Exhibit 10.37

 

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[Published CUSIP Number:                        ]

 

REVOLVING CREDIT AGREEMENT

 

Dated as of December 15, 2004

 

among

 

THE PMI GROUP, INC.,

as the Borrower,

 

BANK OF AMERICA, N.A.,

as the Administrative Agent,

 

and

 

The Lenders Party Hereto

 

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BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

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CITIBANK, N.A.

and

WACHOVIA BANK, NATIONAL ASSOCIATION

as

Co-Documentation Agents

 

 

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TABLE OF CONTENTS

 

Section

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          Page

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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

   1      1.01     

Defined Terms

   1      1.02     

Other Interpretive Provisions

   12      1.03     

Accounting Terms.

   13      1.04     

Rounding

   13      1.05     

References to Agreements and Laws

   13      1.06     

Times of Day

   13

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS

   13      2.01     

Loans

   13      2.02     

Borrowing, Conversions and Continuations of Loans.

   14      2.03     

Prepayments

   15      2.04     

Termination or Reduction of Commitments

   15      2.05     

Repayment of Loans

   15      2.06     

Interest.

   15      2.07     

Fees.

   16      2.08     

Computation of Interest and Fees

   16      2.09     

Evidence of Debt

   16      2.10     

Payments Generally.

   17      2.11     

Sharing of Payments

   18      2.12     

Increase of Aggregate Commitment.

   18

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

   19      3.01     

Taxes.

   19      3.02     

Illegality

   20      3.03     

Inability to Determine Rates

   21      3.04     

Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate
Loans.

   21      3.05     

Funding Losses

   22      3.06     

Matters Applicable to all Requests for Compensation.

   22      3.07     

Survival

   23

ARTICLE IV. CONDITIONS PRECEDENT

   23      4.01     

Conditions of Effectiveness

   23      4.02     

Conditions of Each Borrowing

   24

ARTICLE V. REPRESENTATIONS AND WARRANTIES

   24      5.01     

Existence, Qualification and Power; Compliance with Laws

   24      5.02     

Authorization; No Contravention

   24      5.03     

Governmental Authorization; Other Consents

   24      5.04     

Binding Effect

   24      5.05     

Financial Statements; No Material Adverse Effect.

   25      5.06     

Litigation

   25      5.07     

No Default

   25      5.08     

Taxes

   25      5.09     

ERISA Compliance

   25      5.10     

Margin Regulations; Investment Company Act.

   26      5.11     

Disclosure

   26

ARTICLE VI. AFFIRMATIVE COVENANTS

   26

 

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     6.01     

Financial Statements.

   26      6.02     

Certificates; Other Information

   27      6.03     

Notices

   28      6.04     

Payment of Obligations

   29      6.05     

Preservation of Existence, Etc

   29      6.06     

Maintenance of Insurance

   29      6.07     

Compliance with Laws

   29      6.08     

Books and Records

   29      6.09     

Inspection Rights

   30      6.10     

Use of Proceeds

   30

ARTICLE VII. NEGATIVE COVENANTS

   30      7.01     

Liens

   30      7.02     

Fundamental Changes

   31      7.03     

Asset Dispositions.

   32      7.04     

Transactions with Affiliates

   32      7.05     

Use of Proceeds

   32      7.06     

Financial Covenants.

   32

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

   33      8.01     

Events of Default

   33      8.02     

Remedies Upon Event of Default

   34      8.03     

Application of Funds

   34

ARTICLE IX. ADMINISTRATIVE AGENT

   35      9.01     

Appointment and Authorization of Administrative Agent

   35      9.02     

Delegation of Duties

   35      9.03     

Exculpatory Provisions

   35      9.04     

Reliance by Administrative Agent.

   36      9.05     

Notice of Default

   37      9.06     

Credit Decision; Disclosure of Information by Administrative Agent

   37      9.07     

Indemnification of Administrative Agent

   37      9.08     

Administrative Agent in its Individual Capacity

   38      9.09     

Successor Administrative Agent

   38      9.10     

Administrative Agent May File Proofs of Claim

   38      9.11     

Other Agents; Arrangers and Managers

   39

ARTICLE X. MISCELLANEOUS

   39      10.01     

Amendments, Etc.

   39      10.02     

Notices and Other Communications; Facsimile Copies.

   40      10.03     

No Waiver; Cumulative Remedies

   41      10.04     

Attorney Costs and Expenses

   41      10.05     

Indemnification by the Borrower

   41      10.06     

Payments Set Aside

   42      10.07     

Successors and Assigns.

   42      10.08     

Confidentiality

   44      10.09     

Set-off

   45      10.10     

Interest Rate Limitation

   45      10.11     

Counterparts

   45      10.12     

Integration

   45      10.13     

Survival of Representations and Warranties

   46      10.14     

Severability

   46      10.15     

Tax Forms.

   46

 

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     10.16     

Replacement of Lenders

   48      10.17     

Governing Law.

   48      10.18     

Waiver of Right to Trial by Jury

   48      10.19     

USA Patriot Act Notice

   48

SIGNATURES

        S-1

 

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SCHEDULES        

1.01

 

Insurance Subsidiaries

   

2.01

 

Commitments and Pro Rata Shares

   

7.01

 

Existing Liens

   

10.02

 

Administrative Agent’s Office; Certain Addresses for Notices

 

EXHIBITS         Form of    

A

 

Loan Notice

   

B

 

Note

   

C

 

Compliance Certificate

   

D

 

Assignment and Assumption

   

E

 

Opinion Matters

 

iv

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REVOLVING CREDIT AGREEMENT

 

This REVOLVING CREDIT AGREEMENT (this “Agreement”) is entered into as of
December 15, 2004, among THE PMI GROUP, INC., a Delaware corporation (the
“Borrower”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as
Administrative Agent.

 

The Borrower has requested that the Lenders provide a revolving credit facility
to the Borrower, and the Lenders are willing to do so on the terms and
conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

 

“Adjusted Consolidated Net Worth” means Consolidated Net Worth, as adjusted to
exclude accumulated other comprehensive income net of deferred taxes (whether
such accumulated other comprehensive income net of deferred taxes shall be a
negative or positive amount ) and solely for purposes of Section 7.06(b),
minority interests.

 

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify the Borrower
and the Lenders.

 

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

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

 

“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

 

“Aggregate Commitment” means the Commitments of all the Lenders.

 

“Agreement” has the meaning specified in the introductory paragraph hereof.

 

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“Applicable Facility Fee Rate” means, from time to time, the percentages per
annum based upon the Debt Rating set forth below:

 

Pricing Level

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Debt Rating S&P/Moody’s

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   Applicable
Facility Fee
Rate

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1

   AA-/Aa3 or higher    0.07 %

2

   A+/A1    0.08 %

3

   A/A2    0.10 %

4

   Below A/A2    0.15 %

 

Initially, the Applicable Facility Fee Rate shall be based upon the Debt Rating
corresponding to Pricing Level 2. Thereafter, each change in the Applicable
Facility Fee Rate shall be effective on the effective date of a publicly
announced change in the Debt Rating.

 

“Applicable Margin” means, from time to time, the percentages per annum based
upon the Debt Rating set forth on below:

 

Pricing Level

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

  

Debt Rating S&P/Moody’s

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   Applicable
Margin Rate

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1

   AA-/Aa3 or higher    0.18 %

2

   A+/A1    0.20 %

3

   A/A2    0.25 %

4

   Below A/A2    0.30 %

 

Initially, the Applicable Margin shall be based upon the Debt Rating
corresponding to Pricing Level 2. Thereafter, each change in the Applicable
Margin shall be effective on the effective date of a publicly announced change
in the Debt Rating.

 

“Applicable Utilization Fee Rate” means, from time to time, the percentages per
annum based upon the Debt Rating set forth on below:

 

Pricing Level

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Debt Rating S&P/Moody’s

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   Applicable
Utilization Fee
Rate

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1

   AA-/Aa3 or higher    0.05 %

2

   A+/A1    0.05 %

3

   A/A2    0.10 %

4

   Below A/A2    0.15 %

 

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Initially, the Applicable Utilization Fee Rate shall be based upon the Debt
Rating corresponding to Pricing Level 2. Thereafter, each change in the
Applicable Utilization Fee Rate shall be effective on the effective date of a
publicly announced change in the Debt Rating.

 

“Approved Fund” has the meaning specified in Subsection 10.07(g).

 

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

 

“Asset Disposition” has the meaning specified in Section 7.03.

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit D.

 

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

 

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Commitment Termination Date, (b) the date of termination
of the Aggregate Commitment pursuant to Section 2.04 and (c) the date of
termination of the Commitment of each Lender to make Loans pursuant to Section
8.02(a).

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

 

“Base Rate Loan” means a Loan that bears interest at the Base Rate.

 

“Borrowing” means a borrowing consisting of simultaneous Loans of the same Type
and, in the case of Eurodollar Loans, having the same Interest Period, made by
each of the Lenders pursuant to Section 2.01.

 

“Business Day” means (i) if with regards to a Eurodollar Rate Loan, any day that
(x) is not any of a Saturday, a Sunday or other day on which commercial banks
are authorized to close under the Laws of, or are in fact closed in, the state
where the Administrative Agent’s Office is located and (y) on which dealings in
Dollar deposits are conducted by and between banks in the London interbank
eurodollar market and (ii) if not with regards to a Eurodollar Rate Loan, any
day that is not any of a Saturday, a Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the
state where the Administrative Agent’s Office is located.

 

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“Change of Control” means (a) any “person” as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is or becomes, directly or indirectly, the “beneficial owner,”
as defined in Rule 13D-3 under the Exchange Act, of securities of the Borrower
that represent 51% or more of the combined voting power of the Borrower’s then
outstanding securities or (b) a majority of the members of the Borrower’s Board
of Directors are not persons who were on the Borrower’s Board of Directors on
the date hereof, unless the election or nomination to the Borrower’s Board of
Directors of any such members was approved by persons constituting at the time
of such election or nomination (as the case may be) at least a majority of the
Borrower’s Board of Directors; provided that no “Change of Control” shall have
occurred pursuant to clause (b) of this definition solely as a result of a
Merger of the Borrower permitted by Section 7.02(b) in which the Borrower is not
the surviving entity if such Merger has been approved by persons constituting at
least a majority of the Borrower’s Board of Directors immediately prior to such
Merger.

 

“Closing Date” means the date on which all the conditions precedent in Section
4.01 are satisfied, or waived in accordance with Subsection 10.01(a).

 

“CMG Company” means each of the CMG Mortgage Insurance Company, CMG Mortgage
Reinsurance Company, CMG Mortgage Assurance Company and each of their respective
subsidiaries.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commitment” means, as to each Lender, its obligation to make Loans to the
Borrower pursuant to Section 2.01 in an aggregate principal amount not to exceed
the amount set forth opposite such Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

 

“Commitment Termination Date” means, December 15, 2009 (or, if such day is not a
Business Day, the immediately preceding Business Day).

 

“Commitment Letter” means the letter agreement dated November 30, 2004, among
the Borrower, Bank of America and the Arranger.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C.

 

“Compensation Period” has the meaning specified in Subsection 2.10(c)(ii).

 

“Consolidated Net Income” means, for any period, the consolidated net income of
the Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (but excluding the effect of any extraordinary or
other non-recurring gain or loss outside the ordinary course of business).

 

“Consolidated Net Worth” means, for any period, the sum of the consolidated net
worth of the Borrower and its Subsidiaries, as calculated in accordance with
GAAP.

 

“Consolidated Total Capitalization” shall mean, as of any date of determination,
the sum of (a) Consolidated Total Indebtedness and (b) Adjusted Consolidated Net
Worth.

 

“Consolidated Total Indebtedness” means, as of any date of determination, all
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP. Notwithstanding the foregoing, the following
shall not be included in Consolidated Total Indebtedness: (A) obligations under
securities reverse repurchase agreements of the Borrower or any of its
Subsidiaries

 

4

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as the buyer of securities to deliver such securities to the seller thereunder,
(B) obligations of an Insurance Subsidiary of the Borrower under financial
guarantees and insurance policies in the nature of financial guarantees, in each
case from time to time issued in the ordinary course of such Insurance
Subsidiary’s business and (C) obligations of the Borrower or any of its
Subsidiaries under or in respect of any preferred stock issued or to be issued
by the Borrower or any of its Subsidiaries.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Debt Rating” means, as of any date of determination, the rating as determined
by S&P or Moody’s of the Borrower non-credit-enhanced, long term senior
unsecured long-term debt (collectively, the “Agency Ratings”), subject to the
last sentence of this definition. In the case of split Agency Ratings where the
difference in the Agency Ratings is one notch, the higher of the two Agency
Ratings shall constitute the “Debt Rating” for purposes of this Agreement (with
the Agency Rating described in Pricing Level 1 being the highest and the Agency
Rating described in Pricing Level 4 being the lowest). In the case of split
Agency Ratings where the difference is more than one notch, the Pricing Level
that is one level lower than the higher of the two Agency Ratings will apply and
shall constitute the “Debt Rating” for purposes of this Agreement. In the event
that only one of S&P or Moody’s is then publishing Agency Ratings, the Agency
Rating that is then being published shall constitute the “Debt Rating” for
purposes of this Agreement. In the event that neither S&P nor Moody’s is then
publishing Agency Ratings, the Agency Rating that corresponds with Pricing Level
4 shall be the “Debt Rating” for purposes of this Agreement.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) 2% per
annum; provided, however, that with respect to a Eurodollar Rate Loan (for so
long as it is a Eurodollar Rate Loan), the Default Rate shall be an interest
rate equal to the interest rate (including the Applicable Margin) otherwise
applicable to such Loan plus 2% per annum, in each case to the fullest extent
permitted by applicable Laws.

 

“Department” means the applicable Supervisory Authority.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Eligible Assignee” has the meaning specified in Subsection 10.07(g).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated),
that, together with the Borrower, is treated as a single employer within the
meaning of Section 414(b) or (c) of the Code (or Sections 414(m) and (o) of the
Code solely for purposes of provisions relating to Section 412 of the Code).

 

5

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“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan, (d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan, (e) the institution of proceedings by the PBGC under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.

 

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan:

 

(a) the rate per annum equal to the offered rate that appears on the page of the
Telerate screen that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period; or

 

(b) if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall not be available, the rate per
annum equal to the rate determined in good faith by the Administrative Agent to
be the offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in Dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period; or

 

(c) if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum determined in good faith by the Administrative
Agent as the rate of interest at which deposits in Dollars for delivery on the
first day of such Interest Period in same day funds in the approximate amount of
the Eurodollar Rate Loan being made, continued or converted by Bank of America
and with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar market
at their request at approximately 4:00 p.m. (London time) two Business Days
prior to the first day of such Interest Period.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Event of Default” means any of the events or occurrences described in Section
8.01.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

 

6

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“FGIC Company” means FGIC Corporation and any of its subsidiaries.

 

“Foreign Lender” has the meaning specified in Subsection 10.15(a)(i).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

“Fund” has the meaning specified in Subsection 10.07(g).

 

“GAAP” means generally accepted accounting principles in the United States as in
effect on the date or during the period with respect to which such principles
are applied.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” means any agreement, undertaking or arrangement by which any Person
guarantees, endorses or otherwise becomes or is contingently liable upon (by
direct or indirect agreement, contingent or otherwise, to provide funds for
payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise
to assure a creditor against loss) the Indebtedness of any other Person (other
than by endorsements of instruments in the ordinary course of collection), or
guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person’s obligation under any Guarantee at
any time shall (subject to any limitation set forth therein) be deemed to be the
outstanding amount at such time (or, except in the case of the Indebtedness or
obligation guaranteed thereby being unutilized credit lines or transactions
related to Swap Contracts, if larger, the maximum amount) of the Indebtedness or
obligation guaranteed thereby.

 

“Increase Effective Date” has the meaning specified in Subsection 2.12(b).

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

(b) the principal component of all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

 

(c) net obligations of such Person under any Swap Contract (other than Swap
Contracts that are designated by such Person as hedges in accordance with GAAP);

 

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than intercompany liabilities and trade accounts
payable in the ordinary course of business, which shall not constitute
Indebtedness for purposes of this clause (d) or any other clause of this
definition);

 

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

 

7

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(f) all capital leases obligations of such Person; and

 

(g) all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general partner,
unless such Indebtedness is expressly made non-recourse to such Person.
Notwithstanding the foregoing, the following shall not be considered to be or
otherwise be included as Indebtedness: (A) any obligation of the Borrower or any
of its Subsidiaries under any derivative transaction that qualifies as a
derivative under FAS 133 and (B) any obligation (including any contingent
obligation) of the Borrower or any of its Subsidiaries under any capital support
agreement to provide capital support to one or more Subsidiaries by way of
equity or debt investments in such Subsidiaries or any guaranty by any of the
Borrower or any Subsidiary of a Subsidiary’s obligations under any such capital
support agreement.

 

“Indemnified Liabilities” has the meaning specified in Section 10.05.

 

“Indemnitees” has the meaning specified in Section 10.05.

 

“Insurance Subsidiary” means any Subsidiary of the Borrower designated as an
Insurance Subsidiary on Schedule 1.01, as such Schedule may from time to time be
amended, modified, supplemented or restated.

 

“Interest Payment Date” means (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the date that falls three months after the beginning of
such Interest Period shall also be an Interest Payment Date and (b) as to any
Base Rate Loan, the last Business Day of each March, June, September and
December and the Maturity Date.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Loan Notice; provided that:

 

(a) any Interest Period that would otherwise end on a day (the “Original Date”)
that is not a Business Day shall be extended to the Business Day next succeeding
such Original Date unless such Business Day falls in another calendar month, in
which case such Interest Period shall end on the Business Day immediately
preceding such Original Date;

 

(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and

 

(c) no Interest Period shall extend beyond the Maturity Date.

 

“IRS” means the United States Internal Revenue Service.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including, if consistent
therewith, the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof.

 

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“Lead Arranger” means Bank of America Securities LLC, in its capacity as lead
arranger of the revolving credit facility established pursuant to this
Agreement.

 

“Lender” and “Lenders” have the meanings specified in the introductory paragraph
hereof.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing); provided, however, that “Lien” shall not include (a)
any reserve established in respect of insurance obligations on the books of the
Borrower or any of its Subsidiaries (provided that such reserve shall not create
any preferential claim or priority on any asset of such Person), (b) any reserve
established in respect of any Swap Contract that is designated as a hedge in
accordance with GAAP on the books of the Borrower or any of its Subsidiaries
(provided that such reserve shall not create any preferential claim or priority
on any asset of such Person) and (c) any preferential claim or priority on any
asset of any insurance company Subsidiary granted or established under
applicable insurance laws.

 

“Loan” has the meaning specified in Section 2.01.

 

“Loan Documents” means this Agreement and each Note.

 

“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from
one Type to the other or (c) a continuation of Eurodollar Rate Loans, pursuant
to Subsection 2.02(a), which, if in writing, shall be substantially in the form
of Exhibit A.

 

“Material Adverse Effect” means (a) a material adverse effect on the business,
assets, liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole,
(b) a material adverse effect on the ability of the Borrower to perform its
obligations under any Loan Document or (c) a material adverse effect on the
legality, validity or enforceability of any Loan Document.

 

“Material Insurance Subsidiary” means, at any date of determination, (i) each of
PMI Mortgage Insurance Co. and Residential Guaranty Company and (ii) any other
Insurance Subsidiary that at such date is a Material Subsidiary.

 

“Material Subsidiary” means, at any date of determination, any Subsidiary that,
together with its Subsidiaries, is the owner of at least 20% of the consolidated
total assets of the Borrower and its Subsidiaries, taken as a whole.

 

“Maturity Date” means the Commitment Termination Date.

 

“Maximum Rate” has the meaning specified in Section 10.10.

 

“Merger” has the meaning set forth in Section 7.02.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

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“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

“Net Risk in Force” means, at any date, the dollar amount equal to, in the case
of primary insurance, the product of each insured mortgage loan’s current
principal balance multiplied by such loan’s coverage percentage or, in the case
of pool insurance, the remaining aggregate loss limit, in each case net of
third-party reinsurance, in each case as determined at such date.

 

“Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Loans made by such Lender to the Borrower, substantially in the form
of Exhibit B.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, the Borrower arising under any Loan Document, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising and including interest and fees that accrue after the
commencement by or against the Borrower of any proceeding under any Debtor
Relief Laws naming such Borrower as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

 

“Organization Documents” means (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction),
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement, and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“Other Taxes” has the meaning specified in Subsection 3.01(b).

 

“Participant” has the meaning specified in Subsection 10.07(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Principal Debt” means, on any date, the aggregate outstanding principal amount
of the Loans, after giving effect to any Borrowing or any prepayments or
repayments occurring on such date.

 

“Pro Rata Share” means, with respect to each Lender, (a) at any time prior to
the termination of the Commitments of the Lenders, a fraction (expressed as a
percentage, carried out to the ninth decimal place), the numerator of which is
the amount of the Commitment of such Lender at such time and the

 

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denominator of which is the amount of the Aggregate Commitment at such time and
(b) at any time after the termination of the Commitments of the Lenders, a
fraction (expressed as a fraction, carried out to the ninth decimal place), the
numerator of which is the portion of the Principal Debt owing to such Lender at
such time and the denominator of which is the Principal Debt at such time. The
initial Pro Rata Share of each Lender is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable.

 

“Ram Re Company” means RAM Reinsurance Company Ltd. and any of its subsidiaries.

 

“Register” has the meaning specified in Subsection 10.07(c).

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Required Lender Rating” means an unsecured short-term senior debt rating of not
less than A-2 from Moody’s or P-2 from S&P.

 

“Required Lenders” means, as of any date of determination, Lenders whose Pro
Rata Shares aggregate more than 50%.

 

“Responsible Officer” means, with respect to any Person, the chief executive
officer, president, chief financial officer, controller, assistant controller,
treasurer or assistant treasurer of such Person. Any document delivered
hereunder that is signed by a Responsible Officer of a Person shall be
conclusively presumed to have been authorized by all necessary corporate action
on the part of such Person and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Person.

 

“Risk to Capital Ratio” means, at any date, the ratio of (i) Net Risk in Force
to (ii) Statutory Capital, in each case at such date.

 

“SAP” shall mean statutory accounting principles prescribed or permitted by the
applicable insurance regulatory authority.

 

“SEC” means the Securities and Exchange Commission or any Governmental Authority
in the United States succeeding to any of its principal functions.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

 

“SPS Company” means SPS Holding Corp., a Delaware corporation, and any of its
subsidiaries.

 

“Statutory Capital” means, at any date, the sum of Statutory Surplus and the
contingency reserve, in each case at such date.

 

“Statutory Surplus” means with respect to an Insurance Subsidiary as of the date
of an Annual Statement, the total amount shown on line 35, page 3, column 1 of
the 2003 Annual Statement of such Insurance Subsidiary, or an amount determined
in a consistent manner in accordance with SAP for any date other than one as of
which an Annual Statement is prepared. Notwithstanding the foregoing, if the
format of the Annual Statement is changed in future years so that different
information is contained in such line or such line no longer exists, it is
understood that the foregoing shall refer to information consistent with that
reported in the referenced line in the 2003 Annual Statement of such Insurance
Subsidiary.

 

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“Subsidiary” of a Person means any corporation, association, partnership, joint
venture or other business entity (other than any SPS Company) of which more than
50% of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof;
provided that so long as any FGIC Company or CMG Company is not included as a
consolidated subsidiary of the Borrower in the Borrower’s financial statements,
such FGIC Company or CMG Company, as the case may be, shall not be considered a
“Subsidiary” under this Agreement. Unless the context otherwise clearly
requires, references herein to a Subsidiary refer to a Subsidiary of the
Borrower.

 

“Supervisory Authority” means, with respect to the Borrower or any Material
Subsidiary, the department of insurance of the state of domicile of the Borrower
or such Material Subsidiary, as the case may be.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

“Taxes” has the meaning specified in Subsection 3.01(a).

 

“Threshold Amount” means $45,000,000.

 

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“United States” and “U.S.” mean the United States of America.

 

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

 

(ii) Article, Section, Subsection, Exhibit and Schedule references are to the
Loan Document in which such reference appears.

 

(iii) The term “including” is by way of example and not limitation.

 

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(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

 

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

 

1.03 Accounting Terms. (a) All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
or SAP, as applicable, applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the audited
financial statements of the Borrower described in Subsection 5.05(a), except as
otherwise specifically prescribed herein.

 

(b) If at any time any change in GAAP or SAP, as applicable, would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP or SAP, as applicable, (subject to the approval of
the Required Lenders); provided that, until so amended, such ratio or
requirement shall continue to be computed in accordance with GAAP or SAP, as
applicable, prior to such change therein.

 

1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

1.05 References to Agreements and Laws. Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto or waivers thereof, but only to the extent that such
amendments, restatements, extensions, supplements and other modifications or
waivers are not prohibited by any Loan Document, and (b) references to any Law
shall include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law.

 

1.06 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to New York City time (daylight or standard, as
applicable).

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01 Loans. Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Loan”) to the Borrower from
time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed the amount of such Lender’s Commitment; provided,
however, that after giving effect to each Borrowing, the Principal Debt shall
not exceed the Aggregate Commitment. Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, the Borrower
may borrow under this Section 2.01, prepay under Section 2.03, and reborrow
under this Section 2.01. Loans may be Base Rate Loans or Eurodollar Rate Loans,
as further provided herein.

 

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2.02 Borrowing, Conversions and Continuations of Loans.

 

(a) Each Borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable notice to the Administrative Agent, which may be given by telephone.
Each such notice must be received by the Administrative Agent not later than
11:00 a.m. (i) three Business Days prior to the requested date of the Borrowing
of, conversion to or continuation of Eurodollar Rate Loans or of any conversion
of Eurodollar Rate Loans to Base Rate Loans and (ii) on the requested date of a
Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to
this Subsection 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of such Borrower. A Borrowing of, conversion to
or continuation of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. A Borrowing of
or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof. Each Loan Notice (whether
telephonic or written) shall specify (i) whether the Borrower is requesting a
Borrowing, a conversion of Loans from one Type to the other or a continuation of
Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Loans to be borrowed, converted or continued, (iv) if
applicable, the Type of Loans to be borrowed or to which existing Loans are to
be converted and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Borrower fails to specify a Type of Loan in a Loan
Notice or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Loans shall be made as or converted to (as
the case may be) Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to or continuation of Eurodollar Rate Loans
in any such Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.

 

(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable Loans,
and if no timely notice of a conversion or continuation is provided by the
Borrower, the Administrative Agent shall notify each Lender of the details of
any automatic conversion to Base Rate Loans described in the preceding
subsection. In the case of a Borrowing, each Lender shall make the amount of its
Loan available to the Administrative Agent in immediately available funds at the
Administrative Agent’s Office not later than 1:00 p.m. on the Business Day
specified in the applicable Loan Notice. Upon satisfaction or waiver of the
conditions set forth in Section 4.02, the Administrative Agent shall make all
funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower.

 

(c) Unless the Borrower pays all amounts, if any, due under Section 3.05, except
as otherwise provided herein, a continuation or conversion of a Eurodollar Rate
Loan shall be effective only as of the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of an Event of Default, the
Administrative Agent may (and upon the request of the Required Lenders shall)
prohibit Loans from being requested as, converted to or continued as Eurodollar
Rate Loans.

 

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders
of the interest rate applicable to any Interest Period for Eurodollar Rate Loans
upon determination of such

 

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interest rate. The determination of the Eurodollar Rate by the Administrative
Agent shall be conclusive in the absence of manifest error. At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

 

(e) After giving effect to all Borrowings, all conversions of Loans from one
Type to the other and all continuations of Loans as the same Type, there shall
not be more than ten Interest Periods in effect with respect to Loans.

 

2.03 Prepayments. The Borrower may, upon notice to the Administrative Agent, at
any time or from time to time voluntarily prepay Loans in whole or in part
without premium or penalty; provided that (a) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior
to any date of prepayment of Eurodollar Rate Loans and (ii) on the date of
prepayment of Base Rate Loans, (b) any prepayment of Eurodollar Rate Loans shall
be in a principal amount of (1) $5,000,000 or a whole multiple of $1,000,000 in
excess thereof or (2) equal to the entire principal amount thereof then
outstanding and (c) any prepayment of Base Rate Loans shall be in a principal
amount of (1) $500,000 or a whole multiple of $100,000 in excess thereof or (2)
equal to the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of Loans to
be prepaid. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Pro Rata Share
of such prepayment. If such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 3.05. Each such prepayment
shall be applied to the Loans of the Lenders in accordance with their respective
Pro Rata Shares.

 

2.04 Termination or Reduction of Commitments. The Borrower may, upon notice to
the Administrative Agent, terminate the Aggregate Commitment, or from time to
time permanently reduce the Aggregate Commitment; provided that (a) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m.
three Business Days prior to the date of termination or reduction, (b) any such
partial reduction shall be in an aggregate amount of $5,000,000 or any whole
multiple of $1,000,000 in excess thereof and (c) the Borrower shall not
terminate or reduce the Aggregate Commitment if, after giving effect thereto and
to any concurrent prepayments hereunder, the Principal Debt would exceed the
Aggregate Commitment. The Administrative Agent will promptly notify the Lenders
of any such notice of termination or reduction of the Aggregate Commitment. Any
reduction of the Aggregate Commitment shall be applied to the Commitment of each
Lender according to its Pro Rata Share. In the case of a termination of the
Aggregate Commitment, all facility fees accrued to the effective date of any
termination of the Aggregate Commitment shall be paid on the effective date of
such termination. On the date of effectiveness of any reduction of the Aggregate
Commitment, all facility fees accrued on the portion of the Aggregate Commitment
reduced pursuant to such reduction shall be paid.

 

2.05 Repayment of Loans.

 

On the Maturity Date the Borrower shall repay the Principal Debt then unpaid and
outstanding (if any).

 

2.06 Interest.

 

(a) Subject to the provisions of Subsection 2.06(b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Margin and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof at a rate per annum
equal to the Base Rate.

 

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(b) If any amount payable by the Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

 

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

2.07 Fees.

 

(a) Facility Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with such Lender’s Pro Rata Share, a
facility fee equal to the Applicable Facility Fee Rate times the actual daily
amount of the Aggregate Commitment, regardless of usage (or, from and after the
Closing Date, the Principal Debt). The facility fee shall accrue from and after
the date of this Agreement, including at any time during which one or more of
the conditions in Section 4.02 is not met, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date.

 

(b) Utilization Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with such Lender’s Pro Rata Share, a
utilization fee equal to the Applicable Utilization Fee Rate times the actual
daily amount of the Principal Debt; provided that, prior to the Commitment
Termination Date, such utilization fee shall be payable only in respect of each
day that the Principal Debt exceeds 50% of the Aggregate Commitment. The
utilization fee shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the Maturity Date.

 

(c) Other Fees. The Borrower shall pay to the Administrative Agent, for its own
account, fees in the amounts and at the times specified in the Fee Letter. Such
fees shall be fully earned when paid and shall not be refundable for any reason
whatsoever.

 

2.08 Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by Bank of America’s “prime rate”
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
fees or interest, as applicable, being paid than if computed on the basis of a
365 day year). Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall bear interest for one day.

 

2.09 Evidence of Debt. The Loans made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Loans made by the Lenders to the Borrower and the
interest and payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing by it with respect

 

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to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans to such Borrower in addition to such
accounts or records. Each Lender may attach schedules to its Note and endorse
thereon the date, Type (if applicable), amount and maturity of its Loans and
payments with respect thereto.

 

2.10 Payments Generally.

 

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, each payment by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein for such payment. The Administrative Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
provided herein) of such payment in like funds as received by wire transfer to
such Lender’s Lending Office. All payments received by the Administrative Agent
after 2:00 p.m. (New York City time) shall be deemed received on the immediately
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

 

(b) If any payment to be made by the Borrower shall come due on a day other than
a Business Day, payment shall be made on the immediately succeeding Business
Day, and such extension of time shall be reflected in computing interest or
fees, as the case may be.

 

(c) Unless the Borrower or any Lender has notified the Administrative Agent,
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that the Borrower or such Lender, as the case may be, will not
make such payment, the Administrative Agent may assume that the Borrower or such
Lender, as the case may be, has timely made such payment and may (but shall not
be so required to), in reliance thereon, make available a corresponding amount
to the Person entitled thereto. If and to the extent that such payment was not
in fact made to the Administrative Agent in immediately available funds, then:

 

(i) if the Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed payment
that was made available to such Lender in immediately available funds, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Lender to the date
such amount is repaid to the Administrative Agent in immediately available funds
at the Federal Funds Rate from time to time in effect; and

 

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in the applicable
Borrowing. If such Lender does not pay such amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the Compensation Period
at a rate per annum equal to the rate of interest applicable to such

 

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Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this Subsection 2.10(c) shall be conclusive, absent
manifest error.

 

(d) If any Lender makes available to the Administrative Agent funds for any Loan
to be made by such Lender as provided in the foregoing provisions of this
Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the Borrowing set forth in
Section 4.03 are not satisfied or waived in accordance with the terms hereof,
the Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

(e) The obligations of the Lenders hereunder to make Loans are several and not
joint. The failure of any Lender to make its Loans on the date of any Borrowing
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Loans.

 

(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

 

2.11 Sharing of Payments. If, other than as expressly provided in Section 2.12
or elsewhere herein, any Lender shall obtain on account of the Loans made by it,
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of its Pro Rata Share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact and (b) purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment in respect of such Loans, pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Lender under any of the
circumstances described in Section 10.06 (including pursuant to any settlement
entered into by the purchasing Lender in its discretion), such purchase shall to
that extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to such
paying Lender’s ratable share (according to the proportion of (i) the amount of
such paying Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered, without
further interest thereon. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by
applicable law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.09) with respect to such participation as
fully as if such Lender were the direct creditor of such Borrower in the amount
of such participation. The Administrative Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders following
any such purchases or repayments. Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right to
give all notices, requests, demands, directions and other communications under
this Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Lender were the original owner of the
Obligations purchased.

 

2.12 Increase of Aggregate Commitment.

 

(a) Provided there exists no Default and the Borrower shall not have previously
terminated the Aggregate Commitment pursuant to Section 2.04, upon notice to the
Administrative Agent (which

 

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shall promptly notify the Lenders), the Borrower may from time to time, request
an increase in the Aggregate Commitment by an amount (for all such requests) not
exceeding $25,000,000. At the time of sending such notice, the Borrower (in
consultation with the Administrative Agent) shall specify the time period within
which each Lender is requested to respond (which shall in no event be less than
ten days from the date of delivery of such notice to the Lenders). Each Lender
shall notify the Administrative Agent within such time period whether or not it
agrees to increase its Commitment and, if so, whether by an amount equal to,
greater than, or less than its Pro Rata Share of such requested increase. Any
Lender not responding within such time period shall be deemed to have declined
to increase its Commitment. The Administrative Agent shall notify the Borrower
and each Lender of the Lenders’ responses to each request made hereunder. To
achieve the full amount of a requested increase, the Borrower may also invite
one or more Persons who then qualify as Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance reasonably satisfactory to
the Administrative Agent and its counsel.

 

(b) If the Aggregate Commitment is increased in accordance with this Section,
the Administrative Agent and the Borrower shall determine the effective date
(the “Increase Effective Date”) and the final allocation of such increase. The
Administrative Agent shall promptly notify the Borrower and the Lenders of the
final allocation of such increase and the Increase Effective Date. As a
condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate of the Borrower dated as of the Increase
Effective Date, executed by a Responsible Officer of the Borrower (i) certifying
and attaching the resolutions adopted by the Borrower approving or consenting to
such increase, and (ii) certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Article V are true
and correct in all material respects on and as of the Increase Effective Date,
except to the extent that such representations and warranties specifically refer
to an earlier date, in which case they are true and correct as of such earlier
date, and except that for purposes of this Section 2.12, the representations and
warranties contained in Subsections 5.05(a) and 5.05(b) shall be deemed to refer
to the most recent statements furnished pursuant to Subsections 6.01(a),
6.01(b), 6.01(c) and 6.01(d), respectively and (B) no Default exists. On the
Increase Effective Date following any such increase undertaken pursuant to the
provisions of this Section 2.12, the Pro Rata Share of each Lender shall be
adjusted (as so adjusted, the “Adjusted Pro Rata Share”) so as to reflect the
amount of each Lender’s Commitment relative to the Aggregate Commitment of all
Lenders as in effect immediately following such increase (as so adjusted, the
“Adjusted Pro Rata Share”) and, immediately after giving effect to such
adjustments any Loans then outstanding shall be reallocated among the Lenders if
such reallocation shall be necessary in order to keep the outstanding Loans
ratable with the Adjusted Pro Rata Shares.

 

(c) This Section 2.12 shall supersede any provisions in Section 2.11 or 10.01 to
the contrary.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes.

 

(a) Subject to the provisions of Subsection 10.15(a)(iii), any and all payments
by the Borrower to or for the account of the Administrative Agent or any Lender
under any Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Administrative Agent and each
Lender, (x) taxes (and withholdings in respect thereof) imposed on or measured
by its overall net income and (y) branch profits taxes, franchise taxes, taxes
on doing business and taxes measured by or imposed upon its capital or net
worth, in each case imposed as a result of a present or former connection
between the Administrative

 

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Agent or such Lender and the jurisdiction imposing such taxes (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, any Loan Document) (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as “Taxes”). Subject to the
provisions of Subsection 10.15(a)(iii), if the Borrower shall be required by any
applicable Laws to deduct any Taxes from or in respect of any sum payable under
any Loan Document to the Administrative Agent or any Lender, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section),
each of the Administrative Agent and such Lender receives an amount equal to the
sum it would have received (on an after-tax basis) had no such deductions been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable Laws and (iv) within 30 days after the date of
such payment, the Borrower shall furnish to the Administrative Agent (which
shall forward the same to such Lender) the original or a certified copy of a
receipt, or other evidence reasonably satisfactory to the Administrative Agent,
evidencing payment thereof; provided that the Borrower shall not be required to
increase any sum payable to any Lender with respect to any Taxes that are
attributable to such Lender’s failure to comply with the requirements of Section
10.15.

 

(b) In addition, the Borrower agrees to pay any and all present or future stamp,
court or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under any Loan Document or from
the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document (hereinafter referred to as “Other
Taxes”).

 

(c) Subject to the provisions of Subsection 10.15(a)(iii), the Borrower agrees
to indemnify the Administrative Agent and each Lender for (i) the full amount of
Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 3.01) paid by the
Administrative Agent or such Lender and (ii) any liability (including additions
to tax, penalties, interest and expenses) arising therefrom or with respect
thereto. Payment under this Subsection 3.01(c) shall be made within 30 days
after the date the affected Lender or the Administrative Agent makes a demand to
the Borrower therefor.

 

(d) If the Borrower is required to pay any amounts pursuant to this Section 3.01
to or for the account of the Administrative Agent or any Lender, and if
thereafter the Administrative Agent or such Lender, as the case may be, receives
a refund (including if such refund is not actually received but is applied
against other Tax or Other Tax obligations owed by such Lender or Administrative
Agent to the same taxing authority) of any Taxes or Other Taxes paid by or on
behalf of the Administrative Agent or such Lender, as the case may be, that is
attributable solely to the amounts so paid by the Borrower, the Administrative
Agent or such Lender, as the case may be, shall, to the extent that it can do so
without prejudice to the retention of the amount of such refund, pay to the
Borrower, within 30 days after the date the Administrative Agent or such Lender,
as the case may be, actually receives such refund, an amount equal to the
portion of such refund as will leave it, after such payment, in no better or
worse position than it would have been if the Taxes or Other Taxes had not been
imposed and the corresponding additional amount or indemnification payment had
not been paid by the Borrower. Nothing in this Subsection 3.01(d) shall require
the Administrative Agent or any Lender to conduct its business or arrange or
alter in any respect its tax or financial affairs so that it is to receive such
refund. Neither the Administrative Agent nor any Lender shall be obligated to
disclose information regarding its tax affairs or computations to the Borrower
in connection with this Subsection 3.01(d).

 

3.02 Illegality. If any Lender determines that any applicable Law has made it
unlawful, or that any Governmental Authority of competent jurisdiction has
asserted that it is unlawful, for any Lender

 

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or its applicable Lending Office to make, maintain or fund Eurodollar Rate
Loans, or to determine or charge interest rates based upon the Eurodollar Rate,
then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist (which notification such Lender shall make promptly upon the cessation of
the circumstances giving rise to such determination). Upon receipt of such
notice, the Borrower shall, upon demand from such Lender (with a copy to the
Administrative Agent), either prepay or convert (at the Borrower’s option) all
Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Rate Loans. Each Lender
agrees to designate a different Lending Office if such designation will avoid
the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

 

3.03 Inability to Determine Rates. If the Required Lenders in good faith
determine that for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan does
not adequately and fairly reflect the cost to such Lenders of funding such Loan,
the Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.

 

3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar
Rate Loans.

 

(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any applicable Law, or such Lender’s
compliance therewith, in each case after the date of this Agreement, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this Subsection 3.04(a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
3.01 shall govern), (ii) changes in the basis of taxation of overall net income
or overall gross income of such Lender and (iii) reserve requirements
contemplated by Subsection 3.04(c)), then from time to time upon demand of such
Lender (with a copy of such demand to the Administrative Agent), the Borrower
shall pay to such Lender such additional amounts, within 15 days after the date
such Lender makes a demand to the Borrower therefor, as will compensate such
Lender for such increased cost or reduction.

 

(b) If any Lender determines that the introduction of any applicable Law
regarding capital adequacy or any change therein or in the interpretation
thereof, or compliance by such Lender (or its Lending Office) therewith, in each
case after the date of this Agreement, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender’s obligations hereunder (taking into
consideration its policies and those of its holding company with respect to
capital adequacy), then from time to time, within 15 days after the date such
Lender makes a demand to the Borrower therefor, (with a copy of such demand to
the Administrative Agent), the Borrower shall pay to such Lender such additional
amounts as will compensate such Lender for such reduction.

 

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(c) The Borrower shall pay to each Lender, as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive in the absence of manifest error), which shall
be due and payable on each date on which interest is payable on such Loan,
provided the Borrower shall have received at least 15 days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 15 days from receipt of
such notice.

 

3.05 Funding Losses. Subject to Section 3.06, upon demand of any Lender (with a
copy to the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

 

(a) any continuation, conversion, payment or prepayment by the Borrower of any
Loan other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration or otherwise); or

 

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower;

 

excluding any loss of anticipated profits (other than the Applicable Margin) but
including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
or other borrowing in the London interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Eurodollar Rate Loan was
in fact so funded.

 

3.06 Matters Applicable to all Requests for Compensation.

 

(a) A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth in reasonable detail the
calculation of the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount, the
Administrative Agent or such Lender may use any reasonable averaging and
attribution methods, but shall treat the Borrower in a manner that is consistent
with the treatment of other similarly situated borrowers.

 

(b) Before making a claim for compensation under Section 3.01 or 3.04, each
Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to avoid or minimize the compensation to be
claimed.

 

(c) Upon any Lender’s making any claim for compensation under Section 3.01 or
3.04 or delivering of a notice pursuant to the provisions of Section 3.02, the
Borrower may replace such Lender in accordance with Section 10.16.

 

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3.07 Survival. All of the Borrower’s obligations under this Article III (except
under Section 3.02 and 3.03) shall survive termination of the Aggregate
Commitment and repayment of all other Obligations under the Loan Documents.

 

ARTICLE IV.

CONDITIONS PRECEDENT

 

4.01 Conditions of Effectiveness. (a) The effectiveness of this Agreement is
subject to the satisfaction (or waiver) of the following conditions precedent:

 

(i) The Administrative Agent shall have received the following, each of which
shall be originals or facsimiles (followed promptly by originals), each properly
executed by a Responsible Officer of the Borrower (unless otherwise specified),
each dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and substance
reasonably satisfactory to the Administrative Agent and its legal counsel:

 

(1) this Agreement executed by each party hereto;

 

(2) a Note executed by the Borrower in favor of each Lender requesting a Note;

 

(3) such certificates or resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of the Borrower as the
Administrative Agent may reasonably require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents;

 

(4) such documents and certifications as the Administrative Agent may reasonably
require to evidence that the Borrower is duly organized or formed, and that the
Borrower is validly existing, in good standing and qualified to engage in
business in the state of its organization; and

 

(5) favorable opinions of Sullivan and Cromwell LLP and the Borrower’s General
Counsel, addressed to the Administrative Agent and each Lender, as to the
matters set forth in Exhibit E.

 

(6) The Administrative Agent shall have received evidence reasonably
satisfactory to it that any and all fees and expenses required to be paid on or
before the Closing Date pursuant to the Commitment Letter and the Fee Letter
have been paid.

 

(7) The representations and warranties of the Borrower contained in Article V
shall be true and correct in all material respects on and as of the Closing
Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct in all
material respects as of such earlier date.

 

(8) No Default shall exist.

 

(b) Upon the satisfaction of all of the conditions to effectiveness (or waiver
thereof) set forth in Section 4.01(a), the Administrative Agent shall promptly
notify the Borrower and the Lenders of the effectiveness of this Agreement, and
such notice shall be binding on all parties hereto.

 

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4.02 Conditions of Each Borrowing. The obligation of each Lender to make its Pro
Rata Share of each Borrowing hereunder is subject to the satisfaction of the
following conditions precedent:

 

(a) The Administrative Agent shall have received a Loan Notice from the
Borrower.

 

(b) The representations and warranties of the Borrower contained in Article V
shall be true and correct in all material respects on and as of the date of such
Borrowing, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date.

 

(c) No Default shall exist.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:

 

5.01 Existence, Qualification and Power; Compliance with Laws. The Borrower and
each Material Subsidiary (a) is (i) duly organized, validly existing and (ii) in
good standing under the Laws of the jurisdiction of its formation, (b) has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business and (ii) execute, deliver and perform its obligations under the Loan
Documents to which it is a party, (c) is duly qualified and is licensed and in
good standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification or license and (d) is in compliance with all applicable Laws;
except in each case referred to in clause (b)(i), (c) or (d), to the extent that
failure to do so would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

5.02 Authorization; No Contravention. The execution, delivery and performance by
the Borrower of each Loan Document have been duly authorized by all necessary
corporate action, and do not and will not (a) contravene the terms of any of the
Borrower’s Organization Documents, (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, (i) any Contractual
Obligation to which the Borrower or any Material Subsidiary is a party or (ii)
any order, injunction, writ or decree of any Governmental Authority of competent
jurisdiction or any arbitral award to which such Person or its property is
subject or (c) violate any applicable Law, except in each case referred to in
clause (b) or (c), to the extent that such conflict, breach, contravention,
creation or violation would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority of competent jurisdiction or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, the Borrower of this Agreement or any other Loan
Document, except for approvals, consents, exemptions, authorizations, other
actions by, or notices to, or filings with, any Governmental Authority of
competent jurisdiction or any other Person (a) that have been given, taken, or
made or are in full force and effect or (b) the failure of which to give, take
or make would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

5.04 Binding Effect. This Agreement constitutes, and each other Loan Document
when so delivered will constitute, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

 

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5.05 Financial Statements; No Material Adverse Effect.

 

(a) The Borrower has delivered to the Administrative Agent for delivery to the
Lenders true and complete copies of (i) the audited consolidated balance sheets
of the Borrower for the fiscal years ended December 31, 2001, 2002 and 2003 and
the related audited consolidated statements of income for the fiscal years then
ended and (B) the unaudited consolidated balance sheets of the Borrower as of
March 31, June 30 and September 30, 2004, and the related unaudited consolidated
statements of income for the three, six and nine month periods then ended,
together with all accompanying notes and schedules thereto, if any
(collectively, the “Financial Statements”). The balance sheets and statements of
income included in the Financial Statements have been prepared in accordance
with GAAP consistently applied during the periods involved and fairly present in
accordance with GAAP, in all material respects, the consolidated financial
position and the results of operations of the Borrower as of the dates and for
the periods presented therein (subject, in the case of interim period financial
statements, to normal year-end adjustments, none of which, on the date hereof,
are expected to be material, and subject, in the case of unaudited financial
statements, to the absence of footnotes).

 

(b) Since the date of the most recent audited financial statements described in
Subsection 5.05(a), there has been no condition, event or occurrence that has
had or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower, threatened or contemplated, before
any Governmental Authority of competent jurisdiction, by or against the Borrower
or any Material Subsidiary or against any of their properties or revenues that
(a) purport to affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby or (b) are reasonably likely to
be adversely determined and, if so adversely determined, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.07 No Default. Neither the Borrower nor any Material Subsidiary is in default
under or with respect to any Contractual Obligation that would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
No Default has occurred and is continuing or would result from the consummation
of the transactions contemplated by this Agreement or any other Loan Document.

 

5.08 Taxes. The Borrower and its Material Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed, and have
paid, or made provision for the payment of, all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP and except for failures to so file or pay that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

5.09 ERISA Compliance. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, the Borrower and
its Material Subsidiaries (a) have fulfilled their obligations under the minimum
funding standards of ERISA and the Code with respect to each Pension Plan, (b)
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code and (c) have not incurred any liability to the
PBGC or a Pension Plan under Title IV of ERISA.

 

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5.10 Margin Regulations; Investment Company Act.

 

(a) The Borrower is not engaged and will not engage as one of its principal
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose
of purchasing or carrying margin stock. After applying the proceeds of each
Borrowing, not more than 25% of the value of the assets of the Borrower will
consist of margin stock.

 

(b) Neither the Borrower nor any Material Subsidiary is or is required to be
registered as an “investment company” under the Investment Company Act of 1940.

 

5.11 Disclosure. The statements, information, reports, representations and
warranties made by the Borrower (other than any statements, information or
reports that contain, or representations or warranties made in respect of, any
forecast or financial projection) and furnished to the Administrative Agent or
the Lenders by the Borrower in connection with the Loan Documents, when taken
together with the information contained in the Company’s filings with the SEC,
do not, taken as a whole, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made therein not
misleading.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and
shall (except in the case of the covenants set forth in Sections 6.01, 6.02,
6.03 and 6.10 ) cause each Material Subsidiary to:

 

6.01 Financial Statements. Deliver to the Administrative Agent for distribution
to each Lender: (a) as soon as available, but in any event within 105 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such fiscal year,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP (each such set of financial
statements, “Annual Financial Statements”), audited and accompanied by a report
of Ernst & Young LLP or of other independent certified public accountants of
nationally recognized standing reasonably acceptable to the Administrative Agent
(each such report, an “Audit Report”), which Audit Report shall be prepared in
accordance with generally accepted auditing standards and shall not be subject
to any “going concern” or like qualification or exception or any qualification
or exception as to the scope of audit not reasonably acceptable to the
Administrative Agent; provided that the foregoing requirement shall be deemed to
be satisfied for any fiscal year for which the Borrower shall have filed a Form
10-K under the Exchange Act for such year within 105 days of the end thereof, so
long as such Form 10-K contains Annual Financial Statements for such fiscal year
and an Audit Report that in each case satisfy the requirements set forth in this
subsection (a);

 

(b) as soon as available, but in any event within 60 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end

 

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audit adjustments and the absence of footnotes; provided that the foregoing
requirement, solely with respect to the delivery of financial statements and not
with respect to the delivery of the certification of a Responsible Officer,
shall be deemed to be satisfied for any fiscal quarter for which the Borrower
shall have filed a Form 10-Q under the Exchange Act for such year within 60 days
of the end thereof, so long as such Form 10-Q contains financial statements for
such fiscal quarter that satisfy the requirements set forth in this subsection
(b);

 

(c) as soon as available, but in any event within 170 days after the end of each
fiscal year of each Material Insurance Subsidiary that is organized under the
laws of, and regulated by, the United States or any State thereof, a copy of the
annual statutory statement of such Material Insurance Subsidiary prepared in
accordance with SAP and as filed with the Department (if any), audited and
accompanied by a report of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Administrative
Agent, which report shall be prepared in accordance with statutory auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit;
and

 

(d) as soon as available, but in any event within 80 days after the end of the
first three fiscal quarters of each fiscal year of each Material Insurance
Subsidiary that is organized under the laws of, and regulated by, the United
States or any State thereof, a copy of the quarterly statutory statement of such
Material Insurance Subsidiary prepared in accordance with SAP and as filed with
the Department (if any), certified by a Responsible Officer of such Material
Insurance Subsidiary as fairly presenting in all material respects the financial
condition and results of operations of such Material Insurance Subsidiary in
accordance with SAP, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

6.02 Certificates; Other Information. Deliver to the Administrative Agent:

 

(a) concurrently with the delivery of the financial statements referred to in
Subsections 6.01(a) and (b) (or, if such financial statements are delivered
pursuant to the applicable proviso set forth in such Subsections, within 5
Business Days of the filing of the applicable Form 10-K or Form 10-Q), a duly
completed Compliance Certificate signed by a Responsible Officer of the
Borrower;

 

(b) promptly after the same are available, notice of the filing of each
registration statement that the Borrower may file with the SEC that contains
material information regarding the Borrower or any Material Subsidiary;

 

(c) the following certificates and other information:

 

(i) not later than 30 days after received, a copy of any material financial
examination reports or material market conduct examination reports by any
Supervisory Authority with respect to any Material Insurance Subsidiary of the
Borrower, or the Borrower should it at any time engage or become involved in the
business of insurance, relating to the insurance business of such Material
Insurance Subsidiary or, if applicable, the Borrower (when, and if, prepared);
provided, that such Material Insurance Subsidiary or, if applicable, the
Borrower, shall not have to deliver any interim report hereunder so long as a
final report is issued and delivered to the Administrative Agent within 60 days
of such interim report;

 

(ii) within two Business Days of the receipt of such notice, notice of the
actual suspension, termination or revocation of any material license of the
Borrower or any of its Material Insurance Subsidiaries by any Supervisory
Authority or notice from any Supervisory Authority notifying the Borrower or any
of its Material Insurance Subsidiaries of a hearing relating to such a
suspension, termination or revocation, including any request by any such
Supervisory Authority which commits the Borrower or any of its Material
Insurance Subsidiaries to take, or refrain from taking, any action which
materially and adversely affects the authority of the Borrower and any of its
Material Subsidiaries to conduct their business, taken as a whole; and

 

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(iii) within two Business Days of the receipt of such notice, notice of any
material pending or threatened investigation or regulatory proceeding (other
than routine periodic investigations or reviews) by any Supervisory Authority
concerning the business, practices or operations of the Borrower or any of its
Material Insurance Subsidiaries; and

 

(d) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Material Subsidiary, or compliance with
the terms of the Loan Documents, as the Administrative Agent or any Lender may,
through the Administrative Agent, from time to time reasonably request.

 

Documents required to be delivered by the Borrower pursuant to this Agreement
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at
www.pmigroup.com; or (ii) on which such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that (i) the Borrower
shall deliver electronic copies of such documents to the Administrative Agent or
any Lender that requests the Borrower to deliver such electronic copies until a
written request to cease delivering electronic copies is given by the
Administrative Agent or such Lender and (ii) the Borrower shall notify the
Administrative Agent and each Lender (by telecopier or electronic mail) of the
posting of any such documents. Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Subsection 6.02(a) to the Administrative
Agent. Except for such Compliance Certificates, the Administrative Agent shall
have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

 

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Lead Arranger will make available to the Lenders materials and/or information
provided by or on behalf of the Borrower hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another similar
electronic system (the “Platform”) and (b) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that (w) all Borrower Materials to
be posted on the Platform that are to be made available to Public Lenders shall
be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean
that the word “PUBLIC” shall appear prominently on the first page thereof; (x)
by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have
authorized the Administrative Agent and the Lenders to treat such Borrower
Materials as either publicly available information or not material information
(although it may be sensitive and proprietary) with respect to the Borrower or
its securities for purposes of United States Federal and state securities laws;
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor;” and (z) the
Administrative Agent and the Lead Arranger shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor.”

 

6.03 Notices. Promptly notify the Administrative Agent:

 

(a) of the occurrence of any Default;

 

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(b) of any (i) ERISA Event, (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Material Subsidiary and any
Governmental Authority of competent jurisdiction, or (iii) the commencement of,
or any material development in, any litigation or proceeding pursuant to any
applicable Environmental Laws, in each case referred to in clauses (i), (ii) or
(iii) of this subsection (b), that has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; and

 

(c) of any change in accounting policies or financial reporting practices by the
Borrower or any Material Subsidiary that would result in a material change in
the manner in which any financial covenant set forth in Section 7.06 is
calculated or any financial determination under this Agreement is made.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto, if any. Each notice pursuant to subsection (a)
shall describe with particularity the provisions of this Agreement and any other
Loan Document that, to the Borrower’s knowledge, have been breached.

 

6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Borrower or such Material Subsidiary, (b) all lawful claims which, if
unpaid, would under applicable law become a Lien upon its property not permitted
by Section 7.01 hereof, and (c) all Indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness, except, in each case referred to in
clause (a), (b) or (c), to the extent that failure to do so would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

 

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by Section
7.02, and (b) take all reasonable action to maintain all rights, privileges,
permits, licenses and franchises necessary for the normal conduct of its
business, except, in each case referred to in clause (a) (other than with
respect to the Borrower) or (b), to the extent that failure to do so would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

6.06 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons and to
the extent available on commercially reasonable terms; provided that the
Borrower and its Material Subsidiaries may self-insure to the same extent as
such other Persons.

 

6.07 Compliance with Laws. Comply in all material respects with the requirements
of all applicable Laws and all orders, writs, injunctions and decrees applicable
to it or to its business or property, except in such instances in which the
failure to comply therewith would not reasonably be expected to have,
individually or the aggregate, a Material Adverse Effect.

 

6.08 Books and Records. Maintain proper books of record and account, in which
entries in conformity in all material respects with GAAP and SAP, as applicable,
consistently applied shall be made of all material financial transactions and
matters involving the assets and business of the Borrower or such Material
Subsidiary, as the case may be.

 

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6.09 Inspection Rights. Subject to Section 10.08, permit the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom as may reasonably be requested, and to discuss its affairs, finances
and accounts with its directors, officers, and independent public accountants
(and the Borrower hereby authorizes such independent public accountants to do
so; provided that, so long as no Event of Default exists, a representative of
the Borrower shall be permitted to be present during the discussions), all at
such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that when an Event of Default exists the Administrative Agent or any
Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during
normal business hours and without advance notice.

 

6.10 Use of Proceeds. Use the proceeds of each Borrowing for working capital,
capital expenditures and other purposes not in contravention of any applicable
Law.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, or any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not,
nor shall it permit any Material Subsidiary to, directly or indirectly:

 

7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, of the
Borrower or any Material Subsidiary, other than the following:

 

(a) Liens existing on the date hereof and, if as to each Lien securing
Indebtedness or any other obligation in an amount greater than $40,000,000,
listed on Schedule 7.01;

 

(b) Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

 

(c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 90 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

 

(d) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed by
ERISA;

 

(e) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory or other public obligations, surety bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(f) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property existing on the date hereof or which do not materially
interfere with the use of such real property in the ordinary conduct of the
business of the applicable Person;

 

(g) Liens securing judgments for the payment of money not constituting an Event
of Default under Subsection 8.01(g) or securing appeal or other surety bonds
related to such judgments;

 

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(h) Liens securing purchase money Indebtedness; provided that such Liens attach
no later than 90 days after the purchase of the property subject thereto and do
not at any time encumber any property other than the property financed by such
Indebtedness;

 

(i) any Lien existing on any asset prior to the acquisition thereof by the
Borrower or a Material Subsidiary and not created in contemplation of such
acquisition;

 

(j) Liens arising under or existing as a result of any federal, state or foreign
securities or insurance regulatory law, in each case, that are generally
applicable to Persons that are similarly situated to the Borrower or its
Material Subsidiaries and that are not unique to the Borrower or its Material
Subsidiaries;

 

(k) any Lien existing on the property, assets or revenues of any entity that
merges into the Borrower or any Material Subsidiary, or into which, the Borrower
or any Material Subsidiary is merged; provided that such Lien was not created in
contemplation of such merger;

 

(l) Liens arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by Liens permitted by clauses (a), (c), (h), (i) or (k)
preceding; provided that such Indebtedness is not increased and such Liens do
not encumber any property other than the property already subject to such Liens;

 

(m) Liens on cash, cash equivalents and investment securities securing
obligations under repurchase agreements entered into by the Borrower or any
Material Subsidiary in the ordinary course of business; and

 

(n) any other Liens; provided that the aggregate principal amount of
Indebtedness or other obligations outstanding at any time secured by such other
Liens does not exceed $100,000,000.

 

7.02 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
(each, a “Merger”) another Person, except that:

 

(a) any Material Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries; and

 

(b) the Borrower or any Material Subsidiary may merge with any other Person
(other than pursuant to a transaction described in clause (a) above) provided
that (i) in the case of the Borrower, either (x) the Borrower shall be the
surviving entity to such Merger or (y) the surviving entity to such Merger shall
(1) be incorporated in the United States or any State thereof, (2) expressly
assume the obligations of the Borrower hereunder pursuant to an instrument in
form and substance reasonably satisfactory to the Administrative Agent and (3)
have long-term unsecured debt ratings that are equal to or better than such
ratings of The PMI Group, Inc. in effect immediately prior to such Merger, (ii)
in the case of any Material Subsidiary, either (x) such Material Subsidiary
shall be the surviving entity to such Merger or (y) the surviving entity to such
Merger shall (1) be incorporated in the United States or any State thereof and
(2) have long-term unsecured debt ratings and claims-paying ability (if any)
that are equal to or better than such ratings and claims-paying ability (if any)
of such Material Subsidiary in effect immediately prior to such Merger, (iii)
the Borrower (or surviving entity to the Merger as the case may be) and its
Subsidiaries, as a whole, will have the mortgage guaranty business as one of
their principal businesses and (iv) no Default would exist or would result
therefrom. From and after the consummation of any Merger by the Borrower
permitted pursuant to clause (i)(y) of this Section, all references to the
“Borrower” or the “Borrower’s Board of Directors” under this Agreement shall be
references to the surviving entity to such Merger and its board of directors.
Nothing in this Section shall be construed to constitute a waiver of any Change
of Control.

 

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7.03 Asset Dispositions. Except as otherwise permitted by Section 7.02, sell,
transfer, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to, all or any substantial part of its assets
(including accounts receivable and capital stock of any of its Material
Subsidiaries) to any Person who is not a wholly-owned Subsidiary (any of the
foregoing, an “Asset Disposition”); provided that the Borrower and its Material
Subsidiaries may consummate (a) Asset Dispositions in the ordinary course of
their business, (b) Asset Dispositions constituting dispositions of any
investment or other interest in, or any obligation of, any SPS Company, or loan
to any SPS Company, and (c) so long as no Default exists or would result
therefrom, any other Asset Disposition if, immediately after giving effect
thereto, the aggregate fair market value (determined at the time of the
applicable Asset Disposition) of all assets subject to Asset Dispositions (other
than those described in clause (a) or (b) preceding) consummated by the Borrower
and its Material Subsidiaries (i) after the Closing Date and prior to the end of
the first fiscal year of the Borrower ending after the Closing Date does not,
for such period, exceed 25% of Consolidated Net Worth as of June 30, 2004 and
(ii) during any fiscal year of the Borrower ending after the fiscal year
referred to in clause (i) above does not, for any such fiscal year, exceed 25%
of Consolidated Net Worth as of the last day of the immediately preceding fiscal
year.

 

7.04 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower that is not a wholly-owned Subsidiary of the
Borrower or of a Material Subsidiary, except on terms determined by the Borrower
or such Material Subsidiary to be substantially as favorable to the Borrower or
such Material Subsidiary as would be obtainable by the Borrower or such Material
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that (i) with respect to any transaction or
series of related transactions involving aggregate consideration in excess of
the Threshold Amount, such determination shall be evidenced by a resolution of
the Board of Directors of the Borrower or such Material Subsidiary, as the case
may be, and (ii) the foregoing restriction shall not apply to transactions
between or among the Borrower and/or any of its wholly-owned Material
Subsidiaries, on the one hand, and any one or more SPS Companies, any one or
more FGIC Companies and/or any one or more Ram Re Companies, on the other.

 

7.05 Use of Proceeds. Use the proceeds of any Borrowing, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) if such use
would violate Regulation U or X of the FRB.

 

7.06 Financial Covenants.

 

(a) Adjusted Consolidated Net Worth. Permit Adjusted Consolidated Net Worth at
any time to be less than (i) $2,000,000,000 plus (ii) an amount equal to 50% of
Consolidated Net Income for each fiscal quarter ending after the Closing Date
but before the date of determination, in each case, for which Consolidated Net
Income is positive (but with no deduction on account of negative Consolidated
Net Income for any fiscal quarter) plus (iii) 75% of the aggregate net proceeds,
including the fair market value of property other than cash (as determined in
good faith by the Borrower’s board of directors), received by the Borrower from
the issuance and sale after the date hereof of any capital stock of the Borrower
(other than the proceeds of any issuance and sale of any capital stock (x) to a
Subsidiary or (y) which is required to be redeemed, or is redeemable at the
option of the holder, if certain events or conditions occur or exist or
otherwise) or in connection with the conversion or exchange of any Indebtedness
of the Borrower into capital stock of the Borrower after the Closing Date.

 

(b) Consolidated Total Indebtedness to Consolidated Total Capitalization Ratio.
Permit Consolidated Total Indebtedness to be more than 40% of Consolidated Total
Capitalization at any date on or after the Closing Date.

 

(c) Maximum Risk to Statutory Capital Ratio. Permit at any time the Risk to
Capital Ratio of PMI Mortgage Insurance Co. to be greater than 23.0 to 1.0.

 

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ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

 

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan, or (ii) within four Business Days
after the same becomes due, any interest on any Loan, or any facility,
utilization or other fee due hereunder, or (iii) within five Business Days after
written notice of such failure shall been given to the Borrower by the
Administrative Agent or any Lender, any other amount payable hereunder or under
any other Loan Document; or

 

(b) Specific Covenants. (i) The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.05 with respect to the
Borrower or Sections 6.10 and 7.06; or (ii) the Borrower fails to perform or
observe any term, covenant or agreement contained in any of Sections 7.01, 7.02,
7.03 or 7.04 and such failure continues for 25 days; or

 

(c) Other Defaults. The Borrower fails to perform or observe any other covenant
or agreement (not specified in subsections (a) or (b) above) contained in any
Loan Document on its part to be performed or observed and such failure continues
for 30 days after written notice of such failure shall have been given to the
Borrower by the Administrative Agent or any Lender; or

 

(d) Representations and Warranties. Any representation or warranty made by the
Borrower in this Agreement, including in Section 4.02(b), any Compliance
Certificate or any other written certification delivered pursuant hereto shall
be incorrect in any material respect when made; or

 

(e) Cross-Payment Default and Cross-Acceleration. The Borrower or any Material
Subsidiary (A) fails to make any payment when due (following the expiration of
any applicable grace with regards to such payment) (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of
any Indebtedness (other than Indebtedness hereunder but including Indebtedness
under Swap Contracts) having an aggregate principal amount of more than the
Threshold Amount or (B) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause such Indebtedness having
an aggregate principal amount of more than the Threshold Amount to be demanded
or to become due prior to its stated maturity; or

 

(f) Insolvency Proceedings, Etc. (i) The Borrower or any Material Subsidiary
shall generally not pay its debts as they become due, or shall admit in writing
its inability to pay its debts generally as they become due; or (ii) the
Borrower or any Material Subsidiary institutes or consents to the institution of
any proceeding under any Debtor Relief Law, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer for it or for all or substantially all of its property; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
substantially all of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

 

(g) Judgments. Enforcement proceedings are commenced by any creditor upon any
final judgment or order that has been entered against the Borrower or any
Material Subsidiary for the payment of money in an aggregate amount exceeding
the Threshold Amount (to the extent the payment of money with respect thereto is
not covered by independent third-party insurance or reinsurance as to which the
insurer or reinsurer does not then dispute coverage or liability) or (B) there
is a period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, is not in effect;
or

 

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(h) Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against the Borrower or any Material Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall be any
period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

 

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect, or the Borrower denies in writing that the Borrower has any or
further liability or obligation under any Loan Document, or purports in writing
to revoke, terminate or rescind any Loan Document; or

 

(k) Change of Control. There occurs any Change of Control.

 

8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a) declare the commitment of each Lender to make Loans to be terminated,
whereupon such commitments and obligation shall be terminated;

 

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and

 

(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

 

provided, however, that upon the occurrence of an Event of Default under
Subsection 8.01(f), the obligation of each Lender to make Loans shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, in each case without further act of the Administrative Agent or any
Lender.

 

8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable), any amounts received on account of the Obligations shall be applied by
the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

 

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Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower (or to any Person identified by the Borrower) or
as otherwise required by applicable Law.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01 Appointment and Authorization of Administrative Agent. Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender or Participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

 

9.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.

 

9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Administrative
Agent:

 

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

 

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required

 

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Lenders (or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and

 

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower or
a Lender.

 

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

9.04 Reliance by Administrative Agent.

 

(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders (or such greater
number of Lenders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders.

 

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

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9.05 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article VIII; provided, however, that unless and
until the Administrative Agent has received any such direction, the
Administrative Agent may (but shall not be obligated to) take such action in
accordance with this Agreement, or refrain from taking such action, with respect
to such Default as it shall deem advisable or in the best interest of the
Lenders.

 

9.06 Credit Decision; Disclosure of Information by Administrative Agent. Each
Lender acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender as to
any matter, including whether Agent-Related Persons have disclosed material
information in their possession. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Affiliates, and all applicable bank or other regulatory Laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower hereunder. Each
Lender also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower or any of its Affiliates
which may come into the possession of any Agent-Related Person.

 

9.07 Indemnification of Administrative Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct; provided
further, however, that no action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. Without limitation of the foregoing,
each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrower. The undertaking in this Section shall survive
termination of the Aggregate Commitments, the payment of all other Obligations
and the resignation of the Administrative Agent.

 

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9.08 Administrative Agent in its Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrower and its Affiliates as though Bank of America were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, Bank of America or
its Affiliates may receive information regarding the Borrower or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of such Borrower or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, Bank of America shall have the same rights and
powers under this Agreement as any other Lender and may exercise such rights and
powers as though it were not the Administrative Agent, and the terms “Lender”
and “Lenders” include Bank of America in its individual capacity.

 

9.09 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders and the Borrower. If
the Administrative Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrower at all times other than during the existence of an Event of Default
(which consent of the Borrower shall not be unreasonably withheld or delayed).
If no successor administrative agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders and the Borrower, a successor
administrative agent from among the Lenders. Upon the acceptance of its
appointment as successor administrative agent hereunder, the Person acting as
such successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term “Administrative Agent”
shall mean such successor administrative agent, and the retiring Administrative
Agent’s appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

 

9.10 Administrative Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding under any
Debtor Relief Law relative to the Borrower, the Administrative Agent
(irrespective of whether the principal of any Loan shall then be due and payable
as herein expressed or by declaration or otherwise and irrespective of whether
the Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise to:

 

(a) file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, and all other Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Sections 2.07 and 10.04) allowed in such judicial
proceeding; and

 

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(b) collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.07 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

 

9.11 Other Agents; Arrangers and Managers. None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as a “book
manager” or “lead arranger” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders or other Persons so identified shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders or
other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

 

ARTICLE X.

MISCELLANEOUS

 

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower
therefrom, shall be effective unless in writing signed by the Required Lenders
and the Borrower, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such amendment, waiver or consent shall:

 

(a) waive any condition set forth in Section 4.01 without the written consent of
each Lender;

 

(b) except as contemplated by Section 2.12, extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
shall not constitute an increase of the Commitment of any Lender);

 

(c) postpone any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts due to the Lenders (or any
of them) hereunder or under any other Loan Document without the written consent
of each Lender directly affected thereby;

 

(d) reduce the principal of, or the rate of interest specified herein on, any
Loan, or any fees or other amounts payable hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest at the Default Rate;

 

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(e) change Section 2.11 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender affected thereby; or

 

(f) change any provision of this Section or the definition of “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender;

 

and, provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document.

 

10.02 Notices and Other Communications; Facsimile Copies.

 

(a) General. Unless otherwise expressly provided herein, all notices, demands
and other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to Subsection
10.02(c) below) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i) if to the Borrower, to the address, facsimile number, electronic mail
address or telephone number specified on Schedule 10.02 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by the Borrower in a notice to the Administrative Agent;

 

(ii) if to the Administrative Agent, to the address, facsimile number,
electronic mail address or telephone number specified on Schedule 10.02 or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the other parties;
and

 

(iii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the Borrower and the
Administrative Agent.

 

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto, (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid, (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone, and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of Subsection 10.02(c)
below), when delivered; provided, however, that notices and other communications
to the Administrative Agent pursuant to Article II shall not be effective until
actually received by the Administrative Agent. In no event shall a voicemail
message be effective as a notice, communication or confirmation hereunder.

 

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be

 

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binding on the Borrower, the Administrative Agent and the Lenders. The
Administrative Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.

 

(c) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Loan Notices) purportedly given by or on behalf of the Borrower even
if (i) such notices were not made in a manner specified herein, were incomplete
or were not preceded or followed by any other form of notice specified herein,
or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify each Agent-Related Person and
each Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrower, absent the gross negligence or willful misconduct of the Person
seeking indemnification. All telephonic notices to and other communications with
the Administrative Agent may be recorded by the Administrative Agent, and each
of the parties hereto hereby consents to such recording.

 

10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

10.04 Attorney Costs and Expenses. The Borrower agrees (a) to pay the
Administrative Agent for all reasonable and documented out-of-pocket costs and
expenses associated with the preparation, due diligence, administration (to
include amendments, waivers, consents or other modifications), syndication and
closing of all loan documentation, including, without limitation, the reasonable
legal fees of counsel to the Administrative Agent; provided that (i) the
Borrower shall be required to pay the reasonable fees and expenses of only one
counsel for the Administrative Agent and the Lenders in connection with the
negotiation of the Loan Documents, and (ii) unless an Event of Default has
occurred and is continuing, the Borrower shall not be required to pay the legal
fees of any counsel to any Lender (other than the reasonable legal fees of
counsel to the Administrative Agent). After the occurrence and during the
continuance of an Event of Default, the Borrower will also pay the expenses of
the Administrative Agent and each Lender in connection with the enforcement of
any Loan Documents. All amounts due under this Section 10.04 shall be payable
within ten Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Aggregate Commitment and repayment of all
other Obligations.

 

10.05 Indemnification by the Borrower. Except with respect to the costs and
expenses which are covered by Section 10.04 and Taxes and Other Taxes, which are
covered by Section 3.01, whether or not the transactions contemplated hereby are
consummated, the Borrower shall indemnify and hold harmless each Agent-Related
Person, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against any and all claims, damages, losses, liabilities
and expenses (including without limitation, the reasonable fees, disbursements
and other charges of counsel) that may be incurred by or asserted or awarded
against any such Indemnitee in each case arising out of or in connection with or
by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) any matters contemplated by this Agreement, except to the
extent such claim, damage, loss, liability or expense is found by a court of
competent jurisdiction to have resulted from such Indemnitee’s gross negligence
or willful misconduct. In the case of an investigation, litigation or proceeding
to which the indemnity in this section applies, such indemnity shall be
effective whether or

 

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not such investigation, litigation or proceeding is brought by the Borrower, the
Borrower’s equity holders or creditors or an Indemnitee, whether or not an
Indemnitee is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. No Indemnitee shall be liable for any
damages arising from the use by others of any information or other materials
obtained through IntraLinks or other similar information transmission systems in
connection with this Agreement that has been accurately reproduced and posted
thereon, nor shall any Indemnitee have any liability for any indirect or
consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date). All amounts due under this Section 10.05
shall be payable within ten Business Days after demand therefor. The agreements
in this Section shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the Aggregate Commitment and the
repayment, satisfaction or discharge of all the other Obligations.

 

10.06 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

 

10.07 Successors and Assigns.

 

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not, except as expressly
permitted by Section 7.2, assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of Subsection 10.07(b) below, (ii) by way of participation in accordance with
the provisions of Subsection 10.07(d) below or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of Subsection
10.07(f) below (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Subsection 10.07(d) below and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b) At any time any Lender may, and, within five Business Days after demand by
the Borrower at a time that any Lender shall cease to have the Required Lender
Rating and no Event of Default has occurred and is continuing, such Lender will,
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans); provided that (i) except in the case of an assignment of the
entire remaining amount of the assigning Lender’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund (as defined in Subsection 10.07(g) below) with
respect to a Lender, the aggregate amount of the Commitment or Loans subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to

 

42

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the Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each
of the Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consent, (ii) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or the Commitment assigned, (iii) any assignment of a Commitment must be
consented to by the Administrative Agent (which consent shall not be
unreasonably withheld or delayed) unless the Person that is the proposed
assignee is itself a Lender or an Affiliate of a Lender and (iv) the parties to
each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500. Subject to acceptance and recording thereof by the Administrative Agent
pursuant to Subsection 10.07(c) below, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 10.04 and 10.05
with respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Subsection 10.07(d) below.

 

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be effective to
register each assignment made pursuant to this Agreement and shall be conclusive
absent manifest error, and the Borrower, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant. Subject to Subsection
10.07(e) below, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Subsection
10.07(b) above. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.09 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.11 as though it were a
Lender.

 

43

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(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 or 3.05 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 10.15 as though
it were a Lender.

 

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g) As used herein, the following terms have the following meanings:

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, and (ii) unless an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that, notwithstanding the foregoing,
“Eligible Assignee” shall not include the Borrower or any of the Borrower’s
Subsidiaries; and provided, further, that, unless an Event of Default has
occurred and is continuing, an Eligible Assignee shall have the Required Lender
Rating.

 

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(h) Each Lender shall inform the Borrower of the name and address of each Person
to which such Lender has participated any of its Loans or Commitments promptly
upon a request by the Borrower to such Lender (which requests shall not be made
with unreasonable frequency) for such information.

 

10.08 Confidentiality. The Administrative Agent and each Lender agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential and the Administrative Agent or such Lender, as
the case may be, shall have received assurances reasonably satisfactory to it
that such Persons shall keep such Information confidential), (b) to the extent
requested by any regulatory authority reasonably believed to be of competent
jurisdiction (including any self-regulatory authority reasonably believed to be
of competent jurisdiction, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party hereto, (e) to
the extent necessary to exercise any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this

 

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Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the prior written consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to the Administrative Agent or
any Lender on a nonconfidential basis from a source other than the Borrower;
provided, that if any disclosure is to be made pursuant to a subpoena or similar
legal process, the disclosing party shall notify the Borrower prior to such
disclosure, if practicable, or promptly thereafter if prior notice is not
practicable. For purposes of this Section, “Information” means all information
received from the Borrower relating to the Borrower or any Affiliate or any of
its respective businesses, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower (so long as the source of such information was not
known by the Administrative Agent or such Lender to be bound by a
confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information), provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified at the time of delivery as confidential.

 

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by
applicable law, upon the occurrence and during the continuance of any Event of
Default, each Lender and each of its Affiliates is authorized at any time and
from time to time, without prior notice to the Borrower, any such notice being
waived by the Borrower to the fullest extent permitted by applicable law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender or Affiliate to or for the credit or the account of the
Borrower against any and all Obligations owing by the Borrower to such Lender
hereunder or under any other Loan Document, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any other Loan Document and although
such Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Lender or Affiliate; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application.

 

10.10 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof and (c) amortize, prorate, allocate and spread in equal
or unequal parts the total amount of interest throughout the contemplated term
of the Obligations hereunder.

 

10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

10.12 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement

 

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shall control; provided that the inclusion of supplemental rights or remedies in
favor of the Administrative Agent or the Lenders in any other Loan Document
shall not be deemed a conflict with this Agreement. Each Loan Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.

 

10.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document shall survive the
execution and delivery hereof and thereof. Such representations and warranties
have been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender
or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any
Borrowing, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied.

 

10.14 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.15 Tax Forms.

 

(a) (i) Each Lender that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Borrower (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) and the Administrative Agent, on or
before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation), two duly signed completed copies of (x) IRS Form W-8BEN or any
successor thereto, (y) IRS Form W-8ECI or any successor thereto or (z), in the
case of a Foreign Lender claiming exemption from United States withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest,” a certificate in form and substance satisfactory to the
Administrative Agent and the Borrower, representing that such Foreign Lender is
not a “person” described in Section 871(h)(3) or Section 881(c)(3) of the Code,
and an IRS Form W-8BEN or any successor thereto, claiming complete exemption
from, or a reduced rate of, United States withholding tax on all payments by the
Borrower under the Loan Documents. Thereafter and from time to time as requested
by the Borrower, each such Foreign Lender shall (A) promptly submit to the
Administrative Agent and the Borrower such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may then be
available under then current United States laws and regulations to avoid, or
such evidence as is satisfactory to the Borrower and the Administrative Agent of
any available exemption from or reduction of, United States withholding taxes in
respect of all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement, (B) promptly notify the Administrative Agent and the
Borrower of any change in circumstances which would modify or render invalid any
claimed exemption or reduction, (C) deliver such new forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Foreign
Lender and (D) take such steps as shall not be materially disadvantageous to it,
in the reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement of
applicable Laws that the Borrower make any deduction or withholding for taxes
from amounts payable to such Foreign Lender.

 

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(ii) Each Foreign Lender, if it does not act or ceases to act for its own
account with respect to any portion of any sums paid or payable to such Lender
under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Administrative Agent on or
before the date such Foreign Lender becomes a party to this Agreement, or if it
ceases to act for its own account at a date after the date the Foreign Lender
became a party to this Agreement, the date such Foreign Lender ceases to act for
its own account with respect to any portion of any such sums paid or payable,
and at such other times as may be necessary in the determination of the
Administrative Agent (in the reasonable exercise of its discretion) or the
Borrower, (A) two duly signed completed copies of the forms or statements
required to be furnished by such Lender as set forth in Subsection 10.15(a)(i)
above, to establish the portion of any such sums paid or payable with respect to
which such Lender acts for its own account that is not subject to U.S.
withholding tax and (B) two duly signed completed copies of IRS Form W-8IMY (or
any successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

 

(iii) The Borrower shall not be required to pay any additional amount to any
Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates or statements
of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this
Subsection 10.15(a), (B) if such Lender shall have failed to satisfy the
foregoing provisions of this Subsection 10.15(a), (C) with respect to U.S.
withholding tax, if the applicable forms or certificates furnished in accordance
with this Subsection 10.15(a) do not establish a complete exemption from U.S.
withholding tax or if such forms or certificates are untrue, inaccurate,
incomplete, or invalid in any material respect, or (D) with respect to U.S.
withholding tax, if the Lender designates a successor lending office at which it
maintains its Loans and such designation causes such Lender to be obligated to
make tax payments in excess of the payments it would have been obligated to make
absent such designation; provided, however, that the Borrower shall be required
to pay amounts that would not have been imposed on a Lender that has previously
satisfied and, to the extent permitted to do so by applicable law, continues to
satisfy Subsections 10.15(a)(i) and (ii) but for a change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof (including a change in any
applicable law, treaty or governmental rule, regulation or order, or any change
in interpretation, administration, or application thereof that makes it unlawful
for the Lender to furnish the forms or certificates described in this Subsection
10.15(a)) occurring after the date such Lender became a party to this Agreement
or ceased to act for its own account.

 

(iv) The Administrative Agent may, without reduction, withhold any Taxes
required to be deducted and withheld from any payment under any of the Loan
Documents with respect to which the Borrower is not required to pay additional
amounts under this Subsection 10.15(a).

 

(b) Upon the request of the Administrative Agent or the Borrower, each Lender
that is a “United States person” within the meaning of Section 7701(a)(30) of
the Code shall deliver to the Administrative Agent and the Borrower two duly
signed completed copies of IRS Form W-9. If such Lender fails to deliver such
forms, then the Administrative Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable back-up withholding tax
imposed by the Code, without reduction.

 

(c) If any Governmental Authority asserts that the Administrative Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the

 

47

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Administrative Agent. The obligation of the Lenders under this Section shall
survive the termination of the Aggregate Commitment, repayment of all other
Obligations hereunder and the resignation of the Administrative Agent.

 

10.16 Replacement of Lenders. Under any circumstances set forth herein providing
that the Borrower shall have the right to replace a Lender as a party to this
Agreement, the Borrower may, upon notice to such Lender and the Administrative
Agent, replace such Lender by causing such Lender to assign its Commitment and
outstanding Loans (with the assignment fee to be paid by the Borrower in such
instance) pursuant to Subsection 10.07(b) to one or more other Lenders or
Eligible Assignees procured by the Borrower. The Borrower shall (x) pay any
amounts payable to the Lender being replaced pursuant to Section 3.05 and (y)
release such Lender from its obligations under the Loan Documents. Any Lender
being replaced shall execute and deliver an Assignment and Assumption with
respect to such Lender’s Commitment and outstanding Loans.

 

10.17 Governing Law.

 

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK CITY, NEW YORK, OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT. THE BORROWER,
THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
THE LAW OF SUCH STATE.

 

10.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

 

10.19 USA Patriot Act Notice. Each Lender and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Borrower that,
pursuant to the requirements of the USA Patriot Act (Title III, Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender or the Administrative Agent, as applicable, to identify the
Borrower in accordance with the Act.

 

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[REMAINDER OF PAGE INTENTIONALLY BLANK.

SIGNATURE PAGE FOLLOWS.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

THE PMI GROUP, INC.

By:

 

/s/ Donald P. Lofe, Jr.

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

Name:

 

Donald P. Lofe, Jr.

Title:

 

EVP & CFO

 

S-1

Signature Page to Revolving Credit Agreement

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

BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

/s/ Jim V. Miller

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

Name:

 

Jim V. Miller

Title:

 

Senior Vice President

 

S-2

Signature Page to Revolving Credit Agreement

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

BANK OF AMERICA, N.A., as a Lender

By:

 

/s/ Jim V. Miller

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

Name:

 

Jim V. Miller

Title:

 

Senior Vice President

 

S-3

Signature Page to Revolving Credit Agreement

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

CITIBANK, N.A., as a Lender

By:

 

/s/ David A. Dodge

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

Name:

 

David A. Dodge

Title:

 

Managing Director

 

S-4

Signature Page to Revolving Credit Agreement

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

WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender

By:

 

/s/ John Anderson

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

Name:

 

John Anderson

Title:

 

Director

 

S-5

Signature Page to Revolving Credit Agreement

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

SUNTRUST BANK, as a Lender

By:

 

/s/ Jack V. Mackmull, Jr.

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

Name:

 

Jack V. Mackmull, Jr.

Title:

 

Director

 

S-6

Signature Page to Revolving Credit Agreement

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

JPMORGAN CHASE BANK, N.A., as a Lender

By:

 

/s/ Lawrence Palumbo, Jr.

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

Name:

 

Lawrence Palumbo, Jr.

Title:

 

Vice President

 

S-7

Signature Page to Revolving Credit Agreement