Revolving Credit Agreement

EXECUTION COPY


Exhibit 10.1
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REVOLVING CREDIT AGREEMENT


Among


INTERSTATE BAKERIES CORPORATION, a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,


as Parent Borrower,


CERTAIN OF THE DIRECT AND INDIRECT SUBSIDIARIES
OF INTERSTATE BAKERIES CORPORATION, Debtors and Debtors-in-Possession under Chapter 11 of the Bankruptcy Code,


as Subsidiary Borrowers,


and


THE LENDERS PARTY HERETO,


and


JPMORGAN CHASE BANK,


as Administrative Agent


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


Dated as of September 23, 2004


REVOLVING CREDIT AGREEMENT


TABLE OF CONTENTS


Page No.


Section 1. DEFINITIONS.....................................................................................2


Section 1.1 Defined Terms............................................................................2
Section 1.2 Terms Generally.........................................................................24


Section 2. AMOUNT AND TERMS OF CREDIT.....................................................................24


Section 2.1 Commitment of the Lenders...............................................................24
Section 2.2 Availability of Commitment; Borrowing Base..............................................25
Section 2.3 Letters of Credit.......................................................................25
Section 2.4 Issuance................................................................................28
Section 2.5 Nature of Letter of Credit Obligations Absolute.........................................28
Section 2.6 Making of Loans.........................................................................28
Section 2.7 Repayment of Loans and Unreimbursed Draws; Evidence of Debt.............................29
Section 2.8 Interest on Loans.......................................................................30
Section 2.9 Default Interest........................................................................30
Section 2.10 Optional Termination or Reduction of Commitment.........................................30
Section 2.11 Alternate Rate of Interest..............................................................31
Section 2.12 Refinancing of Loans....................................................................31
Section 2.13 Mandatory Prepayment; Commitment Termination............................................32
Section 2.14 Optional Prepayment of Loans; Reimbursement of Lenders..................................33
Section 2.15 Reserve Requirements; Change in Circumstances...........................................34
Section 2.16 Change in Legality......................................................................36
Section 2.17 Pro Rata Treatment, etc.................................................................36
Section 2.18 Taxes...................................................................................37
Section 2.19 Certain Fees............................................................................39
Section 2.20 Commitment Fee..........................................................................39
Section 2.21 Letter of Credit Fees...................................................................39
Section 2.22 Nature of Fees..........................................................................40
Section 2.23 Priority and Liens......................................................................40
Section 2.24 Use of Cash Collateral..................................................................42
Section 2.25 Right of Set-Off........................................................................42
Section 2.26 Security Interest in Letter of Credit Account...........................................42
Section 2.27 Payment of Obligations..................................................................42
Section 2.28 No Discharge; Survival of Claims........................................................43
Section 2.29 Replacement of Certain Lenders..........................................................43


Section 3. REPRESENTATIONS AND WARRANTIES.................................................................44


Section 3.1 Organization and Authority..............................................................44
Section 3.2 Due Execution...........................................................................44
Section 3.3 Statements Made.........................................................................44
Section 3.4 Financial Statements....................................................................45
Section 3.5 Ownership...............................................................................45
Section 3.6 Liens...................................................................................45
Section 3.7 Compliance with Law.....................................................................45
Section 3.8 Insurance...............................................................................46
Section 3.9 The Orders..............................................................................46
Section 3.10 Use of Proceeds.........................................................................46
Section 3.11 Litigation..............................................................................46
Section 3.12 Intellectual Property...................................................................47
Section 3.13 Taxes...................................................................................47
Section 3.14 Investment Company Act; Other Regulations...............................................47
Section 3.15 ERISA Matters...........................................................................47


Section 4. CONDITIONS OF LENDING..........................................................................47


Section 4.1 Conditions Precedent to Initial Loan and Initial Letter of Credit.......................47
Section 4.2 Conditions Precedent to Each Loan and Each Letter of Credit.............................50


Section 5. AFFIRMATIVE COVENANTS..........................................................................51


Section 5.1 Financial Statements, Reports, etc......................................................51
Section 5.2 Existence...............................................................................54
Section 5.3 Insurance...............................................................................55
Section 5.4 Obligations and Taxes...................................................................55
Section 5.5 Notice of Event of Default, etc.........................................................55
Section 5.6 Access to Books and Records.............................................................55
Section 5.7 Maintenance of Concentration Account....................................................56
Section 5.8 Borrowing Base Certificate..............................................................56
Section 5.9 Compliance with Laws....................................................................57
Section 5.10 Environmental Laws......................................................................57
Section 5.11 Restructuring Advisors..................................................................57


Section 6. NEGATIVE COVENANTS.............................................................................57


Section 6.1 Liens...................................................................................58
Section 6.2 Merger, etc.............................................................................58
Section 6.3 Indebtedness............................................................................58
Section 6.4 Capital Expenditures....................................................................58
Section 6.5 EBITDA..................................................................................58
Section 6.6 Guarantees and Other Liabilities........................................................58
Section 6.7 Chapter 11 Claims.......................................................................59
Section 6.8 Dividends; Capital Stock................................................................59
Section 6.9 Transactions with Affiliates............................................................59
Section 6.10 Investments, Loans and Advances.........................................................59
Section 6.11 Disposition of Assets...................................................................59
Section 6.12 Nature of Business......................................................................60
Section 6.13 Transactions among Borrowers............................................................60
Section 6.14 Right of Subrogation among Borrowers....................................................60
Section 6.15 Derivative Agreements. Enter into any agreement with respect to any....................60
Section 6.16 Reorganization Plan.....................................................................60


Section 7. EVENTS OF DEFAULT..............................................................................60


Section 7.1 Events of Default.......................................................................60


Section 8. THE ADMINISTRATIVE AGENT.......................................................................64


Section 8.1 Administration by Administrative Agent..................................................64
Section 8.2 Advances and Payments...................................................................64
Section 8.3 Sharing of Setoffs......................................................................64
Section 8.4 Agreement of Required Lenders...........................................................65
Section 8.5 Liability of Administrative Agent.......................................................65
Section 8.6 Reimbursement and Indemnification.......................................................66
Section 8.7 Rights of Administrative Agent..........................................................66
Section 8.8 Independent Lenders.....................................................................66
Section 8.9 Notice of Transfer......................................................................66
Section 8.10 Successor Administrative Agent..........................................................67


Section 9. MISCELLANEOUS..................................................................................67


Section 9.1 Notices.................................................................................67
Section 9.2 Survival of Agreement, Representations and Warranties, etc..............................68
Section 9.3 Successors and Assigns..................................................................68
Section 9.4 Confidentiality.........................................................................71
Section 9.5 Expenses................................................................................71
Section 9.6 Indemnity...............................................................................71
Section 9.7 Choice of Law...........................................................................72
Section 9.8 No Waiver...............................................................................72
Section 9.9 Extension of Maturity...................................................................72
Section 9.10 Amendments, etc.........................................................................72
Section 9.11 Severability............................................................................73
Section 9.12 Headings................................................................................73
Section 9.13 Execution in Counterparts...............................................................74
Section 9.14 Prior Agreements........................................................................74
Section 9.15 Further Assurances......................................................................74
Section 9.16 Waiver of Jury Trial....................................................................74
Section 9.17 Subordination of Intercompany Indebtedness..............................................74
Section 9.18 Certain Post Closing Matters............................................................75
Section 9.19 USA Patriot Act.........................................................................77


Annex A - Commitment Amounts Exhibit A - Form of Interim Order Exhibit B - Form of Security and Pledge Agreement Exhibit C-1 - Form of Weekly Borrowing Base Certificate Exhibit C-2 - Form of Monthly Borrowing Base Certificate Exhibit D - Form of Opinion of Counsel Exhibit E - Form of Assignment and Acceptance Schedule 1.1 - Eligible Real Property Schedule 3.5 - Subsidiaries Schedule 3.6 - Liens Schedule 3.12 - Intellectual Property Schedule 6.9 - Transactions with Affiliates Schedule 6.10 - Other Investments Schedule 6.13 - Borrower Transaction Restrictions


REVOLVING CREDIT AGREEMENT
Dated as of September 23, 2004


REVOLVING CREDIT AGREEMENT, dated as of September 23, 2004, among INTERSTATE BAKERIES CORPORATION, a Delaware corporation ("Parent Borrower"), a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code, and each of the direct and indirect subsidiaries of the Parent Borrower party to this Agreement (each individually a "Subsidiary Borrower" and collectively the "Subsidiary Borrowers"; and together with the Parent Borrower, the "Borrowers"), each of which is a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (the cases of the Borrowers, each a "Case" and collectively, the "Cases"), JPMORGAN CHASE BANK, a New York banking corporation ("JPMCB"), and each of the other commercial banks, finance companies, insurance companies or other financial institutions or funds from time to time party hereto (together with JPMCB, the "Lenders"), J.P. MORGAN SECURITIES INC., as lead arranger and book runner, JPMORGAN CHASE BANK, as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, and JPMORGAN CHASE BANK, as collateral agent (in such capacity, the "Collateral Agent") for the Lenders.


INTRODUCTORY STATEMENT


WHEREAS, on September 22, 2004, the Borrowers filed voluntary petitions with the Bankruptcy Court initiating the Cases and have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; and


WHEREAS, the Borrowers have applied to the Lenders for a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $200,000,000 (subject to the terms and conditions of this Agreement); and


WHEREAS, the proceeds of the Loans will be used for (i) working capital, letters of credit and capital expenditures; (ii) other general corporate purposes of the Borrowers; (iii) payment of any related transaction costs, fees and expenses; and (iv) the costs of administration of the Cases, all as provided for herein; and


WHEREAS, to provide for the repayment of the Loans, the reimbursement of any draft drawn under a Letter of Credit and the payment of the other obligations of the Borrowers hereunder and under the other Loan Documents (including, without limitation, the Obligations of the Borrowers under Section 6.3(v)), the Borrowers will provide to the Administrative Agent and the Lenders the following (each as more fully described herein):


(a) an allowed Superpriority Claim;


(b) a perfected first priority Lien, pursuant to Section 364(c)(2) of the Bankruptcy Code, upon all unencumbered property of the Borrowers and on all cash and cash equivalents in the Letter of Credit Account, provided that following the Termination Date, amounts in the Letter of Credit Account shall not be subject to the Carve-Out hereinafter referred to;


(c) a perfected Lien, pursuant to Section 364(c)(3) of the Bankruptcy Code, upon all property of the Borrowers that is subject to valid and perfected Permitted Liens in existence on the Filing Date or that is subject to valid Permitted Liens in existence on the Filing Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy Code; and


(d) a perfected first priority priming Lien, pursuant to Section 364(d)(1) of the Bankruptcy Code, upon all property of the Borrowers (including, without limitation, inventory, accounts receivable, rights under license agreements, and property, plant and equipment), that is subject to the existing Liens (the "Primed Liens") which secure (i) the obligations of the Borrowers to the lenders party to the Pre-Petition Credit Agreement, and (ii) other obligations or indebtedness of the Borrowers, which first priority priming Lien in favor of the Administrative Agent and the Lenders shall be senior in all respects to all of the Primed Liens; and


WHEREAS, all of the claims granted hereunder in the Cases to the Administrative Agent and the Lenders shall be subject to the Carve-Out to the extent provided in Section 2.23.


Accordingly, the parties hereto hereby agree as follows:


Section 1. DEFINITIONS


Section 1.1 Defined Terms.


As used in this Agreement, the following terms shall have the meanings specified below:


"ABR Loan" shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Section 2.


"Account" shall mean any right to payment for goods sold in the ordinary course of business, regardless of how such right is evidenced and whether or not it has been earned by performance.


"Account Debtor" means, with respect to any Account, the obligor with respect to such Account.


"Act" shall have the meaning given such term in Section 9.19.


"Additional Credit" shall have the meaning given such term in Section 4.2(d).


"Adjusted Eligible Accounts Receivable" shall mean Eligible Accounts Receivable, minus the Dilution Reserve.


"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the quotient of (i) the LIBOR Rate in effect for such Interest Period divided by (ii) a percentage (expressed as a decimal) equal to 100% minus Statutory Reserves. For purposes hereof, the term "LIBOR Rate" shall mean the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits approximately equal in principal amount to such Eurodollar Borrowing and for a maturity comparable to such Interest Period are offered to the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.


"Administrative Agent" shall have the meaning set forth in the Introduction.


"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent.


"Affected Lender" shall have the meaning given such term in Section 2.29.


"Affiliate" shall mean, as to any Person, any other Person 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 (a "Controlled Person") shall be deemed to be "controlled by" another Person (a "Controlling Person") if the Controlling Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of the Controlled Person whether by contract or otherwise.


"Agreement" shall mean this Revolving Credit Agreement, as the same may from time to time be amended, restated, modified or supplemented.


"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced. "Base CD Rate" shall mean the sum of (i) the quotient of (a) the Three-Month Secondary CD Rate divided by (b) a percentage expressed as a decimal equal to 100% minus Statutory Reserves and (ii) the Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. "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 for any day which is a 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 absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (ii) 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, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.


"Amounts" shall have the meaning given such term in Section 2.18(a).


"Approved Fund" means, with respect to any Lender that is a fund that invests in bank loans and similar commercial extensions of credit, any other fund that invests in bank loans and similar commercial extensions of credit and is managed by the same investment advisor as such Lender or by a Lender Affiliate of such investment advisor.


"Assessment Rate" shall mean for any date the annual rate (rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the Administrative Agent as the then current net annual assessment rate that will be employed in determining amounts payable by the Administrative Agent to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or any successor) of time deposits made in dollars at the Administrative Agent's domestic offices.


"Asset Sale" shall mean a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than a Borrower), in one transaction or series of transactions, of all or any part of the Borrowers' or any of their Subsidiaries' businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the capital stock of any of the Borrowers (other than the Parent Borrower) or their Subsidiaries in each case other than (i) Inventory, including scrap or obsolete Inventory, sold in the ordinary course of business, and (ii) sales of assets for aggregate consideration of less than $100,000 with respect to any transaction or series of related transactions.


"Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit E.


"Available Commitment" shall have the meaning given to such term in Section 2.2(b).


"Bankruptcy Code" shall mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.


"Bankruptcy Court" shall mean the United States Bankruptcy Court for the Western District of Missouri or any other court having jurisdiction over the Cases from time to time.


"Board" shall mean the Board of Governors of the Federa ...