasing Bank
that is not then a Bank or an Affiliate thereof, by the Company and the Agent)
together with the Note or Notes subject to such assignment and the processing
and recordation fee referred to in
 
 
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paragraph (b) above, the Agent shall promptly (i) accept such Assignment and
Acceptance, (ii) record the information contained therein and (iii) give notice
thereof to the Banks. Within five Business Days after receipt of notice, the
Borrowers shall execute and deliver to the Agent, in exchange for the surrender
of the original Note(s) (A) with respect to the assignment of Loans of any Bank,
a new Note to the order of such Purchasing Bank in an amount equal to the amount
of each applicable commitment assumed and (B) if the assigning Bank has retained
a Revolver Commitment, a new Note or Notes to the order of such assignor in the
amount equal to each applicable Revolver Commitment retained by it. Such new
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note(s); such new Notes shall be dated the date of
the surrendered Notes which they replace and shall otherwise be in substantially
the form of Exhibit A-1, or, in the case of the Swing Line Bank only,
Exhibit A-2 hereto, as applicable. Canceled Notes shall be returned to the
Company.
 
(f)  Each Bank may without the consent of the Company or the Agent sell
participations to one or more banks or other entities (each a “Participant”) in
any Loan owing to such Bank, any Note held by such Bank, any Revolver Commitment
and Swing Line Commitment of such Bank or any other interest of such Bank
hereunder and under the other Loan Documents, provided, however, that (i) such
Bank’s obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Bank
shall remain the holder of any such Note for all purposes under this Agreement
and the other Loan Documents, (iv) the Borrowers, the Banks and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank’s rights and obligations under this Agreement and the other Loan Documents,
(v) in any proceeding under the Bankruptcy Code such Bank shall be, to the
extent permitted by law, the sole representative with respect to the obligations
held in the name of such Bank, whether for its own account or for the account of
any Participant and , (vi) such Bank shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of this Agreement or the Note or Notes held by such Bank or any
other Loan Document, other than any such amendment, modification or waiver with
respect to any Loan or Revolver Commitment or Swing Line Commitment in which
such Participant has an interest that changes the principal amount of any Loans
or Revolver Commitment or Swing Line Commitment, forgives principal, interest or
fees or reduces the interest rate or fees payable with respect to any such Loan
or Commitment, postpones any date fixed for any regularly scheduled payment of
principal of, or interest or fees on, any such Loan or releases any guarantor of
such Loan.
 
(g)  If amounts outstanding under this Agreement and the Notes are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or any Note, provided that in purchasing such participation such Participant
shall be deemed to have agreed to share with the Banks the proceeds thereof as
provided in Section 9.8. The Borrowers also agree that each Participant shall be
entitled to the benefits of Sections 2.13, 2.16, 2.17, 2.18, 5.8(c) and 9.5 with
respect to its participation in the Revolver Commitments and Swing Line
Commitments and the Loans outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
 
 
69

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Sections than the assigning Bank would have been entitled to receive in respect
of the amount of the participation transferred by such assigning Bank to such
Participant had no such transfer occurred.
 
(h)  If any Participant of a Bank is organized under the laws of any
jurisdiction other than the United States or any state thereof, the assigning
Bank, concurrently with the sale of a participating interest to such
Participant, shall cause such Participant (i) to represent to the assigning Bank
(for the benefit of the assigning Bank, the other Banks, the Agent and the
Borrowers) that under applicable law and treaties no taxes will be required to
be withheld by the Agent, the Borrowers or the assigning Bank with respect to
any payments to be made to such Participant in respect of its participation in
the Loans and (ii) to agree (for the benefit of the assigning Bank, the other
Banks, the Agent and the Borrowers) that it will deliver the tax forms and other
documents required to be delivered pursuant to subsection 2.17 and comply from
time to time with all applicable U.S. laws and regulations with respect to
withholding tax exemptions.
 
(i)  Any Bank may at any time assign all or any portion of its rights under this
Agreement and the Notes issued to it to a Federal Reserve Bank; provided that no
such assignment shall release a Bank from any of its obligations hereunder.
 
(j)  Upon the effective date of a New Bank Joinder, each bank or other financial
institution becoming a party to this Agreement pursuant to subsection 2.14(d)
hereof (each a “New Bank”) shall be a party hereto and shall be one of the Banks
hereunder for all purposes. On the effective date of such joinder and/or any
increase in the Revolver Commitment of any existing Bank pursuant to subsection
2.14(d), the Borrowers shall repay all outstanding Revolving Loans (together
with any amounts due under Section 2.18 as a result of such payment) and
reborrow a like amount of Revolving Loans from the Banks, including each New
Bank, according to their new Commitment Percentages.
 
9.7  Disclosure of Information.
 
Unless otherwise consented to by the Company in writing, each of the Banks and
the Agent agrees to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrowers pursuant to this
Agreement; provided that nothing herein shall limit the disclosure of any such
information (a) to the extent required by statute, rule, regulation or judicial
process, (b) to counsel for any Bank or the Agent, (c) to bank examiners,
auditors or accountants, (d) to the Agent or any other Bank, (e) in connection
with any litigation to which any one or more of the Banks or the Agent is a
party and (f) to any Participant or Purchasing Bank (or prospective Participant
or Purchasing Bank) so long as such Participant or Purchasing Bank (or
prospective Participant or Purchasing Bank) agrees to comply with the
requirements of this section. If the Agent or any of the Banks believes it is
obligated to disclose with respect to the Borrowers any non-public information
and is not precluded by law or judicial order from doing so, it shall give
notice thereof to the Borrowers as far in advance of the anticipated disclosure
as is reasonably practicable under the circumstances in order to allow the
Borrowers the opportunity to seek an appropriate protective order, should they
so desire. Notwithstanding anything herein to the contrary, the information
subject to this Section 9.7 shall not include, and the Agent and each Bank may
disclose without limitation of any kind, any information with respect to the
“tax treatment” and “tax structure” (in each case, within the
 
 
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meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to the Agent or such Bank relating to such tax
treatment tax structure; provided that with respect to any document or similar
item that in either case contains information concerning the tax treatment or
tax structure of the transaction as well as other information, this sentence
shall only apply to such portions of the document or similar item that relate to
the tax treatment or tax structure of the Loans, Letters of Credit and
transactions contemplated hereby.
 
9.8  Adjustments; Set-off.
 
(a)  If any Bank (a “benefited Bank”) shall at any time receive any payment of
all or part of its Loans or the Reimbursement Obligations owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in subsection 7.1(f), or otherwise), in a greater
proportion than its Commitment Percentage of any such payment to or collateral
received by any other Bank, if any, in respect of such other Bank’s Loans or the
Reimbursement Obligations owing to it, or interest thereon, such benefited Bank
shall purchase for cash from the other Banks such portion of each such other
Bank’s Loans owing to it, or shall provide such other Banks with the benefits of
any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Banks; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
benefited Bank, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest unless
the benefited Bank is required to pay interest thereon, in which case each Bank
returning funds to the benefited Bank shall pay its pro rata share of such
interest. Each of the Borrowers, jointly and severally agrees that each Bank so
purchasing a portion of another Bank’s Loans may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Bank were the direct holder of such portion.
 
(b)  In addition to any rights and remedies of the Banks provided by law, upon
the occurrence and during the continuance of an Event of Default, each Bank
shall have the right, without prior notice to the Borrowers (or any of them),
any such notice being expressly waived by the Borrowers to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrowers
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Bank to or for the credit or the
account of one or more Borrowers. Each Bank agrees promptly to notify the
Company and the Agent after any such set-off and application made by such Bank,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
 
9.9  Counterparts.
 
This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies
 
 
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of this Agreement signed by all the parties shall be lodged with the Company, on
behalf of the Borrowers, and each of the Banks.
 
9.10  Severability.
 
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
9.11  Integration.
 
This Agreement and the other Loan Documents represent the agreement of the
parties hereto with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Agent or any Bank
relative to the subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
 
9.12  GOVERNING LAW.
 
THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
 
9.13  Submission To Jurisdiction; Waivers.
 
Each of the Borrowers hereby irrevocably and unconditionally:
 
(a)  submits for itself and its property in any legal action or proceeding
relating to this Agreement or the Notes, or for recognition and enforcement of
any judgment in respect thereof, to the non-exclusive general jurisdiction of
the Courts of the Commonwealth of Pennsylvania, the courts of the United States
of America for the Eastern District of Pennsylvania, and appellate courts from
any thereof;
 
(b)  consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;
 
(c)  agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Company at its
address set forth in Section 9.2 or at such other address of which the Agent
shall have been notified pursuant thereto;
 
(d)  agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
 
(e)  waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
 
 
 
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9.14  Acknowledgments.
 
. Each of Borrowers hereby acknowledges that:
 
(a)  it has been advised by counsel in the negotiation, execution and delivery
of this Agreement, the Notes and the other Loan Documents;
 
(b)  neither the Agent nor any Bank has any fiduciary relationship to the
Borrowers (or any of them) and the relationship hereunder between the Agent and
Banks, on the one hand, and the Borrowers, on the other hand, is solely that of
debtor and creditor; and
 
(c)  no joint venture exists among the Banks or among the Borrowers (or any of
them) and the Banks.
 
9.15  No Right of Contribution.
 
On and after the occurrence of an Event of Default hereunder, no Borrower shall
seek or be entitled to any reimbursement from any other Borrower, or be
subrogated to any rights of the Banks against the Borrowers, in respect of any
payments made pursuant to the Loan Documents, until all amounts owing to the
Banks hereunder and under the Notes are paid in full.
 
9.16  WAIVERS OF JURY TRIAL.
 
EACH OF THE BORROWERS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY MANDATORY
COUNTERCLAIM THEREIN.
 

 

 

73

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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
 

TASTY BAKING COMPANY

By:  /s/ David S. Marberger      
David S. Marberger
Senior Vice President

TASTYKAKE INVESTMENT COMPANY

By:  /s/ Eugene P. Malinowski       
Eugene P. Malinowski
Treasurer

TBC FINANCIAL SERVICES, INC.

By:  /s/ Eugene P. Malinowski       
Eugene P. Malinowski
Treasurer

TASTY BAKING OXFORD, INC.

By:  /s/ Eugene P. Malinowski       
Eugene P. Malinowski
Treasurer

 
 

74

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PNC BANK, NATIONAL ASSOCIATION,
as a Bank, as Swing Line Bank, as Issuing Bank and as Agent

By:       /s/ Forrest B. Patterson, Jr.      
Forrest B. Patterson, Jr.
Senior Vice President

CITIZENS BANK OF PENNSYLVANIA, as a Bank

By:       /s/ Mark Bomberger      
Mark Bomberger
Senior Vice President

 

75

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SCHEDULE I
 
BANKS AND COMMITMENT INFORMATION
 

Bank and Lending Office(s)
Commitments
         
Revolver
Swing Line*
     
PNC Bank, National Association
$19,687,500
$10,000,000
1000 Westlakes Drive, Suite 200
   
Berwyn, PA 19312
   
Attn: Forrest B. Patterson
   
Telecopy: (610) 725-5799
         
Citizens Bank of Pennsylvania
$15,312,500
0
2001 Market Street, Suite 600
   
Philadelphia, PA 19103
   
Mark A. Bomberger
   
Telecopy: (215) 751-1516
         
Commitments
$35,000,000
$10,000,000
     

*Swing Line Commitment is a sublimit of the Revolver Commitment

Schedule 1-1

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

SCHEDULE II
 
PERMITTED LIENS
 None.

 

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

SCHEDULE 1.1
 
EXISTING LETTERS OF CREDIT

L/C No.
Face Amount
Expiry Date
Beneficiary
LC# 245987
$925,000.00
Expiry Date 6/30/06
Atlantic Mutual Insurance Co.
LC# 245988
$1,200,000.00
Expiry Date 6/30/06
Pacific Employers Insurance Co.
LC# 259881
$1,350,000.00
Expiry Date 6/30/06
Companion Insurance Company

 

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

SCHEDULE 3.2
 
No Change.
Except as disclosed in the Company’s 2004 Form 10K for the fiscal year ending
December 25, 2004 with respect to the class-action litigation discussed in Item
3. Legal Proceedings and Footnote no. 7 Commitments and Contingencies, the
Company has not experienced any development or event nor any prospective
development or event which has had or could reasonably be expected to have a
Material Adverse Effect as defined in the Amended and Restated Credit Agreement
dated September 13, 2005.
 
 
 

 

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

SCHEDULE 6.4
 
OTHER PERMITTED INDEBTEDNESS

None. 

 

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

 
AMENDED AND RESTATED CREDIT AGREEMENT
 

 
among
 

 
TASTY BAKING COMPANY
 

 
and
 
Its Subsidiaries,
 
as Borrowers,
 

 
The Several Lenders From Time to Time
 
Parties Hereto
 

 
and
 

 
PNC BANK, NATIONAL ASSOCIATION,
 
as Agent
 

 
Dated as of September 13, 2005
 

 

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

TABLE OF CONTENTS
 

  Page 
SECTION 1. DEFINITIONS 
1
1.1
Defined Terms
1
1.2
Other Definitional Provisions
20
SECTION 2. LOANS AND TERMS OF COMMITMENTS 
20
2.1
The Loans
20
2.2
Procedure for Revolving Loans
21
2.3
Swing Line Loans
22
2.4
Conversion and Continuation Options
24
2.5
Nature of Banks’ Obligations with Respect to Loans
25
2.6
Notes
25
2.7
Fees
26
2.8
Letter of Credit Subfacility
27
2.9
Interest Rates and Payment Dates
32
2.10
Default Interest
33
2.11
Pro Rata Treatment of Loans and Payments; Commitment Fees
33
2.12
Payments
33
2.13
LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available
34
2.14
Termination, Reduction and Increase of Commitments
35
2.15
Prepayment of Loans
36
2.16
Requirements of Law
37
2.17
Taxes
39
2.18
Indemnity
40
2.19
Intentionally Omitted
41
2.20
Borrowers’ Representative
41
SECTION 3. REPRESENTATIONS AND WARRANTIES 
41
3.1
Financial Condition
41
3.2
No Change
42
3.3
Corporate Existence; Compliance with Law
42
3.4
Corporate Power; Authorization; Enforceable Obligations
42
3.5
No Legal Bar
43
3.6
No Material Litigation
43
3.7
No Default
43
3.8
Taxes
43
3.9
Federal Regulations
43
3.10
ERISA
43
3.11
Investment Company Act
44

 
 
 
i

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3.12
Public Utility Holding Company Act
44
3.13
Environmental Matters
44
3.14
No Material Misstatements
45
3.15
Title to Properties
46
3.16
Intellectual Property
46
3.17
No Burdensome Restrictions; List of Subsidiaries
46
3.18
Solvency
46
3.19
Insurance
47
3.20
Anti-Terrorism Laws
47
SECTION 4. CONDITIONS PRECEDENT 
48
4.1
Conditions to Effectiveness
48
4.2
Conditions to Each Extension of Credit
49
4.3
Effective Date; Transitional Arrangements
50
SECTION 5. AFFIRMATIVE COVENANTS 
51
5.1
Financial Statements
51
5.2
Certificates; Other Information
51
5.3
Payment of Obligations
52
5.4
Maintenance of Existence
52
5.5
Maintenance of Insurance; Property
52
5.6
Inspection of Property; Books and Records; Discussions
53
5.7
Notices
53
5.8
Environmental Laws
53
5.9
Notice and Joinder of New Subsidiaries
54
5.10
Use of Proceeds
54
5.11
Tax Shelter Regulations
54
5.12
Anti-Terrorism Laws
54
SECTION 6. NEGATIVE COVENANTS 
55
6.1
Financial Condition Covenants
55
6.2
Limitation on Liens
55
6.3
Limitations on Fundamental Changes
55
6.4
Limitation on Indebtedness
56
6.5
Limitation on Sale of Assets
56
6.6
Transactions with Affiliates
56
6.7
Sale and Leaseback
57
6.8
Limitation on Acquisitions, Investments, Loans and Advances
57
6.9
No Negative Pledge
57
6.10
Fiscal Year
57
6.11
Limitation on Conduct of Business
57
6.12
Capital Expenditures
57
SECTION 7. EVENTS OF DEFAULT 
58
7.1
Events of Default
58

 
 
ii

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SECTION 8. THE AGENT 
61
8.1
Appointment
61
8.2
Delegation of Duties
61
8.3
Exculpatory Provisions
61
8.4
Reliance by Agent
61
8.5
Notice of Default
62
8.6
Non Reliance on Agent and Other Banks
62
8.7
Indemnification
63
8.8
Agent in Its Individual Capacity
63
8.9
Successor Agent
63
8.10
Beneficiaries
63
SECTION 9. MISCELLANEOUS 
64
9.1
Amendments and Waivers
64
9.2
Notices; Lending Offices
64
9.3
No Waiver; Cumulative Remedies
65
9.4
Survival of Representations and Warranties
66
9.5
Payment of Expenses and Taxes
66
9.6
Successors and Assigns
67
9.7
Disclosure of Information
70
9.8
Adjustments; Set off
71
9.9
Counterparts
71
9.10
Severability
72
9.11
Integration
72
9.12
GOVERNING LAW
72
9.13
Submission To Jurisdiction; Waivers
72
9.14
Acknowledgments
73
9.15
No Right of Contribution
73
9.16
WAIVERS OF JURY TRIAL
73

 
 
 

iii

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SCHEDULES

SCHEDULE I
Bank and Commitment Information
SCHEDULE II
Existing Liens
SCHEDULE 1.1
Existing Letters of Credit
SCHEDULE 3.2
No Change
SCHEDULE 6.4
Existing Indebtedness
   
EXHIBITS
     
EXHIBIT A-1
Form of Revolver Note
EXHIBIT A-2
Form of Swing Line Note
EXHIBIT B
Form of Assignment and Acceptance Agreement
EXHIBIT C
Form of Notice of Borrowing
EXHIBIT D
Form of Joinder and Assumption Agreement
EXHIBIT E
Form of Increased Commitment and Acceptance
EXHIBIT F
Form of New Bank Joinder
EXHIBIT G
Form of Intercreditor Agreement

 
 
iv

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REVOLVER NOTE
 
 
$19,687,500
 
September 13, 2005
 

 
FOR VALUE RECEIVED, TASTY BAKING COMPANY, and its direct and indirect
subsidiaries party hereto listed on the signature page hereof (collectively, the
“Borrowers”), hereby unconditionally, jointly and severally, promise to pay to
the order of PNC BANK, NATIONAL ASSOCIATION (the “Bank”) at the office of PNC
BANK, NATIONAL ASSOCIATION (the “Agent”) located at 500 First Avenue,
Pittsburgh, PA 15219, on the Revolver Termination Date in immediately available
funds NINETEEN MILLION SIX HUNDRED EIGHTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS
($19,687,500), or such lesser amount as may be advanced for the benefit of the
Borrowers hereunder prior to the Revolver Termination Date. In addition, the
Borrowers shall make principal payments on this Note, to the extent required
under the Credit Agreement (as defined below), on the dates specified in the
Credit Agreement and in the amounts determined in accordance with the provisions
thereof. The Borrowers further agree to pay interest accrued on the unpaid
principal amount outstanding hereunder from time to time from the date hereof at
such office at the rates and on the dates specified in the Credit Agreement,
together with all other costs, fees and expenses as provided in the Credit
Agreement.
 
The holder of this Note is authorized to endorse on Schedule 1 annexed hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, the respective date, Type and amount of each
Revolving Loan made by the Bank to the Borrowers, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and amount
of each payment and prepayment of the principal hereof and interest hereon and
the respective dates thereof, and, in the case of LIBOR Loans, the length of
each Interest Period with respect thereto, or to otherwise record such
information on its internal records, and any such endorsement or recordation
shall constitute prima facie evidence of the accuracy of the information so
endorsed or recorded; provided, however, that the failure to make any such
endorsement (or any error in such endorsement or recordation) shall not affect
the obligations of the Borrowers to make payments of principal, interest and
other amounts outstanding in accordance with the terms of this Note and the
Credit Agreement.
 
Capitalized terms used herein without definition shall have the meanings given
in the Amended and Restated Credit Agreement, dated as of September 13, 2005,
among the Borrowers, the Agent, and the Banks party thereto (as it may be
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). This Note is one of the Revolver Notes referred to in,
evidences indebtedness incurred under, and is entitled to the benefits of, the
Credit Agreement. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity hereof upon the happening of certain events,
for optional or mandatory prepayments of the principal hereof prior to the
maturity thereof, for a higher rate of interest hereunder on amounts past due
and for the amendment or waiver of certain provisions of the Credit Agreement.
 
 
1

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

 
Upon the occurrence of any one or more of the Events of Default specified in the
Credit Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, immediately due and payable, all as provided therein.
 
All parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest and notice of any kind. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
 
Each of the Borrowers acknowledges that it has read and understood all the
provisions of this Note and has been advised by counsel as necessary or
appropriate.
 
[Signature Page to Follow]
 

 
 

2

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

WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
 

 
TASTY BAKING COMPANY

By:    /s/ David S. Marberger
David S. Marberger
Senior Vice President

TASTYKAKE INVESTMENT COMPANY

By:    /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TBC FINANCIAL SERVICES, INC.

By:     /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TASTY BAKING OXFORD, INC.

By:     /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

 
 

3

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

Schedule 1
 
Loans, Conversions and Payments
 
Schedule 1
 
Loans, Conversions and Payments
 

       
 Payments
   
 
 
 
Date
 
 
Amount
of Loan
 
 
Interest
  Rate  
 
 
Interest
  Period  
 
 
 
Principal   
 
 
 
Interest
 
Unpaid
Balance of
   Note   
Name of
Person
Making
Notation
                                                                             

 
4

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

 

REVOLVER NOTE
 

 
$15,312,500
September 13, 2005

 
 
FOR VALUE RECEIVED, TASTY BAKING COMPANY, and its direct and indirect
subsidiaries party hereto listed on the signature page hereof (collectively, the
“Borrowers”), hereby unconditionally, jointly and severally, promise to pay to
the order of CITIZENS BANK OF PENNSYLVANIA (the “Bank”) at the office of PNC
BANK, NATIONAL ASSOCIATION (the “Agent”) located at 500 First Avenue,
Pittsburgh, PA 15219, on the Revolver Termination Date in immediately available
funds FIFTEEN MILLION THREE HUNDRED TWELVE THOUSAND FIVE HUNDRED DOLLARS
($15,312,500), or such lesser amount as may be advanced for the benefit of the
Borrowers hereunder prior to the Revolver Termination Date. In addition, the
Borrowers shall make principal payments on this Note, to the extent required
under the Credit Agreement (as defined below), on the dates specified in the
Credit Agreement and in the amounts determined in accordance with the provisions
thereof. The Borrowers further agree to pay interest accrued on the unpaid
principal amount outstanding hereunder from time to time from the date hereof at
such office at the rates and on the dates specified in the Credit Agreement,
together with all other costs, fees and expenses as provided in the Credit
Agreement.
 
The holder of this Note is authorized to endorse on Schedule 1 annexed hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, the respective date, Type and amount of each
Revolving Loan made by the Bank to the Borrowers, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and amount
of each payment and prepayment of the principal hereof and interest hereon and
the respective dates thereof, and, in the case of LIBOR Loans, the length of
each Interest Period with respect thereto, or to otherwise record such
information on its internal records, and any such endorsement or recordation
shall constitute prima facie evidence of the accuracy of the information so
endorsed or recorded; provided, however, that the failure to make any such
endorsement (or any error in such endorsement or recordation) shall not affect
the obligations of the Borrowers to make payments of principal, interest and
other amounts outstanding in accordance with the terms of this Note and the
Credit Agreement.
 
Capitalized terms used herein without definition shall have the meanings given
in the Amended and Restated Credit Agreement, dated as of September 13, 2005,
among the Borrowers, the Agent, and the Banks party thereto (as it may be
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). This Note is one of the Revolver Notes referred to in,
evidences indebtedness incurred under, and is entitled to the benefits of, the
Credit Agreement. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity hereof upon the happening of certain events,
for optional or mandatory prepayments of the principal hereof prior to the
maturity thereof, for a higher rate of interest hereunder on amounts past due
and for the amendment or waiver of certain provisions of the Credit Agreement.
 
 
1

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Upon the occurrence of any one or more of the Events of Default specified in the
Credit Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, immediately due and payable, all as provided therein.
 
All parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest and notice of any kind. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
 
Each of the Borrowers acknowledges that it has read and understood all the
provisions of this Note and has been advised by counsel as necessary or
appropriate.
 

 
[Signature Page to Follow]
 

 
 

2

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WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
 
TASTY BAKING COMPANY

By:  /s/ David S. Marberger
David S. Marberger
Senior Vice President

TASTYKAKE INVESTMENT COMPANY

By:   /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TBC FINANCIAL SERVICES, INC.

By:  /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TASTY BAKING OXFORD, INC.

By:   /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

 
 

3

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Schedule 1
 
Loans, Conversions and Payments
 
Schedule 1
 
Loans, Conversions and Payments
 
 

       
 Payments
   
 
 
 
Date
 
 
Amount
of Loan
 
 
Interest
  Rate  
 
 
Interest
  Period  
 
 
 
Principal   
 
 
 
Interest
 
Unpaid
Balance of
   Note   
Name of
Person
Making
Notation
                                                                             

4

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SWING LINE NOTE

$10,000,000
September 13, 2005

FOR VALUE RECEIVED, TASTY BAKING COMPANY, and its direct and indirect
subsidiaries party hereto listed on the signature page hereof (collectively, the
“Borrowers”), hereby unconditionally, jointly and severally, promise to pay to
the order of PNC BANK, NATIONAL ASSOCIATION (the “Swing Line Bank”) at the
office of PNC BANK, NATIONAL ASSOCIATION (the “Agent”) located at 500 First
Avenue, Pittsburgh, PA 15219, in Dollars, the aggregate unpaid principal amount
of all Swing Line Loans made by the Swing Line Bank to the Borrowers in
accordance with the terms of the Credit Agreement (as defined below), in
immediately available funds, and to pay interest from the date hereof on such
principal amount from time to time outstanding, in like funds, at said office,
at the rates per annum and payable on the dates specified in the Credit
Agreement.
 
The holder of this Note is authorized to endorse on Schedule I annexed hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, the respective date and amount of each Swing Line
Loan made by the Swing Line Bank to the Borrowers and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof, or to otherwise record such information on its internal records, and
any such endorsement or recordation shall constitute prima facie evidence of the
accuracy of the information so endorsed or recorded; provided, however, that the
failure to make any such endorsement or recordation (or any error in such
endorsement or recordation) shall not affect the obligations of the Borrower to
make payments of principal, interest and other amounts outstanding in accordance
with the terms of this Note and the Credit Agreement.
 
Capitalized terms used herein without definition shall have the meanings given
in the Amended and Restated Credit Agreement, dated as of September 13, 2005,
among the Borrowers, the Agent, the Swing Line Bank, and the Banks party
thereto, and (as it may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”). This Note is the Swing Line Note
referred to in, evidences indebtedness incurred under, and is entitled to the
benefits of, the Credit Agreement. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain events, for optional or mandatory prepayments of the principal hereof
prior to the maturity thereof, for a higher rate of interest hereunder on
amounts past due and for the amendment or waiver of certain provisions of the
Credit Agreement.
 
Upon the occurrence of any one or more of the Events of Default specified in the
Credit Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, immediately due and payable, all as provided therein.
 
All parties now and hereafter liable with respect to this Note, whether maker,
principal, surety, guarantor, endorser or otherwise, hereby waive presentment,
demand, protest and notice of any kind. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
 
 
 
1

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Each of the Borrowers acknowledges that it has read and understood all the
provisions of this Note and has been advised by counsel as necessary or
appropriate.
 
[Signature Page to Follow]
 

 

2

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

WITNESS the due execution hereof as a document under seal, as of the date first
written above, with the intent to be legally bound hereby.
 

TASTY BAKING COMPANY

By: /s/ David S. Marberger
David S. Marberger
Senior Vice President

TASTYKAKE INVESTMENT COMPANY

By:    /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TBC FINANCIAL SERVICES, INC.

By:   /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

TASTY BAKING OXFORD, INC.

By:  /s/ Eugene P. Malinowski
Eugene P. Malinowski
Treasurer

 

3

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Schedule 1
 
Loans, Conversions and Payments
 
Schedule 1
 
Loans, Conversions and Payments
 
 

       
 Payments
   
 
 
 
Date
 
 
Amount
of Loan
 
 
Interest
  Rate  
 
 
Interest
  Period  
 
 
 
Principal   
 
 
 
Interest
 
Unpaid
Balance of
   Note   
Name of
Person
Making
Notation
                                                                             

 
4

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INTERCREDITOR AGREEMENT
 
Dated September 13, 2005
 
TASTY BAKING COMPANY, as Borrowers’ Representative
 
and
 
PNC BANK, NATIONAL ASSOCIATION, as Agent
 
and
 
CITIZENS BANK OF PENNSYLVANIA
 
 
 

 

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

 
INTERCREDITOR AGREEMENT
 
Intercreditor Agreement dated as of September 13, 2005 among CITIZENS BANK OF
PENNSYLVANIA (“CITIZENS”), PNC BANK, NATIONAL ASSOCIATION, as Agent for the
Banks under the Credit Agreement (as such terms are hereinafter defined) (in
such capacity , the “Agent”), and TASTY BAKING COMPANY, on behalf of the
Borrowers (as hereinafter defined), as the Borrowers’ Representative (as defined
in the Credit Agreement referred to below) (the “Borrowers’ Representative”).
 

 
BACKGROUND
 

 
A.  Pursuant to an Amended and Restated Credit Agreement of even date herewith
(the “Credit Agreement”) among the Borrowers’ Representative and its
subsidiaries party thereto (collectively, the “Borrowers”), the several banks
and other financial institutions parties thereto (the “Banks”) and the Agent,
the Banks have extended to Borrowers certain unsecured revolving credit
facilities in the aggregate maximum principal amount of $35,000,000 (the “Banks
Commitment Amount”) evidenced by notes issued by the Borrowers to the Banks. The
Credit Agreement, such notes and all documents and instruments executed in
connection therewith are hereinafter collectively referred to as the “Banks
Credit Agreements.”
 
B.  Pursuant to a Loan Agreement of even date herewith (the “Loan Agreement”)
between Citizens and the Borrowers, Citizens has agreed to make (i) an unsecured
term loan in the principal amount equal to $5,300,000 on the date hereof (the
“Initial Term Loan”), (ii) an unsecured term loan in the maximum principal
amount of $2,550,000 on or before the Funding Expiration Date (as defined in the
Loan Agreement) (the “Secondary Term Loan” and, together with the Initial Term
Loan, the “Unsecured Term Loans”) and (iii) a secured mortgage term loan in the
maximum principal amount of $2,150,000 on or before the Funding Expiration Date
and secured by the Mortgage (as hereinafter defined) (the “Secured Term Loan”
and, together with the Unsecured Term Loans, the “Citizens Loans”). The Loan
Agreement and all notes, documents and instruments executed in connection
therewith are hereinafter collectively referred to as the “Citizens Credit
Agreements”.
 
C.  In anticipation of entering into the foregoing credit facilities, Citizens
and the Agent, on behalf of the Banks, desire to coordinate and provide for the
application of any amounts received from the Borrowers following a Foreclosure
Event (as hereinafter defined), and the parties hereto have agreed to enter into
this Intercreditor Agreement.
 

 
 

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

AGREEMENT
 
NOW, THEREFORE, in consideration of the premises and intending to be legally
bound hereby, the parties hereto agree as follows:
 
1.  DEFINITIONS
 
In addition to the other terms defined in the Background recitals, the following
terms shall have the meanings set forth:
 
“Banks Obligations” means all principal of and interest on and all other fees
due from the Borrowers under any of the Banks Credit Agreements.
 
“Citizens Obligations” means all principal and interest and all other fees due
from the Borrowers under any of the Citizens Credit Agreements.
 
“Credit Documents” means, collectively, the Banks Credit Agreements and the
Citizens Credit Agreements.
 
“Event of Default” means either (i) an Event of Default (as defined in any of
the Banks Credit Agreements) or (ii) an Event of Default (as defined in any of
the Citizens Credit Agreements).
 
“Foreclosure Event” shall mean the determination by either Lender to enforce its
remedies against the Borrowers and their respective assets either by enforcing
its security interests or liens on such assets, by seeking a judgment against
the Borrowers or otherwise, following the occurrence and during the continuation
of an Event of Default.
 
“Lenders” means collectively, and “Lender” means individually the Agent and
Citizens, and their respective successors and permitted assigns.
 
“Mortgage” means the mortgage granted to Citizens by the Borrower owning the
Hunting Park Property (as defined in the Loan Agreement) as security for the
Secured Term Loan.
 
“Obligations” means collectively the Banks Obligations and the Citizens
Obligations.
 

2.  
NOTICE OF FORECLOSURE EVENT; APPLICATION OF PROCEEDS 

 
    
 
A.  Each Lender shall notify the other Lender promptly of the occurrence of a
Foreclosure Event with respect to Obligations held by it, or, in the case of the
Agent, by the Banks.
 
B.  In the event that a Lender has notified the other Lender that a Foreclosure
Event has occurred and either Lender shall thereafter obtain payment of any
amounts owing to it or, in the case of the Agent, to the Banks, on or in respect
of any Obligations through exercise of
 
 

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

 
a right of set-off, banker’s lien or counterclaim, from any realization (whether
through enforcement of security interests or other liens, attachment or
otherwise) on any assets of the Borrowers, or otherwise, such amounts shall be
applied in the order set forth below (to the extent permitted by applicable
law):
 
i.  To the payment of all costs, expenses, liabilities and advances made or
incurred by such Lender in connection with obtaining such payment (including
reasonable fees of counsel).
 
ii.  The remainder of such proceeds, if any, after the application of proceeds
in accordance with the preceding clause i, realized from the Hunting Park
Property, pursuant to Citizens’ enforcement of the Mortgage, to the payment of
the Citizens Obligations attributable to the Secured Term Loan.
 
iii.  The remainder of such proceeds, if any, after the application of proceeds
in accordance with the preceding clauses i and ii, to the payment to the Lenders
of the outstanding principal amount of Obligations which remain unpaid at such
date, pro rata between the Lenders in accordance with the outstanding principal
amount of such Obligations on such date.
 
iv.  The remainder of such proceeds, if any, after the application of proceeds
in accordance with the preceding clauses i, ii and iii, to the payment to the
Lenders of all other Obligations outstanding on such date, including, without
limitation, interest, premium, if any, and fees, pro rata between the Lenders in
accordance with the outstanding amount of such Obligations.
 
v.  The remainder of such proceeds, if any, after the application of proceeds in
accordance with the preceding clauses i, ii, iii and iv and payment in full of
all Obligations, to the payment to the Borrowers, its successors or assigns, or
otherwise as a court of competent jurisdiction may direct.
 
Notwithstanding the foregoing, if a Lender triggers a Foreclosure Event (the
“Foreclosing Lender”) and the other Lender thereafter fails promptly to trigger
a Foreclosure Event and enforce its rights and remedies against the Borrowers
and their respective assets, as applicable, any proceeds obtained by the
Foreclosing Lender may be applied by the Foreclosing Lender solely to the
Obligations owed to it.
 

3.  
MODIFICATION OF LOAN DOCUMENTS AND ASSIGNMENT OF OBLIGATIONS

 
The Lenders agree between themselves (but not with, or for the benefit of the
Borrowers) that:
 
A.  Anything contained in any Credit Document to the contrary notwithstanding,
each Lender agrees that it will not agree or consent to any amendment or
modification of any Credit Documents to which it is party which would (i) alter
the scheduled maturity of the repayment of any amounts payable, or which might
become payable, by or on behalf of the Borrowers under such Credit Documents,
(ii) increase the Banks Commitment
 
 

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

 
 Amount, or the Citizens Loans, as applicable, or (iii) grant security for the
Banks Obligations or additional security for any of the Citizens Obligations, in
each case without first obtaining the written consent of the other Lender to
such amendment or modification or increase. Each Lender shall promptly notify
the other Lender of any amendment to the Credit Documents and provide the other
Lender with copies thereof.
 
B.  Each Lender agrees that it will not assign or otherwise transfer any
Obligation or any right in respect thereof, except where its assignee or
transferee expressly agrees with the other Lender for the benefit of the other
Lender by an instrument in form and substance satisfactory to the other Lender,
to be bound by and comply with the provisions of this Agreement and of the
agreement under which such Obligation was created. Nothing herein shall limit
either Lender’s, or in the case of the Agent, any Bank’s right to participate
interests in its Obligations or any Bank’s right to assign all or any portion of
the Obligations due to it under the terms of the Credit Agreement subject in any
case to the terms of this Agreement. The terms and provisions of this Agreement
shall be binding upon each Lender’s successors and assigns, including any
assignee of a Bank under the Credit Agreement.
 
4.  MISCELLANEOUS.
 
A.  Each Lender acknowledges and agrees that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of the Borrowers and related entities in connection with
the making and continuance of its extensions of credit, and that based upon such
documents and information as it has deemed and may deem appropriate, it has made
and shall continue to make its own decisions regarding extensions of credit made
or to be made by it and actions taken or to be taken by it with respect thereto.
 
B.  This Agreement is solely for the benefit of the Lenders and their respective
successors and assigns, and neither the Borrowers nor their respective
successors or assigns, or any other person, shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
 
C.  All notices, requests and demands will be given to or made upon the
respective parties hereto at their respective addresses specified on the
signature page of this Agreement, or as to any party, at such other address as
may be designated by it in a written notice to all other parties. Written notice
may be delivered by hand or by recognized overnight delivery service, sent by
certified mail, return receipt requested, or by facsimile transmission, and
unless otherwise specified herein, notice shall be deemed effective when
delivered if delivered by hand or by recognized overnight delivery service or
sent by facsimile transmission, and five (5) days following the date such notice
is duly deposited in the mail if sent by mail.
 
D.  This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any party
hereto may execute this Agreement by signing any such counterpart.
 
E.  This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
 

 

 

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

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly
executed as of the date first above written.
 
CITIZENS BANK OF PENNSYLVANIA

By:      
Name:      
Title:      

Address for Notices to PNC:
Two Commerce Square
2001 Market Street, 6th Floor
Philadelphia, PA 19103-7053
Attention: Mark A. Bomberger

PNC BANK, NATIONAL ASSOCIATION, as Agent

By:      
Name:      
Title:      

Address for Notices to Agent

Agency Services
PNC Firstside Center
500 First Avenue, 4th Floor
Pittsburgh, PA 15219
Attention: Lisa Pierce

with a copy to:

1000 Westlakes Drive, Suite 200
Mail Stop F4-F074-02-1
Berwyn, PA 19312
Attention: Forrest B. Patterson, Jr.

 

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TASTY BAKING COMPANY, as the Borrowers’ Representative

By:     /s/ David S. Marberger     
David S. Marberger
Senior Vice President

Address for Notices to Borrower:
2801 Hunting Park Avenue
Philadelphia, PA 19129-1306
Attention: Eugene Malinowski