Exhibit 10.18

 

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

 

Dated as of August 27, 2003

 

by and among

 

WASTE INDUSTRIES USA, INC.

AND ITS SUBSIDIARIES

(the “Borrowers”)

 

THE LENDING INSTITUTIONS PARTY HERETO

(the “Banks”)

 

and

 

FLEET NATIONAL BANK, as Administrative Agent

 

FLEET SECURITIES, INC.,

as Arranger

 

WACHOVIA BANK, N.A., as Syndication Agent

 

BRANCH BANKING AND TRUST COMPANY, as Documentation Agent

 

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TABLE OF CONTENTS

 

1.    DEFINITIONS AND RULES OF INTERPRETATION    1      1.1.    Definitions    1
     1.2.    Rules of Interpretation    18 2.    THE REVOLVING CREDIT FACILITY
   19      2.1.    Commitment to Lend    19      2.2.    Reduction and Increase
of Total Commitment    19           2.2.1.   

Reduction of Total Commitment

   19           2.2.2.   

Increase of Total Commitment

   20      2.3.    The Revolving Credit Notes    20      2.4.    Interest on
Revolving Credit Loans    21      2.5.    Election of Eurodollar Rate; Notice of
Election; Interest Periods; Minimum Amounts    21      2.6.    Requests for
Revolving Credit Loans    22           2.6.1.   

Funds for Revolving Credit Loans

   22      2.7.    Swing Line Loans; Settlements    23      2.8.    Maturity of
the Revolving Credit Loans    25      2.9.    Mandatory Repayments of the
Revolving Credit Loans and Swing Line Loans and Reimbursement Obligations    25
     2.10.    Optional Prepayments of Revolving Credit Loans    26 3.    LETTERS
OF CREDIT    26      3.1.    Letter of Credit Commitments    26      3.2.   
Reimbursement Obligation of the Borrowers    28      3.3.    Letter of Credit
Payments    28      3.4.    Obligations Absolute    29      3.5.    Reliance by
Issuer    29      3.6.    Notice Regarding Letters of Credit    29 4.    CERTAIN
GENERAL PROVISIONS    30      4.1.    Fees    30      4.2.    Payments    30  
   4.3.    Computations    31      4.4.    Capital Adequacy    31      4.5.   
Certificate    32      4.6.    Interest After Default    32           4.6.1   

Overdue Amounts

   32           4.6.2   

Amounts Not Overdue

   32      4.7.    Interest Limitation    32      4.8.    Eurodollar Indemnity
   32      4.9.    Illegality; Inability to Determine Eurodollar Rate    33     
4.10.    Additional Costs, Etc    33      4.11.    Replacement of Banks    34  
   4.12.    Concerning Joint and Several Liability of the Borrowers    35 5.   
REPRESENTATIONS AND WARRANTIES    37      5.1.    Corporate Authority    37     
5.2.    Governmental Approvals    38

 

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     5.3.    Title to Properties; Leases    38      5.4.    Financial
Statements; Solvency; Fiscal Year    38      5.5.    No Material Changes, etc.
   39      5.6.    Permits, Franchises, Patents, Copyrights, etc.    39     
5.7.    Litigation    39      5.8.    No Materially Adverse Contracts, etc.   
39      5.9.    Compliance with Other Instruments, Laws, etc.    39      5.10.
   Tax Status    39      5.11.    No Event of Default    40      5.12.   
Holding Company and Investment Company Acts    40      5.13.    Absence of
Financing Statements, etc.    40      5.14.    Employee Benefit Plans    40     
5.15.    Use of Proceeds    41           5.15.1.   

General

   41           5.15.2.   

Regulations U and X

   41           5.15.3.   

Ineligible Securities

   41      5.16.    Environmental Compliance    41      5.17.    Subsidiaries   
42      5.18.    True Copies of Charter and Other Documents    43      5.19.   
Disclosure    43      5.20.    Capitalization    43      5.21.    Foreign Assets
Control Regulations, Etc.    43 6.    AFFIRMATIVE COVENANTS OF THE BORROWERS   
44      6.1.    Punctual Payment    44      6.2.    Maintenance of Office    44
     6.3.    Records and Accounts    44      6.4.    Financial Statements,
Certificates and Information    44      6.5.    Corporate Existence and Conduct
of Business    45      6.6.    Maintenance of Properties    45      6.7.   
Insurance    46      6.8.    Taxes    46      6.9.    Inspection of Properties,
Books, and Contracts    46      6.10.    Compliance with Laws, Contracts,
Licenses and Permits; Maintenance of Material Licenses and Permits    46     
6.11.    Environmental Indemnification    47      6.12.    Further Assurances   
47      6.13.    Notice of Potential Claims or Litigation    47      6.14.   
Notice of Certain Events Concerning Insurance and Environmental Claims    47  
   6.15.    Notice of Default, Material Change, etc.    48      6.16.    New
Subsidiaries    48      6.17.    Employee Benefit Plans    48      6.18.   
Notices Concerning Tax Treatment    49 7.    CERTAIN NEGATIVE COVENANTS OF THE
BORROWERS    49      7.1.    Restrictions on Indebtedness    49      7.2.   
Restrictions on Liens    51

 

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     7.3.    Restrictions on Investments    52      7.4.    Merger,
Consolidation and Disposition of Assets    53           7.4.1.   

Mergers and Acquisitions

   53           7.4.2.   

Disposition of Assets

   54      7.5.    Sale and Leaseback    55      7.6.    Restricted
Distributions and Redemptions    55      7.7.    Debt Modification, etc.    55  
   7.8.    Employee Benefit Plans    55      7.9.    Negative Pledges    56     
7.10.    Business Activities    56      7.11.    Transactions with Affiliates   
56      7.12.    Transfer Rights    56 8.    FINANCIAL COVENANTS OF THE
BORROWERS    58      8.1.    Funded Debt to EBITDA    58      8.2.    Senior
Funded Debt to EBITDA    58      8.3.    Consolidated Net Worth    59      8.4.
   Interest Coverage    59      8.5.    Profitable Operations    59      8.6.   
Capital Expenditures    59 9.    CLOSING CONDITIONS    59      9.1.    Corporate
Action    59      9.2.    Loan Documents, etc.    59           9.2.1.   

Loan Documents

   59           9.2.2.   

Noteholders’ Documents and Consents

   59      9.3.    Certified Copies of Charter Documents    60      9.4.   
Incumbency Certificate    60      9.5.    Validity of Liens    60      9.6.   
Perfection Certificates and UCC Search Results    60      9.7.    Certificates
of Insurance    60      9.8.    Opinion of Counsel    60      9.9.    Permit
Certificate    60      9.10.    Payment of Fees    61      9.11.    Payoff    61
     9.12.    Funded Debt to EBITDA on Closing Date    61      9.13.    Consents
and Approvals    61 10.    CONDITIONS TO ALL BORROWINGS    61      10.1.   
Representations True; No Event of Default    61      10.2.    No Legal
Impediment    61      10.3.    Governmental Regulation    61      10.4.   
Proceedings and Documents    61 11.    COLLATERAL SECURITY    62 12.    EVENTS
OF DEFAULT; ACCELERATION; ETC.    62      12.1.    Events of Default and
Acceleration    62      12.2.    Termination of Commitments    65      12.3.   
Remedies    65      12.4.    Distribution of Collateral Proceeds    65

 

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     12.5.   

Acknowledgement Regarding the Intercreditor Agreement

   66 13.    SETOFF    66 14.    THE ADMINISTRATIVE AGENT    67      14.1.   

Appointment of Administrative Agent, Powers and Immunities

   67      14.2.   

Actions By Administrative Agent

   68      14.3.   

INDEMNIFICATION

   68      14.4.   

Reimbursement

   69      14.5.   

Closing Documents

   69      14.6.   

Non-Reliance on Administrative Agent and Other Banks

   69      14.7.   

Resignation of Administrative Agent

   70      14.8.   

Action by the Banks, Consents, Amendments, Waivers, Etc.

   70      14.9.   

Administrative Agent May File Proofs of Claim

   71      14.10.   

Documentation Agent and Syndication Agent

   72 15.    EXPENSES    72 16.    INDEMNIFICATION    73 17.    SURVIVAL OF
COVENANTS, ETC.    74 18.    ASSIGNMENT AND PARTICIPATION    74 19.    PARTIES
IN INTEREST    76 20.    NOTICES, ETC.    76 21.    TREATMENT OF CERTAIN
CONFIDENTIAL INFORMATION    76      21.1.   

Confidentiality

   76      21.2.   

Prior Notification

   77      21.3.   

Other

   77 22.    MISCELLANEOUS    77 23.    ENTIRE AGREEMENT, ETC.    78 24.   
WAIVER OF JURY TRIAL    78 25.    GOVERNING LAW    78 26.    SEVERABILITY    78
27.    EXISTING CREDIT AGREEMENT SUPERSEDED    79

 

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Exhibits

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Exhibit A    Form of Revolving Credit Note Exhibit B    Form of Loan and Letter
of Credit Request Exhibit C    Form of Swing Line Note Exhibit D    Form of
Compliance Certificate Exhibit E    Permit Certificate Exhibit F    Form of
Assignment and Acceptance Exhibit G    Form of Designated Intercompany
Debentures     

Schedules

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Schedule 1    Banks and Commitments Schedule 5.7    Litigation Schedule 5.16   
Environmental Matters Schedule 5.17    Subsidiaries Schedule 7.1    Existing
Indebtedness Schedule 7.2    Existing Liens Schedule 7.3    Existing Investments

 

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AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

 

This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of August 27,
2003, by and among (a) WASTE INDUSTRIES USA, INC., a North Carolina corporation
having its principal place of business at 3301 Benson Drive, Suite 601, Raleigh,
North Carolina 27609 (the “Parent”), and each of the subsidiaries of the Parent
(the “Subsidiaries” and together with the Parent, the “Borrowers”), (b) FLEET
NATIONAL BANK, a national banking association having a place of business at 100
Federal Street, Boston, Massachusetts 02110 (acting in its individual capacity,
“Fleet”), and the other lending institutions listed on Schedule 1 (collectively,
the “Banks”), (c) FLEET NATIONAL BANK, as Administrative Agent for the Banks
(the “Administrative Agent”), (d) WACHOVIA BANK, N.A., as Syndication Agent for
the Banks (the “Syndication Agent”) and (e) BRANCH BANKING AND TRUST COMPANY, as
Documentation Agent for the Banks (the “Documentation Agent”).

 

WHEREAS, the Borrowers, the Administrative Agent and certain lending
institutions are parties to that certain Revolving Credit Agreement, dated as of
November 9, 1999 (the “Existing Credit Agreement”), pursuant to which the banks
under the Existing Credit Agreement have made loans and other extensions of
credit to the Borrowers;

 

WHEREAS, the Banks are willing to amend and restate the Existing Credit
Agreement, and the Banks are willing to make loans and other extensions of
credit to the Borrowers on the terms and conditions set forth herein;

 

WHEREAS, Citizens Bank of Massachusetts (as successor to USTRUST) (the “Retiring
Bank”), a bank under the Existing Credit Agreement, will not be Bank hereunder;

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged (these recitals being an integral part of this Credit Agreement),
the Borrowers, the Administrative Agent and the Banks hereby agree that, as of
the Closing Date (as defined below), the Existing Credit Agreement shall be
amended and restated in its entirety and shall remain in full force and effect
only as set forth herein:

 

1. DEFINITIONS AND RULES OF INTERPRETATION.

 

1.1. Definitions. The following terms shall have the meanings set forth in this
§1 or elsewhere in the provisions of this Credit Agreement referred to below:

 

Accountants. An independent accounting firm of national standing acceptable to
the Administrative Agent and the Banks.

 

Administrative Agent. As defined in the preamble hereto.

 

Administrative Agent’s Office. The Administrative Agent’s office located at 100
Federal Street, Boston, Massachusetts 02110, or such other location as the
Administrative Agent may designate from time to time.

 

Administrative Agent’s Special Counsel. Bingham McCutchen LLP or such other
counsel as may be approved by the Administrative Agent.

 

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Affiliate. Any Person that would be considered to be an affiliate of any of the
Borrowers under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if any of the Borrowers
were issuing securities.

 

Applicable Commitment Rate. The applicable rate with respect to the Commitment
Fee shall be as set forth in the Pricing Table.

 

Applicable Base Rate Margin. The Applicable Base Rate Margin on Base Rate Loans
shall be as set forth in the Pricing Table.

 

Applicable Eurodollar Rate Margin. The Applicable Eurodollar Margin on
Eurodollar Loans shall be as set forth in the Pricing Table.

 

Applicable L/C Margin. The Applicable L/C Margin on Letters of Credit shall be
as set forth in the Pricing Table.

 

Applicable Laws. See §6.10.

 

Approved Fund. Any Fund that is administered or managed by (a) a Bank, (b) an
Affiliate of a Bank or (c) an entity or an Affiliate of an entity that
administers or manages a Bank.

 

Arranger. Fleet Securities, Inc.

 

Assignment and Acceptance. See §18.

 

Balance Sheet Date. December 31, 2002.

 

Bank Affiliate. With respect to any Bank, (a) an Affiliate of such Bank or (b)
any Approved Fund.

 

Banks. As defined in the preamble hereto.

 

Base Rate. The higher of (a) the variable annual rate of interest so designated
from time to time by Fleet as its “prime rate”, such rate being a reference rate
and not necessarily representing the lowest or best rate being charged to any
customer, and (b) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, “Federal Funds Effective
Rate” shall mean 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, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three funds brokers of
recognized standing selected by the Administrative Agent. Changes in the Base
Rate resulting from any changes in Fleet’s “prime rate” shall take place
immediately without notice or demand of any kind.

 

Base Rate Loans. Loans bearing interest calculated by reference to the Base
Rate.

 

BBT. Branch Banking and Trust Company.

 

Borrowers. As defined in the preamble hereto.

 

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Business Day. Any day on which lending institutions in Boston, Massachusetts,
are open for the transaction of banking business.

 

Capital Assets. Fixed assets, both tangible (such as land, buildings, fixtures,
machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include (a) any item customarily charged directly to expense or depreciated over
a useful life of twelve (12) months or less in accordance with GAAP, or (b) any
item obtained through an acquisition permitted by §7.4 hereof.

 

Capital Expenditures. Amounts paid or Indebtedness incurred by the Borrowers in
connection with the purchase or lease of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such Person in accordance
with generally accepted accounting principles.

 

Capitalized Leases. Leases under which any Borrower is the lessee or obligor,
the discounted future rental payment obligations under which are required to be
capitalized on the balance sheet of the lessee or obligor in accordance with
generally accepted accounting principles.

 

CERCLA. See the definition of Release.

 

Certified. With respect to the financial statements of any Person, such
statements as audited by a firm of independent auditors, whose report expresses
the opinion without qualifications, that such financial statements present
fairly the financial position of such Person.

 

CFO. See §6.4(b).

 

Closing Date. The date on which the conditions precedent set forth in §9 are
satisfied.

 

Code. The Internal Revenue Code of 1986.

 

Collateral. All of the property, rights and interests of the Borrowers that are
or are intended to be subject to the security interests created by the Security
Documents.

 

Collateral Agent. Fleet acting in its role as collateral agent under the
Security Documents for itself and the other Banks and the Noteholders, as set
forth in the Intercreditor Agreement.

 

Commitment. With respect to each Bank, the amount determined by multiplying such
Bank’s Commitment Percentage by the Total Commitment specified in §2.1 hereof,
as the same may be reduced from time to time.

 

Commitment Fee. See §4.1(b).

 

Commitment Percentage. With respect to each Bank, the percentage set forth
beside its name on Schedule 1 attached hereto (subject to adjustment upon any
assignments pursuant to §18).

 

Compliance Certificate. See § 6.4(c).

 

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Conforming Amendment. The amendment to the Purchase Agreements to conform the
financial covenants and negative covenants therein to the corresponding
covenants hereof, in a form reasonably satisfactory to the Administrative Agent.

 

Consolidated or consolidated. With reference to any term defined herein, shall
mean that term as applied to the accounts of the Borrowers, consolidated in
accordance with generally accepted accounting principles.

 

Consolidated Earnings Before Interest and Taxes or EBIT. For any period, the
Consolidated Net Income (or Deficit) of the Borrowers, plus (a) interest expense
and (b) income taxes, determined in accordance with GAAP.

 

Consolidated Earnings Before Interest, Taxes and Amortization or EBITA. For any
period (without duplication), EBIT plus amortization expense, to the extent that
it was deducted in determining Consolidated Net Income (or Deficit), determined
in accordance with GAAP.

 

For purposes of calculating the financial covenants set forth in §8, the
Borrowers may include the EBITA for the prior twelve (12) months of companies
acquired by the Borrowers during the respective reporting period (without
duplication with respect to the adjustments set forth above) only if (A) the
financial statements of such acquired Borrowers have been audited for the period
sought to be included by an independent accounting firm satisfactory to the
Administrative Agent, or (B) the Administrative Agent consents to such inclusion
after being furnished with other acceptable financial statements. Such acquired
EBITA may be further adjusted to add back non-recurring private company expenses
which are discontinued upon acquisition (including, without limitation, owner’s
compensation), as approved by the Administrative Agent. Simultaneously with the
delivery of the financial statements referred to in (A) and (B) above, the CFO
of the Parent shall deliver to the Administrative Agent a Compliance Certificate
and appropriate documentation certifying the historical operating results,
adjustments and balance sheet of the acquired company.

 

Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization or
EBITDA. For any period (without duplication), EBITA plus depreciation expense,
to the extent that it was deducted in determining Consolidated Net Income (or
Deficit), determined in accordance with GAAP.

 

For purposes of calculating the financial covenants set forth in §8 (other than
§8.4), the Borrowers may include the EBITDA for the prior twelve (12) months of
companies acquired by the Borrowers during the respective reporting period
(without duplication with respect to the adjustments set forth above) only if
(A) the financial statements of such acquired Borrowers have been audited for
the period sought to be included by an independent accounting firm satisfactory
to the Administrative Agent, or (B) the Administrative Agent consents to such
inclusion after being furnished with other acceptable financial statements. Such
acquired EBITDA may be further adjusted to add back non-recurring private
company expenses which are discontinued upon acquisition (including, without
limitation, owner’s compensation), as approved by the Administrative Agent.
Simultaneously with the delivery of the financial statements referred to in (A)
and (B) above, the CFO of the Parent shall deliver to the Administrative Agent a
Compliance Certificate and appropriate documentation certifying the historical
operating results, adjustments and balance sheet of the acquired company.

 

Consolidated Net Income. The consolidated net income of the Borrowers after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP.

 

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Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities.

 

Consolidated Total Assets. All assets of the Borrowers determined on a
consolidated basis in accordance with GAAP.

 

Consolidated Total Debt Service. For any period, the sum, without duplication,
of (a) Consolidated Total Interest Expense for such period, plus (b) any and all
scheduled repayments of principal during such period in respect of Indebtedness
that becomes due and payable or that is to become due and payable during such
period pursuant to any agreement or instrument to which any Borrower is a party
(or, in the case of clause (iii), for which the Borrowers or any of their
Subsidiaries is a guarantor) relating to (i) the borrowing of money or the
obtaining of credit, including the issuance of notes or bonds, (ii) any
Synthetic Leases or any Capitalized Leases, and (iii) Indebtedness of the type
referred to above of another Person guaranteed by the Borrowers or any of their
Subsidiaries.

 

Consolidated Total Interest Expense. For any period, the aggregate amount of
interest required to be paid or accrued by the Borrowers during such period on
all Indebtedness of the Borrowers outstanding during all or any part of such
period, whether such interest was or is required to be reflected as an item of
expense or capitalized, including payments consisting of interest in respect of
any Capitalized Lease or any Synthetic Lease and including commitment fees,
agency fees, facility fees, balance deficiency fees and similar fees or expenses
in connection with the borrowing of money, but excluding therefrom the non-cash
amortization of debt issuance costs.

 

Consolidated Total Liabilities. All liabilities of the Borrowers determined on a
consolidated basis in accordance with GAAP.

 

Consulting Engineer. An environmental consulting firm reasonably acceptable to
the Administrative Agent.

 

Credit Agreement. This Amended and Restated Revolving Credit Agreement,
including the Schedules and Exhibits hereto.

 

Default. See §12.1.

 

Designated Intellectual Property. Those patents, patent applications,
trademarks, trademark applications, trade names, copyrights, copyright
applications, rights to sue and recover for past infringement of patents,
trademarks and copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill owned by Waste Industries of
Mississippi, LLC or Waste Industries Property Co, LLC (each, an “IP Holder” and,
collectively, the “IP Holders”), and all licenses, permits (to the full extent
such permits are assignable by law, subject to regulatory approval if required,
and pursuant to their terms), agreements of any kind or nature pursuant to which
one or both of the IP Holders possesses, uses or has authority to possess or use
property (whether tangible or intangible) of others, or by which others hold the
right to possess, use or have authority to possess or use property (whether
tangible or intangible) of one or both of the IP Holders, and all recorded data
of any kind or nature, regardless of the medium of recording including, without
limitation, all software, writings, plans, specifications and schematics of one
or both of the IP Holders.

 

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Designated Intercompany Debentures. Subordinated intercompany debentures held by
Waste Services of Memphis, LLC, issued by a Borrower in the form of Exhibit G
hereto and which shall be pledged to the Collateral Agent.

 

Designated LLCs. Waste Industries of Mississippi, LLC; Waste Services of
Memphis, LLC; WasteCo, LLC; and Waste Services of Tennessee, LLC, each a
Delaware limited liability company, so long as such company is treated as a
corporation or partnership for federal tax purposes.

 

Designated Property. Includes (a) the applicable Borrower’s ownership interests
in the Designated LLCs; (b) annuity contracts; (c) Investments held principally
as a passive vehicle for the production of income held by a Borrower, (d) the
Designated Intercompany Debentures; (e) prior to its conversion into an LLC, the
stock of S&S Enterprises, Inc.; (f) the cash and cash equivalents, overnight
sweep investments (such as repurchase agreements), and intercompany notes, loans
and accounts payable of the Borrowers; and (g) the Designated Intellectual
Property.

 

Designated Property Notice Period. After the occurrence and continuation of a
Default or an Event of Default, the period beginning three days after the
receipt by the Parent of written notice from the Administrative Agent of its
election to terminate the rights granted in Section 7.12 hereof, and ending upon
receipt by the Parent of written notice that the Administrative Agent has
elected to restore the rights granted in Section 7.12 hereof.

 

Disposal (or Disposed). See the definition of Release.

 

Distribution. The declaration or payment of any dividend on or in respect of any
shares of any class of capital stock, any partnership interests or any
membership units of any Person, other than dividends or other distributions
payable solely in shares of common stock, partnership interests or membership
units of such Person, as the case may be; the purchase, redemption, or other
retirement of any shares of any class of capital stock, partnership interests or
membership units of such Person, directly or indirectly through a Subsidiary or
otherwise; the return of equity capital by any Person to its shareholders,
partners or members as such; or any other distribution on or in respect of any
shares of any class of capital stock, partnership interests or membership units
of such Person.

 

Documentation Agent. As defined in the preamble hereto.

 

Dollars or $. Dollars in lawful currency of the United States of America.

 

Drawdown Date. The date on which any Loan is made or is to be made, and the date
on which any Revolving Credit Loan is converted or continued in accordance with
§2.5, or the date that any draft or other form of demand for payment is honored
with respect to a Letter of Credit.

 

EBIT. See the definition of Consolidated Earnings Before Interest and Taxes.

 

EBITA. See the definition of Consolidated Earnings Before Interest, Taxes and
Amortization.

 

EBITDA. See the definition of Consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization.

 

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Eligible Assignee. Any of (a) a commercial bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having
total assets in excess of $1,000,000,000; (b) a savings and loan association or
savings bank organized under the laws of the United States, or any State thereof
or the District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (c) an
Eligible Foreign Bank; (d) the central bank of any country which is a member of
the OECD; and (e) if, but only if, any Event of Default has occurred and is
continuing, any other bank, insurance company, commercial finance company or
other financial institution or other Person approved by the Administrative
Agent, such approval not to be unreasonably withheld or delayed.

 

Eligible Foreign Bank. (a) Any commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development (the “OECD”), or a political subdivision of any such country,
provided that such bank is acting through a branch or agency located in the
Cayman Islands, in the country in which it is organized or another country which
is also a member of the OECD; or (b) the central bank of any country which is a
member of the OECD.

 

Employee Benefit Plan. Any employee benefit plan within the meaning of §3(3) of
ERISA maintained or contributed to by the Borrowers or any ERISA Affiliate,
other than a Guaranteed Pension Plan or a Multiemployer Plan.

 

Environmental Laws. See §5.16(a).

 

EPA. See §5.16(b).

 

ERISA. The Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate. Any Person which is treated as a single employer with any
Borrower under §414 of the Code.

 

ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension
Plan within the meaning of §4043 of ERISA and the regulations promulgated
thereunder.

 

Eurodollar Business Day. Any Business Day on which dealings in foreign currency
and exchange are carried on among banks in London, England.

 

Eurodollar Interest Determination Date. For any Interest Period, the date two
(2) Eurodollar Business Days prior to the first day of such interest period.

 

Eurodollar Loans. Loans bearing interest calculated by reference to the
Eurodollar Rate.

 

Eurodollar Offered Rate. The rate per annum at which Dollar deposits are offered
to the Administrative Agent by prime banks in whatever Eurodollar interbank
market may be selected by the Administrative Agent, in its sole discretion,
acting in good faith, at or about 11:00 a.m. local time in such interbank
market, on the Eurodollar Interest Determination Date for a period equal to the
period of such Interest Period in an amount substantially equal to the principal
amount requested to be loaned or converted to a rate based on the Eurodollar
Rate.

 

Eurodollar Rate. The rate per annum, rounded upwards to the nearest 1/16 of one
percent (1%), determined by the Administrative Agent with respect to the
Interest Period in accordance with the following formula:

 

-7-

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

Eurodollar Rate = Eurodollar Offered Rate

1 - Reserve Rate

 

Event of Default. See §12.1.

 

Existing Credit Agreement. As defined in the recitals hereto.

 

FHA Transaction. The transactions whereby the Federal Housing Authority, the
City of Norfolk and/or a certain other purchaser will purchase the operating
facility located at 1371 Hanson Avenue in Norfolk, Virginia from the Parent
and/or one of its Subsidiaries in exchange for consideration in the form of cash
and notes, on terms and conditions satisfactory to the Administrative Agent.

 

Financial Affiliate. A Subsidiary of the bank holding company controlling any
Bank, which Subsidiary is engaging in any of the activities permitted by §4(e)
of the Bank Holding Company Act of 1956 (12 U.S.C. §1843).

 

Financial Letter of Credit. A Letter of Credit where the event which triggers
payment is financial, such as the failure to pay money, and not
performance-related, such as failure to ship a product or provide a service, as
set forth in greater detail in the letter dated March 30,1995 from the Board of
Governors of the Federal Reserve System or in any applicable directive or letter
ruling of the Board of Governors of the Federal Reserve System issued subsequent
thereto.

 

Fixed Charge Coverage Ratio. For any period, the ratio of (a) an amount equal to
the result of (i) EBITDA for such period (excluding gains (or losses) from asset
dispositions which occurred during such period), plus (ii) net cash proceeds
from asset dispositions permitted by §7.4.2 for such period less (iii) Capital
Expenditures for such period, less (iv) cash taxes paid during such period to
(b) an amount equal to the sum of (i) Consolidated Total Debt Service for such
period, plus (ii) cash dividends paid or payable during such period.

 

Fleet. As defined in the preamble hereto.

 

Foreign Subsidiary. Each Subsidiary of any Borrower (whether direct or indirect,
existing on the date hereof or acquired or formed hereafter in accordance with
the provisions hereof) which is incorporated under the laws of a jurisdiction
other than a State or other jurisdiction of the United States of America.

 

Fuel Derivatives Obligations. See §7.1(m).

 

Fund. 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.

 

Funded Debt. Collectively, without duplication, whether classified as
indebtedness, an Investment or otherwise on the Borrowers’ consolidated balance
sheet, (a) all indebtedness for borrowed money or credit obtained or other
similar monetary obligations, direct or indirect, (including any unpaid
reimbursement obligations with respect to letters of credit, but excluding any
contingent obligations with respect to letters of credit outstanding,
performance or guarantee bonds, Swap Contracts or Fuel Derivatives Obligations),
(b) all obligations evidenced by notes, bonds, debentures or other similar debt
instruments, (c) all obligations, liabilities and indebtedness under Capitalized
Leases which corresponds to principal, (d) guaranties of the

 

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Funded Debt of others referred to in clauses (a) through (c) above, and (e) the
deferred purchase price of assets and companies (typically known as holdbacks)
other than short-term trade credit incurred in the ordinary course of business.

 

generally accepted accounting principles or GAAP. When used in general,
generally accepted accounting principles means (a) principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal year
ended on the Balance Sheet Date, as shall be concurred in by independent
certified public accountants of recognized standing whose report expresses an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been applied; and (b) when used with reference to the Borrowers,
such principles shall include (to the extent consistent with such principles)
the accounting practices reflected in the consolidated financial statements for
the year ended on the Balance Sheet Date.

 

Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of
§3(2) of ERISA maintained or contributed to by the Borrowers or any ERISA
Affiliate the benefits of which are guarantied on termination in full or in part
by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

 

Guaranty Agreement. Those guaranties of the Noteholders’ Debt by the
Subsidiaries, in the form agreed to by the Administrative Agent.

 

Hazardous Substances. See §5.16(b).

 

Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:

 

(i) every obligation of such Person for money borrowed,

 

(ii) every obligation of such Person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses,

 

(iii) every reimbursement obligation of such Person with respect to letters of
credit, bankers’ acceptances or similar facilities issued for the account of
such Person,

 

(iv) every obligation of such Person issued or assumed as the deferred purchase
price of property or services (including securities repurchase agreements but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith),

 

(v) every obligation of such Person under any Capitalized Lease,

 

(vi) every obligation of such Person under any Synthetic Lease,

 

(vii) all sales by such Person of (A) accounts or general intangibles for money
due or to become due, (B) chattel paper, instruments or documents creating or
evidencing a right to payment of money or (C) other receivables (collectively
“receivables”), whether pursuant to a purchase facility or otherwise, other than
in

 

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connection with the disposition of the business operations of such Person
relating thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of such Person
to pay any discount, interest, fees, indemnities, penalties, recourse, expenses
or other amounts in connection therewith,

 

(viii) every obligation of such Person (an “equity related purchase obligation”)
to purchase, redeem, retire or otherwise acquire for value any shares of capital
stock of any class issued by such Person, any warrants, options or other rights
to acquire any such shares, or any rights measured by the value of such shares,
warrants, options or other rights,

 

(ix) every obligation of such Person under any forward contract, futures
contract, swap, option or other financing agreement or arrangement (including,
without limitation, caps, floors, collars and similar agreements), the value of
which is dependent upon interest rates, currency exchange rates, commodities or
other indices (a “derivative contract”),

 

(x) every obligation in respect of Indebtedness of any other entity (including
any partnership in which such Person is a general partner) to the extent that
such Person is liable therefor as a result of such Person’s ownership interest
in or other relationship with such entity, except to the extent that the terms
of such Indebtedness provide that such Person is not liable therefor and such
terms are enforceable under applicable law,

 

(xi) every obligation, contingent or otherwise, of such Person guarantying, or
having the economic effect of guarantying or otherwise acting as surety for, any
obligation of a type described in any of clauses (i) through (x) (the “primary
obligation”) of another Person (the “primary obligor”), in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person (A) to purchase or pay (or advance or supply funds for the purchase
of) any security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the payment of such
primary obligation, or (C) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.

 

The “amount” or “principal amount” of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrowers) thereof,
excluding amounts representative of yield or interest earned on such investment,
(x) any synthetic lease shall be the stipulated loss value, termination value or
other equivalent amount, (y) any derivative contract shall be the maximum amount
of any termination or loss payment required to be paid by such Person if such
derivative contract were, at the time of determination, to be terminated by
reason of any event of default or early termination event thereunder, whether or
not such event of default or early termination event has in fact occurred and
(z) any equity related purchase obligation shall be the maximum fixed redemption
or purchase price thereof inclusive of any accrued and unpaid dividends to be
comprised in such redemption or purchase price.

 

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Ineligible Securities. Securities which may not be underwritten or dealt in by
member banks of the Federal Reserve System under Section 16 of the Banking Act
of 1933 (12 U.S.C. §24, Seventh), as amended.

 

Intercompany Subordination Agreement. The Intercompany Subordination Agreement,
dated as of March 31, 2001, by and among the Parent, each of the Subsidiaries of
the Parent and the Collateral Agent, as amended.

 

Intercreditor Agreement. The Intercreditor Agreement, dated as of November 9,
1999, between the Administrative Agent (acting on behalf of itself and the
Banks) and the Noteholders, as amended.

 

Interest Period. With respect to each Eurodollar Loan:

 

(a) initially, the period commencing on the making of a Eurodollar Loan or the
conversion from a Base Rate Loan into a Eurodollar Loan and ending one (1), two
(2), three (3), or six (6) months thereafter, as the case may be and subject to
the availability thereof, as the Borrowers may select; and

 

(b) thereafter, each subsequent Interest Period shall begin on the last day of
the preceding Interest Period and end one (1), two (2), three (3), or six (6)
months thereafter, as the case may be and subject to the availability thereof,
as the Borrowers may select;

 

provided, however, that whenever a payment hereunder or under any of the other
Loan Documents becomes due on a day that is not a Business Day, the due date for
such payment shall extend to the next succeeding Business Day; provided that for
any Interest Period for any Eurodollar Loan if such next succeeding Business Day
falls in the next succeeding calendar month or after the Maturity Date, it shall
be deemed to end on the immediately preceding Business Day.

 

Interim Balance Sheet Date. March 31, 2003.

 

International Standby Practices. With respect to any Financial Letter of Credit,
the International Standby Practices (ISP98), International Chamber of Commerce
Publication No. 590, or any successor code of standby letter of credit practices
among banks adopted by the Issuing Bank in the ordinary course of its business
as a standby letter of credit issuer and in effect at the time of issuance of
such Letter of Credit.

 

Investments. All expenditures made and all liabilities incurred (contingently or
otherwise) for the acquisition of stock or Indebtedness of, or for loans,
advances, capital contributions or transfers of property to, or in respect of
any guaranties (or other commitments as described under Indebtedness), or
obligations of, any Person. In determining the aggregate amount of Investments
outstanding at any particular time: (i) the amount of any Investment represented
by a guaranty shall be taken at not less than the principal amount of the
obligations guarantied and still outstanding; (ii) there shall be included as an
Investment all interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (iii) there shall be deducted
in respect of each such Investment any amount received as a return of capital
(but only by repurchase, redemption, retirement, repayment, liquidating dividend
or liquidating distribution); (iv) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted

 

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when paid; and (v) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof.

 

Issuing Bank(s). Fleet and/or the other Banks, as approved by the Administrative
Agent and the Parent.

 

Letter of Credit Application. Letter of Credit Applications in such form as may
be agreed upon by any Borrower and the applicable Issuing Bank from time to time
which are entered into pursuant to §3 hereof, as amended, varied or supplemental
from time to time.

 

Letter of Credit Fee. See §4.1(c).

 

Letter of Credit Participation. See §3.1(b).

 

Letters of Credit. Standby Letters of Credit issued or to be issued by the
Issuing Banks under §3 hereof for the account of the Borrowers.

 

Loan and Letter of Credit Request. See §2.6.

 

Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit and the Security Documents.

 

Loans. Collectively, the Revolving Credit Loans and the Swing Line Loans.

 

Majority Banks. As of any date, the Banks holding at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding principal amount of the
Revolving Credit Loans on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitutes at least sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment.

 

Material Acquisition. See §7.4.1(a).

 

Material Adverse Change. With respect to any event or occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding):

 

(a) a material adverse change in the business, properties, prospects, condition
(financial or otherwise), assets, operations or income of the Borrowers, taken
as a whole;

 

(b) an adverse change in the ability of the Borrowers to perform any of their
respective Obligations under any of the Loan Documents to which they are a
party; or

 

(c) any impairment of the validity, binding effect or enforceability of this
Credit Agreement or any of the other Loan Documents, any impairment of the
rights, remedies or benefits available to the Administrative Agent or any Bank
under any Loan Document or any impairment of the attachment, perfection or
priority of any Lien of the Collateral Agent under the Security Documents.

 

Maturity Date. February 27, 2007.

 

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Maximum Drawing Amount. The maximum aggregate amount that the beneficiaries may
at any time draw under outstanding Letters of Credit, as such aggregate amount
may be reduced from time to time pursuant to the terms of the Letters of Credit.

 

Maximum Rate. With respect to each Bank, the maximum lawful nonusurious rate of
interest (if any) which under Applicable Law such Bank may charge the Borrowers
on the Loans and other Obligations from time to time.

 

Membership Interest Pledge Agreements. Collectively, (i) those certain Amended
and Restated Membership Interest Pledge Agreements, each dated as of March 31,
2001, among certain Borrowers and the Collateral Agent (on behalf of the Banks
and the Noteholders), as amended, (ii) that certain Membership Interest Pledge
Agreement, dated as of December 29, 2000, between Waste Services of Tennessee,
LLC and the Collateral Agent (on behalf of the Banks and the Noteholders), as
amended, (iii) that certain Membership Interest Pledge Agreement, dated as of
December 29, 2000, between Waste Industries of Tennessee, LLC and the Collateral
Agent (on behalf of the Banks and the Noteholders), as amended and (iv) any
other membership interest pledge agreements to be entered into from time to
time, on terms and conditions acceptable to the Administrative Agent.

 

Multiemployer Plan. Any multiemployer plan within the meaning of §3(37) of ERISA
maintained or contributed to by the Borrowers or any ERISA Affiliate.

 

Notes. Collectively, the Revolving Credit Notes and the Swing Line Note.

 

Noteholders. Collectively, The Prudential Insurance Company of America, Pruco
Life Insurance Company, Pruco Life Insurance Company of New Jersey, and U.S.
Private Placement Fund and any other holder of the Noteholders’ Debt executing
an acknowledgement to the Intercreditor Agreement.

 

Noteholders’ Debt. Indebtedness of the Parent to the Noteholders evidenced by
each of (a) the Amended and Restated Note Purchase and Private Shelf Agreement,
dated as of March 31, 2001, pursuant to which $25,000,000 in 7.28% Series A
Senior Notes due April 3, 2006 have been issued by the Parent, with an
additional $25,000,000 Private Shelf Facility available, as amended, and (b) the
Amended and Restated Note Purchase and Private Shelf Agreement, dated as of
March 31, 2001, pursuant to which $25,000,000 in 6.96% Series A Senior Notes due
June 30, 2008 and $25,000,000 in 6.84% Series B Senior Notes due February 2,
2009 have been issued by the Parent, as amended.

 

Noteholders’ Documents. Collectively, (a) the Purchase Agreements, (b) the
Guaranty Agreement, (c) any prior, concurrent or subsequent promissory notes
executed in connection therewith, and (d) any and all guaranties and security
interests, mortgages and other liens directly or indirectly guarantying or
securing any of the Noteholders’ Debt (in each case subject to the Intercreditor
Agreement), and any and all other documents or instruments evidencing the
Noteholders’ Debt, as amended through the date hereof and as further amended
from time to time in accordance with the terms hereof.

 

Obligations. All indebtedness, obligations and liabilities of the Borrowers to
any of the Banks or the Administrative Agent, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under, or with respect to, any Swap
Contract or

 

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Fuel Derivative Obligations between the Borrowers and any Bank, this Credit
Agreement or any of the other Loan Documents or any of the Loans made or
Reimbursement Obligations incurred or any of the Notes, Letters of Credit or
other instruments at any time evidencing any thereof.

 

PBGC. The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any
successor entity or entities having similar responsibilities.

 

Perfection Certificate. The Perfection Certificate as defined in the Security
Agreement.

 

Performance Letter of Credit. A Letter of Credit which is not a Financial Letter
of Credit.

 

Permitted Liens. Liens, security interests and other encumbrances permitted by
§7.2.

 

Permitted Transfer. See §7.12.

 

Person. Any individual, corporation, partnership, limited liability company,
trust, unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.

 

Pricing Ratio. As of the end of any fiscal quarter of the Borrowers, the ratio
of (a) Funded Debt as at the end of such fiscal quarter to (b) EBITDA for the
period of four (4) consecutive fiscal quarters ending on such date.

 

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Pricing Table:

 

Level

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

  

Pricing Ratio

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

  

Applicable

Eurodollar

Margin

(per annum)

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

  

Applicable

Base Rate

Margin

(per annum)

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

  

Applicable

L/C Margin

(per annum)

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

  

Applicable

Commitment

Rate

(per annum)

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

1   

Less than

2.50 to 1

   1.75%    0.25%    1.75%    0.375% 2   

Greater than or

equal to 2.50 and

less than 3.00 to 1

   2.00%    0.50%    2.00%    0.375% 3   

Greater than or

equal to 3.00 and

less than 3.50 to 1

   2.25%    0.75%    2.25%    0.50% 4   

Greater than or

equal to 3.50 and

less than 4.00 to 1

   2.50%    1.00%    2.50%    0.50% 5   

Greater than or

equal to 4.00 to 1

   2.75%    1.25%    2.75%    0.50%

 

Any change in the applicable margin shall become effective on the first day
after receipt by the Banks of the financial statements delivered pursuant to
§6.4(a) or (b) which indicate a change in the Pricing Ratio. Notwithstanding the
foregoing, (a) for the Applicable Eurodollar Margin, Applicable Base Rate
Margin, Applicable L/C Margin and Applicable Commitment Rate payable during the
period commencing on the Closing Date through the date six months after the
Closing Date, the applicable margin rate shall not be lower than Level 3 above,
and (b) if at any time such financial statements are not delivered within the
time periods specified in §6.4(a) or (b), the applicable margin shall be the
highest rate set forth in the respective column of the Pricing Table, subject to
adjustment upon actual receipt of such financial statements.

 

Purchase Agreements. The note purchase agreements referenced in the definition
of Noteholders’ Debt above.

 

RCRA. See definition of Release.

 

Real Property. All real property, now or hereafter owned or leased (as lessee or
sublessee) by any of the Borrowers.

 

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Reimbursement Obligation. The Borrowers’ obligation to reimburse the applicable
Issuing Bank and the Banks on account of any drawing under any Letter of Credit
as provided in §3.2.

 

Release. Shall have the meaning specified in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. §§9601 et seq.
(“CERCLA”) and the term “Disposal” (or “Disposed”) shall have the meaning
specified in the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
§§6901 et seq. (“RCRA”) and regulations promulgated thereunder; provided, that
in the event either CERCLA or RCRA is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply as of the effective
date of such amendment and provided further, to the extent that the laws of a
state wherein the property lies establishes a meaning for “Release” or
“Disposal” which is broader than specified in either CERCLA or RCRA, such
broader meaning shall apply.

 

Replacement Bank. See §4.11.

 

Replacement Notice. See §4.11.

 

Reserve Rate. The rate, expressed as a decimal, at which the Banks would be
required to maintain reserves under Regulation D of the Board of Governors of
the Federal Reserve System (or any subsequent or similar regulation relating to
such reserve requirements) against “Eurocurrency Liabilities” (as such term is
defined in Regulation D), or against any other category of liabilities which
might be incurred by the Banks to fund Loans bearing interest based on the
Eurodollar Rate, if such liabilities were outstanding.

 

Retiring Bank. As defined in the recitals hereto.

 

Revolving Credit Loans. Revolving credit loans made or to be made by the Banks
to the Borrowers pursuant to §2.

 

Revolving Credit Note Record. The grid attached to a Revolving Credit Note, or
the continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Revolving Credit Loan
referred to in such Revolving Credit Note.

 

Revolving Credit Notes. See §2.3.

 

Sampson County Bonds. The Tax-Exempt Adjustable Mode Environmental Facilities
Revenue Bonds (Sampson County Disposal, Inc. Project) Series 2000 in the
aggregate principal amount of $33,700,000 (the “Series 2000 Bonds”) and the
Tax-Exempt Adjustable Mode Environmental Facilities Revenue Bonds (Sampson
County Disposal, LLC Project) Series 2003 in the aggregate principal amount of
$9,500,000 (the “Series 2003 Bonds”), in each case issued by The Sampson County
Industrial Facilities and Pollution Control Financing Authority and, in the case
of the Series 2003 Bonds, issued on terms and conditions satisfactory to the
Administrative Agent.

 

Secured Obligations. Obligations, as defined in the Security Agreement.

 

Security Agreement. The Amended and Restated Security Agreement, dated as of
March 31, 2001, among the Borrowers and the Collateral Agent (on behalf of the
Banks and the Noteholders), as amended.

 

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Security Documents. The Security Agreement, the Membership Interest Pledge
Agreements, the Security Documents Amendment, the Intercompany Subordination
Agreement and all other instruments and documents, including without limitation
Uniform Commercial Code financing statements, required to be executed or
delivered pursuant to any Security Document.

 

Security Documents Amendment. The Omnibus Amendment of Security Documents and
Joinder, dated as of the date hereof, among the Borrowers and the Collateral
Agent, and consented to by the Administrative Agent, the Banks and the
Noteholders.

 

Senior Funded Debt. At any time of determination, the result of Funded Debt
minus the aggregate principal amount of Subordinated Debt outstanding as of such
date.

 

Series 2000 Bonds. See definition of Sampson County Bonds.

 

Series 2003 Bonds. See definition of Sampson County Bonds.

 

Settlement. The making or receiving of payments, in immediately available funds,
by the Banks to or from the Administrative Agent in accordance with §2.7 hereof
to the extent necessary to cause each such Bank’s actual share of the
outstanding amount of the Swing Line Loans to be equal to such Bank’s Commitment
Percentage of the outstanding amount of such Swing Line Loans, in any case when,
prior to such action, the actual share is not so equal.

 

Settlement Amount. See §2.7(b).

 

Settlement Date. See §2.7(b).

 

Settling Bank. See §2.7(b)

 

Subordinated Debt. Unsecured Indebtedness of the Borrowers that is expressly
subordinated and made junior to the payment and performance in full of the
Obligations, and evidenced as such by a subordination agreement or by another
written instrument containing subordination provisions in form and substance
approved by the Administrative Agent in writing.

 

Subsidiary. Any corporation, association, trust, or other business entity of
which the designated parent shall at any time own directly or indirectly through
a Subsidiary or Subsidiaries at least a majority (by number of votes) of the
outstanding Voting Stock.

 

Swap Contracts. Any agreement (including any master agreement and any agreement,
whether or not in writing, relating to any single transaction) that is an
interest rate swap agreement, basis swap, forward rate agreement, commodity
swap, commodity option, equity or equity index swap or option, bond option,
interest rate option, forward foreign exchange agreement, rate cap, collar or
floor agreement, currency swap agreement, cross-currency rate swap agreement,
swaption, currency option or other similar agreement (including any option to
enter into any of the foregoing).

 

Swing Line Bank. BBT.

 

Swing Line Loan(s). See §2.7(a).

 

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Swing Line Note. See §2.7(a).

 

Syndication Agent. As defined in the preamble hereto.

 

Synthetic Lease. Any lease treated as an operating lease under generally
accepted accounting principles and as a loan or financing for U.S. income tax
purposes.

 

Total Commitment. See §2.1.

 

Uniform Customs. With respect to any Letter of Credit, the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Issuing Bank in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.

 

Wachovia. Wachovia Bank, N.A., a national banking association.

 

Wachovia Letters of Credit. Each of (i) the $34,969,367 letter of credit issued
by Wachovia in connection with the Series 2000 Bonds, and (ii) the $9,804,000
letter of credit issued by Wachovia in connection with the Series 2003 Bonds.

 

1.2. Rules of Interpretation.

 

(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Credit Agreement.

 

(b) The singular includes the plural and the plural includes the singular.

 

(c) A reference to any law includes any amendment or modification to such law.

 

(d) A reference to any Person includes its permitted successors and permitted
assigns.

 

(e) Accounting terms not otherwise defined herein have the meanings assigned to
them by generally accepted accounting principles applied on a consistent basis
by the accounting entity to which they refer.

 

(f) The words “include”, “includes” and “including” are not limiting.

 

(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in effect in The Commonwealth of Massachusetts, have the meanings assigned to
them therein, with the term “instrument” being that defined under Article 9 of
the Uniform Commercial Code.

 

(h) Reference to a particular “§” refers to that section of this Credit
Agreement unless otherwise indicated.

 

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(i) The words “herein”, “hereof”, “hereunder” and words of like import shall
refer to this Credit Agreement as a whole and not to any particular section or
subdivision of this Credit Agreement.

 

(j) Unless otherwise expressly indicated, 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.”

 

(k) This Credit Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are, however, cumulative and are to be
performed in accordance with the terms thereof.

 

(l) This Credit Agreement and the other Loan Documents are the result of
negotiation among, and have been reviewed by counsel to, among others, the
Administrative Agent and the Borrowers and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the other
Loan Documents are not intended to be construed against the Administrative Agent
or any of the Banks merely on account of the Administrative Agent’s or any
Bank’s involvement in the preparation of such documents.

 

2. THE REVOLVING CREDIT FACILITY.

 

2.1. Commitment to Lend. Subject to the terms and conditions set forth in this
Credit Agreement, each of the Banks severally agrees to lend to the Borrowers
and the Borrowers may borrow, repay, and reborrow from time to time from the
Closing Date up to but not including the Maturity Date upon notice by the
Borrowers to the Administrative Agent given in accordance with §2.6, such sums
as are requested by the Borrowers up to a maximum aggregate amount outstanding
(after giving effect to all amounts requested) at any one time equal to such
Bank’s Commitment minus such Bank’s Commitment Percentage of the sum of the
Maximum Drawing Amount and all unpaid Reimbursement Obligations, provided that
the sum of the outstanding amount of the Revolving Credit Loans, Swing Line
Loans, unpaid Reimbursement Obligations and the Maximum Drawing Amount (after
giving effect to all amounts requested) shall not exceed a maximum aggregate
amount outstanding of $175,000,000 at any time, as such amount may be reduced or
increased pursuant to §2.2 hereof (the “Total Commitment”). The Revolving Credit
Loans shall be made pro rata in accordance with each Bank’s Commitment
Percentage. Each request for a Loan hereunder shall constitute a representation
and warranty by the Borrowers that the conditions set forth in §9 and §10, as
the case may be, have been satisfied on the date of such request.

 

2.2. Reduction and Increase of Total Commitment.

 

2.2.1. Reduction of Total Commitment.

 

(a) The Borrowers shall have the right at any time and from time to time upon
three (3) Business Days prior written notice to the Administrative Agent to
reduce by $5,000,000 or integral multiples of $1,000,000 in excess thereof or
terminate entirely the Total Commitment, whereupon the Commitments of the Banks
shall be reduced pro rata in accordance with their respective Commitment
Percentages of the amount specified in such notice or, as the case may be,
terminated. The Administrative Agent will notify the

 

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Banks promptly after receiving any notice of the Borrowers delivered pursuant to
this §2.2.

 

(b) No reduction or termination of the Commitments once made may be revoked; the
portion of the Commitments reduced or terminated may not be reinstated and
amounts in respect of such reduced or terminated portion may not be reborrowed.

 

2.2.2. Increase of Total Commitment.

 

Unless a Default or Event of Default has occurred and is continuing, the
Borrowers may request, in consultation with the Administrative Agent but without
the requirement of consent from any Bank except as provided below in connection
with any increase in such Bank’s Commitment, that the Total Commitment be
increased to an amount not to exceed Two Hundred Million Dollars ($200,000,000)
hereunder. Upon such request, the Total Commitment shall be increased to the
requested amount not to exceed Two Hundred Million Dollars ($200,000,000)
provided, however, that (i) no Bank’s Commitment hereunder shall be increased
without such Bank’s prior written consent to such increase, (ii) in the event
that a new Bank (the “Incoming Bank”) is included to provide the requested
increase in the Total Commitment under this §2.2.2, such Incoming Bank must be
reasonably acceptable to the Administrative Agent and the Borrowers, (iii) the
Banks’ Commitment Percentages shall be correspondingly adjusted, as necessary,
to reflect any increase in the Total Commitment and the Banks’ and any Incoming
Bank’s adjusted participation therein and Schedule 1 shall be amended to reflect
such adjustments and (iv) the Borrowers shall indemnify the Banks and the
Administrative Agent for any costs or expenses incurred as a consequence of the
reallocation of any Eurodollar Rate Loan to an Incoming Bank pursuant to the
provisions of §4.8. The Banks, including any Incoming Bank, shall promptly make
such adjustments among themselves, as instructed by the Administrative Agent, in
order to insure that each Bank, including any Incoming Bank, has funded its
Commitment Percentage (adjusted after giving effect to the transactions
increasing the Total Commitment pursuant to this §2.2.2) of the outstanding
amount of the Revolving Credit Loans and all unpaid Reimbursement Obligations.

 

2.3. The Revolving Credit Notes. The Revolving Credit Loans shall be evidenced
by separate promissory notes of the Borrowers in substantially the form of
Exhibit A hereto (each a “Revolving Credit Note”), dated as of the Closing Date
or date of assignment and completed with appropriate insertions. One Revolving
Credit Note shall be payable to the order of each Bank in a principal amount
equal to such Bank’s Commitment or, if less, the outstanding amount of all
Revolving Credit Loans made by such Bank, plus interest accrued thereon, as set
forth below. The Borrowers irrevocably authorize each Bank in connection with
the Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Bank’s Revolving Credit Note, an appropriate
notation on such Bank’s Revolving Credit Note Record reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on such Bank’s
Revolving Credit Note Record shall be prima facie evidence of the principal
amount thereof owing and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank’s Revolving Credit Note
Record shall not limit or otherwise affect the obligations of the Borrowers
hereunder or under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.

 

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2.4. Interest on Revolving Credit Loans. The outstanding principal amount of the
Revolving Credit Loans and Swing Line Loans shall bear interest at the rate per
annum equal to (a) the Base Rate plus the Applicable Base Rate Margin, or (b) at
the Borrowers’ option as provided herein, the Revolving Credit Loans may bear
interest at the Eurodollar Rate plus the Applicable Eurodollar Margin. Interest
shall be payable (x) quarterly in arrears on the first Business Day of each
calendar quarter, with the first such payment commencing October 1, 2003, on
Base Rate Loans, (y) on the last day of the applicable Interest Period, and if
such Interest Period is longer than three (3) months, also on the last day of
the third month following the commencement of such Interest Period, on
Eurodollar Loans, and (z) on the Maturity Date.

 

2.5. Election of Eurodollar Rate; Notice of Election; Interest Periods; Minimum
Amounts.

 

(a) At the Borrowers’ option, so long as no Default or Event of Default has
occurred and is then continuing, the Borrowers may (i) elect to convert any Base
Rate Loan or a portion thereof or any Swing Line Loan to a Eurodollar Loan, (ii)
at the time of any Loan and Letter of Credit Request, specify that such
requested Revolving Credit Loan shall be a Eurodollar Loan, or (iii) upon
expiration of the applicable Interest Period, elect to maintain an existing
Eurodollar Loan as such, provided that the Borrowers give notice to the
Administrative Agent pursuant to §2.5(b) hereof. Upon determining any Eurodollar
Rate, the Administrative Agent shall forthwith provide notice thereof to the
Borrowers and the Banks, and each such notice to the Borrowers and the Banks
shall be considered prima facie correct and binding, absent manifest error.

 

(b) Three (3) Eurodollar Business Days prior to the making of any Eurodollar
Loan or the conversion of any Base Rate Loan to a Eurodollar Loan, or, in the
case of an outstanding Eurodollar Loan, the expiration date of the applicable
Interest Period, the Borrowers shall give telephonic notice (confirmed by
telecopy on the same Eurodollar Business Day) to the Administrative Agent not
later than 11:00 a.m. (Boston time) of its election pursuant to §2.5(a). Each
such notice delivered to the Administrative Agent shall specify the aggregate
principal amount of the Revolving Credit Loans to be borrowed or maintained as
or converted to Eurodollar Loans or the aggregate principal amount of the Swing
Line Loans to be converted to Revolving Credit Loans which are Eurodollar Loans
and the requested duration of the Interest Period that will be applicable to
such Eurodollar Loan, and shall be irrevocable and binding upon the Borrowers.
If the Borrowers shall fail to give the Administrative Agent notice of their
election hereunder together with all of the other information required by this
§2.5(b) with respect to any Revolving Credit Loan, such Revolving Credit Loan
shall be deemed a Base Rate Loan. In the event that the Borrowers fail to
provide any such notice with respect to the continuation of any Eurodollar Loan
as such, then such Eurodollar Loan shall be automatically converted to a Base
Rate Loan at the end of the then expiring Interest Period relating thereto.

 

(c) Notwithstanding anything herein to the contrary, the Borrowers may not
specify an Interest Period that would extend beyond the Maturity Date.

 

(d) All Eurodollar Loans shall be in a minimum amount of not less than
$1,000,000 and in integral multiples of $500,000 above such amount. In no event
shall the Borrowers have more than eight (8) different maturities of Eurodollar
Loans outstanding at any time.

 

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(e) All Base Rate Loans (other than Swing Line Loans) shall be in a minimum
amount of not less than $1,000,000 and in integral multiples of $500,000 above
such amount.

 

2.6. Requests for Revolving Credit Loans. The Borrowers shall give to the
Administrative Agent written notice in the form of Exhibit B hereto (or
telephonic notice confirmed by telecopy on the same Business Day in the form of
Exhibit B hereto) of each Revolving Credit Loan requested hereunder (a “Loan and
Letter of Credit Request”) not later than (a) 11:00 a.m. (Boston time) one (1)
Business Day prior to the proposed Drawdown Date of any Loan which is a Base
Rate Loan, or (b) 1:00 p.m. (Boston time) three (3) Eurodollar Business Days
prior to the proposed Drawdown Date of any Eurodollar Loan. Each such notice
shall be given by the Borrowers and shall specify the principal amount of the
Revolving Credit Loan requested, whether such Loan is a Base Rate Loan or a
Eurodollar Loan, the Drawdown Date of such Loan and shall include a current Loan
and Letter of Credit Request reflecting the Maximum Drawing Amount and the
outstanding Loans. Each Loan and Letter of Credit Request shall be irrevocable
and binding on the Borrowers and shall obligate the Borrowers to accept the Loan
requested from the Banks on the proposed Drawdown Date. Each of the
representations and warranties made by or on behalf of the Borrowers to the
Banks or the Administrative Agent in this Credit Agreement or any other Loan
Document shall be true and correct in all material respects when made and shall,
for all purposes of this Credit Agreement, be deemed to be repeated on and as of
the date of the submission of any Loan and Letter of Credit Request and on and
as of the Drawdown Date of such Loan, or the date of issuance of such Letter of
Credit (except to the extent of changes resulting from transactions contemplated
or permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, or to the extent that such representations and
warranties expressly relate solely to an earlier date). The Administrative Agent
shall notify each Bank of each Loan and Letter of Credit received by the
Administrative Agent hereunder within one (1) Business Day of receipt and no
later than 11:00 a.m. (Boston time) on the Drawdown Date of any Base Rate Loan,
and provide, upon request by any Bank, a monthly summary with respect to Letters
of Credit issued hereunder.

 

2.6.1. Funds for Revolving Credit Loans

 

(a) Not later than 1:00 p.m. (Boston time) on the proposed Drawdown Date of any
Revolving Credit Loan, each of the Banks will make available to the
Administrative Agent, at the Administrative Agent’s Office, in immediately
available funds, the amount of such Bank’s Commitment Percentage of the amount
of the requested Revolving Credit Loan. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by §§9 and 10 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the Borrowers in
immediately available funds the aggregate amount of such Revolving Credit Loan
made available to the Administrative Agent by the Banks. The failure or refusal
of any Bank to make available to the Administrative Agent at the aforesaid time
and place on any Drawdown Date the amount of its Commitment Percentage of the
requested Revolving Credit Loan shall not relieve any other Bank from its
several obligation hereunder to make available to the Administrative Agent the
amount of such other Bank’s Commitment Percentage of any requested Revolving
Credit Loan.

 

(b) The Administrative Agent may, unless notified to the contrary by any Bank
prior to a Drawdown Date, assume that such Bank has made available to the
Administrative Agent on such Drawdown Date of which such Bank has received the

 

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notice required hereunder, the amount of such Bank’s Commitment Percentage of
the Revolving Credit Loans to be made on such Drawdown Date, and the
Administrative Agent may (but shall not be required to), in reliance upon such
assumption, make available to the Borrowers a corresponding amount. If any Bank
makes available to the Administrative Agent such amount on a date after such
Drawdown Date, such Bank shall pay to the Administrative Agent on demand an
amount equal to the product of (i) the average computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by the
Administrative Agent for federal funds acquired by the Administrative Agent
during each day included in such period, times (ii) the amount of such Bank’s
Commitment Percentage of such Revolving Credit Loans, times (iii) a fraction,
the numerator of which is the number of days that elapse from and including such
Drawdown Date to the date on which the amount of such Bank’s Commitment
Percentage of such Revolving Credit Loans shall become immediately available to
the Administrative Agent, and the denominator of which is 365. A statement of
the Administrative Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence, absent manifest error,
of the amount due and owing to the Administrative Agent by such Bank. If the
amount of such Bank’s Commitment Percentage of such Revolving Credit Loans is
not made available to the Administrative Agent by such Bank within three (3)
Business Days following such Drawdown Date, the Administrative Agent shall be
entitled to recover such amount from the Borrowers on demand, with interest
thereon at the rate per annum applicable to the Revolving Credit Loans made on
such Drawdown Date.

 

2.7. Swing Line Loans; Settlements.

 

(a) Solely for ease of administration of the Revolving Credit Loans, the Swing
Line Bank may, upon receipt of a Loan and Letter of Credit Request no later than
1:00 p.m. (Boston time) on the proposed date of funding, but shall not be
required to, fund Base Rate Loans made in accordance with the provisions of this
Credit Agreement (“Swing Line Loans”), bearing interest as set forth in §2.4.
The Swing Line Bank may, in its sole discretion and without conferring with the
Banks, make Swing Line Loans to the appropriate Borrowers by entry of credits to
such Borrowers’ operating account(s) with the Swing Line Bank to cover checks
which the applicable Borrowers have drawn or made against such account and shall
notify the Administrative Agent of any overdrafts being advanced as Swing Line
Loans. The Borrowers hereby request and authorize the Swing Line Bank to make
from time to time such Swing Line Loans by means of appropriate entries of such
credits sufficient to cover checks then presented. The Borrowers acknowledge and
agree that the making of such Swing Line Loans shall be subject in all respects
to the provisions of this Credit Agreement as if they were Swing Line Loans
covered by a Loan and Letter of Credit Request, including, without limitation,
the limitations set forth in §2.1 and the requirements that the applicable
provisions of §9 (in the case of Swing Line Loans made on the Closing Date) and
§10 be satisfied. All actions taken by the Swing Line Bank pursuant to the
provisions of this §2.8(a) shall be conclusive and binding on the Borrowers
absent manifest error or such Swing Line Bank’s gross negligence or willful
misconduct. The Swing Line Loans shall be evidenced by a note in substantially
the form of Exhibit C hereto (the “Swing Line Note”), provided that the
outstanding amount of Swing Line Loans advanced by the Swing Line Bank hereunder
shall not exceed $10,000,000 at any time. Each Bank shall remain severally and
unconditionally liable to fund its pro rata share (based upon each Bank’s
Commitment Percentage) of such Swing Line Loans on each Settlement Date and, in
the event the Swing Line Bank chooses not to fund all Base Rate Loans requested
on

 

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any date, to fund its Commitment Percentage of the Base Rate Loans requested,
subject to satisfaction of the provisions hereof relating to the making of Base
Rate Loans. Prior to each Settlement, all payments or repayments of the
principal of, and interest on, Swing Line Loans shall be credited to the account
of the Swing Line Bank. The Borrowers shall have the right, at their election,
to prepay the outstanding amount of the Swing Line Loans, as a whole or in part,
at any time without penalty or premium.

 

(b) The Banks shall effect Settlements on (i) the Business Day immediately
following any day which the Swing Line Bank gives written notice to the
Administrative Agent to effect a Settlement, (ii) the Business Day immediately
following the Swing Line Bank’s or the Administrative Agent’s becoming aware of
the existence of any Default or Event of Default, (iii) the Maturity Date, (iii)
any date on which the Borrowers wish to convert a Swing Line Loan into a
Revolving Credit Loan, and (iv) in any event, on the first Business Day of each
calendar quarter for the immediately preceding calendar quarter (each such date,
a “Settlement Date”). One (1) Business Day prior to each such Settlement Date,
the Administrative Agent shall give notice by facsimile or telecopier to the
Banks of (A) the respective outstanding amount of Revolving Credit Loans made by
each Bank as at the close of business on the prior day, and (B) the amount that
any Bank, as applicable (a “Settling Bank”), shall pay to effect a Settlement (a
“Settlement Amount”). A statement of the Administrative Agent submitted to the
Banks with respect to any amounts owing hereunder shall be prima facie evidence
of the amount due and owing. Each Settling Bank shall, not later than 1:00 p.m.
(Boston time) on each Settlement Date, effect a wire transfer of immediately
available funds to the Administrative Agent, for the benefit of the Swing Line
Bank, at the Administrative Agent’s Office in the amount of such Bank’s
Settlement Amount. All funds advanced by any Bank as a Settling Bank pursuant to
this §2.7 shall for all purposes be treated as a Base Rate Loan to the
Borrowers.

 

(c) Subject to the Settling Bank’s receipt of the notice required pursuant to
§2.7(b), the Administrative Agent may (unless notified to the contrary by any
Settling Bank by 12:00 noon (Boston time) one (1) Business Day prior to the
Settlement Date) assume that each Settling Bank has made available (or will make
available by the time specified in §2.7(b)) to the Administrative Agent its
Settlement Amount, and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, effect Settlements. If the Settlement
Amount of such Settling Bank is made available to the Administrative Agent on a
date after such Settlement Date, such Settling Bank shall pay the Administrative
Agent, for the benefit of the Swing Line Bank, on demand an amount equal to the
product of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average annual interest rate paid by the Administrative
Agent for federal funds acquired by the Administrative Agent during each day
included in such period times (ii) such Settlement Amount times (iii) a
fraction, the numerator of which is the number of days that elapse from and
including such Settlement Date to but not including the date on which such
Settlement Amount shall become immediately available to the Administrative
Agent, and the denominator of which is 365. Upon payment of such amount such
Settling Bank shall be deemed to have delivered its Settlement Amount on the
Settlement Date and shall become entitled to interest payable by the Borrowers
with respect to such Settling Bank’s Settlement Amount as if such share were
delivered on the Settlement Date. If such Settlement Amount is not in fact made
available to the Administrative Agent by such Settling Bank within three (3)
Business Days of such Settlement Date, the Administrative Agent shall

 

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be entitled to recover such amount from the Borrowers, with interest thereon at
the Base Rate.

 

(d) After any Settlement Date, any payment by the Borrowers of Swing Line Loans
hereunder shall be allocated pro rata among the Banks, in accordance with such
Bank’s Commitment Percentage.

 

(e) If, prior to the making of a Revolving Credit Loan pursuant to paragraph (b)
of this §2.7, a Default or Event of Default has occurred and is continuing, each
Bank will, on the date such Revolving Credit Loan was to have been made,
purchase an undivided participating interest in the outstanding Swing Line Loans
in an amount equal to its Commitment Percentage of such Swing Line Loans. Each
Bank will immediately transfer to the Administrative Agent, for the benefit of
the Swing Line Bank, in immediately available funds, the amount of its
participation and upon receipt thereof the Administrative Agent will deliver to
such Bank a Swing Line participation certificate dated the date of receipt of
such funds and in such amount.

 

(f) Whenever, at any time after the Administrative Agent has received from any
Bank such Bank’s participating interest in the Swing Line Loans pursuant to
clause (e) above, the Administrative Agent receives any payment on account
thereof, the Administrative Agent will distribute to such Bank its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank’s participating
interest was outstanding and funded) in like funds as received; provided,
however, that in the event that such payment received by the Administrative
Agent is required to be returned, such Bank will return to the Administrative
Agent any portion thereof previously distributed by the Administrative Agent to
it in like funds as such payment is required to be returned by the
Administrative Agent.

 

(g) Each Bank’s obligation to purchase participating interests pursuant to
clause (e) above shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may have
against the Administrative Agent, the Borrowers or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of a Default or Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Borrowers or any other Person; (iv) any breach of this Credit Agreement by
the Borrowers or any other Bank or the Administrative Agent; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

 

2.8. Maturity of the Revolving Credit Loans. The Revolving Credit Loans and
Swing Line Loans shall be due and payable on the Maturity Date. The Borrowers
jointly and severally promise to pay on the Maturity Date all Revolving Credit
Loans and Swing Line Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.

 

2.9. Mandatory Repayments of the Revolving Credit Loans and Swing Line Loans and
Reimbursement Obligations. If at any time the sum of the outstanding amount of
the Revolving Credit Loans plus the Swing Line Loans plus the Maximum Drawing
Amount plus unpaid Reimbursement Obligations exceeds the Total Commitment,
whether by reduction of the Total Commitment or otherwise, then the Borrowers
shall immediately pay the amount of such excess to the Administrative Agent for
application first, to any Swing Line Loans, second, to unpaid

 

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Reimbursement Obligations, third, to the Revolving Credit Loans, or if no
Revolving Credit Loans shall be outstanding, to be held by the Administrative
Agent as collateral security for the Reimbursement Obligations, provided,
however, that if the amount of cash collateral held by the Administrative Agent
pursuant to this §2.9 exceeds the amount of the Reimbursement Obligations, the
Administrative Agent shall return such excess to the Borrowers. In addition, the
Borrower shall, within three (3) Business Days of receipt thereof, repay the
outstanding Revolving Credit Loans in an amount equal to 100% of the net cash
proceeds received from the issuance of the Sampson County Bonds.

 

2.10. Optional Prepayments of Revolving Credit Loans. The Borrowers shall have
the right, at their election, to prepay the outstanding amount of the Revolving
Credit Loans, as a whole or in part, at any time without penalty or premium
(other than the obligation to reimburse the Banks and the Administrative Agent
pursuant to §4.8 hereof). The Borrowers shall give written notice to the
Administrative Agent (or telephonic notice confirmed in writing) no later than
(a) 1:00 p.m. (Boston time) on the Business Day of the proposed prepayment of
any Base Rate Loan, (b) 1:00 p.m. (Boston time) three (3) Eurodollar Business
Days prior to the proposed prepayment of any Eurodollar Loan, in each case
specifying the proposed date of prepayment of the Revolving Credit Loans and the
principal amount to be paid. Each such partial repayment of the Revolving Credit
Loans shall be in the amount of $1,000,000 or an integral multiple of $500,000
in excess thereof, and shall be accompanied by the payment of accrued interest
on the principal prepaid to the date of prepayment and shall be applied, in the
absence of instruction by the Borrowers, first to the principal of Base Rate
Loans and then to the principal of Eurodollar Loans. Each partial prepayment of
Revolving Credit Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to the respective unpaid principal amount of each Bank’s
Revolving Credit Loans, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.

 

3. LETTERS OF CREDIT.

 

3.1. Letter of Credit Commitments.

 

(a) Subject to the terms and conditions hereof and the execution and receipt of
a Loan and Letter of Credit Request by any Issuing Bank, with a copy to the
Administrative Agent, reflecting the Maximum Drawing Amount of all Letters of
Credit (including the requested Letter of Credit) and a Letter of Credit
Application, such Issuing Bank on behalf of the Banks and in reliance upon the
agreement of the Banks set forth in §3.1(b) and upon the representations and
warranties of the Borrowers contained herein, agrees to issue standby Letters of
Credit in such form as may be requested from time to time by the Borrowers and
agreed to by such Issuing Bank; provided, however, that, after giving effect to
such request, the Maximum Drawing Amount of all Letters of Credit issued under
this Credit Agreement shall not exceed the lesser of (i) $80,000,000 or (ii) the
Total Commitment minus the aggregate outstanding amount of the Revolving Credit
Loans and Swing Line Loans. No Letter of Credit shall have an expiration date
later than thirty (30) days prior to the Maturity Date and no Letter of Credit
shall have an expiration date later than one (1) year after the date of issuance
of such Letter of Credit (which may incorporate automatic renewals for periods
of up to one (1) year in accordance with subsection (e) hereof). Each Letter of
Credit so issued, extended or renewed shall (i) provide for the payment of sight
drafts for honor thereunder when presented in accordance with the terms thereof
and when accompanied by the documents described therein and (ii) be subject to
the Uniform Customs or, in the case of a Financial Letter of Credit, either the
Uniform Customs or the International Standby

 

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Practices. Notwithstanding the foregoing, the Issuing Banks shall have no
obligation to issue any Letter of Credit to support or secure any Indebtedness
of any Borrower to the extent that such Indebtedness was incurred prior to the
proposed issuance date of such Letter of Credit, unless in any such case such
Borrower demonstrates to the satisfaction of such Issuing Bank that (x) such
prior incurred Indebtedness was then fully secured by a prior perfected and
unavoidable security interest in collateral provided by such Borrower to the
proposed beneficiary of such Letter of Credit or (y) such prior incurred
Indebtedness was then secured or supported by a letter of credit issued for the
account of such Borrower and the reimbursement obligation with respect to such
letter of credit was fully secured by a prior perfected and unavoidable security
interest in collateral provided to the issuer of such letter of credit by such
Borrower.

 

(b) Each Bank severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default or any other
condition precedent whatsoever, to the extent of such Bank’s Commitment
Percentage thereof, to reimburse the applicable Issuing Bank on demand for the
amount of each draft paid by such Issuing Bank under each Letter of Credit to
the extent that such amount is not reimbursed by the Borrowers pursuant to §3.2
(such agreement for a Bank being called herein the “Letter of Credit
Participation” of such Bank).

 

(c) Each such payment made by a Bank shall be treated as the purchase by such
Bank of a participating interest in the Borrowers’ Reimbursement Obligation
under §3.2 in an amount equal to such payment. Each Bank shall share in
accordance with its participating interest in any interest which accrues
pursuant to §3.2.

 

(d) All “Letters of Credit” (as defined in the Existing Credit Agreement)
outstanding under the Existing Credit Agreement on the Closing Date shall become
Letters of Credit hereunder. For the avoidance of doubt, the Wachovia Letters of
Credit shall constitute a Letter of Credit issued under the Credit Agreement and
Wachovia shall constitute an Issuing Bank solely for the Wachovia Letters of
Credit.

 

(e) If any Borrower so requests in an application for a Letter of Credit, the
applicable Issuing Bank may, in its sole and absolute discretion, agree to issue
a Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal
Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must
permit the Issuing Bank to prevent any such renewal at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than thirty
(30) days prior to the renewal date (the “Nonrenewal Notice Date”) in each such
twelve-month period to be agreed upon at the time such Letter of Credit is
issued. Once an Auto-Renewal Letter of Credit has been issued, the Banks shall
be deemed to have authorized (but may not require) the applicable Issuing Bank
to permit the renewal of such Letter of Credit at any time to an expiry date not
later than thirty (30) days prior to the Revolving Credit Maturity Date;
provided, however, that the applicable Issuing Bank shall not permit any such
renewal if (A) such Issuing Bank has determined that it would have no obligation
at such time to issue such Letter of Credit in its renewed form under the terms
hereof, or (B) it has received notice (which may be by telephone or in writing)
on or before the day that is two (2) Business Days before the Nonrenewal Notice
Date (1) from the Administrative Agent that the Majority Banks have elected not
to permit such renewal or (2) from the Administrative Agent, any Bank or the
Borrowers that one or more of the applicable conditions specified in §10 is not
then satisfied.

 

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(f) In the event of any conflict or inconsistency between the terms of any
Letter of Credit Application and this Agreement, the terms of this Agreement
shall control.

 

3.2. Reimbursement Obligation of the Borrowers. In order to induce the Issuing
Banks to issue, extend and renew the Letters of Credit and the Banks to
participate therein, the Borrowers hereby agree to reimburse or pay to the
applicable Issuing Bank, for the account of such Issuing Bank or (as the case
may be) the Banks, with respect to each Letter of Credit issued, extended or
renewed by such Issuing Bank hereunder,

 

(a) on each date that any draft presented under such Letter of Credit is honored
by such Issuing Bank, or such Issuing Bank otherwise makes a payment with
respect thereto, (i) the amount paid by such Issuing Bank under or with respect
to such Letter of Credit, and (ii) the amount of any taxes, fees, charges or
other costs and expenses whatsoever incurred by such Issuing Bank or any Bank in
connection with any payment made by such Issuing Bank or any Bank under, or with
respect to, such Letter of Credit, provided, however, that if the Borrowers do
not reimburse such Issuing Bank on the date such Issuing Bank makes payment with
respect to such Letter of Credit, such amount shall, provided that an Event of
Default specified in §§12.1(g) or 12.1(h) has not occurred, become automatically
a Loan which is a Base Rate Loan;

 

(b) upon the reduction (but not termination) of the Total Commitment to an
amount less than the Maximum Drawing Amount, an amount equal to such difference,
which amount shall be held by the Administrative Agent for the benefit of the
Banks and the Administrative Agent as cash collateral for all Reimbursement
Obligations of the Borrowers; and

 

(c) upon the Maturity Date, the termination of the Total Commitment or the
acceleration of the Reimbursement Obligations with respect to all Letters of
Credit in accordance with §12, an amount equal to the then Maximum Drawing
Amount of all Letters of Credit and any unpaid Reimbursement Obligations, which
amount shall be held by the Administrative Agent for the benefit of the Banks
and the Administrative Agent as cash collateral for all Reimbursement
Obligations.

 

Each such payment shall be made to the Administrative Agent, for the benefit of
the Issuing Bank, at the Administrative Agent’s Office in immediately available
funds. Interest on any and all amounts remaining unpaid by the Borrowers under
this §3.2 at any time from the date such amounts become due and payable (whether
as stated in this §3.2, by acceleration or otherwise) until payment in full
(whether before or after judgment) shall be payable to the Issuing Bank on
demand at the rate specified in §4.6 for overdue amounts.

 

3.3. Letter of Credit Payments. If any draft shall be presented or other demand
for payment shall be made under any Letter of Credit, the applicable Issuing
Bank shall notify the Borrowers of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. On the date that such draft is paid or other
payment is made by such Issuing Bank, such Issuing Bank shall promptly notify
the Banks of the amount of any unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Bank shall make available to the Administrative Agent, for the
benefit of such Issuing Bank, at the Administrative Agent’s Office, in
immediately available funds, such Bank’s Commitment Percentage of such unpaid
Reimbursement Obligation, together with an amount equal to the

 

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product of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average interest rate paid by such Issuing Bank for
federal funds acquired by such Issuing Bank during each day included in such
period, times (ii) the amount equal to such Bank’s Commitment Percentage of such
unpaid Reimbursement Obligation, times (iii) a fraction, the numerator of which
is the number of days that elapse from and including the date such Issuing Bank
paid the draft presented for honor or otherwise made payment to the date on
which such Bank’s Commitment Percentage of such unpaid Reimbursement Obligation
shall become immediately available to such Issuing Bank, and the denominator of
which is 360. The responsibility of each Issuing Bank to the Borrowers and the
Banks shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit.

 

3.4. Obligations Absolute. The Borrowers’ respective obligations under this §3
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against any Issuing Bank, any Bank or
any beneficiary of a Letter of Credit. The Borrowers further agree with the
Issuing Banks and the Banks that the Issuing Banks and the Banks shall not be
responsible for, and the Borrowers’ Reimbursement Obligations under §3.2 shall
not be affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even if such documents should in fact prove to
be in any or all respects invalid, fraudulent or forged, or any dispute between
or among the Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Letter of Credit or any such transferee. The Issuing Banks and the Banks
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrowers agree that
any action taken or omitted by the Issuing Banks or any Bank under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrowers and shall not result in
any liability on the part of the Issuing Banks or any Bank to the Borrowers.

 

3.5. Reliance by Issuer. To the extent not inconsistent with §3.4, each Issuing
Bank shall be entitled to rely, and shall be fully protected in relying upon,
any Letter of Credit, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document 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, independent accountants and other
experts selected by such Issuing Bank. Each Issuing Bank shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Each Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and all future holders of the
Revolving Credit Notes or of a Letter of Credit Participation.

 

3.6. Notice Regarding Letters of Credit. One (1) Business Day prior to the
issuance of any Letter of Credit or amendments, extensions or terminations
thereof, the applicable Issuing Bank shall notify the Administrative Agent of
the terms of such Letter of Credit, amendment,

 

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extension or termination. On the day of any drawing under any Letter of Credit,
such Issuing Bank shall notify the Administrative Agent of such drawing under
any Letter of Credit.

 

4. CERTAIN GENERAL PROVISIONS.

 

4.1. Fees.

 

(a) Administrative Agent’s Fee. The Borrowers jointly and severally agree to pay
to the Administrative Agent annually in advance, for the Administrative Agent’s
own account, a fee (the “Administrative Agent’s Fee”) on the dates and in the
amounts mutually determined by the Administrative Agent and the Borrowers.

 

(b) Commitment Fee. The Borrowers agree to pay to the Administrative Agent, for
the pro rata account of the Banks, a fee (the “Commitment Fee”) equal to the
Applicable Commitment Rate multiplied by the amount of the average daily unused
portion of the Total Commitment during each calendar quarter or portion thereof
from the Closing Date to the Maturity Date (or to the date of termination in
full of the Total Commitment, if earlier). The Commitment Fee shall be payable
quarterly in arrears on the first Business Day of each calendar quarter for the
immediately preceding calendar quarter with the first such payment commencing on
October 1, 2003, and with a final payment on the Maturity Date.

 

(c) Letter of Credit Fees. The Borrowers shall pay in advance on the date of
issuance of each Letter of Credit a fronting fee to the applicable Issuing Bank
equal to one eighth of one percent (1/8%) per annum (the “Fronting Fee”) on the
Maximum Drawing Amount of each Letter of Credit, plus a fee (the “Letter of
Credit Fee”) equal to (a) the Applicable Eurodollar Margin multiplied by the
Maximum Drawing Amount of each outstanding Financial Letter of Credit, or (b)
the Applicable Eurodollar Margin times 0.50%, multiplied by the Maximum Drawing
Amount of all Performance Letters of Credit. Such Letter of Credit Fee (but not
the Fronting Fee) shall be paid quarterly in arrears on the first Business Day
of each fiscal quarter for the immediately preceding calendar quarter with the
first such payment commencing on October 1, 2003, and shall be for the accounts
of the Banks in accordance with their respective Commitment Percentages. In
addition to the Fronting Fee and the Letter of Credit Fee, the Borrowers shall
pay to the Issuing Banks, for their own accounts, all related customary
administrative fees in accordance with customary practice.

 

4.2. Payments.

 

(a) All payments of principal, interest, Reimbursement Obligations, fees and any
other amounts due hereunder or under any of the other Loan Documents (other than
with respect to payments to be made to the Swing Line Bank in accordance with
§2.8) shall be made on the due date thereof to the Administrative Agent, for the
respective accounts of the Banks and the Administrative Agent, at the
Administrative Agent’s Office or at such other place that the Administrative
Agent may from time to time designate, in each case at or about 11:00 a.m.
(Boston, Massachusetts, time or other local time at the place of payment) and in
immediately available funds.

 

(b) All payments by the Borrowers hereunder and under any of the other Loan
Documents shall be made without recoupment, setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties, charges,
fees,

 

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deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrowers with respect to any amount payable by
them hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Administrative Agent, for the account of the Banks or (as the case may
be) the Administrative Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional amount in
Dollars as shall be necessary to enable the Banks or the Administrative Agent to
receive the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed upon the
Borrowers. The Borrowers will deliver promptly to the Administrative Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
such other Loan Document.

 

(c) Whenever a payment or fee hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
or fee shall be extended to the next succeeding Business Day, and interest shall
accrue during such extension; provided that any Interest Period for any
Eurodollar Loan which ends on a day that is not a Eurodollar Business Day shall
end on the next succeeding Eurodollar Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately preceding
Eurodollar Business Day.

 

4.3. Computations. All computations of interest on Base Rate Loans and of
Commitment Fees, Letter of Credit Fees or other fees shall, unless otherwise
expressly provided herein, be based on a 365-day year (or 366-day year, as
applicable) and paid for the actual number of days elapsed. All computations of
interest on Eurodollar Loans shall, unless otherwise expressly provided herein,
be based on a 360-day year and paid for the actual number of days elapsed.

 

4.4. Capital Adequacy. If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by any Bank or the Administrative Agent or any corporation
controlling such Bank or the Administrative Agent, and such Bank or the
Administrative Agent determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of such Bank’s or
the Administrative Agent’s Loans, Letter of Credit Participations or Letters of
Credit, or commitment with respect thereto, then such Bank or the Administrative
Agent may notify the Borrowers of such fact. To the extent that the costs of
such increased capital requirements are not reflected in the Base Rate (if
relating to Base Rate Loans), the Borrowers and such Bank or (as the case may
be) the Administrative Agent shall thereafter attempt to negotiate in good
faith, within thirty (30) days of the day on which the Borrowers receive such
notice, an adjustment payable hereunder that will adequately compensate such
Bank or the Administrative Agent in light of these circumstances. If the
Borrowers and such Bank or the Administrative Agent are unable to agree to such
adjustment within thirty (30) days of the date on which the Borrowers receive
such notice, then commencing on the date of such notice (but not earlier than
the effective date of any such increased capital requirement), the fees payable
hereunder shall increase by an amount that will, in such Bank’s or the
Administrative Agent’s reasonable determination, provide adequate compensation.
Each

 

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Bank and the Administrative Agent shall allocate such cost increases among its
customers in good faith and on an equitable basis.

 

4.5. Certificate. A certificate setting forth any additional amounts payable
pursuant to §4.4 and a reasonable explanation of such amounts which are due,
submitted by any Bank or the Administrative Agent to the Borrowers, shall be
conclusive, absent manifest error, that such amounts are due and owing.

 

4.6. Interest After Default.

 

4.6.1. Overdue Amounts.

 

Overdue principal and (to the extent permitted by applicable law) interest on
the Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to the Base Rate plus the Applicable Base Rate
Margin plus two percentage points (2.00%) until such amount shall be paid in
full (after as well as before judgment).

 

4.6.2. Amounts Not Overdue.

 

Upon written notice from the Administrative Agent and the Majority Banks, during
the continuance of a Default or an Event of Default the principal of the Loans
not overdue shall, until such Default or Event of Default has been cured or
remedied or such Default or Event of Default has been waived by the Majority
Banks pursuant to §14.8, bear interest at a rate per annum equal to two percent
(2%) above the rate of interest otherwise applicable to such Loans pursuant to
§2.4.

 

4.7. Interest Limitation. Notwithstanding any other term of this Credit
Agreement or any Note or any other document referred to herein or therein, the
maximum amount of interest which may be charged to or collected from any person
liable hereunder or under any Note by any Bank shall be absolutely limited to,
and shall in no event exceed, the maximum amount of interest which could
lawfully be charged or collected under applicable law (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of the United
States of America, as amended, 12 U.S.C. Section 85, as amended), so that the
maximum of all amounts constituting interest under applicable law, howsoever
computed, shall never exceed as to any Person liable therefor such lawful
maximum, and any term of this Agreement, the Notes, the Letter of Credit
Applications, or any other document referred to herein or therein which could be
construed as providing for interest in excess of such lawful maximum shall be
and hereby is made expressly subject to and modified by the provisions of this
paragraph.

 

4.8. Eurodollar Indemnity. The Borrowers agree to indemnify the applicable Banks
and the Administrative Agent and to hold them harmless from and against any
loss, cost or expenses (including loss of anticipated profits) that the Banks
and the Administrative Agent may sustain or incur as a consequence of (a)
default by the Borrowers in payment of the principal amount of or any interest
on any Eurodollar Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by any Bank or the Administrative
Agent to Banks of funds obtained by it in order to maintain its Eurodollar
Loans, or (b) default by the Borrowers in making a borrowing or conversion after
the Borrowers have given (or are deemed to have given) notice pursuant to §2.5
or §2.6, the making of any payment of a Eurodollar Loan or the making of any
conversion of any such Eurodollar Loan to a Base Rate Loan on a day that is not

 

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the last day of the applicable Interest Period with respect thereto, including
interest or fees payable by any Bank to Banks of funds obtained by it in order
to maintain any such Loans.

 

4.9. Illegality; Inability to Determine Eurodollar Rate. Notwithstanding any
other provision of this Agreement, if (a) the introduction of, any change in, or
any change in the interpretation of, any law or regulation applicable to the
Administrative Agent or any Bank shall make it unlawful, or any central bank or
other governmental authority having jurisdiction thereof shall assert that it is
unlawful, for any Bank or the Administrative Agent to perform its obligations in
respect of any Eurodollar Loans, or (b) if the Banks or the Administrative Agent
shall reasonably determine with respect to Eurodollar Loans that (i) by reason
of circumstances affecting any Eurodollar interbank market, adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate which would
otherwise be applicable during any Interest Period, or (ii) deposits of Dollars
in the relevant amount for the relevant Interest Period are not available to the
Banks or the Administrative Agent in any Eurodollar interbank market, or (iii)
the Eurodollar Rate does not or will not accurately reflect the cost to the
Banks or the Administrative Agent of obtaining or maintaining the applicable
Eurodollar Loans during any Interest Period, then the Banks or the
Administrative Agent shall promptly give telephonic, telex or cable notice of
such determination to the Borrowers (which notice shall be conclusive and
binding upon the Borrowers). Upon such notification by the Banks or the
Administrative Agent, the obligation of the Banks or the Administrative Agent to
make Eurodollar Loans shall be suspended until the Banks or the Administrative
Agent determine that such circumstances no longer exist, and the outstanding
Eurodollar Loans shall continue to bear interest at the applicable rate based on
the Eurodollar Rate until the end of the applicable Interest Period, and
thereafter shall be deemed converted to Base Rate Loans in equal principal
amounts.

 

4.10. Additional Costs, Etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank,
the Issuing Bank or the Administrative Agent by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall:

 

(a) impose on any Bank, any Issuing Bank or the Administrative Agent any tax,
levy, impost, duty, charge, fees, deduction or withholdings of any nature or
requirements with respect to this Credit Agreement, the other Loan Documents,
the Loans, such Bank’s Commitment, the Letters of Credit or any class of loans
or commitments or letters of credit of which any of the Loans, the Commitment or
the Letters of Credit forms a part (other than taxes based upon or measured by
the income or profits of such Bank, such Issuing Bank or the Administrative
Agent), or

 

(b) materially change the basis of taxation (except for changes in taxes on
income or profits) of payments to any Bank of the principal of or the interest
on any Loans or any other amounts payable to any Bank, any Issuing Bank or the
Administrative Agent under this Credit Agreement or any of the other Loan
Documents, or

 

(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of,

 

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or loans by, or letters of credit issued by, or commitments of an office of any
Bank or any Issuing Bank, or

 

(d) impose on any Bank, any Issuing Bank or the Administrative Agent any other
conditions or requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, such Bank’s Commitment, or any
class of loans, letters of credit or commitments of which any of the Loans or
such Bank’s Commitment forms a part, and the result of any of the foregoing is:

 

(i) to increase the cost to any Bank or any Issuing Bank of making, funding,
issuing, renewing, extending or maintaining the Loans, such Bank’s Commitment or
any Letters of Credit; or

 

(ii) to reduce the amount of principal, interest, Reimbursement Obligation, fees
or other amount payable to such Bank, any Issuing Bank or the Administrative
Agent hereunder on account of such Bank’s Commitment, the Loans, or drawings
under the Letters of Credit, or

 

(iii) to require such Bank, such Issuing Bank or the Administrative Agent to
make any payment or to forego any interest or Reimbursement Obligation or other
sum payable hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by such Bank, such Issuing Bank
or the Administrative Agent from the Borrowers hereunder,

 

then, and in each such case, the Borrowers will, upon demand made by such Bank,
such Issuing Bank or (as the case may be) the Administrative Agent at any time
and from time to time and as often as the occasion therefor may arise, pay to
such Bank, such Issuing Bank or the Administrative Agent such additional amounts
as will be sufficient to compensate such Bank, such Issuing Bank or the
Administrative Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum (after such Bank, such Issuing
Bank or (as the case may be) the Administrative Agent shall have allocated the
same fairly and equitably among all customers of any class generally affected
thereby).

 

4.11. Replacement of Banks. If any Bank (an “Affected Bank”) (i) makes demand
upon the Borrowers for (or if the Borrowers are otherwise required to pay)
amounts pursuant to §§4.4 or 4.10 or (ii) is unable to make or maintain
Eurodollar Loans as a result of a condition described in §4.9, the Borrowers
may, within ninety (90) days of receipt of such demand or notice (or the
occurrence of such other event causing the Borrowers to be required to pay such
compensation or causing §4.9 to be applicable), by notice in writing to the
Administrative Agent and such Affected Bank (a “Replacement Notice”) obtain a
replacement Bank satisfactory to the Administrative Agent (the “Replacement
Bank”) to assume the Affected Bank’s Commitment by (A) requesting the
non-Affected Banks to acquire and assume all of the Affected Bank’s Loans and
Commitment, as provided herein, but none of such Banks shall be under an
obligation to do so; or (B) designating a Replacement Bank reasonably
satisfactory to the Administrative Agent. If any satisfactory Replacement Bank
shall be obtained, and/ or any of the non-Affected Banks shall agree to acquire
and assume all of the Affected Bank’s Loans and Commitment, then such Affected
Bank shall, so long as no Event of Default shall have occurred and be
continuing, assign, in accordance with §18, all of its Commitment, Loans, Notes
and other rights and obligations under this Credit Agreement and all other Loan
Documents to such Replacement Bank or non-

 

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Affected Banks, as the case may be, in exchange for payment of the principal
amount so assigned and all interest and fees accrued on the amount so assigned,
plus all other Obligations then due and payable to the Affected Bank; provided,
however, that (i) such assignment shall be without recourse, representation or
warranty and shall be on terms and conditions reasonably satisfactory to such
Affected Bank and such Replacement Bank and/or non-Affected Banks, as the case
may be, and (ii) prior to any such assignment, the Borrowers shall have paid to
such Affected Bank all amounts properly demanded and unreimbursed under §§4.4,
4.8, 4.9 and 4.10. Upon the effective date of such assignment, the Borrowers
shall issue replacement Revolving Credit Notes or Swing Line Notes, as
applicable, to such Replacement Bank and/or non-Affected Banks, as the case may
be, and such institution shall become a “Bank” for all purposes under this
Credit Agreement and the other Loan Documents.

 

4.12. Concerning Joint and Several Liability of the Borrowers.

 

(a) Each of the Borrowers is accepting joint and several liability hereunder and
under the other Loan Documents in consideration of the financial accommodations
to be provided by the Banks under this Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration of the
undertakings of each other Borrower to accept joint and several liability for
the Obligations.

 

(b) Each of the Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this §4.12), it being the intention of the parties
hereto that all of the Obligations shall be the joint and several Obligations of
each of the Borrowers without preferences or distinction among them.

 

(c) If and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.

 

(d) The Obligations of each of the Borrowers under the provisions of this §4.12
constitute full recourse Obligations of each of the Borrowers enforceable
against each such Person to the full extent of its properties and assets,
irrespective of the validity, regularity or enforceability of this Credit
Agreement or any other circumstance whatsoever.

 

(e) Except as otherwise expressly provided in this Credit Agreement, each of the
Borrowers hereby waives notice of acceptance of its joint and several liability,
notice of any Loans made under this Credit Agreement, notice of any action at
any time taken or omitted by the Banks under or in respect of any of the
Obligations, and, generally, to the extent permitted by applicable law, all
demands, notices and other formalities of every kind in connection with this
Credit Agreement, including without limitation, those rights set forth in
Sections 26-7 through 26-9 of the North Carolina General Statutes. Each Borrower
hereby waives all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right
to require the marshaling of assets of the Borrowers and any other entity or
Person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Each of the Borrowers hereby assents to,
and waives

 

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notice of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by the Banks at any time or times in respect of any default by
any of the Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Credit Agreement, any and all other indulgences
whatsoever by the Banks in respect of any of the Obligations, and the taking,
addition, substitution or release, in whole or in part, at any time or times, of
any security for any of the Obligations or the addition, substitution or
release, in whole or in part, of any of the Borrowers. Without limiting the
generality of the foregoing, each of the Borrowers assents to any other action
or delay in acting or failure to act on the part of the Banks with respect to
the failure by any of the Borrowers to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
§4.12, afford grounds for terminating, discharging or relieving any of the
Borrowers, in whole or in part, from any of its Obligations under this §4.12, it
being the intention of each of the Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Borrowers
under this §4.12 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each of the Borrowers under
this §4.12 shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any of the Borrowers or the Banks. The joint and several
liability of the Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any of
the Borrowers or the Banks.

 

(f) To the extent any Borrower makes a payment hereunder in excess of the
aggregate amount of the benefit received by such Borrower in respect of the
extensions of credit under the Credit Agreement (the “Benefit Amount”), then
such Borrower, after the payment in full, in cash, of all of the Obligations,
shall be entitled to recover from each other Borrower such excess payment, pro
rata, in accordance with the ratio of the Benefit Amount received by each such
other Borrower to the total Benefit Amount received by all Borrowers, and the
right to such recovery shall be deemed to be an asset and property of such
Borrower so funding; provided, that each of the Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Borrowers with respect to any liability incurred by it hereunder or under
any of the other Loan Documents, any payments made by it to any of the Banks or
the Administrative Agent with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
irrevocably paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to the Banks or the
Administrative Agent hereunder or under any other Loan Document are hereby
expressly made subordinate and junior in right of payment, without limitation as
to any increases in the Obligations arising hereunder or thereunder, to the
prior payment in full of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.

 

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(g) Each of Borrowers hereby agrees that the payment of any amounts due with
respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrences and during the
continuance of any Default or Event of Default, such Borrower will not demand,
sue for or otherwise attempt to collect any indebtedness of any other Borrower
owing to such Borrower until the Obligations shall have been paid in full in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced, received by such Borrower as trustee for the
Administrative Agent and be paid over to the Administrative Agent for the pro
rata accounts of the Banks (in accordance with each Bank’s Loan Percentage) to
be applied to repay (or be held as security for the repayment of) the
Obligations.

 

(h) The provisions of this §4.12 are made for the benefit of the Banks and their
successors and assigns, and may be enforced in good faith by them from time to
time against any or all of the Borrowers as often as the occasion therefor may
arise and without requirement on the part of the Banks first to marshal any of
their claims or to exercise any of their rights against any other Borrower or to
exhaust any remedies available to them against any other Borrower or to resort
to any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. The provisions of this §4.12 shall
remain in effect until all of the Obligations shall have been paid in full or
otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by the Banks upon the insolvency, bankruptcy or
reorganization of any of the Borrowers or is repaid in good faith settlement of
a pending or threatened avoidance claim, or otherwise, the provisions of this
§4.12 will forthwith be reinstated in effect, as though such payment had not
been made.

 

(i) Each of the Borrowers hereby appoints the Parent, and the Parent hereby
agrees, to act as its representative and authorized signor with respect to any
notices, demands, communications or requests under this Credit Agreement or the
other Loan Documents, including, without limitation, with respect to Loan and
Letter of Credit Requests and Compliance Certificates and pursuant to §20 of
this Credit Agreement.

 

5. REPRESENTATIONS AND WARRANTIES.

 

The Borrowers jointly and severally represent and warrant to the Banks that on
and as of the date of this Credit Agreement, each Drawdown Date, and the date of
issuance of any Letter of Credit (with any disclosure on a schedule pursuant to
this §5 applying to all relevant representations and warranties, regardless of
whether such schedule is referenced in each relevant representation):

 

5.1. Corporate Authority.

 

(a) Incorporation; Good Standing. Each Borrower (i) is a corporation, limited
partnership or limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of its state of
incorporation or organization, (ii) has all requisite power to own its property
and conduct its business as now conducted and as presently contemplated, and
(iii) is in good standing as a foreign corporation or organization and is duly
authorized to do business in each jurisdiction where such qualification is
necessary except where a failure to be so qualified would not

 

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have a materially adverse effect on the business, assets or financial condition
of such Borrower.

 

(b) Authorization. The execution, delivery and performance of this Credit
Agreement and the other Loan Documents and the transactions contemplated hereby
and thereby (i) are within the authority of each Borrower, (ii) have been duly
authorized by all necessary proceedings, (iii) do not conflict with or result in
any breach or contravention of any provision of law, statute, rule or regulation
to which any Borrower is subject or any judgment, order, writ, injunction,
license or permit applicable to any Borrower so as to materially adversely
affect the assets, business or any activity of the Borrowers taken as a whole,
and (iv) do not conflict with any provision of the corporate charter or bylaws
of any Borrower, or any agreement or other instrument binding upon them.

 

(c) Enforceability. The execution, delivery and performance of the Loan
Documents will result in valid and legally binding obligations of each of the
Borrowers enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors’ rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.

 

5.2. Governmental Approvals. The execution, delivery and performance by the
Borrowers of the Loan Documents and the transactions contemplated hereby and
thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.

 

5.3. Title to Properties; Leases. The Borrowers own all of the assets reflected
in the consolidated balance sheet as at the Interim Balance Sheet Date or
acquired since that date (except property and assets sold or otherwise disposed
of in the ordinary course of business since that date), subject to no rights of
others, including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.

 

5.4. Financial Statements; Solvency; Fiscal Year.

 

(a) Financial Statements. There has been furnished to each of the Banks audited
consolidated financial statements of the Borrowers dated as at the Balance Sheet
Date. In addition, there have been furnished to the Banks consolidated balance
sheets of the Borrowers dated as at the Interim Balance Sheet Date and the
related consolidated statements of operation for the fiscal quarter ending on
the Interim Balance Sheet Date. Such financial statements have been prepared in
accordance with GAAP (but, in the case of any of such financial statements which
are unaudited, only to the extent GAAP is applicable to interim unaudited
reports) and fairly present the financial condition of the Borrowers as at the
close of business on the date thereof and the results of operations for the
fiscal period then ended, subject, in the case of unaudited interim financial
statements, to changes resulting from audit and normal year-end adjustments and
to the absence of complete footnotes. There are no contingent liabilities of the
Borrowers involving material amounts, known to the officers of the Borrowers,
which have not been disclosed in such balance sheets and the notes related
thereto or otherwise in writing to the Banks.

 

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(b) Solvency. The Borrowers on a consolidated basis (both before and after
giving effect to the transactions contemplated by this Credit Agreement) are and
will be solvent (i.e., they have assets having a fair value in excess of the
amount required to pay their probable liabilities on their existing debts as
they become absolute and matured) and have, and expect to have, the ability to
pay their debts from time to time incurred in connection therewith as such debts
mature.

 

(c) Fiscal Year. Each Borrower has a fiscal year which is the twelve (12) months
ending on December 31 of each calendar year.

 

5.5. No Material Changes, etc. Since the Interim Balance Sheet Date, there have
occurred no Material Adverse Changes in the financial condition or businesses of
the Borrowers, as shown on or reflected in the consolidated balance sheet of any
of the Borrowers as at the Interim Balance Sheet Date, or the consolidated
statement of income for the fiscal period then ended. Since the Interim Balance
Sheet Date, there have not been any Distributions, other than as permitted by
§7.6 hereof.

 

5.6. Permits, Franchises, Patents, Copyrights, etc. Each Borrower possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others.

 

5.7. Litigation. Except as set forth in Schedule 5.7 and Schedule 5.16, there
are no actions, suits, proceedings or investigations of any kind pending or, to
the knowledge of any Borrower, threatened against any Borrower before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrowers as a whole,
or materially impair the right of the Borrowers, taken as a whole, to carry on
business substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Borrower and its
Subsidiaries, or which question the validity of this Credit Agreement or any of
the other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.

 

5.8. No Materially Adverse Contracts, etc. No Borrower is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation that has or is expected in the future to have a materially
adverse effect on the business, assets or financial condition of the Borrowers.
No Borrower is a party to any contract or agreement that has or is expected, in
the judgment of the Borrowers’ officers, to have any materially adverse effect
on the business of the Borrowers, taken as a whole.

 

5.9. Compliance with Other Instruments, Laws, etc. No Borrower is violating any
provision of its charter documents, bylaws, or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or materially and adversely affect the financial condition, properties
or business of any Borrower.

 

5.10. Tax Status. Each Borrower has made or filed all federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which any of them is subject (unless and only to the extent that such
Borrower has set aside on its books provisions

 

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reasonably adequate for the payment of all unpaid and unreported taxes, has paid
all taxes and other governmental assessments and charges shown or determined to
be due on such returns, reports and declarations, except those being contested
in good faith; and has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrowers know of no basis for any such claim.

 

5.11. No Event of Default. No Default or Event of Default has occurred and is
continuing.

 

5.12. Holding Company and Investment Company Acts. No Borrower is a “holding
company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of
a “holding company”, as such terms are defined in the Public Utility Holding
Company Act of 1935; nor is it an “investment company”, or an “affiliated
company” or a “principal underwriter” of an “investment company”, as such terms
are defined in the Investment Company Act of 1940.

 

5.13. Absence of Financing Statements, etc. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that purports to cover, affect or give
notice of any present or possible future lien on, or security interest in, any
assets or property of any Borrower or any rights relating thereto.

 

5.14. Employee Benefit Plans.

 

(a) In General. Each Employee Benefit Plan and each Guaranteed Pension Plan has
been maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as required by §412
of ERISA. Each Borrower has heretofore delivered to the Administrative Agent the
most recently completed annual report, Form 5500, with all required attachments,
and the actuarial statement required to be submitted under §103(d) of ERISA,
with respect to each Guaranteed Pension Plan.

 

(b) Terminability of Welfare Plans. No Employee Benefit Plan, which is an
employee welfare benefit plan within the meaning of §3(1) or §3(2)(B) of ERISA,
provides benefit coverage subsequent to termination of employment, except as
required by Title I, Part 6 of ERISA or the applicable state insurance laws. A
Borrower may terminate each such Plan at any time (or at any time subsequent to
the expiration of any applicable bargaining agreement) in the discretion of such
Borrower without liability to any Person other than for claims arising prior to
termination.

 

(c) Guaranteed Pension Plans. Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to avoid the incurrence of
an accumulated funding deficiency, the notice or lien provisions of §302(f) of
ERISA, or otherwise, has been timely made. No waiver of an accumulated funding
deficiency or extension of amortization periods has been received with respect
to any Guaranteed Pension Plan, and no Borrower nor any ERISA Affiliate is
obligated to or has posted security in connection with an amendment to a
Guaranteed Pension Plan pursuant to §307 of ERISA or §401(a)(29) of the Code. No
liability to the PBGC (other than required

 

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insurance premiums, all of which have been paid) has been incurred by any
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event (other than an ERISA Reportable
Event as to which the requirement of thirty (30) days notice has been waived),
or any other event or condition which presents a material risk of termination of
any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months of the
date of this representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities of all such
Guaranteed Pension Plans within the meaning of §4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans, disregarding
for this purpose the benefit liabilities and assets of any Guaranteed Pension
Plan with assets in excess of benefit liabilities.

 

(d) Multiemployer Plans. No Borrower nor any ERISA Affiliate has incurred any
material liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan under
§4201 of ERISA or as a result of a sale of assets described in §4204 of ERISA.
No Borrower nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of §4241 or
§4245 of ERISA or is at risk of entering reorganization or becoming insolvent,
or that any Multiemployer Plan intends to terminate or has been terminated under
§4041A of ERISA.

 

5.15. Use of Proceeds.

 

5.15.1. General. The proceeds of the Loans shall be used solely as follows: (a)
to refinance existing Indebtedness of the Borrowers under the Existing Credit
Agreement, (b) to finance acquisitions permitted pursuant to §7.4, and (c) for
capital expenditures, working capital and general corporate purposes. The
Borrowers will obtain Letters of Credit solely for working capital and general
corporate purposes.

 

5.15.2. Regulations U and X. No portion of any Loan is to be used, and no
portion of any Letter of Credit is to be obtained, for the purpose of purchasing
or carrying any “margin security” or “margin stock” as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.

 

5.15.3. Ineligible Securities. No portion of the proceeds of any Loans is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of knowingly purchasing, or providing credit support for the purchase of, during
the underwriting or placement period or within thirty (30) days thereafter, any
Ineligible Securities underwritten or privately placed by a Financial Affiliate.

 

5.16. Environmental Compliance. Each Borrower has investigated the past and
present condition and usage of the Real Property and the operations conducted
thereon and, based upon such diligent investigation, has determined that, except
as shown on Schedule 5.16:

 

(a) No Borrower nor any operator of the Borrowers’ properties is in violation,
or alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the CERCLA, the Superfund Amendments and Reauthorization Act
of 1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances

 

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Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter “Environmental
Laws”), which violation would have a material adverse effect on the business,
assets or financial condition of the Borrowers on a consolidated basis;

 

(b) no Borrower has received notice from any third party including, without
limitation, any federal, state or local governmental authority, (i) that any one
of them has been identified by the United States Environmental Protection Agency
(“EPA”) as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that
any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardous substances
as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by 42
U.S.C. §9601(33) and any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws (“Hazardous
Substances”) which any of the Borrowers has generated, transported or disposed
of has been found at any site at which a federal, state or local agency or other
third party has conducted or has ordered that any Borrower conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that it is or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party’s incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances;

 

(c) except where it would not have a material adverse effect on the value of the
Real Property: (i) no portion of the Real Property has been used for the
handling, processing, storage or disposal of Hazardous Substances; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (ii) in the course of any activities
conducted by the Borrowers, or operators of the Real Property, no Hazardous
Substances have been generated or are being used on such properties; (iii) there
have been no unpermitted releases or threatened Releases of Hazardous Substances
on, upon, into or from the Real Property; (iv) to the best of the Borrowers’
knowledge, there have been no Releases on, upon, from or into any real property
in the vicinity of any of the Real Property which, through soil or groundwater
contamination, may have come to be located on such properties; and (v) in
addition, when required under applicable Environmental Laws, any Hazardous
Substances that have been generated on the Real Property have been transported
offsite only by carriers having an identification number issued by the EPA,
treated or disposed of only by treatment or disposal facilities maintaining
valid permits as required under applicable Environmental Laws, which
transporters and facilities, to the best of the Borrowers’ knowledge, have been
and are operating in material compliance with such permits and applicable
Environmental Laws; and

 

(d) none of the Real Property is or shall be subject to any applicable
environmental clean-up responsibility law or environmental restrictive transfer
law or regulation by virtue of the transactions set forth herein and
contemplated hereby.

 

5.17. Subsidiaries. Schedule 5.17 sets forth a complete and accurate list of the
Subsidiaries of the Parent, including the name of each Subsidiary, the location
of its chief executive office, its tax identification number, and its
jurisdiction of incorporation or organization, together with the number of
authorized and outstanding shares, partnership interests or membership units, as
the case may be, of each Subsidiary. Each Subsidiary listed on Schedule 5.17 is
wholly owned by the Parent or a Subsidiary of the Parent and is a Borrower

 

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hereunder, 100% of the assets (other than motor vehicle titles and real estate)
and stock or other equity interests of which have been pledged to the
Administrative Agent on behalf of the Banks pursuant to the Security Documents.
The Parent has good and marketable title to all of the shares or other equity
interests it purports to own of each such Subsidiary, free and clear in each
case of any lien or encumbrance. All such shares have been duly issued and are
fully paid and non-assessable. None of the Borrowers is engaged in any joint
venture or partnership with any other Person.

 

5.18. True Copies of Charter and Other Documents. Each Borrower has furnished
the Administrative Agent copies, in each case true and complete as of the
Closing Date, of its (a) charter and other incorporation documents and (b)
by-laws, each including any amendments thereto.

 

5.19. Disclosure. None of this Credit Agreement, nor any of the other Loan
Documents, nor any document or information furnished by the Borrowers in
connection therewith contains any untrue statement of a material fact or omits
to state a material fact (known to any Borrower in the case of any document or
information not furnished by the Borrowers) necessary in order to make the
statements herein or therein not misleading. There is no fact known to any
Borrower which materially adversely affects, or which is reasonably likely in
the future to materially adversely affect, the business, assets, or financial
condition of any Borrower, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.

 

5.20. Capitalization.

 

(a) As of the Closing Date, the authorized capital stock of the Parent consists
of 80,000,000 shares of common stock (no par value) of which 13,440,501 shares
are outstanding as of the Closing Date, and 10,000,000 shares of preferred stock
(par value $.01 per share) of which no shares are outstanding as of the Closing
Date. All of such outstanding shares are fully paid and non-assessable.

 

(b) The shares of the capital stock, partnership interests or membership units,
as the case may be, of the Borrowers (other than the Parent) pledged to the
Administrative Agent pursuant to the Membership Interest Pledge Agreements are
held of record as set forth on Annex A to the Membership Interest Pledge
Agreements. Such capital stock, partnership interests or membership units, as
the case may be, constitutes, of record, 100% of the outstanding capital stock,
partnership interests or membership units, as the case may be, of each such
Subsidiary, and, to the Borrowers’ knowledge, on a fully-diluted basis, 100% of
such outstanding capital stock, partnership interests or membership units, as
the case may be.

 

5.21. Foreign Assets Control Regulations, Etc. None of the requesting or
borrowing of the Loans, the requesting or issuance, extension or renewal of any
Letters of Credit or the use of the proceeds of any thereof will violate the
Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading
With the Enemy Act”) or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the “Foreign Assets Control Regulations”) or any enabling legislation or
executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
“Executive Order”) and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56)). Furthermore,

 

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none of the Borrowers nor any of their Subsidiaries or other Affiliates (a) is
or will become a “blocked person” as described in the Executive Order, the
Trading With the Enemy Act or the Foreign Assets Control Regulations or (b)
engages or will engage in any dealings or transactions, or be otherwise
associated, with any such “blocked person”.

 

6. AFFIRMATIVE COVENANTS OF THE BORROWERS.

 

The Borrowers jointly and severally covenant and agree that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any Loans or any
Issuing Bank has any obligation to issue, extend or renew any Letters of Credit:

 

6.1. Punctual Payment. The Borrowers will duly and punctually pay or cause to be
paid the principal and interest on the Loans, all Reimbursement Obligations,
fees and all other amounts provided for in this Credit Agreement and the other
Loan Documents, all in accordance with the terms of this Credit Agreement and
such other Loan Documents.

 

6.2. Maintenance of Office. Each Borrower will maintain its chief executive
office at 3301 Benson Drive, Suite 601, Raleigh, North Carolina 27609, or at
such other place in the United States of America as such Borrower shall
designate upon thirty (30) days prior written notice to the Administrative
Agent.

 

6.3. Records and Accounts. Each Borrower will (i) keep true and accurate records
and books of account in which full, true and correct entries will be made in
accordance with generally accepted accounting principles, (ii) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties and the properties of
its Subsidiaries, contingencies, and other reserves, and (iii) at all times
engage the Accountants as the independent certified public accountants of the
Borrowers.

 

6.4. Financial Statements, Certificates and Information. The Borrowers will
deliver to each of the Banks:

 

(a) as soon as practicable, but, in any event not later ninety (90) days after
the end of each fiscal year of the Parent, the consolidated and consolidating
balance sheets of the Parent as at the end of such year, statements of cash
flows, and the related consolidated and consolidating statements of operations,
each setting forth in comparative form the figures for the previous fiscal year,
all such consolidated and consolidating financial statements to be in reasonable
detail, prepared in accordance with GAAP and, with respect to the consolidated
financial statements, certified by the Accountants;

 

(b) as soon as practicable, but in any event not later than forty-five (45) days
after the end of each fiscal quarter of the Borrowers, copies of the
consolidated and consolidating balance sheets and statement of operations of the
Parent as at the end of such quarter, subject to year end adjustments, the
related statement of cash flows, all in reasonable detail and prepared in
accordance with GAAP, with a certification by the principal financial or
accounting officer of each Borrower (the “CFO”) that the consolidated financial
statements are prepared in accordance with GAAP and fairly present the
consolidated financial condition of the Borrowers as at the close of business on
the date thereof (subject to year-end adjustments) and the results of operations
for the period then ended;

 

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(c) simultaneously with the delivery of the financial statements referred to in
(a) and (b) above, a statement in the form of Exhibit D hereto (the “Compliance
Certificate”) certified by the CFO that the Borrowers are in compliance with the
covenants contained in §§6, 7 and 8 hereof, as of the end of the applicable
period and setting forth in reasonable detail computations evidencing such
compliance, provided that if the Borrowers shall at the time of issuance of such
certificate or at any other time obtain knowledge of any Default or Event of
Default, the Borrowers shall include in such certificate or otherwise deliver
forthwith to the Banks a certificate specifying the nature and period of
existence thereof and what action the Borrowers propose to take with respect
thereto;

 

(d) annually or at such other time as may be requested by the Administrative
Agent, copies of the financial statements, financial projections, annual budget
and business plan concerning the Borrowers in substantially the same form in
which such information is supplied to the boards of directors of the Borrowers;

 

(e) contemporaneously with, or promptly following, the filing or mailing
thereof, copies of all material of a financial nature filed with the SEC or sent
to the stockholders of the Borrowers; and

 

(g) from time to time, such other financial data and other information
(including accountants’ management letters) as any Bank may reasonably request.

 

The Borrowers hereby authorize the Banks to disclose any information obtained
pursuant to this Credit Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, that this authorization
shall not be deemed to be a waiver of any rights to object to the disclosure by
the Banks of any such information which the Borrowers have or may have under the
federal Right to Financial Privacy Act of 1978, as in effect from time to time.

 

6.5. Corporate Existence and Conduct of Business. Each Borrower will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate or other organizational existence, corporate rights and
franchises; effect and maintain its foreign qualifications, licensing,
domestication or authorization except as terminated by such Borrower’s Board of
Directors in the exercise of its reasonable judgment and except where the
failure of a Borrower to remain so qualified would not materially adversely
impair the financial condition of the Borrowers on a consolidated basis; use its
best efforts to comply with all applicable laws; and shall not become obligated
under any contract or binding arrangement which, at the time it was entered into
would materially adversely impair the financial condition of the Borrowers on a
consolidated basis. Each Borrower will continue to engage primarily in the
businesses now conducted by it and in related businesses.

 

6.6. Maintenance of Properties. The Borrowers will cause all material properties
used or useful in the conduct of their businesses to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrowers may be necessary so that the businesses carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this section shall prevent the Borrowers from
discontinuing the operation and maintenance of any of their properties if such
discontinuance is, in the judgment of the

 

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Borrowers, desirable in the conduct of their business and which does not in the
aggregate materially adversely affect the businesses of the Borrowers on a
consolidated basis.

 

6.7. Insurance. The Borrowers will maintain with financially sound and reputable
insurance companies, funds or underwriters insurance of the kinds, covering the
risks (other than risks arising out of or in any way connected with personal
liability of any officers and directors thereof) and in the relative
proportionate amounts usually carried by reasonable and prudent companies
conducting businesses similar to that of the Borrowers, such insurance to be in
form and substance satisfactory to the Administrative Agent. In addition, the
Borrowers will furnish from time to time, upon the Administrative Agent’s
request, a summary of the insurance coverage of each of the Borrowers, which
summary shall be in form and substance satisfactory to the Administrative Agent
and, if requested by the Administrative Agent, will furnish to the
Administrative Agent copies of the applicable policies.

 

6.8. Taxes. The Borrowers will duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments and
other governmental charges (other than taxes, assessments and other governmental
charges imposed by foreign jurisdictions which in the aggregate are not material
to the business or assets of any Borrower on an individual basis or of the
Borrowers on a consolidated basis) imposed upon it and its real properties,
sales and activities, or any material part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or supplies,
which if unpaid might by law become a lien or charge upon any material portion
of its property, unless such lien is a Permitted Lien; provided, however, that
any such tax, assessment, charge, levy or claim need not be paid if the validity
or amount thereof shall currently be contested in good faith by appropriate
proceedings and if such Borrower shall have set aside on its books adequate
reserves with respect thereto; and provided, further, that the Borrowers will
pay all such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor. The Borrowers do not intend to treat the Loans, Letters of
Credit and/or related transactions hereunder as being a “reportable transaction”
(within the meaning of Treasury Regulation Section 1.6011-4).

 

6.9. Inspection of Properties, Books, and Contracts. The Borrowers will permit
any and all of the Banks, the Administrative Agent or any of their designated
representatives, upon reasonable notice and during normal business hours, to
visit and inspect any of their properties, to examine their books of account
(including the making of periodic accounts receivable reviews), or contracts
(and to make copies thereof and extracts therefrom), and to discuss their
affairs, finances and accounts with, and to be advised as to the same by, their
officers, all at such times and intervals as any of the Banks may reasonably
request.

 

6.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance of
Material Licenses and Permits. The Borrowers will (i) comply with the provisions
of their charter documents and by-laws and all agreements and instruments by
which they or any of their properties may be bound; and (ii) comply with all
applicable laws and regulations (including Environmental Laws), decrees, orders,
judgments, licenses and permits, including, without limitation, all
environmental permits (“Applicable Laws”), except where noncompliance with such
Applicable Laws would not have a material adverse effect in the aggregate on the
consolidated financial condition, properties or businesses of the Borrowers. If
at any time while the Notes, or any Loan or Letter of Credit is outstanding or
any Bank or the Administrative Agent has any obligation to make Loans or any
Issuing Bank has any obligation to issue Letters of Credit hereunder, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that

 

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the Borrowers may fulfill any of their obligations hereunder, the Borrowers will
immediately take or cause to be taken all reasonable steps within the power of
the Borrowers to obtain such authorization, consent, approval, permit or license
and furnish the Banks with evidence thereof.

 

6.11. Environmental Indemnification. Each Borrower covenants and agrees that it
will indemnify and hold the Banks harmless from and against any and all claims,
expense, damage, loss or liability incurred by the Banks (including all costs of
legal representation incurred by the Banks) relating to (a) any release or
threatened release of hazardous substances on the Real Property; (b) any
violation of any Environmental Laws with respect to conditions at the Real
Property or the operations conducted thereon; or (c) the investigation or
remediation of offsite locations at which any Borrower or its predecessors are
alleged to have directly or indirectly disposed of hazardous substances. It is
expressly acknowledged by each Borrower that this covenant of indemnification
shall include all claims, expenses, damages, losses or liabilities incurred by
the Banks relating to the foregoing except those which result from the gross
negligence or willful misconduct of any Bank, and this covenant shall survive
any foreclosure or any modification, release or discharge of the Loan Documents
or the payment of the Loans and shall inure to the benefit of the Banks, their
successors and assigns.

 

6.12. Further Assurances. The Borrowers will cooperate with the Banks and
execute such further instruments and documents as any of the Banks shall
reasonably request to carry out to the Banks’ satisfaction the transactions
contemplated by this Credit Agreement and the Loan Documents.

 

6.13. Notice of Potential Claims or Litigation. The Borrowers will deliver to
the Banks, within thirty (30) days of receipt thereof, written notice of the
initiation of any action, claim, complaint, or any other notice of dispute or
potential litigation (including without limitation any alleged violation of any
Environmental Law), wherein the potential liability is in excess of $250,000,
together with a copy of each such notice received by any Borrower.

 

6.14. Notice of Certain Events Concerning Insurance and Environmental Claims.

 

(a) The Borrowers will provide the Banks with written notice as to any material
cancellation or material change in any insurance of the Borrowers within ten
(10) Business Days after the Borrowers’ receipt of any notice (whether formal or
informal) of such cancellation or change by any of their insurers.

 

(b) The Borrowers will promptly notify the Banks in writing of any of the
following events:

 

(i) upon any Borrower obtaining knowledge of any violation of any Environmental
Law regarding the Real Property or any Borrower’s operations, which violation
could have a material adverse effect on the Real Property or on such Borrower’s
operations;

 

(ii) upon any Borrower obtaining knowledge of any potential or known Release or
threat of Release of any Hazardous Substance at, from, or into the Real Property
which any Borrower reports in writing or is reportable by it in writing to any
governmental authority and which is material in amount or nature or which could
materially affect the value of the Real Property;

 

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(iii) upon any Borrower’s receipt of any notice of violation of any
Environmental Laws or of any Release or threatened Release of Hazardous
Substances, including a notice or claim of liability or potential responsibility
from any third party (including without limitation any federal, state or local
governmental officials) and including notice of any formal inquiry, proceeding,
demand, investigation or other action with regard to (A) any Borrower’s or any
Person’s operation of the Real Property, (B) contamination on, from or into the
Real Property, or (C) investigation or remediation of offsite locations at which
any Borrower or any of its predecessors is alleged to have directly or
indirectly Disposed of Hazardous Substances, which violation or Release in any
such case could have a material adverse effect on the Real Property or on any
Borrower’s operations; or

 

(iv) upon any Borrower obtaining knowledge that any material expense or loss has
been incurred by such governmental authority in connection with the assessment,
containment, removal or remediation of any Hazardous Substances with respect to
which any Borrower may be liable or for which a lien may be imposed on the Real
Property.

 

6.15. Notice of Default, Material Change, etc. The Borrowers will promptly
notify the Banks in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice or take any other action in respect
of a claimed default (whether or not constituting an Event of Default) under
this Credit Agreement or any other note, evidence of Indebtedness, indenture or
other obligation evidencing Indebtedness in excess of $250,000 as to which any
Borrower is a party or obligor, whether as principal or surety, the Borrowers
shall forthwith give written notice thereof to the Banks, describing the notice
of action and the nature of the claimed default. The Borrowers will promptly
notify the Banks in writing upon the occurrence of any Material Adverse Change.

 

6.16. New Subsidiaries. (a) Any newly-created or acquired Subsidiaries permitted
under §7.4 shall become Borrowers hereunder by (i) signing a joinder agreement
or entering into an amendment to this Credit Agreement and the Security
Documents, as applicable, with the other parties hereto and thereto, in form and
substance satisfactory to the Administrative Agent, providing that such
Subsidiary shall become a Borrower hereunder, 100% of the stock, partnership
interests or membership units, as the case may be, and assets (other than motor
vehicle titles and real estate) of which shall be pledged to the Collateral
Agent for the benefit of the Banks and the Noteholders in accordance with the
Intercreditor Agreement, and (ii) providing such other documentation as the
Banks or the Administrative Agent may reasonably request, including, without
limitation, documentation with respect to the conditions specified in §9 hereof.
In such event, the Administrative Agent is hereby authorized by the parties to
amend Schedule 5.17 to include such new Subsidiary.

 

(b) The Parent shall at all times directly or indirectly through a Subsidiary
own all of the shares of capital stock, partnership interests and membership
interests of each of the Subsidiaries, and such shares, partnership interests
and membership interests shall at all times, except with respect to Permitted
Transfers, be pledged to the Collateral Agent for the benefit of the Banks and
the Noteholders pursuant to a Pledge Agreement.

 

6.17. Employee Benefit Plans. The Borrowers will (i) promptly upon filing the
same with the Department of Labor or Internal Revenue Service, upon request of
the Administrative

 

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Agent, furnish to the Administrative Agent a copy of the most recent actuarial
statement required to be submitted under §103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each Guaranteed Pension
Plan and (ii) promptly upon receipt or dispatch, furnish to the Administrative
Agent any notice, report or demand sent or received in respect of a Guaranteed
Pension Plan under §§302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under §§4041A, 4202, 4219, 4242, or 4245
of ERISA.

 

6.18. Notices Concerning Tax Treatment. In the event the Borrowers determine to
take any action inconsistent with their intention to not treat the Loans,
Letters of Credit and/or related transactions hereunder as a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4), they
will promptly notify the Administrative Agent in writing thereof and will
provide the Administrative Agent with a duly completed copy of IRS Form 8886 or
any successor form. Each Borrower acknowledges that one or more of the Banks may
treat its Loans and Letter of Credit Participations as part of a transaction
that is subject to Treasury Regulation Section 1.6011-4 or Section 301.6112-1,
and the Administrative Agent and such Bank or Banks, as applicable, will file
such IRS forms and maintain such lists and other records as they may determine
is required by such Treasury Regulations.

 

7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.

 

Each Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend or renew any Letters of Credit:

 

7.1. Restrictions on Indebtedness. No Borrower shall become or be a guarantor or
surety of, or otherwise create, incur, assume, or be or remain liable,
contingently or otherwise, with respect to any Indebtedness, or become or be
responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any funds, assets,
goods or services or otherwise) with respect to any undertaking or Indebtedness
of any other Person, or incur any Indebtedness other than:

 

(a) Indebtedness to the Banks and the Administrative Agent arising under any of
the Loan Documents;

 

(b) incurrence by any Borrower of guaranty, suretyship or indemnification
obligations in connection with such Borrower’s performance of services for its
respective customers in the ordinary course of its business;

 

(c) Indebtedness of one Borrower (other than a Designated LLC) to another
Borrower (other than a Designated LLC);

 

(d) other Indebtedness existing on the date hereof and listed and described on
Schedule 7.1;

 

(e) (i) purchase money Indebtedness incurred in connection with the acquisition
after the Closing Date of any real or personal property or under equipment
leases or equipment chattel, (ii) existing Indebtedness of any Subsidiary
acquired after the Closing Date (the “Acquired Subsidiary”) originally incurred
by the Acquired Subsidiary in connection with the lease or acquisition of
property or fixed assets used in the business of the Acquired Subsidiary; or
with respect to industrial finance bonds issued to finance the purchase of such
property or assets; (iii) Indebtedness with respect

 

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to obligations under Capitalized Leases (iv) other unsecured Indebtedness; and
(v) Indebtedness with respect to Subordinated Debt; provided that in the event
that after the Closing Date any Subsidiary of the Parent guaranties any
Subordinated Debt, the terms of such guaranty shall provide for the release of
such guaranty upon the sale of stock or all or substantially all of the assets
of such Subsidiary (even if such sale was made in a foreclosure); provided that
the aggregate amount of such Indebtedness under this subsection (e) shall not
exceed .5x EBITDA for the period of four (4) consecutive fiscal quarters most
recently ended;

 

(f) Indebtedness with respect to landfill closure bonds of the Borrowers in an
aggregate amount not to exceed $30,000,000;

 

(g) Noteholders’ Debt in principal amount not to exceed $75,000,000;

 

(h) Indebtedness with respect to (i) the Sampson County Bonds in an aggregate
amount not to exceed (A) $34,969,367 in connection with the Series 2000 Bonds,
and (B) $9,804,000 in connection with the Series 2003 Bonds, and (ii)
Indebtedness with respect to other tax-exempt revenue bonds not to exceed
$25,000,000 in the aggregate;

 

(i) Indebtedness of the Borrowers to the Designated LLCs which is evidenced by
Designated Intercompany Debentures, in an aggregate amount not to exceed
$100,000,000;

 

(j) Indebtedness of a Designated LLC to a Borrower, whether in the form of
intercompany payables, advances, notes or debentures, each of which is pledged
to the Collateral Agent, the proceeds of which are loaned or contributed as
capital to a direct or indirect Subsidiary of such Designated LLC, which
Subsidiary is a Borrower (and not a Designated LLC); provided that the aggregate
amount of all such Indebtedness permitted under this Section 7.1(j) shall not
exceed $100,000,000;

 

(k) Guaranty obligations of Parent with respect to undertakings by Sampson
County Disposal, Inc. (or Sampson County Disposal, LLC as successor to Sampson
County Disposal, Inc.) under (i) the Remarketing and Interest Services Agreement
by and between Sampson County Disposal, Inc., Parent and Wachovia Securities,
Inc. and (ii) the Bond Purchase Agreement by and among Wachovia Securities,
Inc., The Sampson County Industrial Facilities and Pollution Control Financing
Authority, Sampson County Disposal, Inc. and Parent;

 

(l) Indebtedness of the Borrowers in respect of Swap Contracts satisfactory to
the Administrative Agent; and

 

(m) Indebtedness of the Borrowers under fuel price swaps, fuel price caps, and
fuel price collar or floor agreements, and similar agreements or arrangements
designed to protect against or manage fluctuations in fuel prices with respect
to fuel purchased in the ordinary course of business of the Borrowers (“Fuel
Derivatives Obligations”);

 

provided that if the creation, incurrence, assumption or existence of any
Indebtedness would constitute a default or an event of default under the
Noteholders’ Debt, then the creation, incurrence, assumption or existence of
such Indebtedness shall not be permitted hereunder.

 

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7.2. Restrictions on Liens. No Borrower shall create or incur or suffer to be
created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any property or assets
of any character, whether now owned or hereafter acquired, or upon the income or
profits therefrom; or transfer any of such property or assets or the income or
profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors; or acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; or suffer to exist for a period
of more than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it which if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever over
its general creditors; or sell, assign, pledge or otherwise transfer any
accounts, contract rights, general intangibles or chattel paper, with or without
recourse, except as follows (the “Permitted Liens”):

 

(a) liens to secure taxes, assessments and other government charges or claims
for labor, material or supplies in respect of obligations not overdue;

 

(b) deposits or pledges made in connection with, or to secure payment of,
workmen’s compensation, unemployment insurance, old age pensions or other social
security obligations;

 

(c) liens in respect of judgments or awards which have been in force for less
than the applicable period for taking an appeal so long as execution is not
levied thereunder or in respect of which the applicable Borrower shall at the
time in good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review and in respect of which such Borrower maintains adequate
reserves;

 

(d) liens of carriers, warehousemen, mechanics and materialmen, and other like
liens on properties, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue, provided that such liens may
continue to exist for a period of more than 120 days if the validity or amount
thereof shall currently be contested by the applicable Borrower in good faith
and if such Borrower shall have set aside on its books adequate reserves with
respect thereto as required by GAAP, and provided further that such Borrower
will pay any such claim forthwith upon commencement of proceedings to foreclose
any such lien;

 

(e) encumbrances consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities in the
title thereto, landlord’s or lessor’s liens under leases to which any Borrower
is a party, and other minor liens or encumbrances none of which in the opinion
of such Borrower interferes materially with the use of the property affected in
the ordinary conduct of the business of such Borrower, which defects do not
individually or in the aggregate have a materially adverse effect on the
business of such Borrower individually or of the Borrowers on a consolidated
basis;

 

(f) liens existing on the date hereof and listed on Schedule 7.2 of the
Disclosure Schedule delivered herewith;

 

(g) liens in favor of the Collateral Agent for the benefit of the Administrative
Agent and the Banks and the Noteholders under the Security Documents;

 

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(h) purchase money security interests in or purchase money mortgages on real or
personal property acquired after the date hereof to secure purchase money
Indebtedness of the type permitted by §7.1(e)(i), (ii) and (iii), incurred in
connection with the acquisition of such property, which security interests cover
only the real or personal property so acquired; and

 

(i) liens, whether created by contract, law, regulation or ordinance, securing
Indebtedness permitted by §7.1 (b), provided that any security granted therefor
is limited to (i) rights to payment under, and use of equipment or related
assets to perform, the contracts to which such guaranty or suretyship
obligations relate, and (ii) other liens arising under the laws of suretyship.

 

7.3. Restrictions on Investments. No Borrower shall purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or other
obligations or securities of, or any interest in, any other Person, or make or
commit to make any acquisition under §7.4, or make or commit to make any
advance, loan, extension of credit or capital contribution to or any other
investment in, any other Person, other than:

 

(a) marketable direct or guaranteed obligations of the United States of America
that mature within one (1) year from the date of purchase;

 

(b) demand deposits, certificates of deposit, bankers acceptances and time
deposits of United States banks having unimpaired capital and surplus in excess
of $250,000,000;

 

(c) securities commonly known as “commercial paper” issued by a corporation
organized and existing under the laws of the United States of America or any
state thereof that at the time of purchase have been rated and the ratings for
which are not less than “P 1” if rated by Moody’s Investors Service, Inc., and
not less than “A 1” if rated by Standard and Poor’s Rating Group;

 

(d) Investments existing on the date hereof and listed on Schedule 7.3 of the
Disclosure Schedule delivered herewith;

 

(e) (i) Investments permitted under §7.4, and (ii) Investments consisting of
notes issued to the Parent and/or one of its Subsidiaries in connection with the
FHA Transaction;

 

(f) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or surplus in the ordinary
course of business;

 

(g) Investments consisting of loans and advances by any Borrower to another
Borrower (other than a Designated LLC);

 

(h) Investments consisting of the applicable Borrower’s ownership interests in
the Designated LLCs (and the related capital contributions in respect thereof)
as set forth in Schedule 7.3 and Investments in the Borrowers by the Designated
LLCs constituting Indebtedness permitted under Section 7.1; and

 

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(i) other Investments not to exceed the sum of $2,000,000 in the aggregate at
any one time outstanding with respect to non-hazardous solid waste collection,
transfer, hauling, recycling or disposal businesses, projects, joint-ventures or
enterprises or purchase options.

 

7.4. Merger, Consolidation and Disposition of Assets.

 

7.4.1. Mergers and Acquisitions. The Borrowers will not become a party to any
merger or consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course of
business consistent with past practices) except the merger or consolidation of,
or asset or stock acquisitions between existing Borrowers and except as
otherwise provided in this §7.4.1. The Borrowers may purchase or otherwise
acquire all or substantially all of the assets or stock or other equity
interests of any other Person provided that:

 

(a) the Borrowers are in current compliance with and, giving effect to the
proposed acquisition (including any borrowings made or to be made in connection
therewith), will continue to be in compliance with all of the covenants in §8
hereof on a pro forma historical combined basis as if the transaction occurred
on the first day of the period of measurement; provided, that, in the case of
transactions involving cash consideration to be paid by the Borrowers (including
cash deferred payments, contingent or otherwise, and the aggregate amount of all
Funded Debt assumed) in excess of $5,000,000, the Administrative Agent and the
Banks shall have received a Compliance Certificate demonstrating compliance with
§8 on a pro forma historical combined basis as if the transaction occurred on
the first day of the period of measurement (any acquisition requiring cash
consideration (including cash deferred payments, contingent or otherwise, and
the aggregate amount of all Funded Debt assumed) in excess of $5,000,000 being
referred to as a “Material Acquisition”);

 

(b) at the time of such acquisition, no Default or Event of Default has occurred
and is continuing, and such acquisition will not otherwise create a Default or
an Event of Default hereunder;

 

(c) the business to be acquired is predominantly in the same lines of business
as the Borrowers, or businesses reasonably related or incidental thereto (e.g.,
non-hazardous solid waste collection, transfer, hauling, recycling, or
disposal);

 

(d) the business to be acquired operates predominantly in the continental United
States and/ or Canada;

 

(e) all of the assets to be acquired shall be owned by an existing or newly
created Subsidiary of the Parent which Subsidiary shall be a Borrower, 100% of
the assets (other than motor vehicle titles and real estate) and stock or other
equity interests of which have been or, simultaneously with such acquisition,
will be pledged to the Collateral Agent on behalf of the Banks and the
Noteholders in accordance with the Intercreditor Agreement or, in the case of a
stock or other equity interest acquisition, the acquired company, simultaneously
with such acquisition, shall become a Borrower or shall be merged with and into
a wholly owned Subsidiary that is a Borrower and such

 

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newly acquired or created Subsidiary shall otherwise comply with the provisions
of §6.16 hereof;

 

(f) not later than seven (7) days prior to the proposed acquisition date, a copy
of the purchase agreement and financial projections, together with audited (if
available, or otherwise unaudited) financial statements for any Subsidiary to be
acquired or created, for the preceding two (2) fiscal years or such shorter
period of time as such Subsidiary has been in existence shall have been
furnished to the Administrative Agent, only in cases of Material Acquisitions or
upon request by the Administrative Agent;

 

(g) not later than seven (7) days prior to the proposed acquisition date, (1) a
summary of the Borrowers’ results of their standard due diligence review, and
(2) in the case of a landfill acquisition, a review by a Consulting Engineer and
a copy of the Consulting Engineer’s report shall have been furnished to the
Administrative Agent, only in cases of Material Acquisitions or upon request by
the Administrative Agent;

 

(h) the board of directors and (if required by applicable law) the shareholders,
or the equivalent thereof, of the business to be acquired has approved such
acquisition;

 

(i) if such acquisition is made by a merger, a Borrower, or a wholly-owned
Subsidiary of the Parent which shall become a Borrower in connection with such
merger, shall be the surviving entity;

 

(j) cash consideration to be paid by such Borrower in connection with any such
acquisition or series of related acquisitions (including cash deferred payments,
contingent or otherwise, and the aggregate amount of all Funded Debt assumed),
shall not exceed $10,000,000 without the consent of the Administrative Agent and
the Majority Banks;

 

(k) the aggregate cash consideration to be paid by all Borrowers in connection
with all such acquisitions or series of related acquisitions (including cash
deferred payments, contingent or otherwise, and the aggregate amount of all
Funded Debt assumed) during any period of four (4) consecutive fiscal quarters,
shall not exceed $30,000,000 without the consent of the Administrative Agent and
the Majority Banks; and

 

(1) the terms and conditions of any Indebtedness incurred or assumed by such
Borrower in connection with any such acquisition or series of related
acquisitions (other than Indebtedness permitted under Sections 7.1 (e)) shall be
satisfactory to the Administrative Agent.

 

7.4.2. Disposition of Assets. Except in the case of a Permitted Transfer, no
Borrower will become a party to or agree to or effect any disposition of assets
in excess of $500,000 in the aggregate (other than the sale of inventory, the
licensing of intellectual property and the disposition of obsolete assets, in
each case in the ordinary course of business consistent with past practices)
without the prior written consent of the Majority Banks and the Noteholders;
provided that Borrowers shall be permitted to consummate the FHA Transaction in
accordance with the terms thereof.

 

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7.5. Sale and Leaseback. The Borrowers shall not enter into any arrangement,
directly or indirectly, whereby any Borrower shall sell or transfer any property
owned by it in order then or thereafter to lease such property or lease other
property which such Borrower intends to use for substantially the same purpose
as the property being sold or transferred, without the prior written consent of
the Majority Banks.

 

7.6. Restricted Distributions and Redemptions. The Borrowers shall not redeem,
convert, retire or otherwise acquire shares of any class of its capital stock or
other equity interest, or make any Distributions, except that (i) any Borrower
may make Distributions to another Borrower and (ii) so long as no Default or
Event of Default then exists or would result from such payment, the Borrowers
may make cash dividend payments in an amount not to exceed $3,500,000 in any
fiscal year if after giving pro forma effect to such payment the Borrowers’
Fixed Charge Coverage Ratio is greater than or equal to 1.10 to 1 for such
fiscal year. In addition, the Borrowers shall not effect or permit any change in
or amendment to any document or instrument pertaining to the terms of any
Borrower’s capital stock or other equity interest. Notwithstanding the
foregoing, no Borrower shall make any Distribution under this §7.6 if a Default
or Event of Default exists or would be created by the making of such
Distribution.

 

7.7. Debt Modification, etc. The Borrowers will not (i) amend, supplement or
otherwise modify the terms of any Subordinated Debt other than to extend or
defer the time for payments to be made thereunder, (ii) pay (except as permitted
by the terms of the subordination agreement), redeem or repurchase any
Subordinated Debt or (iii) amend, supplement or otherwise modify any event of
default or any negative and financial covenant contained in the Noteholders’
Debt (other than the Conforming Amendment) without the consent of the Majority
Banks. Prior to any principal payment or prepayment of the Noteholders’ Debt,
the Borrowers shall deliver to the Administrative Agent a certificate setting
forth in reasonable detail computations evidencing the pro forma effect of the
contemplated payment on the Borrowers’ compliance with the covenants contained
in §8 hereof.

 

7.8. Employee Benefit Plans. No Borrower nor any ERISA Affiliate will

 

(a) engage in any “prohibited transaction” within the meaning of §406 of ERISA
or §4975 of the Code which could result in a material liability for any
Borrower; or

 

(b) permit any Guaranteed Pension Plan to incur an “accumulated funding
deficiency”, as such term is defined in §302 of ERISA, whether or not such
deficiency is or may be waived; or

 

(c) fail to contribute to any Guaranteed Pension Plan to an extent which, or
terminate any Guaranteed Pension Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of any Borrower pursuant to
§302(f) or §4068 of ERISA; or

 

(d) amend any Guaranteed Pension Plan in circumstances requiring the posting of
security pursuant to §307 of ERISA or §401(a)(29) of the Code; or

 

(e) permit or take any action which would result in the aggregate benefit
liabilities (with the meaning of §4001 of ERISA) of all Guaranteed Pension Plans
exceeding the value of the aggregate assets of such Plans, disregarding for this
purpose the benefit liabilities and assets of any such Plan with assets in
excess of benefit liabilities.

 

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7.9. Negative Pledges. Except for Permitted Liens and subject to the
Intercreditor Agreement, no Borrower shall enter into or permit to exist any
arrangement or agreement, enforceable under applicable law, which directly or
indirectly prohibits such Borrower from creating or incurring any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest in
favor of the Administrative Agent for the benefit of the Banks and the
Administrative Agent under the Loan Documents other than customary
anti-assignment provisions in leases and licensing agreements entered into by
such Borrower in the ordinary course of its business.

 

7.10. Business Activities. No Borrower will engage directly or indirectly
(whether through Subsidiaries or otherwise) in any type of business other than
the businesses conducted by the Borrowers on the Closing Date and in related
businesses.

 

7.11. Transactions with Affiliates. No Borrower will engage in any transaction
with any Affiliate (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate or, to the knowledge of the Borrowers, any corporation, partnership,
trust or other entity in which any such Affiliate has a substantial interest or
is an officer, director, trustee or partner, on terms more favorable to such
Person than would have been obtainable on an arm’s-length basis in the ordinary
course of business.

 

7.12. Transfer Rights. (a) Notwithstanding any provisions contained herein,
transfers of Designated Property (each, a “Permitted Transfer” and collectively,
“Permitted Transfers”) will be permitted while the Sampson County Bonds are
issued and outstanding, provided, that the following conditions are met:

 

(i) such Permitted Transfer is made for fair market value;

 

(ii) the proceeds of such Permitted Transfer are applied to pay down the
outstanding Revolving Credit Loans (but without a permanent reduction of the
Total Commitment);

 

(iii) in the case of a transfer of the ownership interests in a Designated LLC,
the Designated LLC subject to such transfer shall reaffirm its joint and several
Obligations with respect to the Secured Obligations by entering into a Guaranty
Agreement in form and substance satisfactory to the Administrative Agent and the
Noteholders (the “Designated Guaranty”); and

 

(iv) all assets of a transferred Designated LLC other than Designated Property
shall remain subject to the lien thereon that has been granted to the Collateral
Agent for the benefit of the Banks and the Noteholders for the Secured
Obligations, and both the transferee of such Designated LLC and the Designated
LLC shall each have acknowledged the full force and effect of such lien and
Designated Guaranty executed by such Designated LLC pursuant to (iii) above.

 

(b) In the event of a proposed Permitted Transfer of any membership units or
interests of a Designated LLC or any Designated Property, the proposed
transferor will give the Collateral Agent and the Administrative Agent at least
fifteen Business Days prior written notice of the proposed Permitted Transfer.
Subject to the Administrative Agent’s election to exercise its rights of first
refusal as set forth below, the Collateral Agent will, in accordance with
Section 24 of

 

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the Security Agreement, and within ten Business Days of receipt of such notice,
endorse, assign and deliver to the transferor the requested certificates, if
any, of membership units or ownership interests, or any other Designated
Property in the Collateral Agent’s possession or under its control, which are
included in the Permitted Transfer by the transferor and any other instruments
or documents evidencing the ownership of such membership units or ownership
interest or Designated Property in the Collateral Agent’s possession or under
its control, in accordance with Section 24 of the Security Agreement. Upon
receipt of the proceeds of the Permitted Transfer for application to the
Revolving Credit Loans (but without a permanent reduction of the Total
Commitment), the Collateral Agent, the Banks and the Noteholders shall have no
further interest or right to such membership units or interests or such
Designated Property, and, if requested by transferor or transferor’s transferee,
the Collateral Agent (in accordance with Section 24 of the Security Agreement)
shall execute an appropriate termination of the lien with respect to such units
or interests, or such Designated Property, as applicable; provided that any
Designated LLC subject to a Permitted Transfer shall retain its joint and
several Obligations with respect to the Secured Obligations by entering into a
Designated Guaranty and the liens on the assets of such Designated LLC (other
than Designated Property) granted to the Collateral Agent for the benefit of the
Banks and the Noteholders for the Secured Obligations shall continue in force
and shall be reaffirmed by the Designated LLC as a condition of the Permitted
Transfer. To the extent that, notwithstanding the above, any Permitted Transfer
of membership units or ownership interests or Designated Property by a Borrower
occurs after the Designated Property Notice Period, the proceeds shall be
applied to pay the outstanding Secured Obligations and shall permanently reduce
the Commitment by the amount allocated to the Revolving Credit Loans pursuant to
the terms of the Intercreditor Agreement.

 

(c) After the beginning of the Designated Property Notice Period, the provisions
set forth in this Credit Agreement and Loan Documents allowing the Permitted
Transfers shall terminate, until such time, if ever, as restored by the written
election of the Administrative Agent.

 

(d) Right of First Refusal. If at any time following March 31, 2001, the owner
of Designated Property (the “Seller of Designated Property”) receives a bona
fide offer from a third party to purchase all or any part of the Designated
Property for a purchase price that has been reached through arms-length
negotiation and the Seller of Designated Property wishes to accept such offer
(the “Third Party Offer”), that Seller of Designated Property shall, as a
condition precedent to his or her right to sell such Designated Property to the
third party, comply with the following procedure:

 

1. By written notice (the “Notice of Sale of Designated Property”), the Seller
of Designated Property shall inform the Collateral Agent of the Third Party
Offer. The Notice must contain the name of the offeror, a description of the
Designated Property to be sold, the purchase price, the proposed closing date
(which shall in no event be sooner than twenty Business Days from the date of
the Notice of Sale of Designated Property), all other terms and conditions of
the Third Party Offer and shall further contain an offer to sell all of such
Designated Property to the Collateral Agent or its assign pursuant to the terms
and provisions of this Section 7.12(d) and on the same terms and conditions
contained in the Third Party Offer.

 

2. The Collateral Agent may elect, in accordance with Section 24 of the Security
Agreement, with the consent of the Majority Banks, the Required Holders and the
Administrative Agent, exercisable within twenty Business Days of the receipt of
the Notice of Sale of Designated Property, to purchase all of such Designated
Property

 

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contained in the Third Party Offer. In addition, the Collateral Agent, in
accordance with Section 24 of the Security Agreement, with the consent of the
Majority Banks, the Noteholders and the Administrative Agent, shall be entitled
to assign its right to purchase such Designated Property to one or more third
parties.

 

3. If the Collateral Agent shall elect to purchase all of such Designated
Property, it shall, in accordance with Section 24 of the Security Agreement,
deliver notice of the exercise of its option to the Seller of Designated
Property not later than the expiration of the twentieth Business Day following
receipt of the Notice of Sale of Designated Property. In addition, if the
Collateral Agent shall assign some or all of its right to purchase such
Designated Property to a third party, it shall, in accordance with Section 24 of
the Security Agreement, deliver notice of such assignment, together with notice
of Designated Property to be purchased by such third party, not later than the
twentieth Business Day following receipt of the Notice of Sale of Designated
Property. Following delivery of the Collateral Agent’s (or the third parry’s)
notice of the exercise of the option granted herein to purchase such Designated
Property, the Collateral Agent (or such third party) shall, in accordance with
Section 24 of the Security Agreement, set a closing date, which shall be not
later than thirty days following the delivery of the Collateral Agent’s (or the
third party’s) notice of exercise of right to purchase such Designated Property.

 

4. To the extent that the Collateral Agent and its assigns shall not elect to
purchase all of such Designated Property, the Seller of Designated Property
shall thereafter be entitled to sell all of such Designated Property upon the
terms and conditions set forth in the Notice of Sale of Designated Property. Any
modification of such terms and conditions shall require additional compliance
with the provisions of this Section 7.12(d).

 

8. FINANCIAL COVENANTS OF THE BORROWERS.

 

The Borrowers agree that, so long as any Obligation is outstanding or the Banks
have any obligation to make Loans or any Issuing Bank has any obligation to
issue, extend or renew any Letters of Credit hereunder:

 

8.1. Funded Debt to EBITDA. The Borrowers will not permit the ratio of (x)
Funded Debt as at the end of any fiscal quarter to (y) EBITDA for the period of
four (4) consecutive fiscal quarters ending on such date to be greater than the
ratio set forth opposite such fiscal quarter:

 

Fiscal Quarters Ending

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

   Ratio

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

September 30, 2003 - December 31, 2004

   4.25:1.00

March 31, 2005 and thereafter

   4.00:1.00

 

8.2. Senior Funded Debt to EBITDA. The Borrowers will not permit the ratio of
(x) Senior Funded Debt as at the end of any fiscal quarter to (y) EBITDA for the
period of four (4) consecutive fiscal quarters to be greater than the ratio set
forth opposite such fiscal quarter:

 

Fiscal Quarters Ending

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

   Ratio

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

September 30, 2003 - December 31, 2004

   3.75:1.00

March 31, 2005 and thereafter

   3.50:1.00

 

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8.3. Consolidated Net Worth. Commencing with the fiscal quarter ended September
30, 2003, the Borrowers will not permit their Consolidated Net Worth at the end
of any fiscal quarter to be less than the sum of $95,000,000 plus the sum of (a)
50% of positive Consolidated Net Income for each fiscal quarter, beginning with
the fiscal quarter ended June 30, 2003, and (b) 100% of the net proceeds of any
sale by the Borrowers of (i) equity securities issued by the Borrowers or (ii)
warrants or subscription rights for equity securities issued by the Borrowers.

 

8.4. Interest Coverage. The Borrowers will not permit the ratio of (x) EBITA to
(y) Consolidated Total Interest Expense to be less than the ratio for the
quarters ending on or within the respective periods set forth in the following
table:

 

Fiscal Quarter Ending

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

   Ratio

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

September 30, 2003 - December 31, 2004

   2.50:1.00

March 31, 2005 and thereafter

   2.75:1.00

 

8.5. Profitable Operations. The Borrowers will not permit Consolidated Net
Income to be less than $1.00 for any fiscal quarter.

 

8.6. Capital Expenditures. Capital Expenditures for any fiscal year shall not
exceed (i) $35,000,000 for the fiscal year 2003, (ii) $35,000,000 for the fiscal
year 2004, (iii) $37,000,000 for the fiscal year 2005, and (iv) $43,000,000 for
the fiscal year 2006.

 

9. CLOSING CONDITIONS.

 

The obligations of the Banks to make the Loans and of the Issuing Banks to issue
any Letters of Credit on the Closing Date and otherwise be bound by the terms of
this Credit Agreement shall be subject to the satisfaction of the following
conditions precedent:

 

9.1. Corporate Action. All corporate action necessary for the valid execution,
delivery and performance by the Borrowers of this Credit Agreement and the other
Loan Documents shall have been duly and effectively taken, and satisfactory
evidence thereof shall have been provided to the Administrative Agent.

 

9.2. Loan Documents, etc.

 

9.2.1. Loan Documents. Each of the Loan Documents shall have been duly executed
and delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to each of the Banks.

 

9.2.2. Noteholders’ Documents and Consents. The Administrative Agent shall have
received copies of the Noteholders’ Documents, as amended through the Closing

 

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Date. The Conforming Amendment, shall be in effect as of the Closing Date, and
the Noteholders shall have consented to the transactions herein and to certain
amendments of the Intercreditor Agreement, in each case in form satisfactory to
the Administrative Agent and the Banks.

 

9.3. Certified Copies of Charter Documents. Each of the Banks shall have
received from each Borrower a copy, certified by a duly authorized officer of
such Person to be true and complete on the Closing Date, of each of (i) its
charter or other incorporation documents as in effect on such date of
certification, and (ii) its by-laws or operating agreement as in effect on such
date.

 

9.4. Incumbency Certificate. Each of the Banks shall have received from each
Borrower an incumbency certificate, dated as of the Closing Date, signed by a
duly authorized officer of such Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to sign, in
the name and on behalf of such Borrower, each of the Loan Documents to which
such Borrower is or is to become a party; (ii) in the case of the Parent, to
make Loan and Letter of Credit Requests and to apply for Letters of Credit; and
(iii) to give notices and to take other action on its behalf under the Loan
Documents.

 

9.5. Validity of Liens. The Security Documents shall be effective to create in
favor of the Collateral Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral for the benefit of the Banks and the Noteholders,
in accordance with the Intercreditor Agreement. All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Collateral Agent to protect and preserve such security interests
shall have been duly effected. The Collateral Agent shall have received evidence
thereof in form and substance satisfactory to the Collateral Agent.

 

9.6. Perfection Certificates and UCC Search Results. The Collateral Agent shall
have received from each Borrower a completed and fully executed Perfection
Certificate and the results of UCC searches with respect to the Collateral,
indicating no liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Collateral Agent.

 

9.7. Certificates of Insurance. The Administrative Agent shall have received (a)
a certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (b) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).

 

9.8. Opinion of Counsel. Each of the Banks and the Administrative Agent shall
have received a favorable legal opinion from counsel to the Borrowers addressed
to the Banks and the Administrative Agent, dated as of the Closing Date, in form
and substance satisfactory to the Administrative Agent.

 

9.9. Permit Certificate. The Banks shall have received an environmental permit
certificate in substantially the form of Exhibit E from the Borrowers
satisfactory to the Administrative Agent concerning principal operating permits
at the Borrowers’ principal operating facilities.

 

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9.10. Payment of Fees. The Borrowers shall have paid all fees due and payable on
the Closing Date to the Banks, the Administrative Agent, the Administrative
Agent’s Special Counsel and the Arranger.

 

9.11. Payoff. The Administrative Agent shall have received evidence satisfactory
to the Administrative Agent in connection with the refinancing of the Existing
Credit Agreement and disbursement instructions from the Borrowers regarding the
same.

 

9.12. Funded Debt to EBITDA on Closing Date. The Administrative Agent shall have
received a certificate of a duly authorized officer of the Parent, dated as of
the Closing Date, and in form and detail satisfactory to the Administrative
Agent and the Banks, demonstrating that, after giving effect to the transactions
contemplated hereby (including, without limitation, after giving effect to all
borrowings under the Credit Agreement and all credit exposure), the ratio of (x)
Funded Debt as at the Closing Date to (y) EBITDA for the period of four (4)
consecutive fiscal quarters ending on such date shall not exceed 3.25 to 1.

 

9.13. Consents and Approvals. The Administrative Agent shall have received
evidence that all consents and approvals necessary to complete all transactions
contemplated hereby have been obtained.

 

10. CONDITIONS TO ALL BORROWINGS.

 

The obligations of the Banks to make any Loan, and of any Issuing Bank to issue,
extend or renew any Letter of Credit, in each case whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:

 

10.1. Representations True; No Event of Default. Each of the representations and
warranties of the Borrowers contained in this Credit Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Credit Agreement shall be true as of the date as of which
they were made and shall also be true at and as of the time of the making of
such Loan or the issuance, extension or renewal of such Letter of Credit, with
the same effect as if made at and as of that time (except to the extent of
changes resulting from transactions contemplated or permitted by this Credit
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default or Event of Default shall have occurred and be
continuing.

 

10.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Issuing Bank would make it illegal for the Issuing
Bank to issue, extend or renew such Letter of Credit.

 

10.3. Governmental Regulation. Each Bank shall have received such statements in
substance and form reasonably satisfactory to such Bank as such Bank shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.

 

10.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to each of the Banks and to the

 

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Administrative Agent and the Administrative Agent’s Special Counsel, including,
without limitation, a Loan and Letter of Credit Request in the form attached
hereto as Exhibit B, and each of the Banks, the Administrative Agent and such
counsel shall have received all information and such counterpart originals or
certified or other copies of such documents as the Administrative Agent may
reasonably request.

 

11. COLLATERAL SECURITY.

 

The Obligations shall be secured by (a) a perfected (except in the case of Real
Property and motor vehicles, subject to the following proviso) first-priority
security interest (subject to Permitted Liens entitled to priority under
applicable law) in all assets of each Borrower, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents and the Intercreditor
Agreement; (b) a pledge of 100% of the capital stock or other equity interests
of such Borrowers (other than the Parent); and (c) a pledge of 65% of the
capital stock or other equity interests of each Foreign Subsidiary; provided
that the Borrowers hereby agree, upon the request of the Administrative Agent,
to deliver, as promptly as practicable, but in any event within sixty (60) days
after such request, titles to motor vehicles and mortgages with respect to all
Real Property and take such other steps as may be requested (including, without
limitation, the delivery of legal opinions, Consulting Engineer’s reports and
title insurance) so as to provide the Administrative Agent, for the benefit of
the Banks and the Administrative Agent, a perfected first-priority security
interest in such assets.

 

12. EVENTS OF DEFAULT; ACCELERATION; ETC.

 

12.1. Events of Default and Acceleration. If any of the following events
(“Events of Default” or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, “Defaults”) shall occur:

 

(a) the Borrowers shall fail to pay any principal of the Loans or any
Reimbursement Obligation when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at any other
date fixed for payment;

 

(b) the Borrowers shall fail to pay any interest on the Loans, the fees, or
other sums due hereunder or under any of the other Loan Documents within five
(5) Business Days after the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other date
fixed for payment;

 

(c) the Borrowers shall fail to comply with any of the covenants contained in
§§6, 7 or 8;

 

(d) the Borrowers shall fail to perform any term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified elsewhere in this §12.1) for fifteen (15) days after written notice of
such failure has been given to the Borrowers by the Administrative Agent;

 

(e) any representation or warranty of the Borrowers in this Credit Agreement or
any of the other Loan Documents or in any other document or instrument delivered
pursuant to or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have been
made or repeated;

 

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(f) the Borrowers shall fail to pay at maturity, or within any applicable period
of grace, any obligation for borrowed money (other than the Obligations or the
Noteholders’ Debt) or any guaranty with respect thereto in an aggregate amount
greater than $1,000,000, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money in an aggregate amount greater than
$1,000,000 for such period of time as would, or would have permitted (assuming
the giving of appropriate notice if required) the holder or holders thereof or
of any obligations issued thereunder to accelerate the maturity thereof;

 

(g) any Borrower shall make an assignment for the benefit of creditors, or admit
in writing its inability to pay or generally fail to pay its debts as they
mature or become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of any Borrower or of any
substantial part of the assets of any Borrower or shall commence any case or
other proceeding relating to any Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against any Borrower and any Borrower shall indicate its
approval thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days following
the filing thereof;

 

(h) a decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating any Borrower bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or order
for relief is entered in respect of any Borrower in an involuntary case under
federal bankruptcy laws as now or hereafter constituted;

 

(i) there shall remain in force, undischarged, unsatisfied and unstayed, for
more than thirty (30) days, whether or not consecutive, any final judgment
against any Borrower that, with other outstanding final judgments, undischarged,
against any Borrower exceeds in the aggregate $1,000,000;

 

(j) if any of the Loan Documents shall be cancelled, terminated, revoked or
rescinded or the Collateral Agent’s security interests, mortgages or liens in a
substantial portion of the Collateral shall cease to be perfected, or shall
cease to have the priority contemplated by the Security Documents, in each case
otherwise than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Banks, or any action at law, suit
or in equity or other legal proceeding to cancel, revoke or rescind any of the
Loan Documents shall be commenced by or on behalf of any Borrower party thereto
or any of their respective stockholders, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more of the Loan Documents is illegal, invalid or unenforceable
in accordance with the terms thereof;

 

(k) any Borrower or any ERISA Affiliate incurs any liability to the PBGC or a
Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate amount
exceeding $1,000,000; or any Borrower or any ERISA Affiliate is assessed
withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan
requiring aggregate

 

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annual payments exceeding $1,000,000, or any of the following occurs with
respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a
failure to make a required installment or other payment (within the meaning of
§302(f)(l) of ERISA), provided that the Administrative Agent determines in its
reasonable discretion that such event (A) could be expected to result in
liability of any Borrower to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $1,000,000 and (B) could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC, for the appointment by
the appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States District
Court of a trustee to administer such Guaranteed Pension Plan; or (iii) the
institution by the PBGC of proceedings to terminate such Guaranteed Pension
Plan;

 

(l) any Borrower shall be enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
any material part of its business and such order shall continue in effect for
more than thirty (30) days;

 

(m) there shall occur the loss, suspension or revocation of, or failure to
renew, any license or permit now held or hereafter acquired by any Borrower if
such loss, suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of any Borrower;

 

(n) any Borrower shall be indicted for a state or federal crime, or any civil or
criminal action shall otherwise have been brought or threatened against any
Borrower, a punishment for which in any such case could include the forfeiture
of any assets of the Borrowers having a fair market value in excess of
$1,000,000;

 

(o) (i) except with respect to the applicable Designated LLC after a Permitted
Transfer, the Parent shall at any time, legally or beneficially, directly or
indirectly own less than one hundred percent (100%) of the shares of the common
stock, partnership interests or membership units of each other of the Borrower;
or (ii) any person or group of persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 20% or more of the
outstanding shares of common stock of the Parent or, during any period of twelve
(12) consecutive calendar months, individuals who were directors of the Parent
on the first day of such period shall cease to constitute a majority of the
board of directors of the Parent; or

 

(p) (i) a default or event of default shall have occurred under the Noteholders’
Debt, or (ii) the holders of all or any part of the Noteholders’ Debt shall
accelerate the maturity of all or any part of the Noteholders’ Debt, or (iii)
the Noteholders’ Debt shall be prepaid, redeemed or repurchased in whole or in
part or amended except as permitted under §7.7 hereof without the prior consent
of the Majority Banks and the Administrative Agent;

 

then, and in any such Event of Default, so long as the same may be continuing,
the Administrative Agent may, and upon the request of the Majority Banks shall,
by notice in writing to the Borrowers declare all amounts owing with respect to
this Credit Agreement, the Notes and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon

 

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forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrowers; provided that in the event of any Event of Default specified in
§§12.1(g), 12.1(h) or §12.1(p)(ii), all such amounts shall become immediately
due and payable automatically and without any requirement of notice from the
Administrative Agent or any Bank.

 

12.2. Termination of Commitments. If any one or more of the Events of Default
specified in §§12.1(g), 12.1(h) or §12.1(p)(ii) shall occur, any unused portion
of the credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Loans to the Borrowers and the
Issuing Banks shall be relieved of all further obligations to issue, extend or
renew Letters of Credit. If any other Event of Default shall have occurred and
be continuing, or if on any Drawdown Date or other date for issuing, extending
or renewing any Letter of Credit the conditions precedent to the making of the
Loans to be made on such Drawdown Date or (as the case may be) to issuing,
extending or renewing such Letter of Credit on such other date are not
satisfied, the Administrative Agent may and, upon the request of the Majority
Banks, shall, by notice to the Borrower, terminate the unused portion of the
credit hereunder, and upon such notice being given such unused portion of the
credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Issuing Banks shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
No termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.

 

12.3. Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Loans pursuant to §12.1, each Bank, if owed any amount with
respect to the Loans or the Reimbursement Obligations, may, with the consent of
the Majority Banks but not otherwise, proceed to protect and enforce its rights
by suit in equity, action at law or other appropriate proceeding, whether for
the specific performance of any covenant or agreement contained in this Credit
Agreement and the other Loan Documents or any instrument pursuant to which the
Obligations to such Bank are evidenced, including as permitted by applicable law
the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of such Bank, subject to
the Intercreditor Agreement. No remedy herein conferred upon any Bank or the
Administrative Agent or the holder of any Note or purchaser of any Letter of
Credit Participation is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.

 

12.4. Distribution of Collateral Proceeds. Subject in all cases to the
requirements of the Intercreditor Agreement to share proceeds of the Collateral
as set forth therein, in the event that, following the occurrence or during the
continuance of any Default or Event of Default, the Administrative Agent or any
Bank, as the case may be, receives any monies in connection with the enforcement
of any the Security Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed for application as
follows:

 

(a) First, to the payment of, or (as the case may be) the reimbursement of the
Administrative Agent for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by the
Administrative Agent in connection with the collection of such monies by the
Administrative Agent, for the exercise, protection or enforcement by the
Administrative Agent of all or any of the rights, remedies, powers and
privileges of the Administrative Agent under this Credit

 

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Agreement or any of the other Loan Documents or in respect of the Collateral or
in support of any provision of adequate indemnity to the Administrative Agent
against any taxes or liens which by law shall have, or may have, priority over
the rights of the Administrative Agent to such monies;

 

(b) Second, to all other Obligations pari passu among the Administrative Agent
and the Banks; provided, however, that (i) distributions shall be made (A) pari
passu among Obligations with respect to the Administrative Agent’s Fee payable
pursuant to §4.1 and all other Obligations and (B) with respect to each type of
Obligation owing to the Banks, such as interest, principal, fees and expenses,
among the Banks pro rata, and (ii) the Administrative Agent may in its
discretion make proper allowance to take into account any Obligations not then
due and payable;

 

(c) Third, upon payment and satisfaction in full or other provisions for payment
in full satisfactory to the Banks and the Administrative Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant to
§9- 504(l)(c) of the Uniform Commercial Code of The Commonwealth of
Massachusetts; and

 

(d) Fourth, the excess, if any, shall be returned to the Borrowers or to such
other Persons as are entitled thereto.

 

12.5. Acknowledgement Regarding the Intercreditor Agreement. Each Bank hereby
acknowledges receipt of the Intercreditor Agreement under which Fleet is
appointed as Collateral Agent for the benefit of the Banks and the Noteholders
(and their respective successors and assigns). Each Bank by its execution of
this Agreement or an Assignment and Acceptance Agreement agrees to be bound by
the terms of such Intercreditor Agreement as if such Bank were an original
signatory thereto, including without limitation, the waivers of certain rights
(including a waiver of jury trial) as specified therein and the turnover and
collateral sharing provisions thereof. Furthermore, the Banks acknowledge and
agree that pursuant to the terms of the Intercreditor Agreement, this §12.5
cannot be amended without the consent of the Noteholders, and that the
Noteholders shall be a third party beneficiary of the agreements and obligations
of the Banks contained in this §12.5.

 

13. SETOFF.

 

Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrowers and any securities or other property of the Borrowers in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrowers to such Bank. Each of the Banks agrees with
each other Bank that (i) if an amount to be set off is to be applied to
Indebtedness of the Borrowers to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank and all such amounts to
be applied to the Notes and Reimbursement Obligations shall be subject to the
Intercreditor Agreement, and (ii) if such Bank shall receive from the Borrowers,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by the Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by proceedings against
the Borrowers at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation,

 

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receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of the Note or Notes held by, or Reimbursement Obligations owed to,
such Bank any amount in excess of its ratable portion of the payments received
by all of the Banks with respect to the Notes held by, and Reimbursement
Obligations owed to, all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by way of
distribution, pro tanto assignment of claims, subrogation or otherwise as shall
result in each Bank receiving in respect of the Notes held by it or
Reimbursement Obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; provided that if all or any part of such excess payment
is thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.

 

14. THE ADMINISTRATIVE AGENT.

 

14.1. Appointment of Administrative Agent, Powers and Immunities.

 

(a) Each Bank hereby irrevocably appoints and authorizes Fleet to act as
Administrative Agent hereunder and under the other Loan Documents and the
Intercreditor Agreement, provided, however, the Administrative Agent is hereby
authorized by the Banks to serve only as an administrative and collateral agent
for the Banks and to exercise such powers as are reasonably incidental thereto
and as are set forth in this Credit Agreement and the other Loan Documents and
the Intercreditor Agreement. Each Bank irrevocably authorizes the Administrative
Agent to execute the Security Documents, the Intercreditor Agreement and all
other instruments relating thereto and to take from time to time any action with
respect to any Collateral or the Security Documents which may be necessary to
perfect, maintain perfected or insure the priority of the security interest in
and liens upon the Collateral granted pursuant to the Security Documents, and
authorizes the Administrative Agent to take such other action on behalf of each
of the Banks and to exercise all such powers as are delegated to the
Administrative Agent hereunder and under any of the other Loan Documents and all
related documents, together with such other powers as are reasonably incidental
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Administrative
Agent.

 

(b) The relationship between the Administrative Agent and each of the Banks is
that of an independent contractor. The use of the term “Administrative Agent” is
for convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Administrative Agent and each
of the Banks. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Administrative Agent and any of the Banks. As an
independent contractor empowered by the Banks to exercise certain rights and
perform certain duties and responsibilities hereunder and under the other Loan
Documents, the Administrative Agent is nevertheless a “representative” of the
Banks, as that term is defined in Article 1 of the Uniform Commercial Code, for
purposes of actions for the benefit of the Banks and the Administrative Agent
with respect to all collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of the Administrative Agent as
“secured party”, “mortgagee” or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to the
attachment, perfection, priority or enforcement of any security interests,
mortgages or deeds of trust

 

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in collateral security intended to secure the payment or performance of any of
the Obligations, all for the benefit of the Banks and the Administrative Agent.

 

(c) The Administrative Agent may exercise its powers and execute its duties by
or through employees or agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such employees, agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to their rights and duties under this Credit Agreement and
the other Loan Documents. The Administrative Agent may utilize the services of
such Persons as it in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the Borrowers.

 

(d) Neither the Administrative Agent nor any of its respective shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Administrative Agent
or such other Person, as the case may be, may be liable for losses due to their
willful misconduct or gross negligence.

 

(e) The Administrative Agent in its separate capacity as a Bank shall have the
same rights and powers hereunder as any other Bank. It is agreed that the
duties, rights, privileges and immunities of the Issuing Bank, in its capacity
as issuer of Letters of Credit hereunder, shall be identical to its duties,
rights, privileges and immunities as a Bank as provided in this §14.

 

14.2. Actions By Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Credit Agreement
or the Loan Documents as it reasonably deems appropriate unless it shall first
have received such advice or concurrence of the Banks and shall be indemnified
to its reasonable satisfaction by the Banks 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 Credit Agreement or any of
the Loan Documents in accordance with a request of the Banks, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
the Banks and all future holders of the Notes or any Letter of Credit
Participation.

 

14.3. INDEMNIFICATION. WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWERS
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, THE BANKS AGREE TO INDEMNIFY THE
ADMINISTRATIVE AGENT, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENT
PERCENTAGES, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER (OTHER THAN LOSSES WITH RESPECT TO THE ADMINISTRATIVE
AGENT’S PRO RATA SHARE OF THE OBLIGATIONS) WHICH MAY AT ANY TIME BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO
OR ARISING OUT OF THIS CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ENFORCEMENT OF

 

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ANY OF THE TERMS HEREOF OR THEREOF OR OF ANY SUCH OTHER DOCUMENTS; PROVIDED,
THAT NO BANK SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ADMINISTRATIVE AGENT (OR
ANY AGENT THEREOF), IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH
INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY
NEGLIGENCE.

 

14.4. Reimbursement. Without limiting the provisions of §14.3, the Banks hereby
agree that the Administrative Agent shall not be obliged to make available to
any Person any sum which the Administrative Agent is expecting to receive for
the account of that Person until the Administrative Agent has determined that it
has received that sum. The Administrative Agent may, however, disburse funds
prior to determining that the sums which the Administrative Agent expects to
receive have been finally and unconditionally paid to the Administrative Agent,
if the Administrative Agent wishes to do so. If and to the extent that the
Administrative Agent does disburse funds and it later becomes apparent that the
Administrative Agent did not then receive a payment in an amount equal to the
sum paid out, then any Person to whom the Administrative Agent made the funds
available shall, on demand from the Administrative Agent, refund to the
Administrative Agent the sum paid to that Person. If, in the opinion of the
Administrative Agent, the distribution of any amount received by it in such
capacity hereunder or under the Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
the Administrative Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Administrative Agent
its proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such manner and to such Persons as shall be determined by such
court.

 

14.5. Closing Documents. For purposes of determining compliance with the
conditions set forth in §9, each Bank that has executed this Credit Agreement
shall be deemed to have consented to, approved or accepted, or to be satisfied
with, each document and matter either sent, or made available, by the
Administrative Agent or the Arranger to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be to be consent to or
approved by or acceptable or satisfactory to such Bank, unless an officer of the
Administrative Agent or the Arranger active upon the Borrowers’ account shall
have received notice from such Bank prior to the Effective Date specifying such
Bank’s objection thereto and such objection shall not have been withdrawn by
notice to the Administrative Agent or the Arranger to such effect on or prior to
the Effective Date. The Administrative Agent will forward to each Bank, promptly
after the Administrative Agent’s receipt thereof, a copy of each notice or other
document furnished to the Administrative Agent for such Bank hereunder or under
the Intercreditor Agreement; provided, however, that, notwithstanding the
foregoing, the Administrative Agent may furnish to the Banks a monthly summary
with respect to Letters of Credit issued hereunder in lieu of copies of the
related Letter of Credit Applications.

 

14.6. Non-Reliance on Administrative Agent and Other Banks. Each Bank represents
that it has, independently and without reliance on the Administrative Agent or
any other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Borrowers and decision to enter into this Credit Agreement and the other
Loan Documents and agrees that it will, independently and without reliance upon
the Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
appraisals and decisions in taking or not taking action under this Credit
Agreement or any other

 

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Loan Document. The Administrative Agent shall not be responsible for the due
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrowers, or be bound to
ascertain or inquire as to the performance or observance by the Borrowers of any
of the terms, conditions, covenants or agreements in this Credit Agreement, the
other Loan Documents or any other document referred to or provided for herein or
therein or to make inquiry of, or to inspect the properties or books of, any
Person. The Administrative Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrowers or any
holder of any of the Notes shall have been duly authorized or is true, accurate
and complete. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning any Person
which may come into the possession of the Administrative Agent or any of their
affiliates. The Administrative Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the credit worthiness or financial
conditions of the Borrowers. Each Bank shall have access to all documents
relating to the Administrative Agent’s performance of its duties hereunder at
such Bank’s request. Unless any Bank shall promptly object to any action taken
by the Administrative Agent hereunder (other than actions to which the
provisions of §14.8 are applicable and other than actions which constitute gross
negligence or willful misconduct by the Administrative Agent), such Bank shall
conclusively be presumed to have approved the same.

 

14.7. Resignation of Administrative Agent. The Administrative Agent may resign
at any time by giving sixty (60) days prior written notice thereof to the Banks
and the Borrowers. Upon any such resignation, the Banks shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed by the Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent’s
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative Agent, which shall be a
financial institution having a combined capital and surplus in excess of
$150,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent’s resignation, the provisions
of this Credit Agreement shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as
Administrative Agent. Any new Administrative Agent appointed pursuant to this
§14.7 shall immediately issue new Letters of Credit in place of Letters of
Credit previously issued by the Administrative Agent.

 

14.8. Action by the Banks, Consents, Amendments, Waivers, Etc. Except as
otherwise expressly provided in this §14.8, any action to be taken (including
the giving of notice) may be taken or any consent or approval required or
permitted by this Credit Agreement or any other Loan Document to be given by the
Banks may be given, and any term of this Credit Agreement, any other Loan
Document or any other instrument, document or agreement related to this Credit
Agreement or the other Loan Documents or mentioned therein may be amended and
the performance or observance by the Borrowers or any other person of any of the
terms thereof and

 

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any Default or Event of Default (as defined in any of the above-referenced
documents or instruments) may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Majority Banks; provided, however, that no such consent or
amendment which affects the rights, duties or liabilities of the Administrative
Agent (in its capacity as Administrative Agent) shall be effective without the
written consent of the Administrative Agent. Notwithstanding the foregoing, no
amendment, waiver or consent shall do any of the following unless in writing and
signed by each Bank directly affected thereby: (a) increase the amount of such
Bank’s Commitment (or subject the Banks to any additional obligations), (b)
reduce the principal of or rate of interest on the Notes (including, without
limitation, interest on overdue amounts) or any Reimbursement Obligation or any
fees payable hereunder, (c) postpone the Maturity Date or any date fixed for any
payment in respect of principal or interest (including, without limitation,
interest on overdue amounts) on the Notes, or any fees payable hereunder; (d)
change the Commitment Percentage of any Bank, except as permitted under §§2.2.2
or 18 hereof. Notwithstanding the foregoing, no amendment, waiver or consent
shall (a) without the written consent of all Banks (i) change the definition of
“Majority Banks” or percentage of Banks which shall be required for the Banks or
any of them to take any action under the Loan Documents, (ii) amend this §14.8
or (iii) release any Borrower from its obligations hereunder; (iv) other than
pursuant to a transaction permitted by the terms of this Credit Agreement,
release all or substantially all of the Collateral (excluding, if any Borrower
becomes a debtor under the federal Bankruptcy Code, the release of “cash
collateral”, as defined in Section 363(a) of the federal Bankruptcy Code
pursuant to a cash collateral stipulation with the debtor approved by the
Majority Banks); or (v) amend or modify §12.4 (Distribution of Collateral
Proceeds), (b) without the written consent of the Administrative Agent, amend or
waive §14, the amount or time of payment of the Administrative Agent’s fees
payable for the Administrative Agent’s account or any other provision applicable
to the Administrative Agent; (c) without the written consent of the Issuing Bank
affected thereby, amend or waive the amount or time of payment of any fees
payable for the Issuing Bank’s account or any other provision applicable to the
Issuing Bank; or (d) without the written consent of the Swing Line Bank, amend
or waive §2.7, the amount or time of payment of any fees payable for the Swing
Line Bank’s account or any other provision applicable to the Swing Line Bank.

 

No course of dealing or delay or omission on the part of the Administrative
Agent or any Bank in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrowers
shall entitle the Borrowers to other or further notice or demand in similar or
other circumstances. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.

 

In addition, the Administrative Agent, when acting on behalf of itself and the
Banks pursuant to the Intercreditor Agreement, shall vote on the Banks’ behalf
on matters requiring consent and shall agree to amend the Security Documents
only with the consent of the Majority Banks.

 

14.9. Administrative Agent May File Proofs of Claim.

 

(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial, administrative or like proceeding or any assignment for the benefit of
creditors relative to any Borrower, the Administrative Agent (irrespective of
whether the principal of any Loan or Reimbursement Obligation shall then be due
and payable as herein expressed or by declaration or otherwise and irrespective
of whether the Administrative Agent shall

 

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have made any demand on such Borrower) shall be entitled and empowered, by
intervention in such proceeding, under any such assignment or otherwise:

 

(i) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans or Reimbursement Obligations 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 Banks and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Banks and the Administrative Agent
and their respective agents and counsel and all other amounts due the Banks and
the Administrative Agent under §§4.1 and 15) allowed in such proceeding or under
any such assignment; and

 

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

 

(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such proceeding or under any such assignment is
hereby authorized by each Bank 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 Banks, nevertheless 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 §§4.1 and 15.

 

(c) Nothing contained herein shall authorize the Administrative Agent to consent
to or accept or adopt on behalf of any Bank any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations owed to such
Bank or the rights of any Bank or to authorize the Administrative Agent to vote
in respect of the claim of any Bank in any such proceeding or under any such
assignment.

 

14.10. Documentation Agent and Syndication Agent. The Documentation Agent and
the Syndication Agent shall not have any right, power, obligation, liability,
responsibility or duty under this Credit Agreement other than those applicable
to all Banks as such. Without limiting the foregoing, the Documentation Agent
and the Syndication Agent shall not have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied, and
will not rely, on the Documentation Agent or the Syndication Agent in deciding
to enter into this Credit Agreement or not taking any action hereunder.

 

15. EXPENSES.

 

The Borrowers hereby agree to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Administrative Agent
or any of the Banks (other than taxes based upon the Administrative Agent’s or
any Bank’s net income) on or with respect to the transactions contemplated by
this Credit Agreement (the Borrowers hereby agreeing to indemnify the
Administrative Agent and each Bank with respect thereto), (c) the reasonable
fees, expenses and disbursements of the Administrative Agent’s Special Counsel
or any local counsel to the Administrative Agent incurred in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, each closing

 

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hereunder, any amendments, modifications, approvals, consents or waivers hereto
or hereunder, or the cancellation of any Loan Document upon payment in full in
cash of all of the Obligations or pursuant to any terms of such Loan Document
for providing for such cancellation, (d) the fees, expenses and disbursements of
the Administrative Agent or any of its affiliates incurred by the Administrative
Agent or such affiliate in connection with the preparation, syndication,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, including all title insurance premiums and surveyor,
engineering, appraisal and examination charges, (e) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys’ fees and costs,
which attorneys may be employees of any Bank or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Administrative Agent
in connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(ii) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Bank’s or the Administrative Agent’s
relationship with the Borrower or any of its Subsidiaries and (f) all reasonable
fees, expenses and disbursements of any Bank or the Administrative Agent
incurred in connection with UCC searches, UCC filings, intellectual property
searches, intellectual property filings or mortgage recordings. The covenants
contained in this §15 shall survive payment or satisfaction in full of all other
obligations.

 

16. INDEMNIFICATION.

 

Each of the Borrowers agrees to indemnify and hold harmless the Administrative
Agent, its affiliates and the Banks from and against any and all claims, actions
and suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any actual
or proposed use by the Borrower or any of its Subsidiaries of the proceeds of
any of the Loans or Letters of Credit, (b) the reversal or withdrawal of any
provisional credits granted by the Administrative Agent upon the transfer of
funds from lock box, bank agency, concentration accounts or otherwise under any
cash management arrangements with the Borrower or any Subsidiary or in
connection with the provisional honoring of funds transfers, checks or other
items, (c) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower or any of its
Subsidiaries comprised in the Collateral, (d) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (e) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the preparation
therefor, the Banks and the Administrative Agent and its affiliates shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this §16 are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants contained in this §16
shall survive payment or satisfaction in full of all other Obligations.

 

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17. SURVIVAL OF COVENANTS, ETC.

 

Unless otherwise stated herein, all covenants, agreements, representations and
warranties made herein, in the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrowers pursuant hereto shall be
deemed to have been relied upon by the Banks and the Administrative Agent,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of the Loans and the issuance,
extension or renewal by the Issuing Banks of any Letters of Credit, as herein
contemplated, and shall continue in full force and effect so long as any amount
due under this Credit Agreement, any Letter of Credit or the Notes remains
outstanding and unpaid or any Bank has any obligation to make any Loans or the
Issuing Banks have any obligation to issue any Letters of Credit hereunder. All
statements contained in any certificate or other paper delivered by or on behalf
of the Borrowers pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrowers hereunder.

 

18. ASSIGNMENT AND PARTICIPATION.

 

It is understood and agreed that each Bank shall have the right to assign at any
time all or any portion of its Commitment and interests in the risk relating to
the Loans and outstanding Letters of Credit hereunder in an amount equal to or
greater than $2,500,000 (which assignment shall be of an equal percentage of its
Commitment, the Loans and outstanding Letters of Credit unless otherwise agreed
to by the Administrative Agent) to any Eligible Assignees with the prior written
approval of the Administrative Agent and, if no Default or Event of Default
exists, the Borrowers, which approvals shall not be unreasonably withheld or
delayed; provided, however, that the Administrative Agent may assign without the
consent of the Borrowers such portion of its Commitment and interests in the
risk relating to the Loans and outstanding Letters of Credit necessary to reach
its desired hold level. Any Bank may at any time, and from time to time, assign
to any Bank Affiliate of such Bank all or any part of its rights and obligations
under the Loan Documents by notice to the Administrative Agent and the
Borrowers. It is further agreed that each assignee which executes and delivers
to the Administrative Agent and the Borrowers hereunder an Assignment and
Acceptance substantially in the form of Exhibit F hereto together with an
assignment fee in the amount of $3,500 payable by the assigning Bank to the
Administrative Agent, shall, on the date specified in such Assignment and
Acceptance, become a party to this Credit Agreement and the other Loan Documents
for all purposes of this Credit Agreement and the other Loan Documents, and its
portion of the Commitment, the Loans and Letters of Credit shall be as set forth
in such Assignment and Acceptance. The Bank assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Credit Agreement. Upon the execution and delivery of
such Assignment and Acceptance, the Borrowers shall issue to the assignee a Note
in the amount of such assignee’s Commitment, dated the date of the assignment
and otherwise completed in substantially the form of Exhibit B and to the extent
any assigning Bank has retained a portion of its obligations hereunder, an
appropriate replacement Note to the assigning Bank reflecting its assignment;
(b) the Administrative Agent shall distribute to the Borrowers, the Banks and
such assignee a schedule reflecting such changes; and (c) this Credit Agreement
shall be appropriately amended to reflect (i) the status of the assignee as a
party hereto and (ii) the status and rights of the Banks hereunder.

 

Each Bank shall also have the right to grant participations to one or more banks
or other financial institutions in its Commitment, the Loans and outstanding
Letters of Credit. The

 

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documents evidencing any such participation shall limit such participating bank
or financial institutions voting rights solely to those matters set forth in
§14.8 which require the vote of each Bank directly affected thereby.

 

Notwithstanding the foregoing, no assignment or participation shall operate to
increase the Commitment hereunder or otherwise alter the substantive terms of
this Credit Agreement, and no Bank which retains a Commitment hereunder shall
have a Commitment of less than $2,500,000, as such amount may be reduced upon
reductions in the Total Commitment pursuant to §2.2 hereof.

 

Notwithstanding anything to the contrary contained in this §18, any Bank (a
“Granting Bank”) may grant to a special purpose funding vehicle (an “SPV”) of
such Granting Bank, identified as such in writing from time to time delivered by
the Granting Bank to the Administrative Agent and the Borrowers, the option to
provide to the Borrowers all or any part of any Loan that such Granting Bank
would otherwise be obligated to make to the Borrowers pursuant to this Credit
Agreement, provided that (a) nothing herein shall constitute a commitment to
make any Loan by any SPV, (b) the Granting Bank’s obligations under this Credit
Agreement shall remain unchanged, (c) the Granting Bank shall retain the sole
right to enforce this Credit Agreement and to approve any amendment,
modification or waiver of any provision of this Credit Agreement and (d) if an
SPV elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by the Granting Bank. Each party hereto hereby agrees that no SPV
shall be liable for any expense reimbursement, indemnity or similar payment
obligation under this Credit Agreement (all liability for which shall remain
with the Granting Bank). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Credit
Agreement) that, prior to the date that is one year and one day after the later
of (i) the payment in full of all outstanding senior indebtedness of any SPV and
(ii) the Maturity Date, it will not institute against, or join any other person
in instituting against, such SPV any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or similar proceedings under the laws of
the United States of America or any State thereof. In addition, notwithstanding
anything to the contrary contained in this §18, any SPV may (A) with notice to,
but (except as specified below) without the prior written consent of, the
Borrowers or the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to its Granting
Bank or to any financial institutions (consented to by the Administrative Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrowers, which consents shall not be unreasonably withheld or delayed)
providing liquidity and/or credit facilities to or for the account of such SPV
to fund the Loans made by such SPV or to support the securities (if any) issued
by such SPV to fund such Loans and (B) disclose on a confidential basis any
non-public information relating to its Loans (other than financial statements
referred to in §5.4 or §6.4) to any rating agency, commercial paper dealer or
provider of a surety, guarantee or credit or liquidity enhancement to such SPV.
In no event shall the Borrowers be obligated to pay to an SPV that has made a
Loan any greater amount than the Borrowers would have been obligated to pay
under this Agreement if the Granting Bank had made such Loan. An amendment to
this paragraph without the written consent of an SPV shall be ineffective
insofar as it alters the rights and obligations of such SPV.

 

Anything contained in this §18 to the contrary notwithstanding, any Bank may at
any time pledge, without the consent of the Borrower or the Administrative
Agent, all or any portion of its interest and rights under this Credit Agreement
(including all or any portion of its Notes) to

 

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any of the twelve Federal Reserve Banks organized under §4 of the Federal
Reserve Act, 12 U.S.C. 341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.

 

19. PARTIES IN INTEREST.

 

All the terms of this Credit Agreement and the other Loan Documents shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto and thereto; provided that no
Borrower shall assign or transfer its rights hereunder without the prior written
consent of the Banks. Nothing in this Credit Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby) any legal or equitable
right, remedy or claim under or by reason of this Credit Agreement or any of the
other Loan Documents.

 

20. NOTICES, ETC.

 

Except as otherwise expressly provided in this Credit Agreement, all notices and
other communications made or required to be given pursuant to this Credit
Agreement or the other Loan Documents shall be in writing and shall be delivered
by hand, mailed by United States first-class mail, postage prepaid, or sent by
telegraph, telex or telecopier and confirmed by letter, addressed as follows:

 

(a) if to the Borrowers, at Waste Industries USA, Inc., 3301 Benson Drive, Suite
601, Raleigh, North Carolina 27609, Attention: D. Stephen Grissom, Vice
President of Finance, telecopy number 919-325-3013;

 

(b) if to the Administrative Agent or Fleet, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Timothy M. Laurion, Managing Director, telecopy
number 617-434-2160; or

 

(c) if to any Bank, at such Bank’s address as provided to the Administrative
Agent;

 

or at such other address for notice as shall have last been furnished in writing
to the Person giving the notice.

 

Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (a) if delivered by hand overnight courier or facsimile to
a responsible officer of the party to which it is directed, at the time of the
receipt thereof by such officer or the sending of such facsimile and (b) if sent
by registered or certified first-class mail, postage prepaid, three (3) Business
Days after the mailing thereof.

 

21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.

 

21.1. Confidentiality. Each of the Banks and the Administrative Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrowers or any of their
Subsidiaries pursuant to this Credit Agreement that is identified by such Person
as being confidential at the time the same is delivered to the Banks or the
Administrative Agent, provided that nothing herein shall limit the disclosure of
any such information (a) after such information

 

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shall have become public other than through a violation of this §21, or becomes
available to any of the Banks or the Administrative Agent on a nonconfidential
basis from a source other than the Borrowers, (b) to the extent required by
statute, rule, regulation or judicial process, (c) to counsel for any of the
Banks or the Administrative Agent, (d) to bank examiners or any other regulatory
authority having jurisdiction over any Bank or the Administrative Agent, or to
auditors or accountants, (e) to the Administrative Agent, any Bank or any
Financial Affiliate, (f) in connection with any litigation to which any one or
more of the Banks, the Administrative Agent or any Financial Affiliate is a
party, or in connection with the enforcement of rights or remedies hereunder or
under any other Loan Document, (g) to a Bank Affiliate or a Subsidiary or
affiliate of the Administrative Agent, (h) to any actual or prospective assignee
or participant or any actual or prospective counterparty (or its advisors) to
any swap or derivative transactions referenced to credit or other risks or
events arising under this Credit Agreement or any other Loan Document so long as
such assignee, participant or counterparty, as the case may be, agrees to be
bound by the provisions of §21 or (i) with the consent of the Borrower.
Notwithstanding anything herein to the contrary, the Administrative Agent and
each Bank may disclose to any and all Persons, without limitation of any kind,
any information with respect to the “tax treatment” and “tax structure” (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent or
such Bank relating to such tax treatment and tax structure.

 

21.2. Prior Notification. Unless specifically prohibited by applicable law or
court order, each of the Banks and the Administrative Agent shall, prior to
disclosure thereof, notify the Borrower of any request for disclosure of any
such non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.

 

21.3. Other. In no event shall any Bank or the Administrative Agent be obligated
or required to return any materials furnished to it or any Financial Affiliate
by the Borrower or any of its Subsidiaries. The obligations of each Bank under
this §21 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Loans or Reimbursement Obligations from any Bank.

 

22. MISCELLANEOUS.

 

The rights and remedies herein expressed are cumulative and not exclusive of any
other rights which the Banks or Administrative Agent would otherwise have. The
captions in this Credit Agreement are for convenience of reference only and
shall not define or limit the provisions hereof. This Credit Agreement and any
amendment hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one instrument. In proving
this Credit Agreement it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom enforcement is
sought. Delivery by facsimile by any of the parties hereto of an executed
counterpart hereof or of any amendment or waiver hereto shall be as effective as
an original executed counterpart hereof or of such amendment or waiver and shall
be considered a representation that an original executed counterpart hereof or
such amendment or waiver, as the case may be, will be delivered.

 

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23. ENTIRE AGREEMENT, ETC.

 

The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
§14.8. No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or omission on the
part of the Administrative Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrowers shall entitle the Borrowers to other or further notice
or demand in similar or other circumstances.

 

24. WAIVER OF JURY TRIAL.

 

EACH OF THE BORROWERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE BORROWERS (a)
CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY BANK
OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
BANK OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT
AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE
BORROWERS’ WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

 

25. GOVERNING LAW.

 

THIS CREDIT AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS
CONSENT TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE
COMMONWEALTH OF MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS
OF ANY BANK OR THE ADMINISTRATIVE AGENT UNDER THIS CREDIT AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS.

 

26. SEVERABILITY.

 

The provisions of this Credit Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.

 

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27. EXISTING CREDIT AGREEMENT SUPERSEDED.

 

This Credit Agreement shall supersede the Existing Credit Agreement in its
entirety, except as provided in this §27. On the Closing Date, the rights and
obligations of the parties under the Existing Credit Agreement and the “Notes”
as defined therein shall be subsumed within and be governed by this Credit
Agreement and the Notes; provided, however, that each of the “Revolving Credit
Loans”, “Swingline Loans”, and “Letters of Credit” (as each such term is defined
in the Existing Credit Agreement) outstanding under the Existing Credit
Agreement on the Effective Date shall, for purposes of this Credit Agreement, be
included as Revolving Credit Loans, Swingline Loans, and Letters of Credit
hereunder in accordance with the provisions hereof. The Retiring Bank shall not
be Bank hereunder and the Borrowers hereby agree to pay on the Closing Date any
amounts due to the Retiring Bank under the Existing Credit Agreement.

 

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IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as
a sealed instrument as of the date first set forth above.

 

BORROWERS WASTE INDUSTRIES USA, INC. By:        

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

Name:

   

Title:

   

 

WASTE INDUSTRIES, LLC

DUPLIN COUNTY DISPOSAL, LLC

VAN BUREN COUNTY LANDFILL, LLC

WASTE INDUSTRIES LANDCO, LLC

WASTE SERVICES OF NORTH CAROLINA, LLC

ECO SERVICES, LLC

SOUTHERN WASTE SERVICES OF MISSISSIPPI, LLC

RELIABLE TRASH SERVICE, LLC

SOUTHERN WASTE OF ALABAMA, LLC

WASTE INDUSTRIES OF MISSISSIPPI, LLC

WASTE SERVICES OF MEMPHIS, LLC

WASTECO, LLC

LAURENS COUNTY LANDFILL, LLC

S & S ENTERPRISES OF MISSISSIPPI, LLC

SAMPSON COUNTY DISPOSAL, LLC

SAFEGUARD LANDFILL MANAGEMENT, LLC

SHAMROCK ENVIRONMENTAL SERVICES, LLC

TRANSWASTE SERVICES, LLC

RED ROCK DISPOSAL, LLC

MOSS POINT DISPOSAL, LLC

BLACK BEAR DISPOSAL, LLC

   

By: Waste Industries USA, Inc.,
its Manager

By:        

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

Name:

   

Title:

   

 

[Signature Page to Waste Industries Amended and Restated Revolving Credit
Agreement]

 

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

RAILROAD AVENUE DISPOSAL, LLC

WASTE INDUSTRIES PROPERTY CO., LLC

OLD KINGS ROAD SOLID WASTE, LLC

   

By: Waste Industries of Mississippi, LLC,
its Manager

By:        

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

Name:

   

Title:

   

 

WASTE SERVICES OF TENNESSEE, LLC

   

By: Wasteco, LLC, its Manager

By:        

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

Name:

   

Title:

   

 

WASTE INDUSTRIES OF TENNESSEE, LLC

   

By: Waste Services of Tennessee, LLC,
its Manager

By:        

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

Name:

   

Title:

   

 

WASTE SERVICES OF DECATUR, LLC    

By: Waste Industries of Tennessee, LLC,
its Manager

By:        

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

Name:

   

Title:

   

 

[Signature Page to Waste Industries Amended and Restated Revolving Credit
Agreement]

 

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

AGENTS AND BANKS

FLEET NATIONAL BANK, individually and as

Administrative Agent

By:

       

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

Name:

   

 

WACHOVIA BANK, N.A., individually and as

Syndication Agent

By:

       

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

Name:

   

 

BRANCH BANKING AND TRUST COMPANY,

individually and as Documentation Agent

By:

       

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

Name:

   

 

COMERICA BANK

By:

       

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

Name:

   

 

RBC CENTURA BANK (f/k/a Centura Bank)

By:

       

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

Name:

   

 

LASALLE BANK NATIONAL ASSOCIATION

By:

       

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

Name:

   

 

[Signature Page to Waste Industries Amended and Restated Revolving Credit
Agreement]

 

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

BANK OF AMERICA

By:

       

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

Name:

   

 

[Signature Page to Waste Industries Amended and Restated Revolving Credit
Agreement]