exv4w1



 







EXHIBIT 4.1




EXECUTION COPY




 






 









 








JOHN B. SANFILIPPO & SON, INC.



 




LIMITED WAIVER

and

SECOND AMENDMENT




Dated as of July 25, 2006




to




Note Purchase Agreement

Dated as of December 16, 2004



 




Re: $65,000,000 Senior Notes

Due December 1, 2014




 





 









 








LIMITED WAIVER

and

SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT




     This Limited Waiver and Second Amendment, dated as of July 25, 2006 (this “Amendment”), to the
Note Purchase Agreement, dated as of December 16, 2004, is between John B. Sanfilippo & Son, Inc.,
a Delaware corporation (the “Company”), and each of the institutions which is a signatory to this
Amendment (collectively, the “Noteholders”).



Recitals:




     A. The Company and certain of the Noteholders have heretofore entered into the Note Purchase
Agreement, dated as of December 16, 2004, as amended by the Limited Waiver and First Amendment to
Note Purchase Agreement, dated as of February 6, 2006 and the Limited Waiver to Note Purchase
Agreement, dated as of May 5, 2006 (the “Note Agreement”). The Company has heretofore issued the
$65,000,000 4.67% Senior Notes Due December 1, 2014 (the “Notes”) pursuant to the Note Agreement.
Prudential Retirement Ceded Business Trust has heretofore transferred the Notes held by it to
Prudential Retirement Insurance and Annuity Company.



     B. The Company has advised the Noteholders that an Event of Default has occurred and is
continuing under Section 11(c) of the Note Agreement as a result of the default by the Company in
the compliance with the provisions of Section 10.1(e) of the Note Agreement as at April 30, 2006
and May 31, 2006 and Sections 10.1(b), (c), (d) and (e) of the Note Agreement as of the end of the
Fiscal Quarter ended June 29, 2006 (the “Existing Defaults”).



     C. The Company has requested that the Noteholders waive the Existing Defaults. The Company
has also requested that the Noteholders agree to certain modifications to the Note Agreement.
Subject to the terms and conditions hereof, and effective as provided herein, the Noteholders are
willing to agree to such requests provided that the Company agrees to certain amendments to the
Note Agreement and the Notes as provided herein.



     D. All requirements of law have been fully complied with and all other acts and things
necessary to make this Amendment a valid, legal and binding instrument according to its terms for
the purposes herein expressed have been done or performed.



     NOW, THEREFORE, in consideration of good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as
follows:



     SECTION 1. AMENDMENTS. From and after the Effective Date (as defined in Section 4 hereof),
the Noteholders and the Company agree to amend the Note Agreement as follows:



     1.1. Section 1 and Schedule A of the Note Agreement are amended by changing each reference
therein from “4.67%” to “5.67%”.



 









 





1.2. Section 7.1 of the Note Agreement is amended by adding a new clause (i) at the end
thereof to read as follows:




     “(i) Notices under Credit Agreement —  Simultaneously with the transmission thereof,
copies of all notices, reports, financial statements or other communications given to the
Bank Agent or the Banks under the Credit Agreement, excluding routine borrowing requests.”



1.3. Clause (a) of Section 7.2 of the Note Agreement is amended and restated in its entirety
as follows:




     “(a) Covenant Compliance — the information (including detailed calculations), in the
form of Exhibit 7.2(a) attached hereto, required in order to establish whether the Company
was in compliance with the requirements of Sections 10.1, 10.3. 10.5(c) and (g), 10.8(d),
10.10, 10.11, and 10.12, inclusive, during and/or at the end of the monthly, quarterly or
annual period covered by the statements then being furnished, as applicable (including with
respect to each such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in existence); and



1.4. Section 8.1 of the Note Agreement is amended and restated in its entirety as follows:




     “Section 8.1. Required Prepayments.




     (a) Scheduled Required Prepayments — On June 1, 2006 and on each June 1 and December 1
thereafter to and including June 1, 2014 the Company will prepay $3,611,111.11 principal
amount (or such lesser principal amount as shall then be outstanding) of the Notes at par
and without payment of the Make-Whole Amount or any premium, provided that upon any partial
prepayment of the Notes pursuant to Section 8.1(b) or Section 8.2, the principal amount of
each required prepayment of the Notes becoming due under this Section 8.1(a) on and after
the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such prepayment. As provided
therein, the entire remaining unpaid principal balance of the Notes shall be due and payable
on the stated maturity date thereof.




     (b) Required Prepayments Pursuant to Intercreditor Agreement —  If any amounts are to
be distributed to the holders with respect to the Notes on any date pursuant to the terms of
the Intercreditor Agreement, such amount shall be allocated to the principal of the Notes,
together with interest thereon to such date and together with the Make-Whole Amount, if any,
with respect thereto, all of which shall be due and payable on such date.”



1.5. Section 8.6 of the Note Agreement is amended by amending and restating in their entirety
the following definitions therein as follows:



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     “Called Principal” means, with respect to any Note, the principal of such Note that is
to be prepaid pursuant to Section 8.1(b) or Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.




     “Remaining Scheduled Payments” means, with respect to the Called Principal of any Note,
all payments of such Called Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.1(b), Section 8.2 or Section 12.1.




     “Settlement Date” means, with respect to the Called Principal of any Note, the date on
which such Called Principal is to be prepaid pursuant to Section 8.1(b) or Section 8.2 or
has become or is declared to be immediately due and payable pursuant to Section 12.1, as the
context requires



1.6. Section 8.7 of the Note Agreement is amended and restated in its entirety as follows:




     “Section 8.7. Excess Leverage Fee. In addition to interest accruing on the Notes, the
Company hereby agrees to pay to the holder of each Note a fee (the “Excess Leverage Fee”) at
the rate per annum set forth in the table below on the outstanding principal balance of the
Notes during any Fiscal Quarter ending after the Second Amendment Effective Date for the
Financial Performance Level(s) in effect from time to time during such Fiscal Quarter and
the Leverage Ratio as of the end of such Fiscal Quarter. The Financial Performance Level(s)
in effect from time to time during such Fiscal Quarter for the purposes of this Section 8.7
shall be the Financial Performance Level(s) in effect from time to time under the Credit
Agreement for the purposes of determining the “Applicable Margin” (as defined in the Credit
Agreement) during such Fiscal Quarter. The Excess Leverage Fee with respect to each Note
for any Fiscal Quarter shall be calculated on the same basis as interest on such Note is
calculated and shall be paid in arrears on the last day of such Fiscal Quarter if interest
is payable on the Notes on such date, and if interest is not payable on the Notes on the
last day of such Fiscal Quarter, on next date after the end of such Fiscal Quarter on which
interest is payable on the Notes. The payment of any Excess Leverage Fee shall not
constitute a waiver of any Default or Event of Default. If an Excess Leverage Fee is due
for any Fiscal Quarter, the Company will notify the holders of that fact as soon as
reasonably possible and in any event no later than 5 Business Days prior to the interest
payment date on which the payment of such Excess Leverage Fee is due.



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	 	 	Excess Leverage Fee if	 	Excess Leverage
	 	 	Leverage Ratio is equal	 	Fee if Leverage
	 	 	to or greater than 3.50	 	Ratio is less than
	Financial Performance Level	 	to 1.00	 	3.50 to 1.00
	Level 1
	 	1.00%	 	0.75%
	Level 2
	 	0.50%	 	0.00%
	Level 3
	 	0.25%	 	0.00%
	Level 4
	 	0.00%	 	0.00%
	Level 5
	 	0.00%	 	0.00%






1.7. Section 9.7 of the Note Agreement is amended and restated as follows:




     “Section 9.7. Notes to Rank Pari Passu. The Company will cause the Notes and all other
obligations hereunder to at all times be direct obligations of the Company ranking pari
passu with all Debt of the Company outstanding under the Credit Agreement.”



1.8. Section 9.8 of the Note Agreement is amended by adding after each occurrence of the word
“Liens” therein the following parenthetical phrase:




     “(other than Liens in favor of the Collateral Agent)”



1.9. A new Section 9.9 is added to the Note Agreement as follows:




     “Section 9.9 Deliveries; Further Assurances. The Company covenants to, at its sole
expense, promptly execute and deliver, or cause to be executed and delivered, to the holders
of the Notes or the Collateral Agent, in due form for filing or recording (the Company
hereby agrees to pay the cost of filing or recording the same (including without limitation
any and all filing fees and recording taxes)) in all public offices necessary or deemed
necessary by the Required Holder(s) or the Collateral Agent, in their respective reasonable
discretion, such collateral assignments, security agreements, pledge agreements, mortgages,
leasehold mortgages, warehouse receipts, bailee letters, consents, waivers, financing
statements and other instruments and documents, and do such other acts and things,
including, without limitation, all acts and things as the Required Holder(s) or the
Collateral Agent may from time to time reasonably request, to establish and maintain to the
satisfaction of the Required Holder(s) and the Collateral Agent a valid and perfected first
priority security interest in favor of the Collateral Agent in all of the present and/or
future Collateral free of all other Liens whatsoever (subject only to the



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Liens permitted by Section 10.5, and to deliver to the Collateral Agent or the holders of
the Notes such certificates, documents, instruments and opinions in connection therewith as
may be reasonably requested by the Collateral Agent or the Required Holder(s), each in form
and substance reasonably satisfactory to the Collateral Agent and the Required Holder(s)).
In the event that the Company hereafter acquires any real property or interest in real
property on which a Lien is required to be granted to the Collateral Agent pursuant to this
paragraph, then the Company shall also supply to the Collateral Agent and the holders of the
Notes, at the Company’s sole cost and expense, a survey, environmental report, hazard
insurance policy and a mortgagee’s policy of title insurance from a title insurer reasonably
acceptable to the Required Holder(s) insuring the validity of such Lien on the real property
or interest in real property encumbered thereby, each in form and substance reasonably
satisfactory to the Collateral Agent and the Required Holder(s). The Company hereby
irrevocably makes, constitutes and appoints the Collateral Agent (and all other persons
designated by the Collateral Agent for that purpose) as the Company’s true and lawful agent
and attorney-in-fact to, if the Company fails to do so as required upon the request of the
Required Holder(s) or the Collateral Agent, sign the Company’s name on any such agreements,
instruments and documents referred to in the preceding sentences and to deliver such
agreements, instruments and documents to such Persons as the Required Holder(s) or the
Collateral Agent in their sole discretion may elect.”



1.10. Section 10 of the Note Agreement is amended and restated to read as follows:




     “Section 10. Negative Covenants.




The Company covenants that so long as any of the Notes are outstanding:




Section 10.1. Financial Covenants.




     (a) Leverage Ratio. The Company will not permit the Leverage Ratio as
of the end of any Fiscal Quarter, beginning with the Fiscal Quarter ending
December 31, 2007, to be more than 4.00 to 1.00.




     (b) Borrowing Base Limit. The Company will not permit, as of the end
of each fiscal month, an Adjusted Borrowing Base Limit II of not less than
$10,000,000.




     (c) Fixed Charge Coverage Ratio. The Company will not permit the Fixed
Charge Coverage Ratio as of the end of any Fiscal Quarter at which the
Adjusted Borrowing Base Limit III is less than $20,000,000, to be less than
1.10 to 1.00.




     (d) Minimum EBITDA. The Company will not permit EBITDA for any Fiscal
Quarter ending during any period set forth below to be less than the amount
set forth below opposite such period:



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	Period
	 	EBITDA	 
	June 30, 2006 through and including September 28, 2006
	 	$	1,500,000	 
	September 29, 2006 through and including December 28, 2006
	 	$	5,500,000	 
	December 29, 2007 through and including March 29, 2007
	 	$	6,250,000	 
	March 30, 2007 through and including June 28, 2007
	 	$	8,000,000	 







The Noteholders and the Company agree to engage in discussions to attempt to
determine mutually agreeable minimum levels of EBITDA for the Fiscal
Quarters ending after June 28, 2007, provided that if no such levels are
agreed upon in writing by the Company and the Required Holder(s) on or prior
to June 28, 2007, the required level shall be $8,000,000 for each such
Fiscal Quarter and the Company will not permit EBITDA for any Fiscal Quarter
ending after June 28, 2007 to be less than $8,000,000.




     (e) Minimum Working Capital. The Company will not permit Working
Capital at the end of any month ending after July 25, 2006 to be less than
$75,000,000.




       Section 10.2. Consolidations, Mergers and Acquisitions. The Company shall
not recapitalize or consolidate with, merge with, or
otherwise acquire (including by the formation or acquisition
of a Subsidiary) all or substantially all of the assets or
properties of any other Person, except described as part of
the Project in the definition of “Project”.




       Section 10.3. Disposition of Assets. Except for dispositions of property
as described in the definitions of the “Project” and “Selma
Sale-Leaseback” and the disposition of inventory or obsolete
or worn out property in the ordinary course of business, the
Company shall not sell, lease, transfer or otherwise dispose
of any of Company’s properties, assets or rights.




       Section 10.4. [Intentionally Omitted]




       Section 10.5. Encumbrances. Except for those liens, security interests and
encumbrances presently in existence and reflected in the most recent audited
financial statements delivered pursuant to Section 7.1(c), and those created by the
Collateral Documents, the Company shall not create, incur, assume or suffer to exist
any security interest, mortgage, pledge, lien, capitalized lease, levy, assessment,
attachment, seizure, writ, distress warrant, or other



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encumbrance of any nature whatsoever on or with regard to any of the Company’s
assets (and, for this purpose, the Company’s “priced as sold” arrangements with
respect to its purchases of almonds and walnuts from growers in the ordinary course
of business as customarily conducted in the past shall not be considered an
assignment or a conveyance of a right to receive income or profits) other than: (a)
liens securing the payment of taxes, either not yet due or the validity of which is
being contested in good faith by appropriate proceedings, and as to which the
Company shall, if appropriate under GAAP, have set aside on the Company’s books and
records adequate reserves; (b) liens securing deposits with insurance carriers or
under workmen’s compensation, unemployment insurance, social security and other
similar laws, or securing the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases, or securing indemnity, performance
or other similar bonds for the performance of bids, tenders, contracts (other than
for the repayment of borrowed money) or leases, or securing statutory obligations
(including obligations to landlords, warehousemen and mechanics) or surety bonds, or
securing indemnity, performance or other similar bonds in the ordinary course of the
Company’s business, which are not past due; (c) liens securing appeal bonds securing
judgments not in excess of $1,000,000; (d) liens and security interests in favor of
the Collateral Agent for the ratable benefit of the holders of the Notes; (e) liens
securing the interests of Broker in any Margin Account; (f) zoning restrictions,
easements, licenses, covenants and other restrictions affecting the use of the
Company’s real property, and other liens, security interests and encumbrances on
property which do not, in the reasonable determination of the Required Holder(s):
(i) materially impair the use of such property, or (ii) materially lessen the value
of such property for the purposes for which the same is held by the Company; (g)
purchase money security interests securing amounts not exceeding $1,500,000 in the
aggregate during any Fiscal Year of the Company; and (h) liens and encumbrances as
described as part of the Project. Notwithstanding the foregoing, the fact that the
Deed of Trust, recorded February 13, 1997 as Instrument No.5458, Book 3562, Page 483
in the Official Records of Merced County, California (the “Deed of Trust”) in favor
of Bank of America Illinois (“BOA”) with respect to certain property owned by the
Company and located in Merced County, Gustine, California (the “California
Property”) remains of record notwithstanding that the Company has repaid all of the
obligations that had been secured thereby shall not constitute a violation of this
Section 10.5 so long as the Company (1) is using reasonable efforts to (A) cause BOA
to file an appropriate Deed of Reconveyance that would remove the Deed of Trust from
the Title Commitment issued to the Collateral Agent for the California Property, or
(B) in the alternative, to deliver to First America Title Insurance Company, the
issuer of such Title Commitment, such other evidence as would remove the Deed of
Trust from such Title Commitment, and (2) in any event shall cause either the
aforesaid event (A) or event (B) to occur within one hundred twenty (120) days of
date of the Second Amendment.



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     Section 10.6. Transactions with Affiliates. The Company will not and will not
permit any Subsidiary to enter into directly or indirectly any transaction or
Material group of related transactions (including without limitation the purchase,
lease, sale or exchange of properties of any kind or the rendering of any service)
with any Affiliate (other than the Company or another Subsidiary), except (i) in the
ordinary course and pursuant to the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to the
Company or such Subsidiary than would be obtainable in a comparable arm’s-length
transaction with a Person not an Affiliate and (ii) the Selma Sale-Leaseback.




     Section 10.7. Deposits, Investments, Advances or Loans. The Company shall not
make or permit to exist deposits, investments, advances or loans (other than loans
existing on the Second Amendment Effective Date and disclosed to the holders of the
Notes in writing on or prior to such date) in or to Affiliates or any other Person,
except: (a) investments in short term direct obligations of the United States
Government; (b) investments in negotiable certificates of deposit issued by a bank a
commercial banking institution that is a member of the Federal Reserve System and
has a combined capital and surplus and undivided profits of not less than
$500,000,000, made payable to the order of the Company or to bearer; (c) loans to
officers, directors, employees, or Affiliates as and when permitted by Section
10.11; (d) demand deposits, other than Deposit Accounts (as defined in the Security
Agreement), not to exceed $100,000 in the aggregate; (e) pre-payments to vendors in
the ordinary course of business; and (f) deposits, investments, advances or loans as
described as part of the Project.




     Section 10.8. Indebtedness. Except for those obligations and that
indebtedness presently in existence and reflected in the most recent audited
financial statements delivered pursuant to Section 7.1(c), or referred to in Section
10.12, the Company shall not incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any obligations or indebtedness, direct
or indirect fixed or contingent, including obligations under capitalized leases,
except: (a) obligations and indebtedness under the Note Agreement, the Notes and
the Credit Agreement; (b) obligations secured by liens or security interests
permitted under Section 10.5 or contingent obligations permitted under Section 10.9;
(c) trade obligations and normal accruals in the ordinary course of the Company’s
business not yet due and payable, or with respect to which the Company is contesting
in good faith the amount or validity thereof by appropriate proceedings, and then
only to the extent that the Company has set aside on the Company’s books adequate
reserves, if appropriate under GAAP; (d) other unsecured indebtedness, not exceeding
the lesser of (i) $2,000,000 or (ii) $3,500,000 less the amount of indebtedness
incurred under Section 10.5(g); (e) indebtedness as described as part of the
Project; and (f) and obligations to make premium payments for officer’s and
director’s life insurance contracts.




     Section 10.9. Guarantees and Other Contingent Obligations. Except as
permitted under Section 10.8, the Company shall not guarantee, endorse or



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otherwise in any way become or be responsible for obligations of any
other Person, whether by agreement to purchase the indebtedness of such Person or
through the purchase of Goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging any
indebtedness or obligation of such Person or otherwise, except: (a) for endorsements
of negotiable Instruments for collection in the ordinary course of business; (b)
that the Company may indemnify the Company’s officers, directors and managers to the
extent permitted under the laws of the State in which the Company is organized and
may indemnify (in the customary manner) underwriters and any selling shareholders in
connection with any public offering of the Company’s securities; (c) that the
Company may guaranty and fund obligations of the Company’s Supplemental Retirement
Plan to cover certain executive officers of the Company; (d) guaranties and other
contingent obligations not exceeding $1,000,000 in the aggregate during any one
Fiscal Year; and (c) guaranties as described as part of the Project.




     Section 10.10. Capital Investment Limitations. The Company shall not (i)
purchase, invest in or otherwise acquire (including acquisitions through capitalized
leases) additional real estate, equipment or other fixed assets in connection with
the Project, in excess $110,000,000, in aggregate, over Fiscal Years 2004 through
and including 2008 (“Project Related Capital Expenditures”) or (ii) purchase, invest
in or otherwise acquire (including acquisitions through capitalized leases)
additional real estate, equipment or other fixed assets (including Project Related
Capital Expenditures) in any Fiscal Year, in an amount in excess of $13,000,000 in
the aggregate in any such Fiscal Year; it being agreed that the maximum permissible
expenditures in clauses (i) and (ii) shall be cumulative and expenditures under one
clause shall not reduce the permitted amounts expendable under the other clause.




     Section 10.11. Loans to Affiliates. The Company shall not make any loans to
any officers, directors, Affiliates or shareholders of the Company, except for (a)
advances for travel and expenses to the Company’s officers, directors or employees
in the ordinary course of the Company’s business; (b) loans (including obligations
under existing split-dollar life insurance contracts) to the Company’s officers,
directors or employees not exceeding $2,500,000 in the aggregate at any one time
outstanding; and (c) rental payments made under the lease entered into in the Selma
Sale-Leaseback and security deposits held by the lessors in connection with the
Selma Sale-Leaseback in amounts customarily required for transactions of that type.




     Section 10.12. Distributions in Respect of Equity, Prepayment of Debt. The
Company shall not directly or indirectly: (a) redeem any of the Company’s shares of
capital stock; (b) declare any cash dividends in any year on any class of the
Company’s capital stock, except that during each Fiscal Year, the Company may make,
declare and pay cash dividends to its shareholders in amounts up to the lesser of
(i) 25% of the Company’s consolidated net income
during the



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previous Fiscal Year, or (ii) $5,000,000; or (c) prepay any principal,
interest or other payments on or in connection with any indebtedness of the Company
other than (i) prepayments of the Notes and indebtedness under the Credit Agreement
and (ii) prepayments of debt as described as part of the Project.




     Section 10.13. Amendment of Organizational Documents. The Company shall not
amend the Company’s articles or certificate of incorporation, bylaws or any other
agreement, instrument or document affecting the Company’s organization, management
or governance or form any subsidiaries, provided, however, that a request by the
Company for a waiver of this Section 10.13, shall not be unreasonably withheld or
delayed by the Required Holder(s).




     Section 10.14. Amendment of Bainbridge Documents. The
Company shall not amend any of the Bainbridge Bond Documents or any of the
Bainbridge Loan Documents without the prior written consent of the Required
Holder(s); provided however that a request by the Company for a waiver of this
Section 10.14 shall not be unreasonably delayed or withheld by the Required
Holder(s).




     Section 10.15. Subsidiaries. The Company will not form and will not permit to
exist any Subsidiaries.




     Section 10.16. Line of Business. The Company will not and will not permit any
Subsidiary to engage in any business if, as a result, the general nature of the
business in which the Company and its Subsidiaries, taken as a whole, would then be
engaged would be substantially changed from the general nature of the business in
which the Company and its Subsidiaries, taken as a whole, are engaged on the date of
Second Amendment Effective Date.




     Section 10.17. Terrorism Sanctions Regulations. The Company will not and will
not permit any Subsidiary to (a) become a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti-Terrorism Order or (b) engage in any
dealings or transactions with any such Person.




     Section 10.18. Most Favored Lender Status. The Company will not, and will not
permit any Subsidiary to, enter into, assume or otherwise become bound or obligated
under the Credit Agreement or any agreement evidencing, securing, guaranteeing or
otherwise relating to Debt under the Credit Agreement or any other working capital
credit facility that contains, or amend the Credit Agreement or any such agreement
to contain, one or more Additional Covenants or Additional Defaults, unless the
Company or such Subsidiary has offered to make an amendment this Agreement, in form
and substance satisfactory to the Required Holders, to add to or amend this
Agreement to contain such Additional Covenants
or Additional Defaults; provided, however, in the event that the
Company or any Subsidiary enters into, assumes or otherwise becomes bound or
obligated under, or so amends, the Credit Agreement or any such agreement without
making such offer, or if such offer was made and has not been rejected by the
Required



10









 






Holders, this Agreement shall, without any further action on the part of
the Company, or any of the holders, be deemed to be amended automatically to include
each Additional Covenant and each Additional Default contained in such agreement.
The Company further covenants to, and to cause each of its Subsidiaries to, promptly
execute and deliver at its expense (including the reasonable fees and expenses of
counsel for the holders) an amendment to this Agreement in form and substance
satisfactory to the Required Holders evidencing the amendments of this Agreement to
include such Additional Covenants and Additional Defaults, provided that the
execution and delivery of such amendments shall not be a precondition to the
effectiveness of such amendment as provided for in this Section 10.18, but shall
merely be for the convenience of the parties hereto.”



     1.11. Section 11 of the Note Agreement is amended and restated in its entirety as follows:



     “Section 11. Events of Default.




An “Event of Default” shall exist if any of the following conditions or events shall
occur and be continuing:




     (a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note when the same becomes due and payable, whether at maturity or at
a date fixed for prepayment or by declaration or otherwise; or




     (b) the Company defaults in the payment of any interest or Excess Leverage Fee
with respect to any Note for more than five Business Days after the same becomes due
and payable; or




     (c) the Company defaults in the performance of or compliance with any term
contained in Section 7.1(e) or Section 10; or




     (d) the Company defaults in the performance of or compliance with any term
contained herein (other than those referred to in Sections 11(a), (b) and (c)) and
such default is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company receiving
written notice of such default from any holder of a Note (any such written notice to
be identified as a “notice of default” and to refer specifically to this Section
11(d)), or the Company defaults in the performance of or compliance with any term
contained any other Transaction Document and such default shall not be remedied
within the grace period, if any, provided therefore in such Transaction Document; or




     (e) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company in this Agreement or in any other
Transaction Document or in any writing furnished in connection with the transactions
contemplated hereby or by any other Transaction Document proves



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to have been false
or incorrect in any material respect on the date as of which made; or




     (f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $1,000,000 beyond any period of grace provided with
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $1,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition exists, and as
a consequence of such default or condition, any holder of such Debt may cause or
declare such Debt to be, or such Debt has become, or has been declared, due and
payable, before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), any holder of Debt in an aggregate
outstanding principal amount of at least $1,000,000 may obligate the Company or any
Subsidiary, or the Company or any Subsidiary has become obligated, to purchase or
repay such Debt before its regular maturity or before its regularly scheduled dates
of payment, provided that to the extent the holder of such Debt waives any such
default or any such default is cured, the Event of Default existing under this
clause (f) solely as a result of such default shall be deemed to be no longer
continuing; or




     (g) the Company or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for liquidation
or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the foregoing;
or




     (h) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Subsidiaries, or any such petition
shall be filed against the Company or any of its Subsidiaries and such petition
shall not be dismissed within 60 days; or



12









 






     (i) a final judgment or judgments for the payment of money aggregating in
excess of $1,000,000 in excess of any insurance coverage therefor (which coverage
has not been denied and is not being contested by the insurance provider) against
one or more of the Company and its Subsidiaries and which judgments are not, within
30 days after entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 30 days after the expiration of such stay; or




     (j) if (i) any Plan shall fail to satisfy the minimum funding standards of
ERISA or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of the
Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii) the aggregate “amount of unfunded
benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all
Plans, determined in accordance with Title IV of ERISA, shall exceed $1,000,000,
(iv) the Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans, (v) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together with
any other such event or events, could reasonably be expected to have a Material
Adverse Effect; or




     (k) any Collateral Document shall cease to be in full force and effect, or the
Company shall contest or deny the validity or enforceability of, or deny that it has
any obligations under, any collateral document, or the Collateral Agent does not
have or ceases to have a valid first priority perfected security interest (subject
only to Liens permitted by Section 10.5) in any Collateral for the benefit of the
holders of the Notes.




       As used in Section 11(j), the terms “employee benefit plan” and “employee welfare
benefit plan” shall have the respective meanings assigned to such terms in Section 3 of
ERISA.”



1.12. Section 12.2 of the Note Agreement is amended and restated in its entirety as follows:




     “Section 12.2. Other Remedies. If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the



13









 






time
outstanding may proceed to protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein, in any Note or in any of the other Transaction Documents or
for an injunction against a violation of any of the terms hereof or thereof, or in aid of
the exercise of any power granted hereby or thereby or by law or otherwise.”



1.13. Clause (d) of Section 12.3 of the Note Agreement is amended and restated in its entirety
as follows:




“(d) no judgment or decree has been entered for the payment of any monies due
pursuant hereto, to the Notes or to any of the other Transaction Documents.”



1.14. Section 12.4 of the Note Agreement is amended and restated in its entirety as follows:




     “Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of dealing
and no delay on the part of any holder of any Note in exercising any right, power or remedy
shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or
remedies. No right, power or remedy conferred by this Agreement, by any Note or by any
other Transaction Document upon any holder thereof shall be exclusive of any other right,
power or remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the Company under
Section 15, the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation, reasonable
attorneys’ fees, expenses and disbursements.”



1.15. Sections 15 and 16 of the Note Agreement are amended and restated in its entirety as
follows:



“Section 15. Expenses, Etc.




     Section 15.1. Transaction Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees of a special counsel and, if reasonably required by
the Required Holders, local or other counsel) incurred by the Purchasers and each other
holder of a Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Notes or the other
Transaction Documents (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the reasonable out-of-pocket costs and expenses incurred
in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement, the Notes
or the other Transaction Documents or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement, the Notes or the
other Transaction Documents, or by reason of being a holder of any Note, (b) the costs and
expenses, including financial advisors’ fees, incurred in



14









 






connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby and by the Notes and (c) the
reasonable out-of-pocket costs and expenses incurred in connection with the initial filing
of this Agreement and all related documents and financial information with the SVO. The
Company will pay, and will save each Purchaser and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders
(other than those, if any, retained by a Purchaser or other holder in connection with its
purchase of the Notes).




     Section 15.2. Survival. The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement, the Notes or any of the other Transaction Documents, and the
termination of this Agreement or any of the other Transaction Documents.



Section 16. Survival of Representations and Warranties; Entire Agreement.




     All representations and warranties contained herein or in any other Transaction
Document shall survive the execution and delivery of this Agreement, the Notes and the other
Transaction Documents, the purchase or transfer by any Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any time by or on
behalf of such Purchaser or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company pursuant to this
Agreement or any other Transaction Document shall be deemed representations and warranties
of the Company under this Agreement. Subject to the preceding sentence, this Agreement, the
Notes and the other Transaction Documents embody the entire agreement and understanding
between each Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.”



1.16. Section 22 of the Note Agreement is amended and restated in its entirety as follows:




     “Section 22. [Intentionally Omitted]”



        1.17. Schedule B to the Note Agreement is amended by adding, or amending and restating, as
applicable, the following definitions in proper alphabetical order:




     “Adjusted Borrowing Base Limit I” shall mean the “Adjusted Borrowing Base Limit I”, as
defined in the Credit Agreement.




     “Adjusted Borrowing Base Limit II” shall mean the “Adjusted Borrowing Base Limit II”,
as defined in the Credit Agreement.




     “Adjusted Borrowing Base Limit III” shall mean the “Adjusted Borrowing Base Limit III”,
as defined in the Credit Agreement.



15









 






     “Bainbridge Bond Documents” shall mean all agreements, instruments and documents as now
in effect and executed or delivered in connection with the Bainbridge Indenture, and as the
same may be amended, replaced, restated and/or supplemented from time to time hereafter,
including without limitation, the Bainbridge Loan Agreement.




     “Bainbridge Indenture” shall mean that certain Trust Indenture dated as of June 1, 1987
between the Decatur County — Bainbridge Industrial Development Authority and Trust Company
Bank, as now in effect and as the same may be amended, replaced, restated and/or
supplemented from time to time hereafter.




     “Bainbridge Loan Agreement” shall mean that certain Loan Agreement dated as of June 1,
1987, between the Decatur County — Bainbridge Industrial Development Authority and the
Company, as now in effect and as the same may be amended, replaced, restated and/or
supplemented hereafter.




     “Bainbridge Loan Documents” shall mean all agreements, instruments and documents
executed or delivered in connection with the Bainbridge Loan Agreement, as now in existence
and as the same may be amended, replaced, restated and/or supplemented from time to time.




     “Bank Agent” means U.S. Bank National Association, as agent for the Banks under the
Credit Agreement, and its successors and assigns in that capacity.




     “Banks” means U.S. Bank National Association, LaSalle Bank National Association,
JPMorgan Chase Bank, N.A., and their respective successors and assigns.




     “Broker” shall mean shall have the meaning given in the UCC.




     “California Deed of Trust” shall mean that certain Deed of Trust, dated as of July 25,
2006, by the Company in favor of the Collateral Agent with respect to the real property
commonly known as the Crane Walnut Sheller Property in Merced County, California.




     “Credit Agreement” means the Amended and Restated Credit Agreement, dated as of July
25, 2006, by and among the Company, the Bank Agent and the Banks.




     “Collateral” means the “Collateral”, as defined in the Security Agreement, the
“Property”, as defined in the Illinois Mortgage, and the “Property”, as defined in the
California Deed of Trust.




     “Collateral Agent” shall mean U.S. Bank National Association, in its capacity as
collateral agent under the Intercreditor Agreement, and its successor and assigns in that
capacity.




     “Collateral Documents” shall mean the Security Agreement, the Mortgages, the Control
Account Agreements, the Trademark License Agreement and any other agreement, document or
instrument in effect on the Second Amendment Effective Date



16









 






or executed by the Company after
the Second Amendment Effective Date under which the Company has granted a lien upon or
security interest in any property or assets to the Collateral Agent to secure all or any
part of the obligations of the Company under this Agreement or the Notes, and all financing
statements, certificates, documents and instruments relating thereto or executed or provided
in connection therewith, each as amended, restated, supplemented or otherwise modified from
time to time.




     “Commodity Accounts” shall have the meaning given in the UCC.




     “Commodity Contracts” shall have the meaning given in the UCC.




     “Control Account Agreements” shall mean that certain Agreement Re: Blocked Accounts,
date as of July 25, 2006, among the Company, the Collateral Agent and LaSalle Bank National
Association and each other control account agreement entered into by the Company, a
depositary bank and the Collateral Agent, each as amended, restated, supplemented or
otherwise modified from time to time.




     “EBITDA” shall mean, for the then preceding four Fiscal Quarters, the net income of the
Company before provision for income taxes, interest expense (including without limitation,
implicit interest expense on capitalized leases and any Excess Leverage Fee, regardless of
how the charge is accounted for per GAAP), depreciation, amortization and other non-cash
expenses or charges (including (i) any non-cash charges associated with FAS 142 adjustments,
and (ii) any one-time slotting fees or distribution allowances), excluding (to the extent
otherwise included): (a) non-operating gains (including without limitation, extraordinary
or nonrecurring gains, gains from discontinuance of operations and gains arising from the
sale of assets other than Inventory or property, plant and equipment) during the applicable
period; and (b) similar non-operating losses, costs and expenses during such period
(including without limitation fees and expenses associated with the negotiation, execution,
delivery and closing of the Second Amendment and the Credit Agreement). To the extent not
included in net income, proceeds from business interruption insurance shall be added in the
calculation of EBITDA.




     “Fixed Charge Coverage Ratio” shall mean, as of the end of any Fiscal Quarter, the
ratio of the Company’s: (a) (i) EBITDA for the then preceding four Fiscal Quarters, minus
(ii) the amount of cash income taxes paid during such period, minus (iii) the amount of cash
dividends or distributions paid and the amount paid to redeem capital stock or other equity
interests during such period, minus (iv) the lesser of (A) capital expenditures during such
period or (B) depreciation expense during such period, plus (v) the amount of rent and other
lease expense under operating leases and Synthetic Leases
during such period; divided by (b) (i) the amount of principal paid (or due to be paid if
not paid on or before the original due date) by the Company during such period with respect
to long term debt (including capitalized leases), excluding payments that were due and
counted as of their original due date, plus (ii) the amount of cash interest paid by the
Company during such period (including without limitation, implicit interest expense on
capitalized leases and any Excess Leverage Fee, regardless of how the charge is



17









 






accounted
for per GAAP), plus (iii) the amount of rent and other lease payments under operating leases
and Synthetic Leases paid during such period.




     “Goods” shall have the meaning given in the UCC.




     “Illinois Mortgage” shall mean that certain Mortgage, dated of July 25, 2006, by the
Company in favor of the Collateral Agent with respect to the real property commonly known as
the Panasonic Property in Kane County, Illinois.




     “Instruments” shall have the meaning given in the UCC.




     “Intercreditor Agreement” means that certain Intercreditor and Collateral Agency
Agreement, dated as of July 25, 2006, among the Noteholders, the Bank Agent, the Banks and
the Collateral Agent, as the same may be amended, modified or supplemented from time to time
in accordance with the provisions thereof.




     “Margin Accounts” shall mean, collectively, all Commodity Accounts and all Commodity
Contracts.




     “Mortgages” means (i) the California Deed of Trust, (ii) the Illinois Mortgage, and
(iii) any other mortgage pursuant to which the Notes are secured and which is entered into
as contemplated hereby, by the Intercreditor Agreement or by any other Transaction Document.




     “NAIC” means the National Association of Insurance Commissioners or any successor
thereto.




     “Second Amendment” means the that certain Limited Waiver and Second Amendment to Note
Purchase Agreement, dated as of July 25, 2006, among the Company and the Noteholders.




     “Second Amendment Effective Date” means the “Effective Date”, as defined in the Second
Amendment.




     “Security Agreement” means that certain Security Agreement, dated as of July 25, 2006,
made by the Company in favor of the Collateral Agent for the benefit of the Banks and the
holders of the Notes, as the same may be amended, modified, or supplemented from time to
time in accordance with the provisions thereof.




     “Selma Sale-Leaseback” means the sale-leaseback of the Company’s property in Selma,
Texas entered into by the Company with certain partnerships controlled by
Affiliates of the Company and approved by a committee of independent members of the
Company’s board of directors; provided (a) the cash purchase price for such property is not
less than $14,300,000, (b) the lease term of such property shall be at least 10-years and
the lease shall contain an option to purchase after five years at an aggregate purchase
price not to exceed the then fair market value of such property, or if greater, $14,300,000,



18









 






and (c) rental rates under such lease shall not exceed fair market rates for rentals of
similar properties, as determined by an independent appraiser as of the time of appraisal.




     “SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.




     “Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but is classified as an operating
lease under GAAP.




     “Trademark License Agreement” means that certain Trademark License Agreement, dated as
of July 25, 2006, made by the Company in favor of the Collateral Agent for the benefit of
the Banks and the holders of the Notes, as the same may be amended, modified, or
supplemented from time to time in accordance with the provisions thereof.




     “Transaction Documents” shall mean this Agreement, the Notes, the Intercreditor
Agreement, the Company’s Acknowledgment to Intercreditor Agreement, the Collateral Documents
and the other agreements, documents, certificates and instruments now or hereafter executed
or delivered by the Company or any Affiliate in connection with this Agreement.




     “UCC” shall mean the Uniform Commercial Code as in effect in the State of Colorado.




     “Working Capital” shall mean as of any particular date, the Company’s combined current
assets, less the Company’s combined current liabilities determined in accordance with GAAP,
provided, however (a) temporary long-term debt reclassifications as current liabilities
shall not be included as current liabilities (including during a “Sharing Period”, as
defined in the Intercreditor Agreement), and (b) the aggregate amount of Loans (as defined
in the Credit Agreement) outstanding shall be included as current liabilities regardless of
their maturity.



1.18. Schedule B to the Note Agreement is amended by deleting the following definitions:




     “Acceptable Letter of Credit”




     “Acceptable Letter of Credit Issuer”




     “Asset Disposition”




     “Debt Prepayment Application”




     “Disposition Value”




     “Excess Leverage Fee”



19









 






     “Net Proceeds Amount”




     “Priority Debt”




     “Property Reinvestment Application”




     “Supplemental Letter of Credit”




     “Tangible Net Worth”




     “Transfer”




     “Unallocated Cash Flow”



     1.19. The Noteholders and the Company agree that each outstanding Note shall be amended and
restated to be a like principal amount of Note in the form of Exhibit 1 hereto.



     1.20. Exhibit 1 and Exhibit 7.2(a) to the Note Agreement are hereby amended and restated in
their entirety as set forth on Exhibit 1 and Exhibit 7.2(a), respectively, hereto.



     SECTION 2. LIMITED WAIVER.



     Subject to the terms and conditions set forth herein, in reliance upon the representations and
warranties of the Company set forth herein, and effective on (and subject to the occurrence of) the
Effective Date (as defined in Section 4 below), the Noteholders hereby waive the Existing Defaults.
The foregoing waiver shall be limited precisely as written and shall relate solely to the Note
Agreement in the manner and to the extent described herein, and nothing in this Limited Waiver
shall be deemed to (a) constitute a waiver of compliance by the Company with respect to or any
modification of Section 10.1 of the Note Agreement as of the end of any other month or any other
Fiscal Quarter, as applicable, or in any other instance or respect or (ii) any other term,
provision or condition of the Note Agreement, (b) waive any right that any holder may have to
receive the payment of any Excess Leverage Fee, (c) constitute a waiver of any Default or Event of
Default other than the Existing Defaults, or (d) prejudice any right or remedy that the any holder
of Notes may now have (after giving effect to the foregoing waiver) or may have in the future under
or in connection with the Note Agreement or any Note.



     SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY; ACKNOWLEDGMENT.



     3.1. Representations. To induce the Noteholders to execute and deliver this Amendment, the
Company represents and warrants to the Noteholders (which representations shall survive the
execution and delivery of this Amendment), that:




     (a) this Amendment has been duly authorized, executed and delivered by it and
this Amendment constitutes the legal, valid and binding obligation, contract and
agreement of the Company enforceable against it in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency,



20









 






reorganization, moratorium
or similar laws or equitable principles relating to or limiting creditors’ rights
generally;




     (b) the Note Agreement, as amended by this Amendment, constitute the legal,
valid and binding obligations, contracts and agreements of the Company enforceable
against it in accordance with their respective terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors’ rights generally;




     (c) the execution, delivery and performance by the Company of this Amendment
(i) has been duly authorized by all requisite corporate action and, if required,
shareholder action, (ii) does not require the consent or approval of any
governmental or regulatory body or agency, and (iii) will not (A) violate (1) any
provision of law, statute, rule or regulation or its certificate of incorporation or
bylaws, (2) any order of any court or any rule, regulation or order of any other
agency or government binding upon it, or (3) any provision of any indenture,
agreement or other instrument to which it is a party or by which its properties or
assets are or may be bound, including, without limitation, the Credit Agreement, or
(B) result in a breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument referred to in
clause (iii)(A)(3) of this Section 3.1(c);




     (d) as of the date hereof, and after giving effect to this Amendment and the
other transactions contemplated hereby and by the other Transaction Documents, (i)
each representation and warranty set forth in Section 5 of the Note Agreement and in
each other Transaction Document is true and correct (except to the extent such
representations and warranties expressly refer to a specific date, in which case
they were true and correct as of such date), (ii) no Event of Default or Default
exists, (iii) each of the representations and warranties made by the Company in
Credit Agreement is true and complete, (iv) as of the Effective Date, all filings,
assignments, pledges and deposits of documents or instruments have been made, and
all other actions have been taken, that are necessary or advisable under applicable
law and are required to be made or taken on or prior to the Effective Date under the
provisions of the Note Agreement and the other Transaction Documents to create and
perfect a security interest in the Collateral in favor of the Collateral Agent to
secure the Notes and the Company’s obligations under the Credit Agreement, subject
to no Liens other than Liens permitted under Section 10.5, (v) the Collateral and
the Collateral Agent’s rights with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses (except any such setoff, claim or
defense which could not, individually or in the aggregate, materially impair the
rights of the Collateral Agent with respect to the Collateral), (vi) the Company is
the owner of the Collateral described in the
Collateral Documents free from any Lien, security interest, encumbrance and any
other claim or demand, except for Liens permitted under Section 10.5 and (v) the
Company has no Subsidiaries.



21









 





     SECTION 4. CONDITIONS TO EFFECTIVENESS OF LIMITED WAIVER AND AMENDMENTS.



     The amendments in Section 1 of this Amendment and the limited waiver in Section 2 of this
Amendment shall not become effective until, and shall become effective only when, each and every
one of the following conditions shall have been satisfied (the date upon which such conditions are
satisfied is called the “Effective Date”):



     4.1. Documents. Each Noteholder shall have received original counterparts or, if satisfactory
to such Purchaser, certified or other copies of all of the following, each duly executed and
delivered by the party or parties thereto, in form and substance satisfactory to such Purchaser,
dated the date of Effective Date unless otherwise indicated, and, on Effective Date, in full force
and effect with no event having occurred and being then continuing that would constitute a default
thereunder or constitute or provide the basis for the termination thereof:




     (i) counterparts of this Amendment, duly executed by the Company and the holders of at
least a majority of the outstanding principal of the Notes;




     (ii) the Amended and Restated Notes dated as of the most recent date on which interest
on the thereon has been paid (the “Amended and Restated Notes”), in the form of Exhibit 1
attached hereto, duly executed by the Company;




     (iii) counterparts of the Intercreditor Agreement, duly executed by the Noteholders,
the Bank Agent, the Banks and the Collateral Agent;




     (iv) the Security Agreement, the California Deed of Trust, the Illinois Mortgage, the
Trademark License Agreement and the Control Account Agreements, each duly executed by the
parties thereto;




     (v) all chattel paper, instruments and documents of title in which the Collateral Agent
has been granted a security interest and are then required under the Collateral Documents to
be delivered to the Collateral Agent, together with the related transfer documents executed
in blank, in each case received by the Collateral Agent, all Uniform Commercial Code
financing statements perfecting the security interests and liens granted to the Collateral
Agent, duly filed in all offices necessary to perfect such security interests and liens or
deemed by the Required Holders to be advisable, and all such other certificates, documents,
agreements, recording and filings necessary to establish a valid and perfected first
priority lien and security interest (subject only to Liens described in Section 10.5) in
favor of the Collateral Agent in all of the Collateral or deemed by the Required Holders to
be advisable;




     (vi) a Secretary’s Certificate signed by the Secretary or an Assistant Secretary and
one other officer of the Company certifying, among other things, (a) as to the names, titles
and true signatures of the officers of the Company authorized to sign this
Amendment, the Amended and Restated Notes, the Security Agreement, the Mortgages and the
other Transaction Documents to be delivered in connection with this Amendment, (b) that
attached thereto is a true, accurate and complete copy of the



22









 






certificate of incorporation
of the Company, certified by the Secretary of State of Delaware, as of a recent date, (c)
that attached thereto is a true, accurate and complete copy of the by-laws of the Company
which were duly adopted and are in effect as of the Second Amendment Effective Date and have
been in effect immediately prior to and at all times since the adoption of the resolutions
referred to in clause (d), below, (d) that attached thereto is a true, accurate and complete
copy of the resolutions of the board of directors of the Company, duly adopted at a meeting
or by unanimous written consent of such board of directors, authorizing the execution,
delivery and performance of this Amendment, the Amended and Restated Notes, the Security
Agreement, the Mortgages and the other Transaction Documents to be delivered in connection
with this Amendment, and that such resolutions have not been amended, modified, revoked or
rescinded, are in full force and effect and are the only resolutions of the shareholders of
the Company, or of such board of directors or any committee thereof relating to the subject
matter thereof, (e) that this Amendment, the Amended and Restated Notes, the Security
Agreement, the Mortgages and the other Transaction Documents to be executed and delivered in
connection with this Amendment to the Noteholders by the Company are in the form approved by
its board of directors in the resolutions referred to in clause (d), above, and (f) that no
dissolution or liquidation proceedings as to the Company have been commenced or are
contemplated;




     (vii) a certificate of corporate or other type of entity and tax good standing for the
Company from the Secretary of State of Delaware and from the Secretary of State or other
applicable governmental office of the States of California, Georgia, Illinois, North
Carolina and Texas;




     (viii) Certified copies of Requests for Information or Copies (Form UCC-11) or
equivalent reports listing all effective financing statements which name the Company (under
its present name and previous names) as debtor and which are filed in the office of the
Secretary of State in any state in which the Company is located (as determined under the
UCC), and lien and judgment search reports from the county recorder of any county in which
the Company maintains an office or in which any assets of the Company are located; and




     (ix) such other certificates, documents and agreements as such Purchaser may reasonably
request.



        4.2. Opinion of Company’s Counsel. The Noteholders shall have received from Jenner & Block,
special counsel for the Company, a favorable opinion reasonably satisfactory to the Required
Holders, and the Company, by its execution hereof, hereby requests and authorizes such special
counsel to render such opinion and to allow the Noteholders to rely on such opinion, and
understands and agrees that each Noteholders receiving such an opinion will be relying, and is
hereby authorized to rely, on such opinion.



        4.3. Title Insurance, Surveys and Environmental Assessments. The Noteholders shall have
received, with respect to each parcel of real estate subject to the Illinois Mortgage or the
California Deed of Trust, (i) from a title company acceptable to the Required Holders, a



23









 




prepaid
mortgagee title insurance policy in form acceptable to the Required Holders, in an amount at least
equal to the estimated fair market value of such parcel and the improvements thereon, insuring the
lien of such Mortgage with respect to such parcel of real estate as a valid, prior lien on such
parcel subject only to such exceptions as shall be approved by the Required Holders and containing
such endorsements as may be required by the Required Holders, (ii) an ALTA Survey and Flood Plain
designations with respect to the property subject to the Illinois Mortgage and a Survey and Flood
Plain designations with respect to the property subject to the California Deed of Trust, in each
case satisfactory to the Required Holders, and (iii) a Phase 1 environmental assessment, and such
additional environmental assessments and reports as the Required Holders may request, satisfactory
to the Required Holders, and the Required Holders shall be satisfied with the environmental
condition of such real estate.




     4.4. Certificates of Insurance. The Company shall have delivered from insurance carriers
acceptable to the Required Holders certificates of insurance in such forms and amounts acceptable
to the Required Holders evidencing insurance required to be maintained under Section 9.2 of the
Note Agreement or under any of the Collateral Documents under insurance policies with loss payable
clauses in favor of the Collateral Agent and acceptable to the Required Holders.



     4.5. Amended and Restated Credit Agreement. The Credit Agreement, providing for a $100,000
revolving credit facility to the Company, a waiver of any default under Section 9.6 of the Prior
Agreement (as defined in the Credit Agreement) and any default under the Prior Agreement (as
defined in the Credit Agreement) as a result of the Existing Defaults and having other terms and
conditions satisfactory to the Require Holders, shall have been duly executed and delivered by the
Company, the Bank Agent and the Banks, and shall be in full force and effect. All conditions
precedent to the making of the initial revolving loan under the Credit Agreement shall have been
satisfied and the Company shall have received the proceeds of the term loan and the initial
revolving loan thereunder. The Noteholders shall have received a copy of the Credit Agreement and
all instruments, documents and agreements delivered at the closing of making of the initial
revolving loan thereunder, certified by an Officer’s Certificate, dated the Effective Date, as
correct and complete.



     4.6. The representations and warranties of the Company set forth in Section 3 hereof are true
and correct on and as of the Effective Date.



     4.7. The Noteholders shall have received payment of the Amendment Fee described in Section 5
hereof.



     SECTION 5. AMENDMENT FEE.



     In consideration of the execution and delivery of this letter by the Noteholders, the Company
hereby agrees to pay to the holders, pro rata in proportion to the outstanding principal amount of
the Notes held by each holder, a waiver fee (the “Amendment Fee”) in an aggregate amount for all
holders equal to $97,000.



24









 





     SECTION 6. MISCELLANEOUS.



     6.1. Reference to and Effect on Note Agreement and Notes; No Course of Dealing. Upon the
effectiveness of the amendments in Section 1 hereof and the limited waiver in Section 2 hereof,
each reference to the Note Agreement and the Notes in any other document, instrument or agreement
shall mean and be a reference to the Note Agreement as modified by this Amendment or the Notes as
modified by this the Amended and Restated Notes. Except as specifically set forth in Sections 1
and 2 hereof or the Amended and Restated Notes, each of the Note Agreement and the Notes shall
remain in full force and effect and is hereby ratified and confirmed in all respects. The Company
acknowledges and agrees that no holder is under any duty or obligation of any kind or nature
whatsoever to grant the Company any additional amendments or waivers of any type, whether under the
same or different circumstances, and no course of dealing or course of performance shall be deemed
to have occurred as a result of the amendments and wavier herein.



     6.2. Expenses. The Company hereby confirms its obligations under the Note Agreement, whether
or not the transactions hereby contemplated are consummated, to pay, promptly after request by any
Noteholder, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and
expenses, incurred by the Noteholders in connection with this Amendment or the transactions
contemplated hereby, in enforcing any rights under this Amendment, or in responding to any subpoena
or other legal process or informal investigative demand issued in connection with this letter or
the transactions contemplated hereby. The obligations of the Company under this Section 6.2 shall
survive transfer by any Noteholder of any Note and payment of any Note.



     6.3. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY
CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AMENDMENT TO BE CONSTRUED OR ENFORCED IN
ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER
JURISDICTION).



     6.4. Counterparts; Section Titles. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument. Delivery of an
executed counterpart of a signature page to this Amendment by facsimile shall be effective as
delivery of a manually executed counterpart of this Amendment. The section titles contained in
this Amendment are and shall be without substance, meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.



[signature page follows]




25









 








	 	 	 	 	 
	 	JOHN B. SANFILIPPO & SON, INC.

 	 
	 	By:  	/s/ Michael J. Valentine
 	 
	 	 	Its: Chief Financial Officer 	 
	 	 	 	 
	 



Accepted and Agreed to:




THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA




	 	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 
	PRUCO LIFE INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 
	AMERICAN
SKANDIA LIFE ASSURANCE CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Investment Management, Inc.,	 	 	 	 
	 

	 	as investment manager	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 






26









 






	 	 	 	 	 	 	 
	PRUDENTIAL RETIREMENT INSURANCE	 	 	 	 
	   AND ANNUITY COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Investment Management, Inc.,	 	 	 	 
	 

	 	as investment manager	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 
	ING LIFE INSURANCE AND ANNUITY COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, L.P.	 	 	 	 
	 

	 	(as Investment Advisor)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, Inc.	 	 	 	 
	 

	 	(as its General Partner)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 
	FARMERS NEW WORLD LIFE INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, L.P.	 	 	 	 
	 

	 	(as Investment Advisor)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, Inc.	 	 	 	 
	 

	 	(as its General Partner)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 






27









 






	 	 	 	 	 	 	 
	PHYSICIANS MUTUAL INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, L.P.	 	 	 	 
	 

	 	(as Investment Advisor)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	Prudential Private Placement Investors, Inc.	 	 	 	 
	 

	 	(as its General Partner)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ G. A. Coletta	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 
	GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Eve Hampton	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: Vice President — Investments	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Bruce Masters	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: Assistant Vice President — Investments	 	 	 	 
	 
	 	 	 	 	 	 
	THE GREAT-WEST LIFE ASSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ B. R. Allison	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: Authorized Signatory	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ W. J. Sharman	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: Authorized Signatory	 	 	 	 
	 
	 	 	 	 	 	 
	UNITED OF OMAHA LIFE INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Curtis R. Caldwell	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: Vice President	 	 	 	 






28









 






	 	 	 	 	 	 	 
	JEFFERSON PILOT FINANCIAL INSURANCE COMPANY	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Devon Everhart	 	 	 	 
	 

	 	Title: Vice President	 	 	 	 






29









 






[Form of Amended and Restated Note]




John B. Sanfilippo & Son, Inc.




5.67% Amended and Restated Senior Note Due December 1, 2014




 




			
	No. [___]
	 	[Date]
	$[___]
	 	PPN: 800422 D* 5






     For Value Received, the undersigned, John B. Sanfilippo & Son, Inc. (herein called
the “Company”), a corporation organized and existing under the laws of the State of Delaware,
hereby promises to pay to [___], or registered assigns, the principal sum of
[                                        ] Dollars (or so much thereof as shall not have been prepaid) on
December 1, 2014, with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid balance hereof at the rate per annum equal to 5.67%, payable semiannually, on the
1st day of June and December in each year, commencing with the June 1 or December 1 next
succeeding the date hereof, until the principal hereof shall have become due and payable, and (b)
to the extent permitted by law, at the Default Rate (as defined in the Note Purchase Agreement
referred to below), on any overdue payment of interest and, during the continuance of an Event of
Default, on the unpaid balance hereof and on any overdue payment of any Make-Whole Amount, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).



     Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are
to be made in lawful money of the United States of America at the principal office of the Company
in the United States, or at such other place as the Company shall have designated by written notice
to the holder of this Note as provided in the Note Purchase Agreement referred to below.



     This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to
the Note Purchase Agreement, dated as of December 16, 2004 (as from time to time amended, the “Note
Purchase Agreement”), between the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representation set forth in Section 6.2 of the Note Purchase
Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.



     This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender
of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized
in writing, a new Note for a like principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company will not be affected by any notice to the
contrary.



Exhibit 1

(to Second Amendment to Note Purchase Agreement)






 









 








     The Company will make required prepayments of principal on the dates and in the amounts
specified in the Note Purchase Agreement. This Note is also subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.



     If an Event of Default occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreement.



     This Note (i) merely re-evidences a portion of the indebtedness previously evidenced by the
Company’s 4.67% Senior Notes due December 1, 2014 (the “Existing Notes”), (ii) is given in
substitution for, and not as payment of the Existing Note(s) and (iii) is in no way intended to
constitute a novation of any Existing Note.



[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE ON THE FOLLOWING PAGE.]



Exhibit 1

(to Second Amendment to Note Purchase Agreement)




 









 








     This Note shall be construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the State of Illinois excluding choice-of-law principles of the
law of such State that would require the application of the laws of a jurisdiction other than such
State.



	 	 	 	 	 	 	 
	 	 	JOHN B. SANFILIPPO & SON, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	[Title]	 	 






Exhibit 1

(to Second Amendment to Note Purchase Agreement)




 









 








Form of Compliance Certificate




     Pursuant to Section 7.2(a) of the Note Purchase Agreement dated as of the 16th day of
December, 2004, as amended by the Limited Waiver and First Amendment to Note Purchase Agreement,
dated as of February 6, 2006 and the Limited Waiver to Note Purchase Agreement, dated as of May 5,
2006, and as the same may be amended, replaced, restated or supplemented from time to time (the
“Note Agreement”) by and among John B. Sanfilippo & Son, Inc., a Delaware corporation (the
“Company”), and each of the purchasers party thereto (each, a “Purchaser” and, collectively, the
“Purchasers”), the undersigned certifies to the holders of the Company’s 5.67% Amended and Restated
Senior Notes due December 1, 2014 as follows (with capitalized terms not defined herein having the
meanings given to such terms in the Note Agreement):




	 	1.	 	The financial statements of the Company attached hereto (the “Financial Statements”)
for the period ending ___, 20___(the “Determination Date”) have been prepared in
accordance with the requirements of Section 23.3 of the Note Agreement.
	 
	 	2.	 	The Company is in compliance with all of the covenants set forth in Sections 10.1,
10.3. 10.5(c) and (g), 10.8(d), 10.10, 10.11, and 10.12 of the Note Agreement as of the
Determination Date.






	 	 	 	Yes ___ No ___






	 	3.	 	Except as indicated by a check in a “No” box below, the Company is in compliance with
the covenants set forth in Section 10.1 of the Note Agreement as of the Determination Date,
as follows:






	 	a.	 	The Leverage Ratio as of the Determination Date is required to be not
more than 4.00 to 1.00; the Company’s actual Leverage Ratio as of the Determination
Date is ___to 1.00, as shown on the Calculations attached hereto.1]
	 
	 	 	 	In Compliance: Yes ___ No ___
	 
	 	b.	 	Adjusted Borrowing Base Limit II as of the Determination Date is
required to be not less than $10,000,000, as shown on the attached Calculations;
the Company’s actual Adjusted Borrowing Base Limit II as of the Determination Date
is $___, as shown on the Calculations attached hereto.
	 
	 	 	 	In Compliance: Yes ___ No ___
	 
	 	c.	 	If the Company’s actual Adjusted Borrowing Base Limit III as of the
Determination Date is less than $20,000,000, as shown on the Calculations attached
hereto, the Fixed Charge Coverage Ratio as of the Determination Date is required to
be not less than 1.10 to 1.00; the Company’s actual Fixed Charge Coverage Ratio as
of the Determination Date is ___to 1.00, as shown on the Calculations attached
hereto.*







 




			
	1	 	Include with quarterly and annual financial statements on and after December 31, 2007.




 









 











	 	 	 	In Compliance: Yes ___ No ___
	 
	 	d.	 	EBITDA for the Fiscal Quarter ending with the Determination Date is
required to be not less than $___, as shown on the attached Calculations; the
Company’s actual EBITDA for the period of the four consecutive Fiscal Quarters
ending with the Determination Date is $___, as shown on the attached
Calculations.*
	 
	 	 	 	In Compliance: Yes ___ No ___
	 
	 	e.	 	Working Capital as of the Determination Date is required to be not less
than $75,000,000; the Company’s actual Working Capital as of the Determination Date
is $___, as shown on the Calculations attached hereto.
	 
	 	 	 	In Compliance: Yes ___ No ___






	 	4.	 	All calculations related to the amounts set forth in each of 3 above are attached
hereto and all of such calculations are true and correct and prepared consistent with the
requirements of the Note Agreement.





	 	 	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	 	 	JOHN B. SANFILIPPO & SON, INC.	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	[Title]	 	 






Exhibit 1

(to Second Amendment to Note Purchase Agreement)





 









 








Calculations

(as of the Determination Date)




EBITDA for the Four Consecutive Fiscal Quarters 

Ending on the Determination Date




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated net income
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus income taxes
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus interest expense:
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Implicit interest expense on capitalized leases
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Other interest expense
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total interest expense:
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus depreciation
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus amortization
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus non-cash expenses or charges:
	 	 	 	 	 	 	 	 	 	 	 	 
	Non-cash charges associated with
	 	 	 	 	 	 	 	 	 	 	 	 
	FAS 142 adjustments
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	One-time slotting fees or distribution allowances
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Other non-cash expenses or charges
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total non-cash expenses or charges:
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus non-operating gains:
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Extraordinary or nonrecurring gains
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Gains from discontinuance of operations
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Gains arising from the sale of assets (other than inventory)
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Gains arising from the sale of property
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Gains arising from the sale of plant and equipment
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Total non- operating gains:
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus similar non-operating losses (including without limitation
fees and expenses associated with the negotiation, execution,
delivery and closing of the Second Amendment and the Credit
Agreement) during such period ending on the Determination Date
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Total EBITDA
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Leverage Ratio
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Funded Debt (excluding Revolving Loans)
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus averaged outstanding balance of Revolving Loans as of
the last day of the month for each of the twelve preceding months
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Divided by EBITDA for the four consecutive Fiscal Quarters
ending on the Determination Date
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Leverage Ratio
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted Borrowing Base Limit I
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted Borrowing Base Limit II
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 





Exhibit 1

(to Second Amendment to Note Purchase Agreement)





 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjusted Borrowing Base Limit III
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed Charge Coverage Ratio
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EBITDA for the four consecutive Fiscal Quarters ending on
the Determination Date
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus net new long term debt including during such four Fiscal Quarters
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus net capital contributions during such four Fiscal Quarters
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus cash income taxes paid during such four Fiscal Quarters
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus cash dividends during such four Fiscal Quarters
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus cash interest paid during such four Fiscal Quarters
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Minus the lesser of:
	 	 	 	 	 	 	 	 	 	 	 	 
	Depreciation
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Actual capital expenditures
	 	$	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Unallocated Cash Flow
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Plus Cash interest paid
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Total:
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Divided by:
	 	 	 	 	 	 	 	 	 	 	 	 
	Principal paid on long term debt
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Plus cash interest paid
	 	 	 	 	 	$	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total:
	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Fixed Charge Coverage Ratio
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 






Exhibit 1

(to Second Amendment to Note Purchase Agreement)




 









 








	 	 	 	 	 
	EBITDA
	 	 	 	 
	 
	EBITDA for the four consecutive Fiscal Quarters ending on
the Determination Date
	 	$	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Working Capital
	 	 	 	 
	 
	 	 	 	 
	Combined current assets
	 	$	 	 
	 
	 	 	 	 
	Minus combined current liabilities
	 	$	 	 
	 
	 	 	 	 
	Plus (to the extent included in current liabilities above)
temporary long-term debt reclassifications as current liabilities
	 	$	 	 
	 
	 	 	 	 
	Minus (to the extent not included in current liabilities above) the
aggregate amount of Revolving Loans
	 	$	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Working Capital as of the Determination Date
	 	$	 	 
	 
	 	 	 	 





Exhibit 1

(to Second Amendment to Note Purchase Agreement)