Credit Facility Agreement

EXECUTION COPY


$150,000,000


CREDIT AGREEMENT


among


DIMON INCORPORATED,
as Borrower,


THE MATERIAL DOMESTIC SUBSIDIARIES
OF THE BORROWER
FROM TIME TO TIME PARTIES HERETO,
as Guarantors,


THE LENDERS PARTIES HERETO


and


WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent


WACHOVIA CAPITAL MARKETS, LLC
as Sole Lead Arranger and Sole Book Manager


Dated as of October 27, 2003


TABLE OF CONTENTS
Page
Section 1.1 Defined Terms................................................
Section 1.2 Other Definitional Provisions................................
Section 1.3 Accounting Terms.............................................


ARTICLE II THE LOANS; AMOUNT AND TERMS........................................
Section 2.1 Revolving Loans..............................................
Section 2.1ASwingline Loan Subfacility...................................
Section 2.2 Fees.........................................................
Section 2.3 Commitment Reductions and Increases..........................
Section 2.4 Prepayments..................................................
Section 2.5 Minimum Principal Amount of Tranches.........................
Section 2.6 Default Rate and Payment Dates...............................
Section 2.7 Conversion Options...........................................
Section 2.8 Computation of Interest and Fees.............................
Section 2.9 Pro Rata Treatment and Payments..............................
Section 2.10Non-Receipt of Funds by the Administrative Agent.............
Section 2.11Inability to Determine Interest Rate.........................
Section 2.12Illegality...................................................
Section 2.13Requirements of Law..........................................
Section 2.14Indemnity....................................................
Section 2.15Taxes........................................................
Section 2.16Extension of Maturity Date...................................


ARTICLE III REPRESENTATIONS AND WARRANTIES....................................
Section 3.1 Financial Condition..........................................
Section 3.2 No Change....................................................
Section 3.3 Corporate Existence; Compliance with Law.....................
Section 3.4 Corporate Power; Authorization; Enforceable Obligations; No
Consents.....................................................
Section 3.5 No Legal Bar; No Default.....................................
Section 3.6 No Material Litigation.......................................
Section 3.7 Investment Company Act.......................................
Section 3.8 Margin Regulations...........................................
Section 3.9 ERISA........................................................
Section 3.10Environmental Matters........................................
Section 3.11Use of Proceeds..............................................
Section 3.12Subsidiaries.................................................
Section 3.13Ownership....................................................
Section 3.14Indebtedness.................................................
Section 3.15Taxes........................................................
Section 3.16Intellectual Property........................................
Section 3.17Solvency.....................................................
Section 3.18Investments..................................................
Section 3.19No Burdensome Restrictions...................................
Section 3.20Brokers' Fees................................................
Section 3.21Labor Matters................................................
Section 3.22Accuracy and Completeness of Information.....................
Section 3.23Material Contracts...........................................
Section 3.24Senior Debt..................................................


ARTICLE IV CONDITIONS PRECEDENT...............................................
Section 4.1 Conditions to Closing Date and Initial Loans.................
Section 4.2 Conditions to All Extensions of Credit.......................


ARTICLE V AFFIRMATIVE COVENANTS...............................................
Section 5.1 Financial Statements.........................................
Section 5.2 Certificates; Other Information..............................
Section 5.3 Payment of Obligations.......................................
Section 5.4 Conduct of Business and Maintenance of Existence.............
Section 5.5 Maintenance of Property; Insurance...........................
Section 5.6 Inspection of Property; Books and Records; Discussions.......
Section 5.7 Notices......................................................
Section 5.8 Environmental Laws...........................................
Section 5.9 Financial Covenants..........................................
Section 5.10Additional Guarantors........................................


ARTICLE VI NEGATIVE COVENANTS.................................................
Section 6.1 Indebtedness.................................................
Section 6.2 Liens........................................................
Section 6.3 Guaranty Obligations.........................................
Section 6.4 [Intentionally Omitted]......................................
Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc.......
Section 6.6 Acquisitions, Advances, Investments and Loans................
Section 6.7 Transactions with Affiliates.................................
Section 6.8 Ownership of Subsidiaries; Restrictions......................
Section 6.9 Fiscal Year; Changes in Capital Structure Organizational
Documents; Material Contracts.
Section 6.10Limitation on Restricted Actions.............................
Section 6.11Restricted Payments..........................................
Section 6.12Amendments to Indebtedness, etc..............................
Section 6.13Sale Leasebacks..............................................
Section 6.14No Further Negative Pledges..................................
Section 6.15Maximum Uncommitted Inventories..............................


ARTICLE VII EVENTS OF DEFAULT.................................................
Section 7.1 Events of Default............................................
Section 7.2 Acceleration; Remedies.......................................


ARTICLE VIII THE AGENT........................................................
Section 8.1 Appointment..................................................
Section 8.2 Delegation of Duties.........................................
Section 8.3 Exculpatory Provisions.......................................
Section 8.4 Reliance by Administrative Agent.............................
Section 8.5 Notice of Default............................................
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.......
Section 8.7 Indemnification..............................................
Section 8.8 Administrative Agent in Its Individual Capacity..............
Section 8.9 Successor Administrative Agent...............................


ARTICLE IX MISCELLANEOUS......................................................
Section 9.1 Amendments and Waivers.......................................
Section 9.2 Notices......................................................
Section 9.3 No Waiver; Cumulative Remedies...............................
Section 9.4 Survival of Representations and Warranties...................
Section 9.5 Payment of Expenses and Taxes................................
Section 9.6 Successors and Assigns; Participations; Purchasing Lenders...
Section 9.7 Adjustments; Set-off.........................................
Section 9.8 Table of Contents and Section Headings.......................
Section 9.9 Counterparts.................................................
Section 9.10Effectiveness................................................
Section 9.11Severability.................................................
Section 9.12Integration..................................................
Section 9.13Governing Law................................................
Section 9.14Consent to Jurisdiction and Service of Process...............
Section 9.15Arbitration..................................................
Section 9.16Confidentiality..............................................
Section 9.17Acknowledgments..............................................
Section 9.18Waivers of Jury Trial........................................


ARTICLE X GUARANTY............................................................
Section 10.1The Guaranty.................................................
Section 10.2Bankruptcy...................................................
Section 10.3Nature of Liability..........................................
Section 10.4Independent Obligation.......................................
Section 10.5Authorization................................................
Section 10.6Reliance.....................................................
Section 10.7Waiver.......................................................
Section 10.8Limitation on Enforcement....................................
Section 10.9Confirmation of Payment......................................


SCHEDULES


Schedule 1.1(a) Form of Account Designation Letter Schedule 2.1(a) Schedule of Lenders and Commitments Schedule 2.1(b)(i) Form of Notice of Borrowing Schedule 2.1(e) Form of Revolving Note Schedule 2.1A(d) Form of Swingline Note Schedule 2.7 Form of Notice of Conversion/Extension Schedule 3.6 Litigation Schedule 3.10 Environmental Matters Schedule 3.12 Subsidiaries Schedule 3.14 Indebtedness Schedule 3.21 Labor Matters Schedule 3.23 Material Contracts Schedule 5.2(c) Form of Borrowing Base Certificate Schedule 5.10 Form of Joinder Agreement Schedule 6.2 Liens Schedule 9.2 Addresses for Notices to Credit Parties and
Lenders/Lending Offices Schedule 9.6(c) Form of Commitment Transfer Supplement


CREDIT AGREEMENT, dated as of October 27, 2003, among DIMON INCORPORATED, a Virginia corporation (the "Borrower"), those Domestic Subsidiaries of the Borrower identified as a "Guarantor" on the signature pages hereto and such other Material Domestic Subsidiaries of the Borrower as may from time to time become a party hereto (collectively, the "Guarantors"), the several banks and other financial institutions as may from time to time become parties to this Agreement (collectively, the "Lenders" and individually, a "Lender"), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Lenders hereunder (in such capacity, the "Administrative Agent").


W I T N E S S E T H:


WHEREAS, the Borrower, has requested that the Lenders make loans and other financial accommodations to the Borrower in the amount of up to $150,000,000, as more particularly described herein; and


WHEREAS, the Lenders have agreed to make such loans and other financial accomodations to the Borrower on the terms and conditions contained herein.


NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:


ARTICLE I


DEFINITIONS


SECTION 1.1 DEFINED TERMS.


As used in this Agreement, terms defined in the preamble to this Agreement have the meanings therein indicated, and the following terms have the following meanings:


"Account Designation Letter" shall mean the Notice of Account Designation Letter dated the Closing Date from the Borrower to the Administrative Agent substantially in the form attached hereto as Schedule 1.1(a).


"Acquisition" shall mean any transaction, or any series of related transactions, by which the Borrower and/or any of its Subsidiaries directly or indirectly (a) acquires any ongoing business or all or substantially all of the assets of any Person or division thereof, whether through purchase of assets, merger or otherwise, (b) acquires (in one transaction or as the most recent transaction in a series of transactions) control of at least a majority in ordinary voting power of the securities of a Person which have ordinary voting power for the election of directors or (c) otherwise acquires control of a 50% or more ownership interest in any such Person.


"Additional Credit Party" shall mean each Person that becomes a Guarantor by execution of a Joinder Agreement in accordance with Section 5.10.


"Additional Senior Debt Securities" shall mean any one of the 9 5/8% Senior Notes due 2011, in an aggregate principal amount of $200,000,000, issued by the Borrower pursuant to the Second Senior Indenture, as supplemented, amended or otherwise modified from time to time.


"Administrative Agent" shall have the meaning set forth in the first paragraph of this Agreement and any successors in such capacity.


"Advances on Tobacco" means loans, advances and extensions of credit made by the Borrower or any of its Subsidiaries to growers and other suppliers of tobacco (including Affiliates) and tobacco growers' cooperatives, whether short-term or long-term, in the ordinary course of business to finance the growing or processing of tobacco.


"Affiliate" shall mean as to any Person, any other Person (excluding any Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, a Person shall be deemed to be "controlled by" a Person if such Person possesses, directly or indirectly, power either (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


"Agreement" shall mean this Credit Agreement, as amended, modified or supplemented from time to time in accordance with its terms.


"Alternate Base Rate" shall mean, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean, at any time, the rate of interest per annum publicly announced from time to time by Wachovia at its principal office in Charlotte, North Carolina as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Wachovia as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and "Federal Funds Effective Rate" shall mean, 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 on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change.


"Alternate Base Rate Loans" shall mean Loans that bear interest at an interest rate based on the Alternate Base Rate.


"Applicable Lending Office" shall mean, with respect to each Lender, such Lender's Domestic Lending Office in the case of an Alternate Base Rate Loan and such Lender's LIBOR Lending Office in the case of LIBOR Rate Loans.


"Applicable Percentage" shall mean, for any day, the rate per annum set forth below opposite the applicable Level then in effect based on the Borrower's then current Debt Rating, it being understood that the Applicable Percentage for (i) Revolving Loans which are Alternate Base Rate Loans shall be the percentage set forth under the column "Alternate Base Rate Margin" (ii) Revolving Loans which are LIBOR Rate Loans shall be the percentage set forth under the column "LIBOR Rate Margin" and (iii) the Commitment Fee shall be the percentage set forth under the column "Commitment Fee":


Alternate
Base Rate LIBOR Rate Commitment Level Rating Margin Margin Fee I BBB/Baa2 0.25% 1.50% 0.50% II BBB-/Baa3 0.75% 2.00% 0.75% III BB+/Ba1 1.25% 2.50% 0.75% IV BB/Ba2 1.75% 3.00% 1.00% V BB-/Ba3 2.00% 3.25% 1.00%


Any change in the Applicable Percentage due to a change in the Debt Rating shall be effective on the effective date of such change in the Debt Rating. Notwithstanding the foregoing, the Borrower shall be obligated to provide notice to the Administrative Agent and the Lenders of any change in the Debt Rating in accordance with Section 5.2(h). The initial Applicable Percentages shall be set at a rate no lower than that set forth in Level V and shall not be adjusted to a higher level for the first complete fiscal quarter following the Closing Date.


If (a) only one of S&P and Moody's at any time of determination shall have in effect a Debt Rating, the Applicable Percentage shall be determined by reference to the available rating, (b) neither S&P nor Moody's at any time of determination shall have in effect a Debt Rating, the Applicable Percentage will be set in accordance with Level V, (c) the ratings established by S&P and Moody's shall fall within different levels, the Applicable Percentage shall be based upon the lower rating, (d) any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change, and (e) S&P or Moody's shall change the basis on which ratings are established, each reference to the Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be.


"Approved Accounting Firm" shall mean Ernst & Young LLP or any other independent public accountants selected by the Borrower and reasonably satisfactory to the Required Lenders.


"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.


"Borrower" shall have the meaning set forth in the first paragraph of this Agreement.


"Borrowing Base" means, as of any day, the sum of (a) 80% of Eligible Receivables, plus (b) 80% of total Advances on Tobacco, plus (c) 90% of Committed Inventories constituting Eligible Inventory, plus (d) 60% of Uncommitted Inventories constituting Eligible Inventory, in each case as set forth in the most recent Borrowing Base Certificate delivered to the Administrative Agent and the Lenders in accordance with the terms of Section 5.2(c).


"Borrowing Base Certificate" shall have the meaning set forth in Section 5.2(c).


"Borrowing Date" shall mean, in respect of any Loan, the date such Loan is made.


"Business Day" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina or New York, New York are authorized or required by law to close; provided, however, that when used in connection with a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the term "Business Day" shall also exclude any day on which banks in London, England are not open for dealings in Dollar deposits in the London interbank market.


"Calculation Period" shall mean as of the last day of any fiscal quarter the four fiscal-quarter period of the Borrower ending on such date.


"Capital Lease" shall mean any lease of property, real or personal, the obligations with respect to which are required to be capitalized on a balance sheet of the lessee in accordance with GAAP.


"Capital Lease Obligations" shall mean the capitalized lease obligations relating to a Capital Lease determined in accordance with GAAP.


"Capital Stock" shall mean (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.


"Cash Equivalents" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition ("Government Obligations"), (ii) U.S. dollar denominated (or foreign currency fully hedged) time deposits, certificates of deposit, Eurodollar time deposits and Eurodollar certificates of deposit of (y) any domestic commercial bank of recognized standing having capital and surplus in excess of $250,000,000 or (z) any bank whose short term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "Approved Bank"), in each case with maturities of not more than 364 days from the date of acquisition, (iii) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition, (iv) repurchase agreements with a bank or trust company (including a Lender) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America, (v) obligations of any state of the United States or any political subdivision thereof for the payment of the principal and redemption price of and interest on which there shall have been irrevocably deposited Government Obligations maturing as to principal and interest at times and in amounts sufficient to provide such payment, and (vi) auction preferred stock rated in the highest short term credit rating category by S&P or Moody's.


"Change of Control" means such time as:


(i) any Person or group (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act) has become, directly or
indirectly, the beneficial owner, by way of merger, consolidation or
otherwise, of 30% or more of the voting power of the Voting Stock of the
Borrower on a fully-diluted basis, after giving effect to the conversion
and exercise of all outstanding warrants, options and other securities of
the Borrower convertible into or exercisable for Voting Stock of the
Borrower (whether or not such securities are then currently convertible
or exercisable); or


(ii) the sale, lease or transfer of all or substantially all of
the consolidated assets of the Borrower to any Person or group; or


(iii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of the Borrower, together with any new members of such Board of
Directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Borrower was approved by a vote
of a majority of the members of such Board of Directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the directors of the Borrower then
in office; or


(iv) the Borrower consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the
Borrower (in each case, whether or not in compliance with the terms of
this Agreement), in any such event pursuant to a transaction in which
immediately after the consummation thereof Persons owning a majority of
the Voting Stock of the Borrower immediately prior to such consummation
shall cease to own a majority of the Voting Stock of the Borrower.


"Closing Date" shall mean the date of this Agreement.


"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.


"Commitment" shall mean the Revolving Commitment and the Swingline Commitment, individually or collectively, as appropriate.


"Commitment Fee" shall have the meaning set forth in Section 2.2(a).


"Commitment Percentage" shall mean, for each Lender, the percentage identified as its Commitment Percentage on S ...