LIBERTY GROUP PUBLISHING INC
COMMITMENT LETTER
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c91231exv10w1.txt
<DESCRIPTION>COMMITMENT LETTER
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

January 3, 2005

CONFIDENTIAL

Liberty Group Operating, Inc.
3000 Dundee Road, Suite 202
Northbrook, Illinois  60062
Attention:   Kenneth Serota

Ladies and Gentlemen:

FINANCING. Liberty Group Operating, Inc. ("you" or "Company") has advised Wells
Fargo Bank, National Association ("we" or "us") that the Company would like to
have up to $330,000,000 available to refinance existing indebtedness of the
Company and Liberty Group Publishing, Inc. ("Holdings"), retire preferred stock
of Holdings, make certain fee and expense payments, and provide for its ongoing
working capital and letter of credit needs. The financing we propose
("Financing") is described in the Summary of Terms and Conditions attached as
Exhibit A ("Term Sheet"), and consists of a $50,000,000 senior secured revolving
credit facility with a sublimit for letters of credit ("Revolver"), and a
$280,000,000 senior secured term loan ("Term Loan").

COMMITMENT. Subject to the terms and conditions of this letter, we are pleased
to commit up to $50,000,000 of the Financing and to endeavor to form a syndicate
of institutional lenders and accredited investors acceptable to the Company and
us to provide the remainder of the Financing plus, if we so decide, a portion of
our commitment. Our commitment may be reduced as and when commitments to provide
a portion of the Financing exceeding such remainder are received from such
lenders.

If necessary for successful syndication of the Financing, we are willing to
commit up to $25,000,000 of second lien term financing, which would reduce the
first lien Term Loan to an aggregate amount of $255,000,000 and our commitment
for the first lien Financing to $25,000,000. Pricing for the second lien term
financing would be floating rate, at LIBOR plus 5.50%.

We will act as sole and exclusive lead arranger and book runner for the
Financing, and also as administrative agent for the syndicate of lenders. You
agree that no additional agents, co-agents or arrangers will be appointed, no
other titles will be awarded and no compensation (other than as set forth in
this letter and the Fee Letter referred to below) will be paid in connection
with the Financing, unless you and we agree in writing.

CONDITIONS TO COMMITMENT. Our commitment is conditioned on (a) no material
adverse change occurring in the business, assets, condition (financial or
otherwise), or results of operations of the Company or any of its material
subsidiaries, taken as a whole, or in the enforceability of the credit
documentation for the transactions contemplated hereby, in each case since the
date of the latest audited financial statements provided to us, (b) our being
satisfied with the results of our continuing due diligence review of the Company
and discovering no information in the course of our due diligence or otherwise
that we reasonably believe has a materially adverse impact on any of the items
in (a) above, (c) the information provided by the

<PAGE>

Company as described above being correct in all material respects, and (d) the
conditions to be set forth in the loan documents being satisfied. We note that
the commitments of prospective lenders will be conditioned on their satisfaction
with their own due diligence reviews.

Our commitment is also conditioned on the negotiation, execution and delivery of
loan documents acceptable to you, us, the other lenders and respective counsel,
not later than February 28, 2005. The Term Sheet does not include all of the
conditions, business and financial covenants, representations, warranties,
defaults, definitions and other terms to be contained in the loan documents,
some of which must still be developed and agreed upon.

SYNDICATION. We intend to commence syndication efforts promptly after you sign
this letter. You agree to cooperate with us in good faith toward a successful
Closing and to take all actions we reasonably request of you to assist us in
forming a syndicate of lenders and completing a syndication satisfactory to us,
in consultation with you and with your approval of the identities of the lenders
in the syndicate. These actions will include (a) providing us with all
information we consider reasonably necessary, and in the form we reasonably
request, including information and projections relating to the Financing and its
uses, (b) assisting us in preparing an information memorandum for use in
connection with the syndication, and verifying the information contained
therein, (c) making senior officers and representatives of the Company available
during the syndication to make presentations concerning the business and
prospects of the Company at one or more meetings and conference calls we may
arrange with prospective lenders, and (d) providing assistance to us in
obtaining ratings from rating agencies prior to the Closing. The content of the
information memorandum will be subject to your approval prior to distribution.
You also agree to refrain from any activity in the bank loan syndication market
and the private placement market from the date you sign this letter until the
date the Closing occurs and the syndication has been successfully completed or
this letter is terminated in accordance with the provisions herein.

You represent and warrant (in the case of industry information, to the best of
your knowledge) that (a) all information (other than financial projections) that
you or your representatives have provided or will provide to us or any
prospective lender is, or when provided will be, correct in all material
respects and does not, or when provided will not, contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which they are made, and (b) all financial projections that
have been or will be so provided have been or will be prepared in good faith
based on reasonable assumptions (it being understood that assumptions as to
future results are inherently subject to uncertainty and contingencies, many of
which are beyond your control, and that no assurance can be given that any
particular projections will be realized). You agree to supplement such
information and projections from time to time before the Closing and during the
syndication so that these representations and warranties remain correct. We will
use the information and projections without independent verification in
syndicating the Financing.

INDEMNIFICATION AND EXPENSES. You agree to indemnify and hold harmless us, the
prospective lenders and our and their respective directors, officers, employees,
agents, attorneys and affiliates (each, an "indemnified person") from and
against all losses, claims, damages, liabilities and expenses which may be
incurred by or asserted against an indemnified person in connection with or
arising out of this letter, the Financing, the use of the proceeds thereof, or
any related transaction, regardless of whether the indemnified person is a party
thereto, and to reimburse each indemnified person on demand for all reasonable
out-of-pocket legal and other expenses incurred in connection with investigating
or defending any of the

<PAGE>

foregoing, provided that this indemnity will not, as to any indemnified person,
apply to losses, claims, damages, liabilities or expenses arising from the
willful misconduct or gross negligence of such indemnified person or any breach
by such indemnified person of its obligations under this letter. No party hereto
will be liable to any other party hereto for indirect or consequential damages
relating to any such matters. You also agree to pay all of our reasonable
out-of-pocket expenses (including fees and expenses of our outside counsel)
incurred in connection with preparing, negotiating and enforcing this letter and
the loan documents, conducting the due diligence reviews, syndicating the
Financing and related matters.

GENERAL. Your obligations to pay the expenses set forth in the last sentence
under Indemnification and Expenses above will survive the Closing or the
expiration or termination of our commitments in this letter. Your
representations and warranties under Syndication above, and your indemnification
obligations under Indemnification and Expenses above, will be superseded at the
Closing by the representations and warranties and indemnification provisions,
respectively, in the loan documents.

This letter may be terminated by the Company at any time, in its sole
discretion, and without any further liability except under the first sentence
under Indemnification and Expenses above and the fourth full paragraph on this
page (relating to confidentiality).

This letter is supplemented by a separate fee letter dated the date hereof from
us to you (the "Fee Letter"). This letter and the Fee Letter constitute the
entire understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior and current understandings and agreements,
whether written or oral. Any changes to this letter or the Fee Letter must be
agreed in writing by the parties hereto. This letter and the Fee Letter may be
executed in any number of counterparts (and delivery of an executed counterpart
by telecopier will be effective as delivery of a manually executed counterpart),
which together will constitute one agreement, and will be governed by and
construed in accordance with the internal laws of the State of New York. The
parties hereto hereby waive any right to trial by jury with respect to any
claim, action, suit or proceeding arising out of or contemplated by this letter
and/or the Fee Letter.

You agree not to disclose this letter, the Fee Letter or any of their terms,
directly or indirectly, to any person other than your employees, agents and
advisors who are directly involved in the Financing or related transactions and
agree not to disclose the same, or as may be required by law (in which case you
agree to inform us promptly thereof); provided that after you sign and return
this letter and the Fee Letter, the foregoing restrictions will cease to apply
to this letter but continue to apply to the Fee Letter. This letter is for your
benefit only and may not be relied upon by, and does not create any rights in
favor of, any other person or entity, including those who are authorized to
receive copies hereof.

If you are in agreement with the foregoing, please sign and return to us a copy
of this letter and the Fee Letter, no later than 5:00 p.m., Pacific time, on
January 12, 2005. Our commitment and other agreements herein will expire at that
time if by then we have not received such signed letters.

We look forward to working with you on this transaction.

<PAGE>

                                      Very truly yours,

                                      WELLS FARGO BANK, NATIONAL
                                      ASSOCIATION

                                      By: /s/ Alex Y. Kim
                                          -----------------------
                                      Name: Alex Y. Kim
                                      Title: Vice President

Accepted and agreed to:

LIBERTY GROUP OPERATING, INC.

By: /s/ Ken Serota
    -------------------------
Name: Ken Serota
Title: President and Chief Executive Officer

Dated: January 12, 2005

<PAGE>

                                    EXHIBIT A

                          LIBERTY GROUP OPERATING, INC.

                         SUMMARY OF TERMS AND CONDITIONS
                  $330,000,000 SENIOR SECURED CREDIT FACILITIES

I.    THE SENIOR CREDIT FACILITIES

Borrower:                      Liberty Group Operating, Inc.

Guarantors:                    All existing and future subsidiaries of the
                               Borrower (the "Guarantors" and together with the
                               Borrower, the "Credit Parties"); provided,
                               however, that non-U.S. subsidiaries shall only be
                               required to deliver guarantees to the extent it
                               would not result in material increased tax
                               liabilities for the Credit Parties.

Sole Lead Arranger and Book    Wells Fargo Bank, National Association ("Wells
Runner:                        Fargo," the "Lead Arranger").

Administrative Agent:          Wells Fargo (the "Administrative Agent").

Collateral Agent:              Wells Fargo (the "Collateral Agent").

Lenders:                       Wells Fargo and a syndicate of financial
                               institutions and other accredited investors (the
                               "Lenders").

Closing Date:                  The date the initial loans are made under the
                               Senior Credit Facilities.

Type and Amount:               Revolver: A $50,000,000 senior secured revolving
                               credit facility (the "Revolver" or "Revolving
                               Loans"). The Revolver will also be available for
                               standby and commercial letters of credit. In
                               addition, a portion of the Revolver in an amount
                               to be agreed upon shall be available for swing
                               line advances (the "Swingline Loans"). Swingline
                               Loans will constitute usage under the Revolver
                               (except for purposes of computing the Commitment
                               Fee, as defined below) and will reduce
                               availability of the Revolving Loans and the
                               letters of credit dollar-for-dollar.

                               Term Loan: A $280,000,000 senior secured term
                               loan facility (the "Term Loan" and together with
                               the Revolver, the "Senior Credit Facilities"),
                               provided in two tranches. "Tranche B-1" of the
                               Term Loan may be in an aggregate amount of up to
                               $80,000,000 and shall

                                      A-1

<PAGE>

                               be drawn in full on the Closing Date. "Tranche
                               B-2" of the Term Loan may be in an aggregate
                               amount of up to $210,000,000 and shall be drawn
                               in full in a single drawing on a date that is not
                               more than 60 days from the Closing Date, in
                               connection with redemption of the Senior
                               Subordinated Notes, Holdings Senior Discount
                               Notes and Holdings Preferred Stock.
                               Notwithstanding the above, the final aggregate
                               amount of the Tranche B-1 Term Loan and the
                               Tranche B-2 Term Loan together shall not exceed
                               $280,000,000. A commitment fee shall apply to the
                               committed amount of the Tranche B-2 Term Loan
                               prior to draw.

Final Maturity:                Revolver: Six (6) years from the Closing Date.

                               Term Loan: Seven (7) years from the Closing Date.

Repayment:                     The Term Loan will be payable in quarterly
                               principal installments equal to 1/4 of 1% of the
                               aggregate original principal amount of the Term
                               Loan, beginning with the fiscal quarter after the
                               Closing Date, with the remaining principal amount
                               payable in full at the Term Loan Final Maturity.

                               Any outstanding loans under the Revolver will be
                               payable and the commitment will terminate at the
                               Revolver Final Maturity.

Purpose:                       A description of the sources and uses of the
                               funds used to consummate the Transaction is set
                               forth in the Sources and Uses Table annexed as
                               Schedule A(I) hereto. In addition, the Revolver
                               will provide for the working capital requirements
                               and other general corporate purposes of the
                               Credit Parties after the consummation of the
                               Transaction.

                               As used herein "Transaction" shall refer to the
                               refinancing of existing indebtedness, retiring of
                               preferred stock, and fee and expense payments set
                               forth in the Sources and Uses Table annexed as
                               Schedule A(I) hereto.

Collateral:                    The Senior Credit Facilities and any interest
                               rate protection agreement or other permitted
                               hedging agreement entered into with any Lender
                               (or any affiliate of any Lender) will be secured
                               by: (i) 100% of the capital stock of the Borrower
                               and each of its direct and indirect domestic
                               subsidiaries and 65% of the capital stock of the
                               Borrower's direct and indirect foreign
                               subsidiaries (unless the pledge of the stock of
                               any such foreign subsidiary is reasonably likely
                               to create adverse tax consequences), but
                               excluding certain non-material foreign
                               subsidiaries to be mutually agreed upon, and (ii)
                               all present and hereafter acquired tangible and
                               intangible assets of the Borrower and its
                               domestic subsidiaries, but excluding any
                               leasehold interest in real

                                      A-2

<PAGE>

                               estate and any immaterial owned real estate, in
                               each case except for fixtures in which the Credit
                               Party has an interest (all such property and
                               assets described in clauses (i) and (ii)
                               hereinafter referred to as the "Collateral").

Interest Rates:                All amounts outstanding under the Senior Credit
                               Facilities shall bear interest, at the Borrower's
                               option, at the Base Rate or at the reserve
                               adjusted Eurodollar Rate plus, in each case, an
                               applicable margin as set forth in Schedule A(II)
                               attached hereto.

                               Swingline Loans shall bear interest at the rate
                               applicable to Revolving Loans which are Base Rate
                               Loans and such outstanding Swingline Loans shall
                               not constitute usage of the Revolver for purposes
                               of calculating the Commitment Fee.

Interest Payments:             Quarterly for Base Rate Loans; on the last day of
                               selected interest periods (which shall be 1, 2, 3
                               and 6 months, at the election of the Borrower)
                               for LIBOR Loans (and at the end of every three
                               months, in the case of interest periods of longer
                               than three months); and upon prepayment, in each
                               case payable in arrears and computed on the basis
                               of a 360-day year.

Letter of Credit Fees:         A letter of credit fee equal to the applicable
                               margin for LIBOR Loans under the Revolver, which
                               shall be shared by the Lenders with Revolving
                               Loan commitments, and a per annum fronting fee in
                               an amount to be agreed upon by the issuing lender
                               and the Borrower, which shall be retained by the
                               Lender issuing the letter of credit, in each case
                               based upon the applicable percentage multiplied
                               by the amount available from time to time for
                               drawing under such letter of credit and payable
                               quarterly in arrears. Customary drawing and
                               amendment fees will be charged by each issuing
                               Lender.

Commitment Fees:               Commitment fees equal to a percentage per annum
                               to be agreed, times the daily average unused
                               portion of the Revolver, shall accrue from the
                               Closing Date and shall be computed on the basis
                               of a 360-day year and payable quarterly in
                               arrears and upon the maturity or termination of
                               the Revolver.

Interest                       Within 90 days after the Closing Date, the
Rate Protection:               Borrower will obtain interest rate protection,
                               pursuant to interest rate swaps, caps or other
                               similar arrangements satisfactory to the
                               Administrative Agent, against increases in
                               interest rates with respect to a notional amount
                               equal to not less than 50% of the Term Loans
                               outstanding on the Closing Date, such
                               arrangements to remain in effect for a period of
                               not less than three years after the Closing Date.

                                      A-3

<PAGE>

Voluntary Prepayments          The Borrower may prepay amounts outstanding under
and Commitment Reductions:     the Senior Credit Facilities at any time, without
                               premium or penalty (subject to advance notice
                               provisions and minimum repayment amounts to be
                               agreed upon, and subject to payment of any
                               funding losses resulting from prepayment of LIBOR
                               loans other than on the last day of the
                               applicable interest period). Additionally, the
                               Borrower may, at its option upon five business
                               days' notice to the Agent, reduce the aggregate
                               unutilized commitments under the Revolver in part
                               in minimum amounts to be determined or in whole.
                               Each voluntary prepayment of the Term Loan shall
                               be applied as the Borrower may elect.

Mandatory Prepayments and      Subject to exceptions to be mutually agreed upon,
Commitment Reductions:         the Borrower and its respective subsidiaries
                               shall make mandatory prepayments without premium
                               or penalty (subject to payment of any funding
                               losses resulting from prepayment of LIBOR loans
                               other than on the last day of the applicable
                               interest period) in an amount equal to (i) 100%
                               of net proceeds from casualty and condemnation
                               events not applied toward the repair or
                               replacement of the damaged or condemned
                               properties within 270 days, (ii) 100% of net
                               proceeds from asset sales or series of asset
                               sales other than proceeds from asset sales to the
                               extent that such proceeds are reinvested in a
                               like asset within 270 days, (iii) 100% of the net
                               proceeds from the issuance of any debt (other
                               than permitted purchase money financings and
                               capital leases), (iv) 50% of net proceeds from
                               the issuance of any equity, and (v) 75% of annual
                               excess cash flow (to be defined in a mutually
                               acceptable manner) ("Excess Cash Flow");
                               provided, however, that at any time when the
                               Leverage Ratio of the Borrower (defined below) is
                               less than or equal to 4.0 to 1.0 as of the end of
                               any fiscal year, only 50% of Excess Cash Flow
                               shall be required to be repaid hereunder for such
                               fiscal year. Such proceeds shall be applied in
                               the following order: (a) first, to repay the Term
                               Loan pro rata to the remaining amortization
                               payments thereof, (b) second, to repay amounts
                               outstanding under the Revolver (with
                               corresponding commitment reductions) and (c)
                               third, to cash collateralize outstanding letters
                               of credit.

Representations and            Customary and appropriate for financings of this
Warranties:                    type (and subject to customary exceptions),
                               including without limitation due organization and
                               authorization, enforceability, financial
                               condition, no material adverse changes, title to
                               properties, no liens, no litigation, payment of
                               taxes, compliance with laws and regulations, no
                               employee benefit liabilities, no environmental
                               liabilities, perfection and priority of liens
                               securing the Senior Credit Facilities, full
                               disclosure, and the accuracy of all
                               representations and warranties in the definitive
                               documents related to the Transaction.

                                      A-4

<PAGE>

Affirmative                    Customary and appropriate for financings of this
and Negative Covenants:        type (and subject to customary exceptions),
                               including without limitation, and with exceptions
                               and baskets to be mutually agreed upon; including
                               (1) limitations on liens or other encumbrances,
                               investments, acquisitions, leases, incurrence of
                               additional debt, sale leasebacks and contingent
                               liabilities, the making of restricted junior
                               payments and other similar distributions,
                               mergers, consolidations and similar combinations,
                               sales of assets or similar transfers, capital
                               expenditures, and transactions with affiliates;
                               and (2) maintenance of existence, properties,
                               insurance, rights and privileges, conduct of
                               business, compliance with law, payment of taxes,
                               delivery of financial information and other
                               information, and inspection of books and records.

Financial Covenants:           Customary and appropriate for financings of this
                               type, including, without limitation, the
                               financial covenants set forth below (all
                               accounting terms to be interpreted, and all
                               accounting determinations and computations to be
                               made, in accordance with generally accepted
                               accounting principles, except as otherwise
                               agreed):

                               1. Minimum fixed charge coverage ratio test

                               2. Maximum Leverage Ratio

Conditions to All Borrowings:  In addition to the conditions precedent to the
                               initial funding of the Senior Credit Facilities
                               described in Schedule A(III), the conditions to
                               all borrowings will include requirements relating
                               to prior written notice of borrowing, the
                               accuracy of representations and warranties in all
                               material respects, and the absence of any event
                               of default or potential event of default, and
                               will otherwise be customary and appropriate for
                               financings of this type; provided that the
                               funding of the Tranche B-2 Term Loans shall not
                               be subject to any funding condition or any other
                               conditions precedent whatsoever, except only that
                               no Event of Default relating to insolvency or
                               bankruptcy shall then exist or be continuing with
                               respect to any Credit Party.

Indemnification:               The Borrower shall indemnify the Lead Arranger,
                               Agent, each Lender and each of their respective
                               affiliates, directors, officers, agents,
                               attorneys and employees from and against any
                               losses, claims, damages, liabilities and other
                               reasonable expenses in a manner customary for
                               financings of this type.

Assignments/ Participations:   Customary participation rights will be provided,
                               subject to voting restrictions on significant
                               matters. Assignments by Lenders to banks and
                               other financial institutions of no less than
                               $2,500,000 for the Revolver and no less than
                               $1,000,000 for the Term Loans will be

                                      A-5

<PAGE>

                               permitted with the approval (not to be
                               unreasonably withheld) of the Agent and the
                               Borrower (provided no Default or Event of Default
                               exists), subject to payment of a $3,500
                               assignment fee to the Agent.

Waivers and Amendments:        On any date of determination, (i) those Lenders
                               who collectively hold more than 50% of the sum of
                               Revolver commitments plus the Term Loans
                               outstanding or (ii) if the Revolver commitments
                               have been terminated, those Lenders who
                               collectively hold more than 50% of the sum of the
                               outstanding Revolver Loans, Swingline Loans,
                               Letters of Credit and Term Loans.

Taxes, Reserve                 All payments are to be made free and clear of any
Requirements and               present or future taxes (other than franchise
Indemnities:                   taxes and taxes on overall net income), imposts,
                               assessments, withholdings, or other deductions
                               whatsoever. Foreign Lenders shall furnish to the
                               Administrative Agent (for delivery to the
                               Borrower) appropriate certificates or other
                               evidence of exemption from U.S. federal income
                               tax withholding.

                               The Borrower shall indemnify the Lenders against
                               all increased costs of capital resulting from
                               reserve requirements or otherwise imposed, in
                               each case subject to customary increased costs,
                               capital adequacy and similar provisions.

Governing Law and              The Borrower will submit to the non-exclusive
Jurisdiction:                  jurisdiction and venue of the federal and state
                               courts of the State of New York and will waive
                               any right to trial by jury. New York law shall
                               govern the definitive loan documents.

                                      A-6

<PAGE>

                                  SCHEDULE A(I)
                             SOURCES AND USES TABLE

<TABLE>
<CAPTION>
                          USES
---------------------------------------------------------------------------
<S>                                                                                          <C>
Repayment of Existing Credit Facility                                                        $ 64,557,000
Redemption of Senior Subordinated Notes                                                       180,000,000
Call Premium on Senior Subordinated Notes                                                       2,813,000
Interest on Senior Subordinated Notes (30 days)                                                 1,406,000
Payment to Holdings for Redemption of Holdings Senior Discount Notes                           19,800,000
Payment to Holdings for Call Premium on Holdings Senior Discount Notes                            384,000
Payment to Holdings for Interest on Holdings Senior Discount Notes (30 days)                      192,000
Payment to Holdings for Redemption of Holdings Preferred Stock                                 10,899,000
Financing and Other Fees                                                                        3,125,000
                                                                                             ------------
TOTAL USES                                                                                   $283,176,000
</TABLE>

<TABLE>
<CAPTION>
   SOURCES
-------------
<S>                                                                                          <C>
Term Loan                                                                                    $280,000,000
Cash on Hand                                                                                    3,176,000
                                                                                             ------------
TOTAL SOURCES                                                                                $283,176,000
</TABLE>

                                  Schedule A(I)

<PAGE>

                                 SCHEDULE A(II)

                                  INTEREST RATE

A.    The initial Applicable Margin for Eurodollar Loans and Base Rate Loans
      shall be as set forth below.

      Revolving Loans:

<TABLE>
<CAPTION>
Eurodollar Loans                   Base Rate Loans
----------------                   ---------------
<S>                                <C>
    2.75%                              1.50%
</TABLE>

      Term Loan:

<TABLE>
<CAPTION>
Eurodollar Loans                   Base Rate Loans
----------------                   ---------------
<S>                                <C>
     2.75%                              1.50%
</TABLE>

B.    Commencing with the receipt of Borrower's financial statements for the
      most recent quarter ending six months after the Closing Date, pricing for
      the Revolver will be determined according to a grid based upon the
      Borrower's Leverage Ratio.

<TABLE>
<CAPTION>
                                               Revolving Loans
     Leverage Ratio                  Eurodollar               Base Rate
-----------------------              ----------               ---------
<S>                                  <C>                      <C>
      > 6.00:1.00                       3.00%                   1.75%
      -
> 5.50:1.00 < 6.00:1.00                 2.75%                   1.50%
-
> 5.00:1.00 < 5.50:1.00                 2.50%                   1.25%
-
> 4.50:1.00 < 5.00:1.00                 2.25%                   1.00%
-
      < 4.50:1.00                       2.00%                   0.75%
</TABLE>

C.    Swingline Loans

Loans outstanding under the swingline facility shall bear interest at the rate
applicable to Revolving Loans which are Base Rate Loans minus the applicable
commitment fee percentage and such outstanding swingline loans shall not
constitute usage of the Revolver for purposes of calculating the commitment fee.

The terms "Base Rate" and "reserve adjusted Eurodollar Rate" shall have meanings
customary and appropriate for financings of this type, and the basis for
calculating accrued interest and the interest periods for loans bearing interest
at the reserve adjusted Eurodollar Rate ("Eurodollar Loans") shall be customary
and appropriate for financings of this type. After the occurrence and during the
continuation of an event of default, interest shall accrue at a rate equal to
the rate on loans bearing interest at the rate determined by reference to the
Base Rate ("Base Rate Loans") plus an additional 2.00% per annum and shall be
payable on demand.

                                 Schedule A(II)

<PAGE>

                                 SCHEDULE A(III)

                          INITIAL CONDITIONS PRECEDENT

The commitments of the Lenders to make the initial loans under the Senior Credit
Facilities are subject to the satisfaction of conditions precedent deemed
appropriate by the Administrative Agent and the Lenders for financings of this
type, including without limitation the following:

Transaction Structure          The structure utilized to consummate the
and Documentation:             Transaction and the definitive documentation
                               relating thereto (the "Definitive Transaction
                               Documents") shall be in form and substance
                               satisfactory to the Lead Arranger and shall
                               include, among other things, (i) redemption of
                               not less than $180,000,000 of the Company's 9
                               3/8% Senior Subordinated Notes due 2008 (the
                               "Senior Subordinated Notes"), (ii) redemption by
                               Holdings of all of its 11 5/8% Senior Discount
                               Debentures due 2009 (the "Holdings Senior
                               Discount Notes") and 14 -3/4% Senior Redeemable
                               Exchangeable Cumulative Preferred Stock (the
                               "Holdings Preferred Stock") held by parties other
                               than Green Equity Investors II, L.P., Green
                               Equity Investors III, L.P. and their respective
                               affiliates (the "Green Holders") and (iii)
                               agreement of the Green Holders that any interest
                               and/or dividend payments on the Holdings Senior
                               Discount Notes and the Holdings Preferred Stock
                               shall be paid in kind during the term of the
                               Senior Credit Facilities.

                               The Definitive Transaction Documents shall be in
                               full force and effect and in compliance in all
                               material respects with applicable laws and
                               regulations. All aspects of the Transaction shall
                               be consummated in accordance with the Definitive
                               Transaction Documents and Schedule I attached
                               hereto and no provision of the Definitive
                               Transaction Documents shall have been amended,
                               supplemented, waived or otherwise modified in any
                               material respect without the prior written
                               consent of the Lead Arranger.

Corporate Structure, etc.:     Changes in the corporate and ownership structure
                               after the date hereof shall be satisfactory to
                               the Lead Arranger in all respects.

Capital Structure:             Changes in the capital structure after the date
                               hereof shall be satisfactory to the Lead Arranger
                               in all respects.

Senior Credit Facilities       The definitive documentation evidencing the
Documentation:                 Senior Credit Facilities (the "Definitive Senior
                               Financing Documents") shall be prepared by
                               counsel to the Lead Arranger and shall be in form
                               and substance satisfactory to the Lead Arranger
                               and the Lenders

                                 Schedule A(III)

<PAGE>

                               and shall have been executed and delivered by the
                               Credit Parties. Such Definitive Senior Financing
                               Documents shall include (i) customary closing
                               documentation, including without limitation legal
                               opinions, officers' certificates, solvency
                               certificates, resolutions, corporate and public
                               records and the like, (ii) such documentation and
                               actions as may be necessary to create a
                               perfected, first priority lien in the collateral
                               described under "Collateral" above, subject to
                               customary permitted liens to be agreed upon; and
                               all filings, recordations and searches necessary
                               or desirable in connection with such liens and
                               security interests shall have been duly made; and
                               all filing and recording fees and taxes shall
                               have been duly paid, and (iii) such other
                               documentation as is customarily delivered in
                               connection with security interests in real
                               property.

Certain Approvals              All governmental, shareholder and third party
and Agreements:                approvals necessary or advisable in connection
                               with the Transaction, the financings contemplated
                               hereby and the continuing operations of the
                               business of the Credit Parties shall have been
                               obtained and be in full force and effect.

Financial Statements:          The Lead Arranger shall have received and be
                               reasonably satisfied with all financial
                               statements of the Credit Parties as reasonably
                               requested by Lead Arranger.

Ratings:                       Prior to the Closing Date, Borrower shall be
                               required to be re-rated by both Moody's and
                               Standard and Poors after giving pro forma effect
                               to the Transaction.

No Material Adverse Change:    There shall have occurred no material adverse
                               change in the business, assets, condition
                               (financial or otherwise) or results of operations
                               of the Credit Parties taken as a whole, or in the
                               enforceability of the credit documentation for
                               the transactions contemplated hereby, since the
                               end of the most recently ended fiscal year for
                               which audited financial statements have been
                               provided to the Lenders or in the facts and
                               information as represented to date.

Litigation:                    There shall not be pending or threatened any
                               action, suit, investigation, litigation or
                               proceeding in any court or before any arbitrator
                               or governmental instrumentality that could
                               reasonably be expected to have a material adverse
                               effect on the Transaction, the Credit Parties,
                               the Senior Credit Facilities or any of the other
                               transactions contemplated hereby.

                                 Schedule A(III)

<PAGE>

Closing Date Certificate:      On the Closing Date, the Borrower shall deliver
                               to the Lead Arranger and Lenders a Closing Date
                               Certificate signed by the Borrower's chief
                               financial officer, demonstrating in reasonable
                               detail (i) trailing twelve-month pro forma EBITDA
                               for the twelve-month period ending December 31,
                               2004 of a minimum amount to be agreed upon; and
                               (ii) pro forma total leverage of a maximum amount
                               to be agreed upon, as of the Closing Date, after
                               giving effect to the Transaction.

                                 Schedule A(III)

</TEXT>
</DOCUMENT>
